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Latest Altria Acquisition Bolsters Its Smokeless Segment Source from: Motley Fool 06/18/2019 ![]() Snus may sound like a Dr. Seuss character, but the smokeless tobacco product is among the fastest-growing tobacco-derived nicotine (TDN) products on the market today. Data from market researcher IRI shows TDN products grew 250% last year, hitting some $60 million in sales. Although that pales in comparison to actual cigarette sales, it clearly indicates that as combustible cigarettes fall further out of favor, people are looking for reduced-risk alternatives to get their nicotine fix. As the leading U.S. cigarette manufacturer, Altria (NYSE:MO) feels the impact of cigarettes' decline more acutely than others, it seems determined to build up a portfolio of products separate from them. It just announced it was paying $372 million for an 80% stake in the global business of Burger Sohne, a Swiss tobacco company that makes a snus-like product called on! for which it expects to quickly expand distribution in the U.S. What is snus? Snus, on the other hand, while also finely ground or powdered tobacco, and sometimes sold loose, is more often found in small teabag-like pouches placed between the lip and gum. Altria sells snus under its Copenhagen and Skoal brands. on! is similar to snus in that it is a nicotine pouch that is placed under the upper lip, but it is tobacco-free. Rather, on! and similar pouches like Swedish Match's Zyn brand contain nicotine salts derived from tobacco and other food-grade ingredients as filler and flavor enhancers. Hitting the ground running The tobacco giant plans to quickly expand distribution of on! and said the transaction with Burger Sohne includes a clause that allows it to begin distributing the smokeless product right away. Once the sale is complete, by the end of the second half of 2019, Burger Sohne will operate under a new subsidiary Altria created called Helix Innovations. The benefit for Altria is that by acquiring on! instead of developing its own product, it doesn't have to go through the regulatory process of getting it approved by the FDA. on! has been on the market since 2016. Enditem |