This alternative to smoking under the radar could be bigger than e-cigarettes
The Food and Drug Administration’s animosity towards traditional and electronic cigarettes is escalating. It proposes new graphic packaging rules for traditional cigarettes that would require photorealistic health warnings on all cigarette packages and in tobacco advertisements, despite the fact that they lost a case in federal court several years ago, forbidding it to do so. The agency is also broadcasting public service announcements comparing e-cigarettes to traditional cigarettes and investigating suspected cases of seizures and lung disease from vaping.
The result of these efforts will add to existing barriers for e-cigarette manufacturers to comply with costly and bulky pre-approval marketing requests. All of this could seriously cripple the tobacco industry and leave a yawning chasm for smokers looking for a substitute.
But there is already a niche product in the market that could get a big boost if even some of the government’s initiatives come true.
The future of nicotine replacement?
Snus, a wet powdered tobacco typically sold in small, lozenge-sized sachets, is one of the fastest growing tobacco products in the market, with sales up 250% last year, according to IRI data. Tobacco industry sales in the United States totaled about $ 127 billion last year, while e-cigarette sales exceeded $ 2.3 billion. That makes the $ 60 million in snus generated in 2018 a small drop, but that could all change quickly.
Global giant Swedish match (SWMAF 0.00% ) is the largest producer of snus in Sweden and the third largest in the United States.
Earlier this year, she announced plans to expand the availability of her tobacco-free brand called ZYN and said she was embarking on a major marketing rollout for her. “In the United States, we will expand the distribution of ZYN, in order to make this popular nicotine sachet product available to consumers nationwide,” Swedish Match said, adding that it was building a 16,000 plant. square footage in Kentucky to support the campaign.
If Swedish Match can get a reduced risk label for its snus – which may not be such a fanciful possibility although the FDA has yet to issue a single such label for any product – it could become the leading supplier on the market.
Swedish Match has been a prolific filer with the FDA for reduced risk labels for its snus, but it has so far been pushed back due to shortcomings in its applications. The agency, however, appears to be inclined to approve requests because it told the company it can resubmit them once the issues are corrected. British American Tobacco (RTC 1.24% ) also submitted a number of applications for its brand of Camel snus.
Although snus has been on the market here for years, it is only just starting to gain popularity. In Scandinavia – where it originated – it is immensely popular, with sales exceeding traditional cigarettes.
ZYN nicotine sachet is similar to snus except that it does not use tobacco. It is chemically similar to nicotine chewing gum, containing nicotine salts derived from tobacco, and it uses other food grade ingredients as fillers and flavor enhancers. Rather than inhaling or chewing, a pocket of ZYN is placed under the upper lip, much like snus.
They sleepy, they lose
It is likely that Swedish Match’s expansion plans Altria (LU 1.64% ) buy it Burger Sohne international business, whose main product – on! – is another sachet of nicotine without tobacco. Although the deal will not be finalized until later this year, the transaction allows Altria to immediately begin marketing the sachets.
Sales of traditional cigarettes are in free fall. Nielsen the data shows a 7.2% drop in the four-week period ending Aug. 10, but it has been in secular decline for years.
Tobacco companies have switched to e-cigs as their primary replacement, but they now face an early 2020 deadline to submit requests to the FDA validating their rationale for remaining in the market.
As the agency is also taking a closer look at vaping as the root cause of 127 cases of teens suffering from seizures, there is a strong possibility that even more restrictions will be placed on them – even companies like Philip Morris International who have already passed the regulatory labyrinth.
Snus may be an odd-sounding alternative to cigarettes right now, but with tobacco-free nicotine packets like Zyn, this may be where the industry’s next big growth spurt is coming from.
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