UST Head: OTP Is Critical Growth Category

UST Inc. Chairman and CEO Murray Kessler is pinpointing the company’s continued success in the moist smokeless tobacco category and said he believes the growth will continue over the long-term.

Kessler discussed the OTP issues at the JPMorgan Global Tobacco Conference in London on June 27, which were presented in a Web cast at the UST Web site.

Kessler discussed the implications of moist smokeless tobacco, and how it has become one of the fastest growing consumer packaged goods categories at retail, growing 6% compounded annually since 2004.

Kessler highlighted the company’s ongoing success in attracting adult cigarette smokers to moist smokeless tobacco, which has enabled the company to generate profitable volume growth.

Kessler said research shows 50% of smokers are looking for a socially acceptable alternative to cigarettes, and smokeless is filling their needs. To appeal to smokers, the company has continuously offered new flavors and products that offer ease of use, such as pouched tobacco.

In the past four years UST has strengthened its marketing muscle to change consumer habits, specifically educating smokers on the alternatives that are available to them. Kessler said the company has representatives at about 7,000 events a year – perhaps 25 to 30 events a day – where they sample millions of consumers and collect names, while also communicating the benefits of smokeless tobacco.

Kessler said about 1 in 6 smokeless tobacco users just a few years ago said they were previously smokers, a ratio that today has changed to about 1 in 2. In the past four years, UST has seen its MST can sales rise by 25%.

Additionally, the UST chairman pointed to strong performance in the company’s wine business, which is also benefiting from strong category growth and currently ranks as the fastest growing of the Top 10 wine companies in the U.S.

Kessler’s presentation was Webcast at 7 a.m. Eastern time on June 27, and will be available through the UST website at www.ustinc.com. The Webcast will be archived for 60 days.

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