Tobacco makers looking to smokeless tobacco for growth

In contrast to the declining cigarette market, demand for smokeless tobacco has never been stronger than it is today. Awareness about the health risks of smoking coupled with unprecedented government regulation on lighting up has prompted tobacco manufacturers to invest in promoting the switch from cigarettes to smokeless tobacco. According to the Centers for Disease Control and Prevention (CDC), “the five largest tobacco manufacturers have spent record amounts of money on smokeless tobacco advertising and promotions.”

There are several smokeless (and generally more profitable) alternatives to cigarettes on the market. Most moist snuff (also known as dipping tobacco) is produced by Altria’s subsidiary UST and its arch rival Reynolds American’s American Snuff. Snus or skruf — a spit-less smokeless tobacco product — is made by Philip Morris USA (also owned by Altria), Swedish Match, Imperial Tobacco, and others.

Snuff and snus are the key drivers to tobacco manufacturers’ growth. UST is introducing 10 new products along with other brand-building initiatives under the Skoal label in 2011. American Snuff’s strategy continues to support its Kodiak and Grizzly brands through packaging that features a classic embossed metal lid, and pouches with pre-measured portions designed to be more convenient than loose snuff. Philip Morris launched two new snus varieties nationally in 2011, preceded by Marlboro Snus in 2010. The US smokeless tobacco market, the largest next to Scandinavia, is forecast to spiral at a compound annual growth rate of 7% during 2010-2012.

In light of this information, are non-smokers and non-chewers being overly cautious when considering tobacco and its effects on the next generation? Take the recent case of Major League Baseball‘s 2011 World Series between the Texas Rangers and St. Louis Cardinals. Health officials and a group of senators fumed that chewing and spitting by big leaguers might spur imitation by young fans, and called to ban use of all tobacco products — including smokeless tobacco — from the field. Smokeless tobacco, which is already banned in the minor leagues, is used in some form by approximately a third of MLB ballplayers. Other sports organizations that have kicked out tobacco chewing by players and coaches include the National Hockey League and the NCAA.

The call to quit is backed by results from CDC research, which found that in 2009 about 15% of high school boys use smokeless tobacco, a whopping 36% increase since 2003. Realizing the less-than-stellar example they were setting, some ballplayers decided to give up their snuff this season; others said a ban stomped on their freedom.

More significantly, World Series players with a wad of chew do something for the tobacco industry that it cannot do for itself — provide free advertising on television. (Similarly, movie maker Columbia Pictures did not remove scenes showing tobacco use in Moneyball despite being asked to.) Implementing a ban on the use of smokeless tobacco as part of the 2012 Major League collective bargaining agreement may not stop players who dip, but it will create a hard line against the temptation for aspiring ballplayers (and hopefully young fans) to copy more than their heroes’ stance and swing.

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