April 7, 2011 Larry Waters

Snus News, New Swedish Match Snus, and Nicoventures by BAT

The last few weeks have been interesting in the world of snus news. We ended March with a de facto EU snus ban. The EU snus ban story continues as some snus eStores and even Swedish snus manufacturers ignore recent events and have resumed selling Swedish snus to EU retail customers. This is putting those snus eStores who have stopped selling within the EU at an obvious competitive disadvantage. Do these snus store risk selling snus to EU retail customers and hope the law will turn a blind eye or will they end up being shut down and jailed if the government decides to act harshly? This situation warrants a new article of its own which will published in the very near future.

In other snus news, Swedish Match announced some mystery new snus releases for the American market. British American Tobacco (BAT) also formally announced the formation of a stand-alone BAT-owned start-up company called Nicoventures Limited whose astonishing goal is to one day market a variety of “regulatory approved” non-tobacco product options for smokers who chose to or can not quit smoking cigarettes.

Finally, the most anticipated tobacco industry trade show of the year, NATO Show 2011 is taking place this week in Las Vegas. The keynote speaker is FDA Tobacco Czar Lawrence Deyton himself. Other noteworthy speakers and seminars will be held and the sold-out exhibit hall will contain the likes of Altria, Swedish Match, RJ Reynolds, and even publicity shy Lorillard Tobacco. I’ll be flying out on SnusCENTRAL One along with my personal staff, invited reporters, dignitaries, captains of industry, and a brigade of SnusCIA Security Agents. We decided to keep it low key this year.

I’ll try and squeeze in a little time to report from NATO Show 2011 and will bring everyone up to date upon my return. This year’s show promises a lot of intrigue and secret discussions but I’ll tell you what I can without being killed for it.

Swedish Match Mystery Snus coming to the US Portland, Boise, and Pittsburg Markets

Markus Ersmark, Manager for On-Line Sales in the Strategic Markets office of Swedish Match Northern Europe, stated in an email on April 7th that Swedish Match will be introducing new American snus products in the US on May 2nd. This will not be a national release; it will initially be limited to test markets in Portland, Boise, and Pittsburgh.

Ersmark sadistically teased the email recipients by only describing the new products as “something that a lot of people have been waiting for. The products will have a natural flavor……..”. He promised more information around April 15th.

Based on information the SnusCIA has been collecting over the last few months, we believe Swedish Match will be adding General Ekstra Sterk to their General Snus offering available over-the-counter in the United States. Indications are it may be renamed or at least translated into English as General Extra Strong Snus. The labelling will have to comply with the ugly label requirements established by FDA, but the snus should be the same.

General Ekstra Sterk is a very popular product in the US and would be the ideal candidate to test the popularity of their extra high nicotine snus in the American retail environment. General Ekstra Sterk also has the advantage of being already available in both portion and loose snus versions.

There is a less likely possibility that instead of Ekstra Sterk, Swedish Match may be introducing General Long Portion and Long Sterk Portion instead. These cans have more free space for the ugly and inaccurate FDA required warnings. Long portion and similar snus pouches were also designed partially with the US market in mind.

As Portland is one of the test markets, adding the General Long series instead of Ekstra Sterk would have the marketing advantage of being very depressing for Portland’s many General Ekstra Sterk fans. Citizens of Portland, Oregon are generally depressed. Portland fas the distinction of being one of the most depressed and suicide prone cities in America; primarily because of the weather. Portland natives may appreciate Swedish Match recognizing their depressed attitude.

We will know more in the days to come, but speaking as a lover of General Ekstra Sterk since the day it was released, I will join Portland in their depression if the SnusCIA is wrong.

I should also note the SnusCIA has picked up on Ersmark’s comment The products will have a natural flavor. Taking that literally, our analysts allow a 5% chance that Swedish Match may introduce either Grovsnus or even Ettan in the test markets.

