Swedish Company Hopes to Chip Away at Reynolds' Snus Market

Source from:  Journal Now 02/28/2012

Swedish Match is ramping up production of snus in hopes of chipping away at the dominant U.S. market share held by R.J. Reynolds Tobacco Co.'s Camel Snus brand. Based in Stockholm, Sweden, Swedish Match has been selling its snus product in the United States since 2006, Sandy Fowler-Jones, a U.S. spokeswoman, said Friday. Swedish Match is the third-largest producer of moist snuff in the United States, said Stephen Pope, an industry analyst and managing partner of Spotlight Ideas in England. The main Swedish Match snus brand is General, which is sold locally at outlets that include Tar Heel Tobacco shops and Four Brothers convenience stores. The company is testing two new styles of snus in rectangular cans in Chicago, Dallas and Philadelphia. Camel Snus is by far the largest competitor, with a 75 percent market share in the fourth quarter, according to Reynolds. Reynolds began selling Camel Snus in test markets in April 2006, going national with distribution in October 2008. Smokeless tobacco, including three dissolvable products in test markets, could play a pivotal role in Reynolds' transformation into a "total tobacco company." The company is emphasizing smokeless tobacco as cigarette sales continue to decline amid regulatory and social pressures. The transformation is daunting for tobacco manufacturers, considering there are 42 million adult smokers in the United States compared with 8 million adults who use moist snuff and 3 million adults who use snus. Clark Darrah, vice president of next-generation products for Swedish Match, said the group's strategy includes researching current snus sales in key markets that best fit its customer demographics, adjusting distribution channels and responding to markets with increasing smoking restrictions. "We believe our products will differentiate themselves in the marketplace," Darrah said. "While we have more of our sales in traditional tobacco stores, we know the majority of snus sales are taking place in convenience stores, and that's where our focus will be." David Howard, a spokesman for Reynolds, said the company is not surprised Swedish Match is aiming at increasing its U.S. market share. Bill Godshall, executive director of SmokeFree Pennsylvania, is a prominent advocate for using smokeless products as a means of helping smokers quit. "The big-market advantages for Camel Snus, Marlboro Snus and Skoal Snus are that Reynolds and Altria have already located those in many/most tobacco retail stores," Godshall said. "Many people who begin using snus with Camel Snus or Marlboro Snus are likely to end up trying and switching to Swedish Match snus products. "Camel Snus is more like Skoal, while Swedish snus products are more like Copenhagen," Godshall said. "Most new moist snuff users begin with Skoal and some switch to Copenhagen, which has more nicotine." Enditem