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Snus on the Loose

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Snus on the Loose SNUSSNUS ONON THETHE LOOSE:LOOSE: BigBig TobaccoTobacco’’ss latestlatest attemptattempt toto makemake nicotinenicotine moremore attractiveattractive U.S.U.S. SmokelessSmokeless TobaccoTobacco MarketMarket HistoricallyHistorically thethe preservepreserve ofof smaller,smaller, specializedspecialized companies:companies: ►Conwood ►U.S. Smokeless Tobacco Company ►Swedish Match North America ►Swisher CigaretteCigarette companiescompanies havehave recentlyrecently enteredentered thethe marketmarket SmokelessSmokeless TobaccoTobacco (SLT)(SLT) ChewingChewing tobacco:tobacco: looseloose--leaf,leaf, plug,plug, twisttwist Snuff:Snuff: moist,moist, drydry oror packetspackets MostMost popularpopular formform isis moistmoist snuffsnuff SmokelessSmokeless tobaccotobacco salessales havehave growngrown dramaticallydramatically inin pastpast 1010 yearsyears LimitedLimited socialsocial acceptance:acceptance: productsproducts inconvenient,inconvenient, usuallyusually requirerequire spitting,spitting, andand carrycarry aa masculine/machomasculine/macho image.image. HarmsHarms ► SLTSLT productsproducts containcontain numerousnumerous carcinogenscarcinogens andand alsoalso havehave nicotinenicotine’’ss addictiveaddictive propertiesproperties HealthHealth RisksRisks ► CancersCancers ofof thethe mouthmouth ► OralOral leukoplakialeukoplakia,, gumgum disease,disease, gumgum recessionrecession ► IncreasedIncreased risksrisks forfor otherother cancers,cancers, heartheart disease,disease, diabetesdiabetes,, andand reproductivereproductive problemsproblems AA NewNew EntrantEntrant-- SnusSnus ► Fine, moist, pasteurized tobacco ► Popular in Sweden, Norway, and Denmark. (banned in rest of EU) ► Available loose or in portions (pouches) ► No need to spit ► Potentially safer than cigarettes or other SLT because of low TSNA levels CigaretteCigarette CompaniesCompanies EnterEnter thethe Market:Market: Reynolds American ► April 06 - acquired Conwood for $3.5 billion, gaining Kodiak, Grizzly, Levi Garrett brands, among others ► April 06 - announced test market sales of Camel Snus ► July 06 - announced partnership with Taboca AS to make a SLT product Philip Morris USA ► May 06 - began test market sales of Taboka Snus ► August 07 – began test marketing of Marlboro Snus ► October 07 – Test market of Marlboro MST Lorillard ► Oct. 06 - announced partnership with Swedish Match for a SLT product for US market Other activity in the international market SomeSome areare newnew productsproducts withwith familiarfamiliar brandingbranding…… Camel Snus (Reynolds) FamiliarFamiliar brandingbranding Marlboro Snus (PM USA) FamiliarFamiliar brandingbranding Lucky Strike Snus (BAT) UsingUsing attractiveattractive newnew packagingpackaging…… Taboka (PM USA) MarketingMarketing:: CamelCamel SnusSnus Sold like candy, mints “Pleasure for wherever” Displayed on countertop Special refrigerated display MarketingMarketing:: SkoalSkoal DryDry Price promotions Deep discounts Coupons Mixed messages Marketed as cessation tool Solution to smoking restrictions Marketing:Marketing: Marlboro Snus Sold next to cigarettes ►“No Smoke, No Spit, No Hassle” ►Display case on cigarette racks ►Coupon offers / free samples with cigarette packs Marlboro Snus Marlboro Snus Marlboro Snus Marketing:Marketing: Taboka Sold next to cigarettes ► “Instead of a smoke, tuck a Taboka” ►“New way to try tobacco” ►Display case on cigarette racks ►Coupon offers / free samples with cigarette packs ““HowHow toto SnusSnus”” –– ReynoldsReynolds guideguide TabokaTaboka InsertInsert –– PMPM--USAUSA MarlboroMarlboro SnusSnus AdvertisingAdvertising MotivationsMotivations-- OfficiallyOfficially ► Profit in a growing market- “We are excited about the growth prospects Conwood brings to Reynolds American. Conwood’s strong, well- positioned brands are gaining share in the growing moist snuff market, and its high margins will enhance our ability to continue to provide an excellent return to our shareholders.” –Susan Ivey, RAI CEO ► Desire to switch smokers to a safer alternative- “We hope those adult smokers who are interested in smokeless tobacco alternatives to smoking will switch to Taboka.” –John Nelson, President of Operations and Technology, PM USA MotivationsMotivations -- ReallyReally HedgingHedging bets:bets: ►► ManyMany marketmarket changeschanges areare smallsmall acquisitionsacquisitions oror trialstrials ► PossiblePossible preparationpreparation forfor aa changechange inin thethe EUEU snussnus laws,laws, oror FDAFDA regulationregulation inin thethe USUS MotivationsMotivations -- ReallyReally KeepingKeeping smokerssmokers asas customers:customers: ► ResponseResponse toto widespreadwidespread cleanclean indoorindoor airair laws:laws: ►Allow tobacco use indoors ►Encourage or enhance nicotine addiction ►► SLTSLT intendedintended asas ancillaryancillary productsproducts toto cigarettescigarettes MotivationsMotivations PublicPublic ImageImage PRPR benefitbenefit inin marketingmarketing lowerlower--riskrisk productsproducts LoweringLowering ofof legallegal exposureexposure AssociatingAssociating aa popularpopular cigarettecigarette brandbrand withwith aa lowlow--riskrisk productproduct couldcould boostboost thethe imageimage ofof thethe cigarettecigarette brandbrand SummarySummary ►►NearlyNearly allall majormajor cigarettecigarette companiescompanies havehave mademade recentrecent movesmoves inin toto thethe SLTSLT market,market, somesome byby acquisitions,acquisitions, somesome byby introducingintroducing newnew productsproducts ►►IndustryIndustry interestinterest inin snussnus asas aa spitspit--freefree SLTSLT alternativealternative toto smokingsmoking ►►CompaniesCompanies willingwilling toto associateassociate valuablevaluable brandsbrands withwith thethe newnew productsproducts ConcernsConcerns ►►BringsBrings harmharm reductionreduction debatedebate intointo spotlightspotlight ►►ImplicationsImplications forfor useuse include:include: RetainingRetaining smokerssmokers smokingsmoking whowho wouldwould otherwiseotherwise quitquit EnticingEnticing youthyouth toto useuse smokelesssmokeless productsproducts underunder thethe radarradar RecruitingRecruiting newnew oror exex--smokerssmokers Remember:Remember: IfIf youyou snussnus,, youyou lose!lose!.
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