- USA beats Netherlands to win Women's World Cup
- Box Office: ‘Spider-Man: Far From Home’ debuts with heroic $185 million
- U.S. Women's World Cup win sets off immediate calls for equal pay
- Deutsche Bank to cut 18,000 jobs in 7.4 billion euro overhaul
- Oil Minister Zanganeh says hopeful Iran’s oil exports will improve: TV
Altria Group’s recent $372 million acquisition of a Switzerland-based maker of smokeless tobacco products comes as the industry seems to be shifting in response to plummeting cigarette sales.
Continue Reading Below
The transaction makes Altria, the parent company of Phillip Morris, 80 percent owner of the producer of a smokeless pouch called On!, a product similar to another nicotine pouch, Zyn, made by Swedish Match—which also produces Snus.
“I don’t think there is any question cigarette sales are on a steep decline and tobacco companies are [shifting] to smoke-free products, traditional smokeless tobacco, vaping and … others,” Dr. Brad Rodu, endowed chairman of tobacco harm reduction research at the University of Louisville, told Fox Business.
Americans still buy more cigarettes than alternative tobacco products, but the trend is definitely in favor of the new products, he said.
The Centers for Disease Control and Prevention reports a 3.5 percent decrease in cigarette sales from 2016 to 2017, or 9 million fewer cigarettes sold. Cigarette smoking in 2017 reached an all-time low of 14 percent of American adults — a 67 percent decline since 1965.
From 2007 to 2017, the number of individual cigarettes sold in the United States fell from 337.7 billion to 229.1 billion, according to the Federal Trade Commission. Regarding smokeless tobacco, what the FTC classifies at “moist snuff” saw a steady increase—going from $2.3 million in sales in 2007 to $3.7 million in 2017.
Zyn, initially sold only in Western states last year, went national in April. Both Zyn and On! are tobacco products designed to be stuck inside a user’s lip to satisfy nicotine cravings. Snus is a Swedish name for snuff, a powdered tobacco also placed in the mouth. Although studies have found e-cigarettes known as “vaping” have been helpful in smoking reduction, the Food and Drug Administration has scrutinized these more after reports of seizures by younger users.
Smokeless products, while containing the same addictive nicotine, pose only about 2 percent of the health risks of smoking, Rodu said.
“It’s vastly less hazardous when you are not inhaling the toxic smoke into your lungs. It’s so important that Americans make a switch and step away from the fire,” said Rodu, an oral pathologist.
Camel, a division of Reynolds American, has produced dissolvable nicotine lozenges, but is not stepping away from other products, a spokeswoman said.
“We are excited about the future of the tobacco industry. At Reynolds American, we are pleased to provide adult tobacco consumers with a variety of options that meet evolving preferences and reflect dynamic consumer trends,” Natasha Webster, senior director for brand and innovation communications at Reynolds, told Fox Business. “Our products are designed to encourage choice among adult tobacco consumers and are intended to be used throughout the day, regardless of lifestyle and without forfeiting flavor and satisfaction.”
Strong evidence shows vaping is helping millions of Americans quit smoking, but there’s no such evidence yet of smokeless tobacco’s effectiveness in the United States, said Dr. Michael Siegel, a professor at Boston University School of Public Health.
Still, for a business model, it’s no surprise to see the tobacco firms pivot, Siegel said.
“In the United States, I think the cigarette companies realize that the writing is on the wall. Smoking is [becoming] less and less popular and among young people, the smoking culture is gradually disappearing,” Siegel told Fox Business. “I think the companies realize that eventually there will not be a significant market for combustible tobacco products and so they are working to diversify their portfolio by exploring various non-combustible alternatives, including electronic cigarettes, heat-not-burn tobacco products, and other forms of nicotine delivery.”
The Campaign for Tobacco Free Kids, however, does not see more tobacco products as a legitimate alternative for smoking.
“None of these products have been authorized by the FDA as a tobacco cessation device, nor have they been authorized as a modified risk tobacco product,” campaign spokesman Boot Bullwinkle told Fox Business regarding smokeless tobacco products.
A 2010 federal court decision was followed by a 2017 FDA rule prohibiting tobacco products from being marketed with therapeutic claims, including smoking cessation claims, without FDA approval, Bullwinkle noted.
“Like all other consumers, smokers deserve to know what products have been shown to be safe and effective at helping them quit,” Bullwinkle continued. “If Altria, or any other manufacturer, wants to make a therapeutic claim, they must follow the law.”
The tobacco industry has been gradually more aware “cigarettes were ultimately a bad play” for business viability, said Rodu of the University of Louisville. But said the government’s crackdown on vaping and skepticism of other products is a result of an unrealistic “vision of a tobacco-free society.”
Siegel, of Boston University, similarly fears government could impede the progress.
“Policy makers and regulators – rather than embracing this significant move towards harm reduction – are interfering with this transition and actually hindering it,” Siegel said. “They are in fact putting into place policies that favor cigarette sales over the sale of much safer products. This is a tragic irony because the government is now helping to protect cigarette company profits at a time when the cigarette companies themselves are willing to transition towards safer alternatives.”