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• US moist snuff consumption is increasing even if aggregate smokeless tobacco is declining
  Jonathan Fell
  Published on: 13 May 2016

• Published on: 13 May 2016

  US moist snuff consumption is increasing even if aggregate smokeless tobacco is declining

  • Jonathan Fell, Investment analyst

  Care is needed when using aggregate smokeless tobacco (SLT) consumption data to examine the potential for SLT being used as a potential reduced exposure product. As far as I am aware very few people, if any, are suggesting that traditional chewing tobacco be used as an aid to smoking cessation; any hopes in this area have been focused on moist smokeless tobacco (MST).

  Data from the US Alcohol and Tobacco Tax an...

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  Care is needed when using aggregate smokeless tobacco (SLT) consumption data to examine the potential for SLT being used as a potential reduced exposure product. As far as I am aware very few people, if any, are suggesting that traditional chewing tobacco be used as an aid to smoking cessation; any hopes in this area have been focused on moist smokeless tobacco (MST).

  Data from the US Alcohol and Tobacco Tax and Trade Bureau (TTB), available at www.ttb.gov, show that MST and chewing tobacco have had very different consumption patterns over the last decade. Using taxable removals (in pounds) in the US, plus imports, as a proxy for consumption, consumption of chewing tobacco seems to have declined at a rate of 5.2% a year between 1997 and 2005, while consumption of MST grew at a rate of 3.6% a year over the same period. Aggregate SLT consumption over the period declined at 0.1% a year.

  The picture of steady growth in annual MST volumes – contrasting with declines for cigarette consumption – is also corroborated by industry data. Data from Swedish Match, based on AC Nielsen figures, suggest that consumption of MST grew at 3.7% a year between 1997 and 2005, as measured per can (available in investor presentations section of www.swedishmatch.com).

  Both the TTB and the industry data suggest that MST consumption may have accelerated in recent years. Measured by weight, MST consumption grew at an annual rate of 3.3% from 1997 to 2002, and by 4.0% a year from 2002 to 2005 according to TTB data. Measured in cans, MST consumption grew at 2.3% a year from 1997 to 2002, and by 6.2% annually from 2002 to 2005, according to Swedish Match. The latest Nielsen figures also seem to be indicating that the MST category is growing by volume at 6-7% in the first half of 2006.

  I have not seen a definitive study of why this apparent acceleration of consumption is happening. Part of the explanation is down to the fairly rapid growth of discount snuff brands, which may be encouraging existing MST users to consume more product. But industry leader UST also believes that the number of adult consumers has increased recently.

  According to UST survey data (see its December 2005 Annual Investor Meeting presentation at www.ustinc.com) the number of adult consumers of MST grew from 4.7mn in 2001 to 5.4mn in 2004. If we take US Census Bureau (www.census.gov) estimates for the population size in July of each of those years (285.1mn in 2001 and 293.7 in 2004), that would mean MST prevalence grew from 1.65% to 1.83% over the period. The same UST survey from 2004 also suggests that 63% of those MST users who had been using MST for less than a year had used cigarettes or roll-your-own tobacco as their first regular tobacco product.

  Disclosures: Deutsche Bank and/or affiliates own one percent of more of the common equity of Swedish Match, expects to receive, or intends to seek, compensation for investment banking services in the next three months, and received non-investment banking related compensation from this company within the past year.

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  Conflict of Interest:
  None declared.

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