logo

logo

logo
SMOKE Magazine
logo
Cigar Rights of America Promo
logo
El Original
logo
Sell SMOKE Magazine!
logo
NATO Tobacco Show
logo
Fujima
June,
2005

Ploom
Moist Snuff...
Prices Keep Dropping

By Chris Bickers

The era of dollar-a-can moist snuff pricing has definitely begun. Or at least it had by May in Raleigh, North Carolina, where I live.

While checking several local tobacco outlets for lowest prices, I found U.S. Smokeless Tobacco Co.'s (USSTC) Husky at $.96 per can, Swedish Match's Longhorn for what appeared to be an "everyday" low price of $.99 per puck, Swisher International's Kayak at a counter for $1 a puck (but on a shelf in the same store the stated price was $1.17 per puck, leading one to think the first price was some sort of promotion), and Conwood's Grizzly for $1.34 a puck.

The downward trend on lowest-of-low priced moist snuff seemed to have been set off in March with the surprise announcement from USSTC that all versions of Husky would henceforth contain 10% more tobacco per can. In addition, a special introductory price would be instituted for Husky for at least 12 weeks.

Wall Street analysts have commented that because the competition in the subprice value tier of moist snuff is becoming so intense, these products now have more consumer traction compared to the established brands.

That may be, but none of the three shop operators I consulted in Raleigh felt that there had been any movement down to the sub-discount brands by their regular customers who prefer premium brands.

  • Smokeless-tobacco sales were up 6.1% in the first quarter of 2005, according to an April research note from Smith Barney. It found in a recent survey that "over 40% of retailers and 50% of wholesalers believe this stronger growth is due to the lower-priced brands that have been introduced into the market by the major manufacturers." Three fourths of retailers have seen evidence of these lower-priced brands stealing share from the premium smokeless-tobacco brands, particularly Skoal, the note said.

    Nearly that many had seen an increase in incidence of downtrading.

    Smith Barney's tobacco analyst, Bonnie Herzog, said in the note that relying on value-priced brands to drive growth in moist snuff will erode the companies' financial strength. "We believe downtrading will likely continue," she said, and "operating margins will continue to be squeezed."

    She noted that Swedish Match had said earlier in the year that all its 2005 growth in this category was driven by value-priced products. The company's market for medium-priced and premium products was essentially flat.

  • Four brands are fighting now for the top spot in the sub-discount segments. A few months ago, the leaders seemed to be Grizzly, Husky and Longhorn, but Swisher has aggressively pushed Kayak into the fray. With a suggested retail price of $.99 to $1.25 per can and a marketing campaign built around the phrase "Big Taste, Big Value," the brand has by all accounts performed well so far. A well-received new apple flavor was added recently to natural long cut, straight long cut, and wintergreen long cut versions. The wintergreen was the original version introduced two years ago.

    "We felt there was a need for us to have a presence in that price structure," says Ron Carroll, director of marketing for Swisher. "To build a brand in any segment of moist snuff is very competitive, but Kayak is doing well."

  • An opinion piece in the Wall Street Journal in April gave grudging acceptance to the possibility that smokeless tobacco might play a part in smoking cessation programs. But the author, Robert J. Davis, couldn't admit the obvious without getting in a dig.

    "Using smokeless tobacco is safer than smoking, but it does pose health risks," he wrote, "and there's no ironclad evidence that it helps smokers quit... If all attempts to quit smoking repeatedly fail, it may be worth considering a switch to smokeless. But remember that if it, too, fails, you run the risk of being addicted to two forms of tobacco."

    One wonders how many forms of nicotine Davis thinks a person could be addicted to at once? In any case, the treatment reduction program built around smokeless tobacco seems to be developing some momentum, at least in the public eye.

    The "harm reduction" approach to smoking cessation differs significantly from the accepted cessation philosophy, says Dr. Brad Rodu, pathology professor and a senior scientist at the University of Alabama at Birmingham Cancer Center. "It uses minimal intervention... Each participant attended only a single counseling session instead of intensive behavioral modification and frequent counseling sessions that are expensive and impractical."

    Second, he adds, because of the safer profile of smokeless relative to cigarettes, nicotine maintenance with smokeless is permanent, if necessary. "Conventional cessation programs, whose goal is nicotine abstinence, employ nicotine substitutes only temporarily to wean individuals from cigarettes - but it is clear that abstinence from nicotine is not necessary to obtain [the] health benefits of smoking cessation."

    In 1998 Rodu reported on one-year success rates from a clinical trial that was the first to use smokeless tobacco as a nicotine substitute. That program resulted in quit-rates of 31% among men and 19% among women using smokeless tobacco.


    SMOKESHOP - June, 2005

  • Vapor Convention Circuit