Modern Oral Tobacco Products Make Waves on the Backbar
NATIONAL REPORT — The rise of modern oral nicotine products is having an impact on traditional smokeless tobacco. Modern oral is nipping at the heels of the traditional category, taking bites out of segments such as moist tobacco, chew, dip, snuff and snus.
"It's really interesting to see the impact modern oral is having on traditional smokeless, especially moist. It is the No. 1 product form being cannibalized by modern oral," said Don Burke, senior vice president of Management Sciences Associates Inc. (MSA). "Snus is also being affected. Like moist, it is experiencing significant cannibalization."
In fact, the only year-over-year volume growth in "other tobacco" in the third quarter of last year was in modern oral, which was up 55%. Conversely, moist was down 8% and snus was down 12%, according to data from MSA, a Pittsburgh-based research and consulting firm.
Pricing is a major factor in the category, according to Greg Schmidt, vice president of business analytics for Jacksonville, Fla.-based Swisher, which does business in both the traditional smokeless and modern oral segments. In 2024, he said the premium moist smokeless tobacco subsegment — home to the highest-priced products — fell by about 13%. At the same time, the branded discount moist smokeless tobacco subsegment grew by more than 6%.
"This shows a clear consumer shift toward more affordable options," Schmidt said. "Beyond that, much of the remaining decline is likely being absorbed by the modern oral nicotine category, which offers a convenient, widely available format in most convenience stores and is often priced below many premium traditional products."
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He added that chew and dry snuff are also relatively expensive and have far less distribution compared to moist smokeless. "This, combined with the ease and convenience of other formats, seems to be driving much of the decline in those segments," he said.
Burke agrees that the lower-priced moist brands are faring the best. "Just like what's happening in the cigarette category, we're seeing consumers moving toward deep-discount moist smokeless," he observed.
Throughout the category, retailers should make sure that pricing is prominently displayed, easy to understand and accurate, according to a spokesperson for Winston, Salem, N.C.-based Reynolds American Inc. "There are multiple price tiers within the traditional oral category and you don't want your customers to be surprised by pricing at checkout," he stated.
Along with pricing, variety is important as adult smokeless consumers like to have their pick of different forms. The Grizzly brand from Reynolds' American Snuff Co. is now available in traditional smokeless, snus and modern oral varieties. Enabling adult customers to view all options in close proximity on-shelf can entice them to buy for different occasions.
Profit Pointers
What other avenues can c-store retailers take to maximize profit in traditional smokeless?
Refresh, Refresh, Refresh. Freshness and rotation are very important in the traditional smokeless space. "Your store clerks must ensure that they are consistent in using a first-in, first-out stock rotation program," Reynolds' spokesperson stressed. "Failing to do so will leave a bad impression in your customer's mind and they might choose to buy their preferred nicotine products at a competitive store that emphasizes freshness."
Highlight the Cost-Saving Subsegment. Despite overall decline in the traditional smokeless category, the branded discount subsegment is showing strong potential, Schmidt and Burke both noted. "This trend isn't unique to us [Swisher] — most moist smokeless tobacco producers are recognizing the shift and are investing heavily in their branded discount brands," Schmidt reported. Retailers should follow suit.
Consider Standalone Merchandising Units. There's been "a noticeable increase" in this type of display, which can be placed outside the traditional backbar setup, according to Schmidt. In many cases, he said these units provide better visibility for products.
Embrace Personalized Offers. Retailers are encouraged to take advantage of manufacturer programs, especially in the digital and loyalty spaces. "Personalized offers are the future of the category. Failing to adapt quickly to these programs will put your store at a disadvantage," Reynolds' spokesperson cautioned.
Keep Things in Perspective. "While the modern oral category is experiencing explosive growth, there are still over a billion cans of traditional moist smokeless products being purchased annually," Schmidt noted. The highest-volume states for moist smokeless are Pennsylvania, Ohio, Virginia, Indiana, Kentucky, Tennessee, North Carolina, Georgia, Alabama, Florida, Oklahoma, Texas and Missouri, according to Burke.
Forward Thinking
When asked about the future viability of traditional smokeless tobacco, most experts take a measured stance on the category overall, but are bullish on the branded discount segment.
"There will always be consumers who prefer a more traditional smokeless tobacco experience, like the current moist smokeless users," said Schmidt. "While the overall category is expected to keep declining, the branded discount segment shows no signs of slowing down. We believe this segment will continue to support the broader moist smokeless category and is likely to keep growing over the next five years."
The way Reynolds' spokesperson sees it, traditional smokeless remains a large profit center that can help fuel investments in future growth products for convenience store operators. "We are working every day to help create our vision of 'A Better Tomorrow,' wherein adult nicotine consumers have access to potentially less risky products. At the same time, we also offer traditional products that have a loyal consumer base and continue to deliver large profits for store operators," he said.
Looking forward, he emphasized that "it is critically important to keep in mind that nicotine consumption overall remains relatively flat. While more traditional products like cigarettes and traditional oral may see a shift in their volumes, that shift is to the benefit of next-generation products like vapor and modern oral."