After recovering from product recalls, the smokeless category is once again thriving at c-stores.
When the U.S. Smokeless Tobacco Co., a division of Philip Morris International’s Altria Group, issued a nationwide recall of several Copenhagen, Skoal, Cope and Husky products last year, retailers weren’t sure how consumers would react, and how long the category would suffer the effects.
As one might suspect, sales did fall. Wells Fargo Securities reported volume growth tanked during the 2017 second quarter, recording only 0.5% growth.
Third quarter results weren’t much better with 0.6%.
“My smokeless [tobacco sales last year] were basically flat with 2016,” said David Collins, president of DC Oil Co., which owns and operates more than a dozen Quick Shop convenience stores throughout Alabama.
By autumn, however, the tobacco subcategory was back on an upward swing with volume gains of 1.5%, and it appears the recovery will be ongoing. For the four weeks ending Jan. 27, dollar sales of smokeless tobacco in convenience stores cashed in at 3.8% growth. For the 12-week period, dollar sales rose 5.2%.
When it comes to individual brands, Copenhagen leads with nearly 52% of the unit share. Skoal edges out BAT’s Grizzly by slightly more than 3%.
In years past, the smokeless tobacco category, including moist chew and snus, received boosts by introducing new types of products, packaging or flavors. Since the U.S. Food & Drug Administration (FDA) ruled these products must be regulated and taxed at the same level of traditional cigarettes, innovation has slowed.
“Like all other categories, product introductions have been significantly impacted by premarket authorization, and we anticipate that there’s likely no relief from this freeze in the coming years absent very significant changes to how new products gain FDA authorization to get into the market,” said Darryl Jayson, TMA chief operating officer.
That said, buzz is building around R.J. Reynolds Tobacco Co.’s (owned by BAT), announcement that it will seek a reduced-risk classification for six Camel snus. This is the first attempt for a smokeless item. In 2015, the FDA denied a Swedish Match North America Inc. request for a modified risk tobacco product (MRTP) qualification for some of its products under the General brand. But the agency did grant the company a premarket tobacco application (PMTA).
“Swedish Match’s PMTA authorization for General snus was a notable achievement,” said Chris Greer, TMA president and CEO. “We think that Swedish Match and the earlier attempts were early in the FDA’s process of setting up what it wants to do as far as the MRTP process goes. The industry was disappointed that earlier attempts to gain this did not result in the MRTP authorization.”
“TMA believes the biggest issue for smokeless will be the Camel snus MRTP application, which could start heating up late in the year,” he concluded.