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completely different from moist snuff and long
cut. It’s sweet, it’s not as strong, and it’s overall
more attractive. I’m expecting it to do well now
with all the emphasis on alternatives.Customers
are ready and eager to try new things.”
In the tobacco outlet channel, leading
player Smoker Friendly puts credence in snus
growing for 2014, according to Jeremy Weiner,
marketing and purchasing director.
At Nothin’ Butt Smokes, snus hasn’t had a
great following so far,as stated by Vice President
Shon Ross, but he’s not discounting it—not at
all. “Snus has not taken off like people in the
industry imagined, but we still have a decent
section dedicated to it,” he explains. “We want
to make sure we try all of these alternatives in
small doses until they take off. We know it’s all
still playing out.”
Reduced- and
Modified-Risk Products
The future of the tobacco sector is paved with
reduced-risk products (RRPs), modified-risk
products (MRPs), next generation products
(NPGs), and overall tobacco harm reduction
(THR). All referring to the same group of
products, the day will likely come when one
wins out as the definitive designated acronym.
In the meantime, whatever you want to call this
emerging category, it clearly warrants research
and investment for both the short and long
term.
The
Wall Street Journal’
s Corporate
Intelligence blog recently reported that “coming
up with something new to sell is a matter of
existential importance” for major cigarette
companies “whose core product is in long-
term decline,” and who have been investing in
“reduced-risk products.”
Philip Morris International CEO André
Calantzopoulos said at a recent investor
conference that “reduced-risk products” are
“our greatest growth opportunity in the years
to come, which we believe has the very real
potential to transform the industry.”
RRPs continue to be Philip Morris’s “greatest
growth opportunity,” agrees Wells Fargo
Securities analyst Bonnie Herzog. She reports
that Philip Morris remains on track to launch
its Platform 1 RRP (HeatSticks) in two test
cities in the fourth quarter of this year, with
the first national launch set for 2015. Platform
Moist Smokeless Can Growth
Total MST
Portion Pouch MST
Low Price MST
Premium MST
0% 5% 10% 15% 20%
While portion pouches are growing at
a faster rate, low price is contribut-
ing more in absolute bases (e.g., 64
percent of can growth) given its size.
However, portion pouches still drive
an impressive 33 percent of the can
growth. Two-thirds of portion pouch is
being driven by the low-price segment,
which is essentially flipped versus two
years ago.
SOURCE: BALVOR/CSNEWS RESEARCH
