Does Swedish Tobacco Have the Right Snuff?
R.J. Reynolds wants to sell America on smokeless, spitless mouth pouches.
By Rachel Metz, Business 2.0 Magazine

(Business 2.0 Magazine) -- When Americans think of Sweden, they tend to envision boxy blue Ikea stores or blonds in bikinis. North Carolina-based giant R.J. Reynolds Tobacco is hoping to add another item to that list: snus (it rhymes with "loose"), the Swedish word for "snuff." In Sweden, a million adults use snus - more than smoke cigarettes.

Unlike regular fermented chewing tobacco, snus is pasteurized, refrigerated for freshness, and packed in disposable tea-bag-like pouches, meaning no spitting or chewing is necessary. (Snus may still cause mouth cancer.) Reynolds's Camel-branded version, called simply Snus, hit test-market shelves in Portland, Ore., and Austin in June.

snus.03.jpg

Its arrival may help reverse the fortunes of U.S. tobacco companies. Cigarette sales have been declining 2 to 3 percent annually. Smokeless products' sales have grown about 4 to 5 percent a year.

But the smokeless market's biggest gains have been at the low end, with cheap chew that can sell for as little as $1.75. Snus, meanwhile, will retail for as much as $5 a tin - in line with a pack of premium cigarettes. Still, Philip Morris USA and UST (Charts) are testing the waters with their own versions, Taboka and Skoal Dry.

Let the snus wars begin.

The experts sound off

Cecilia Nilsson Founder, Snusworldwide.com

"Snus has made an amazing social journey in Sweden. You used to just see old men doing it. Now anyone can take out a can of snus in a business meeting and use it. There's definitely a business opportunity: Smokeless products already in the U.S. market do not target the white-collar group."

Kenneth Warner Dean, University of Michigan School of Public Health

"About 20 percent of Swedish males use the product daily. That's a very large percentage of the population using smokeless tobacco. It has not appealed to women in Sweden, however, and that suggests there are barriers."

Fayaz Popalzai Manager, Cigarette World, Sunnyvale, Calif.

"Everybody knows the Camel brand, so anything else they bring out, people will be attracted to that. If it is fancy packaging and the product is good - the best tobacco and the best make - then people will want it. It might do well."

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.