Even with poor SNUS sales in the U.S. and Canada - these guys aren't going away

July 30, 2008 - In general the test marketing of SNUS products in both United States and Canada have been poor. For example, UST Executives are very disappointed in the sales of the entire SNUS segment. The entire segment itself has gained very little traction, and they had plans to be more aggressive. From their perspective, the category still has not gained significant traction and are disappointed in the consumer response to it. What they are seeing in market for all of the players is, versus some reasonable velocities in the early days when they were very heavily promoted, sequentially the volume has really not held up and has declined overtime. Mr. Kessler, the UST CEO, has stated that nine of ten smokers who try smokeless tobacco reject the product. They wonder whether the American consumer is really interested in this form of tobacco or not. More from UST management.

UST announced that they have renamed Skoal Dry to Skoal Snus. Susan M. Ivey - Chairman, President and Chief Executive Officer of Reynolds American, Inc. believes this is a positive step that the SNUS category is now more uniformly named across all of the brands that are out there. She claims that SNUS has been established as the spitless (or spitfree) category.(Reynolds American, Inc Q2 2008 Earnings Call, Seeking Alpha, 7/30/2008.)

Sales of Camel SNUS has been poor at best. They have tried so many promotions but we bet they have had to give away more cans than they have sold. We just could not believe how they could expand their major metropolitan markets across the country, test marketing to additional urban areas.

Altria - Philip Morris USA (PM) - their original entry Taboka failed and has been removed and Marlboro SNUS hasn't done much better. As we know, PM considers Marlboro more than a cigarette - a brand that stands for superior tobacco flavor. It was felt just using the Marlboro name would create value in new businesses such as SNUS and the Moist Smokeless Tobacco entry. (Altria Group, Inc., Investor Presentation, New York, March 11, 2008) But market tests find that even the name Marlboro doesn't seem to sell the Marlboro smokeless products. Nik Modi, a UBS tobacco analyst has stated, "The Marlboro brand name is not as transferable as many originally believed." (Altria's growth depends on the Marlboro name..; Philip Morris USA (PM) continues to stumble in the smokeless tobacco arena...

We questioned why back in February 2008 with the poor performance of snus market why the Liggett Group would want to introduce another product - Grand Prix Snus.

These guys aren't going away. David Beran, Executive Vice President and Chief Financial Officer said Philip Morris USA believes it can offset declining cigarette consumption by moving more aggresively into the smokeless tobacco and spitfree smokeless-tobacco pouches called SNUS. Without PMI - Altria's Net Income Drops 58%..

R.J. Reynolds along with the others see considerable potential for this smoke-free product, and these companies continue to refine its efforts to create awareness and educate adult tobacco consumers about this new category.

Many more news briefs within the library that support these conclusions.

TobaccoWatch.org