Knowing the Swedish Match Brand Managers as I do, I think they would jump into a tobacco grinder before allowing this to happen. Swedish Match is in the midst of another reorganization however; one they have not been very talkative about. We shall be following the new snus introduction into the US over-the-counter stores very closely.

BAT and Nicoventures Ltd

British American Tobacco (BAT) announced last week that they had formed a wholly owned start-up subsidiary named Nicoventures Ltd. Nicoventures mission is to design and ultimately market non-tobacco nicotine alternatives. “It’s not for (tobacco) cessation,” BAT Spokesperson Kate Matrunola said. “There is an unmet need out there for consumers who don’t want to quit”.

Apparently, BAT has given up on it’s popular Lucky Strike Snus products ever gaining legitimacy in the EU. Instead of focusing on over-turning the EU Snus Ban in the next EU Tobacco Products Directive (TPD), Nicoventures and it’s valiant staff of four will work with regulators to identify non-tobacco nicotine products which will be politically correct enough to overcome anti-tobacco extremism, advertising and labeling restrictions.

Erik Bloomquist of London’s Berenberg Bank was recently quoted as opining “The grail is a product that replicates as closely as possible the sensations and rituals of smoking.” Last time I checked, there were these products called eCigarettes or Vapor cigarettes which in theory already accomplish this. Instead of being embraced by the EU and FDA, these products are under constant regulatory assault.

Much has been made in the US of FDA declining to classify Star Scientific’s Ariva-BDL and Stonewall BDL tobacco/nicotine lozenges as cigarettes, cigarette tobacco, smokeless tobacco or roll-your-own tobacco; the only products Tobacco Czar Lawrence Deyton claims fall unter the Tobacco Control Act of 2009. By that logic, RJ Reynolds can make a very strong case for Camel Orbs and Camel Sticks to be removed from Tobacco Control Act oversight as well.

The tortured logic Dr. Deyton used to make that determination conveniently left out the word ‘nicotine’. Failing to classify unconventional nicotine delivery devices as drug delivery tools, FDA is engaged in a new strategy. By classifying these as non-tobacco products (despite the fact they do contain tobacco) and encouraging Star to market them, other government agencies with different mandates will be able to fight to ban or heavily regulate these products because they do contain nicotine.

The flaw in all of this is that if, as Nicoventures contend, Current cigarette and tobacco users of all kinds do not want to quit, why in the world would they switch to totally non-tobacco products? There is more to the love of tobacco among many consumers than simple nicotine addiction. Ask any fine cigar smoker or Swedish snus user.

Deyton’s ruling simply fragments the efforts of the NRT and Reduced Risk Tobacco Products community into chasing after Mr. Bloomquist’s “holy grail”. Shifting emphasis away from the new EU TPD and snus, BAT weakens the efforts of those fighting the EU ban and FDA draconian tobacco control in the US. The anti-all-tobacco extremists; both governmental and private, will never diverge from their mission to eliminate all legal sources of tobacco and nicotine not controlled by the pharmaceutical industry.

The extremists are very patient. The battle against cigarettes and tobacco has been going on for decades. Their progress has exponentially grown since 1990. They will use Star Scientific and Nicoventures to shine a false light of hope to the tobacco community that they can develop profitable products to replace their tobacco-based ones. As everyone is attempts to exploit this so-called loophole FDA has created, FDA will have less resistance on their focus of effectively banning of all tobacco products.

Then the anti-all-tobacco extremists will forcefully shift gears and work to ban every other nicotine containing product made by Star, Nicoventures, and the rest. In the end, only the largest tobacco black market in the history of the world will remain. Black market cigarettes, smokeless tobacco, and tobacco in general will then be completely unregulated as to ingredients and safety. Freedom of choice will be gone as will any reduced risk tobacco alternatives.

History is repeating itself….think 1920’s Prohibition of alcohol in the US or Prime Minister Chamberlain’s Peace Treaty concessions to Nazi Germany in the 1930’s. Our watchwords in the war against tobacco and real Swedish snus must be Churchill’s “never retreat; never surrender.

On the Road to Las Vegas,

LARRY WATERS