Tobacco regulation could lead to more competition

One of the real tests of how federal regulation will affect tobacco use could be something you’ll spot at a convenience store counter.

A new law signed by President Barack Obama yesterday will, among many changes, move all tobacco products — snuff and cigars as well as cigarettes — behind the counter.

How they share space back there could clear the way for more competition in a market now dominated by Henrico County-based Altria Group Inc.

It’s competition that Chesterfield County-based Swedish Match North America is hoping for, and a rule it believes could lead to something it’s long wanted: more space on retailer’s shelves for its snuff and chewing tobacco.

“It’s back to old fashioned blocking and tackling, how to be more competitive — including against cigarettes,” said Gerry Roerty, Swedish Match’s president and general counsel.

Both Richmond-area tobacco companies broke with most of the rest of the tobacco industry in supporting the regulation of tobacco by the U.S. Food and Drug Administration.

“We have consistently advocated for federal regulation that recognizes the serious harm caused by tobacco products,” said Michael E. Szymanczyk, chairman and chief executive of Altria, parent of Philip Morris USA, the largest cigarette-maker.

But critics say Altria’s nearly decade-old support of regulation is a way to lock in its dominant share of the U.S. market — both for cigarettes and now oral tobacco, after buying the nation’s No.1 smokeless tobacco-maker this year. More than half of U.S. smokers smoke Philip Morris brands.

“This puts Philip Morris absolutely in control of the American market,” said Alan Blum, director of the Center for the Study of Tobacco and Society at the University of Alabama. “This means Marlboro is king.”

It is also likely to make oral tobacco — snuff and similar products — a major public-health issue, he said.

Swedish Match thinks regulation could open up the market, especially for its oral tobacco, Roerty said.

Moving all tobacco products behind retailers’ counters, for instance, turns the question of how much shelf space a brand gets into a simpler matter of managing inventory.

Swedish Match has for years felt its products were elbowed out of the way because of marketing promotions and incentives from the cigarette companies and larger players in the snuff market.

Philip Morris and Swedish Match say a key issue will be how the FDA regulates the companies marketing to consumers.

For Roerty, one practical concern is snus.

That’s the moist, powdered tobacco Swedes have been tucking under their upper lips for a century or so.

It is treated with steam instead of heat, as U.S.-style snuff is. That may affect the kind of chemical compounds that form, Roerty said.

About a fifth of Swedish men use snus, a bit less than the percentage of adult U.S. males who smoke, while the percentage of male Swedish smokers is far lower than in the U.S.

Roerty said a key reason may be Swedish medical studies showing snus use does not boost oral cancers, as studies of U.S. snuff have suggested.

“We’d like to talk to the FDA about whether there is potential for reduced harm,” Roerty said.

Brian Hill, founder of the Oral Cancer Foundation, says that potential is not proved.

But he said he supports the FDA bill because it should mean objective studies, as well as requiring disclosure of risks and of ingredients.

“I think this is about making informed choices,” Hill said of FDA regulation. “At this point, I can’t tell you if snus is harmless or bad . . . but we definitely know smoking is bad.”

Many tobacco control advocates say snus and other smokeless products — whether snuff or the new imported electronic cigarettes the FDA is trying to block as illegal drug-delivery devices — don’t really reduce harm.

Instead, they argue, those alternatives just make it easier for smokers to stay hooked by allowing them to get nicotine, the addictive ingredient in tobacco, even in places where smoking is banned.

“I’ve never seen anyone in my clinical practice who uses smokeless tobacco stop smoking,” Blum said. Meanwhile, the nicotine affects users’ hearts, arteries and veins.

Public health advocates also worry that an increasing number of alternatives, ranging from snuff to electronic cigarettes, could encourage young people to get hooked on nicotine and then move on to smoke cigarettes.

“The gateway issue is going to be a very important one for the FDA,” Roerty said. “In Sweden, our experience is that smokers move to snus, but snus users don’t start smoking.”

Roerty thinks regulation could be a business opportunity for Swedish Match to boost its snus business here — currently, it sells snus through about a hundred high-end tobacconists.

But depending on the marketing rules the FDA eventually sets for communicating with consumers, the new legislation could also leave snus as little more than a small, specialty product, he said.

Philip Morris and Reynolds American Inc., the No. 2 cigarette-maker, are already selling snus in the United States.

Asked about the impact of the new law on oral tobacco, Altria’s Phelps said it was too soon to say.

“With some clear guidelines for products with the potential to reduce the harm caused by smoking, our goal will be to design the best products,” he said.

source:  http://www.timesdispatch.com

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