High Hopes for Smokeless Tobacco

The U.S. Centers for Disease Control and Prevention reported that the rate of smoking has remained constant since 2008, but the number of smokeless tobacco consumers is rising. The smokeless category has emerged as convenient and practical for those times and locations where cigarettes are desired, but prohibited.

While smokeless products represented just 6% of all tobacco sales in 2009, the market is growing at a rate of about 7% a year, according to Chicago-based Morningstar.

SymphonyIRI reported that smokeless tobacco sales for the 52 weeks ended Dec. 26, 2010, surged 12.23% to $4.266 billion. Units sold increased 10.5% to 1.13 billion. The average price per unit increased a slight six cents to $3.77.

Those numbers figure to increase in 2011 as the heat remains on cigarettes, partly the result of taxation, competition from Native Americans and bans on smoking in public places, not to mention that the Food and Drug Administration (FDA) is going to require graphic images on cigarette packs in two years to help curb smoking.

Smokeless tobacco products, including snus—which comes in shapes ranging from toothpicks to orbs and in flavors from cherry to peach—so far have not met with the same intense scrutiny, though there have been some changes. In June, the FDA increased the size of warning labels on smokeless products.

Filling the Void for Smokers
“Cigarettes continue to go up in price, and there are lots of places where people can’t smoke,” said Phil Metzinger, vice president of specialty beverage and tobacco operations at Brookshire Brothers, a Lufkin, Texas-based company that operates grocery and convenience stores, plus 41 tobacco outlets. “People who enjoy tobacco are looking for an alternative that can be used in a restaurant or at work. Smokeless tobacco is gaining in popularity, especially in urban environments.”

One of the reasons for the uptick is that “now you can consume products without anybody else being aware of it,’’ said Phil Gorham, a Morningstar analyst who follows the tobacco industry. He also said economic factors are driving people to quit or to switch to smokeless products. “We’ve had a big tax increase on both the federal and state levels on cigarettes, and it’s becoming more expensive to smoke in some states,” he said.

Big Tobacco has taken notice. Between 2006 and 2009, the country’s two largest tobacco companies by market share—Altria Group and Reynolds American Inc.—acquired smokeless tobacco companies that together give them about 90% of the U.S. market share in that category, according to a Chicago Tribune report.

The tobacco companies have begun branding smokeless products with traditional cigarette brand names, such as Marlboro and Camel to lure disenfranchised smokers.

In 2009, Altria Group’s Marlboro Snus and Reynolds’ Camel Snus made the national scene. Snus comes in small tea-bag like sachets that are placed in the mouth but don’t need to be chewed for the user to absorb the nicotine. Snus is pasteurized and refrigerated instead of fermented, a process that significantly lowers the levels of carcinogens that lead to mouth cancers.

The Snus market saw 28% year-over-year growth by volume in 2009, according to Euromonitor.

  • Rabbithole

    If only convenience stores would realize how quickly actual Swedish snus would fly off the shelves…this crap from Marlboro and Camel doesn’t cut it. If there were a cooler of Swedish Match products at my local convenience store, I wouldn’t have to order rolls online!

    Hell…you already carry Swedish Match cigar products…how about hooking us up with some REAL snus guys?

  • JOE

    I have been living in sweden for a month and i already love snus so much. If this stuff was on sale in london(uk) the snus market would explode.

    GO SNUS

css.php