Tobacco: Snus Clues
Is snus a challenge-riddled fad or a product with promise?
Snus manufacturers would tell you it’s the little segment that could. A relative newcomer, the spit-free tobacco product has enjoyed solid growth since it first hit the United States around 2007. Last year was no exception, with Nielsen showing snus dollar sales in large convenience chains rising 7.2% in 2013, and volume up 4.8%.
“Looking at the percentages, this category is growing at a very healthy rate relative to its counterpart, moist smokeless,” says David Bishop, managing partner of Barrington, Ill.-based sales and marketing firm Balvor LLC. “That being said, snus is a fraction of the size. It’s a larger percentage of a smaller base.”
It’s a nice success story for those in the snus business to sell. But are those numbers actually translating into retailer profits?
For some, Nielsen paints an accurate picture.
“Nielsen’s 4% growth sounds about right for our c-stores,” says Andrea Myers, president of Kocolene Marketing LLC, Seymour, Ind., which runs convenience stores and tobacco shops. “It’s higher than that in our tobacco stores, where we’re averaging double-digit growth. We really push it.”
But Nielsen’s growth is definitely not indicative of all retailers, such as Framingham, Mass.-based Cumberland Farms. Anne Flint, the company’s senior manager of tobacco, says she “really has not seen snus take off” at Cumberland’s 574 locations.
Others are downright frustrated by their snus sales—or lack thereof.
“I am not sure this segment has validity based on our sales and, really, the lack of commitment from the manufacturers,” says Frank White, director of retail operations for Tri-State Petroleum, Wheeling, W.Va. “I’m not seeing that they’re that committed to it.”
Bishop agrees that snus has become somewhat of a forgotten segment, often overshadowed by the newer, glitzier sector of electronic cigarettes and vaporizers.
“We’re kind of in a position now where there’s still a healthy number of snus users,” he says, estimating a few million U.S. consumers of snus. “But in terms of buzz in the industry and focus from the consumers, there really isn’t a lot.”
That said, Bishop is still a believer in snus’ value within the modern tobacco set, provided retailers are willing to attack the challenges that come with it.
“If there’s any differences between what Nielsen’s large-chain numbers report and the broader industry performance, it’s likely due to a function of the execution,” Bishop says.
Here are some of the most pressing issues facing retailers when it comes to properly executing this segment, and how snus manufacturers can aid operators in facing these challenges.
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