Growth in smokeless tobacco this year will depend on the variety of offerings, adequate inventory and focus on roll pricing.
Total smokeless tobacco sales experienced a 5% rise over the last 12 months, according to Nielsen. However, enthusiasm among retailers was tempered recently when President Obama released a proposed federal budget that included a 94-cents-per-pack increase in the federal cigarette tax rate and a likely proportionate increase in all other tobacco tax rates.
“Based on a 94-cents-per-pack increase in the cigarette tax, a proportionate increase for all other tobacco products would be a 93% increase in the applicable tax rates,” the National Association of Tobacco Outlets (NATO) recently stated.
Under the 2015 budget proposal, the new tax rates for cigarettes and little cigars, as well as other tobacco products, would include: 97.13 cents per pound on chewing tobacco; $2.91 per pound on moist snuff; $47.82 per pound on roll your own tobacco; and $5.46 per pound on pipe tobacco.
Lou Maiellano, president of TAZ Marketing & Consulting Group in Sevierville, Tenn., predicted 2015 will be a good year for moist smokeless sales thanks to the relatively low price and popularity of pouches. “I’m really intrigued that there is this constant, constant growth.”
ALTERNATIVE OPTIONS
“I think people are looking at snus and smokeless in general as a good alternative to smoking,” said Tim Greene, category manager/area manager for Boulder, Colo.-based Smoker Friendly. “Obviously, with all the smoking bans and fewer places to smoke, and even with the vaping restrictions that we’re starting to see, they still want their nicotine, as well.” Added Smoker Friendly’s Marketing and Purchasing Director Jeremy Weiner, “It’s a little more discreet.”
Maiellano agreed.
“Consumers are looking for options, for discreet options that deliver. There is no question that moist smokeless tobacco delivers nicotine, and there are those that see this as a leading harm-reduction product,” Maiellano said.
Beyond that, the category has experienced lower pricing.
“Most of the growth is happening in pouches, I believe, and there is the significant growth in (sales of) low-priced product. Some of the premium product is struggling a little,” Maiellano said.
Greene said there are more c-stores getting deeper into the snus category. “They’ve always had Camel snus, but they are starting to get into general, so there are more offerings not by manufacturers but by retailers. The focus continues to be on wintergreen and pouch offerings. The category as a whole continues steady growth,” Greene said. Smoker Friendly runs promotions that can save consumers 50 cents per purchase when they buy two cans of snus.
Indeed, the consumer base for smokeless may be expanding as well, according to Maiellano.
“There is an interesting twist that people are probably not realizing is happening, and it’s something that I always envisioned would happen,” Maiellano said, referring to an increase in the number of women purchasing moist smokeless tobacco products. “There is an interesting dynamic that’s taking place as relates to pouches and the female consumer.”
