US smokeless product sales growth, ** price increase is still a magic weapon

The two major American tobacco companies, Altria Group and Reynolds America, have expanded their distribution of snus, a popular smokeless, non-moist moist snuff tobacco product in Scandinavian countries, which are looking for sales. Give smokers products that try to quit cigarettes.

Since the Swedish match brought snuff to the United States 10 years ago, snus has achieved modest success, but the introduction of new products has not shifted the focus of the tobacco company's profits from cigarettes.

Cigarette manufacturers also look to raise prices to make profits.

"(Tobacco) does regard smoke-free products as a long-term business," said Morningstar analyst Phil Golham. "But don't be fooled... Although this is a growing product category and cigarette sales are declining, it is still a very small part of the overall business."

According to Euromonitor International, in the United States, the annual decline in cigarette consumption exceeds 2%, but companies such as Marlboro cigarette maker Altria Group, camel brand manufacturer Renault and Newport manufacturer Lorillard Use price increase to compensate.

According to Gorham, who tracks tobacco companies in Morningstar, it was even harder to do so last year. Renault used promotions to try to gain market share.

Gorham expects all three companies in this fall will increase prices by 3-4%.

Stifel Nicolaus analyst Chris Growe said that the price gap between high-end brands such as Marlboro and Camel is smaller than in the past few years. It is for this reason that he expects the price of high-end brands to increase by at least 5 cents per pack in the second half of this year.

However, focusing on cigarette prices does not prevent tobacco companies from trying to increase overall sales efforts, thus making snuff appear at convenience stores and gas stations.

According to Euromonitor data, in the United States, Swedish snuff increased by 122% in 2007--08, increased by 28% in 2008--09, and the initial sales were very low.

The Swedish match in Stockholm stated that in 2009, the consumption of American general brand snuff cigarettes increased by four times compared to 2008.

Gorham said that the entire smokeless tobacco category has grown by 6% to 7% each year, but compared with cigarettes, the amount of smokeless tobacco is very small and snus products are even smaller.

According to Euromonitor data, in the United States, total smokeless tobacco accounts for 2% of tobacco company’s net operating income; snus accounts for 0.5% of moist snuff sales.