Smokeless Tobacco Market Analysis

Smokeless Tobacco Market Deep Dive – PESTLE, Porter, SWOT

The snuff market has become a significant part of the tobacco industry. Its products are diversified and cater for the different preferences and practices of consumers. The world’s growing concern for health has led to a change in consumers’ behaviour, with more and more people seeking alternatives to smoking. Snuff is one of the most effective ways of reducing the risk of cancer, and it is also one of the best ways of bringing in younger consumers. However, regulatory changes and public health campaigns are influencing the market and requiring manufacturers to adapt their strategies to meet the changing needs of consumers and to ensure compliance with the law. These factors are shaping the snuff market and bringing opportunities and challenges for those who want to benefit from it.

PESTLE Analysis

• Political:
  In 2024, the snus market is heavily influenced by government regulations aimed at reducing the consumption of tobacco. In the United States, for example, the Food and Drug Administration (FDA) has imposed a policy that requires a 25 percent reduction in nicotine in snus by 2025. The policy is part of a broader public health initiative aimed at reducing tobacco-related diseases, which caused about 480,000 deaths in the United States in 2022. In Europe, stricter advertising regulations have been introduced in several countries, with fines of up to five hundred thousand dollars for a single infraction. This has influenced the marketing strategies for snus brands.
• Economic:
  In 2024, the market for chewing tobacco is characterized by a fluctuating purchasing power and the threat of inflation. A can of tobacco has risen by about six and a half dollars in the last year. Higher production costs and taxes levied by individual states, which can reach as much as seventy-five percent of the retail price, are the cause of this increase. Americans’ disposable incomes are expected to reach about forty-five thousand dollars in 2024. This will influence their spending habits and may lead them to shift to cheaper substitutes.
• Social:
  The social attitude towards chewing tobacco is changing, especially among the younger generations. Surveys show that in 2024, 35% of people aged 18 to 24 consider that snuff is less harmful than smoking. This view has been shaped by targeted advertising. The public health authorities continue to raise awareness of the dangers of chewing tobacco, and in a recent survey, 60% of the people questioned admitted that it can cause oral cancer and periodontitis. This disparity of opinion is reflected in consumption and brand loyalty.
• Technological:
  In the snuff industry, the most important role is played by technological developments, especially in the field of product innovation and manufacturing. In 2024, companies will invest about $200 million in the development of new products for snuff with added flavors and nicotine delivery systems. E-commerce has led to a growth of 30% in the sale of snuff via the Internet, and consumers are looking for convenience and variety. This has forced traditional retailers to adopt new strategies to compete with e-commerce platforms.
• Legal:
  The law regulating the use of snus becomes more and more stringent in 2024. In the United States, the Tobacco Control Act has been extended with a new labeling requirement that requires that all snus packages show a health warning covering at least thirty percent of the package. If the warning is not adhered to, a fine of up to a hundred thousand dollars per offense is imposed. In addition, several states have introduced laws that ban the sale of snus with a snus flavor. Ten states have already introduced such a ban in the first quarter of 2024, which strongly affects the market in these states.
• Environmental:
  Environmental issues are increasingly affecting the snus market, particularly with regard to the viability of tobacco farming. By 2024, it is estimated that tobacco farming will have contributed to the deforestation of about 2 million hectares per year. There is a growing demand for sustainable tobacco farming, and 25 percent of consumers prefer organic and sustainable products. The companies have responded with investments in sustainable farming, and it is estimated that about 50 million dollars are being invested in the promotion of sustainable tobacco farming.

Porters Five Forces

• Threat of New Entrants:
  The market for snus has medium-sized barriers to entry, owing to the regulatory requirements and the large amount of capital needed for production. The established brands have strong customer loyalty and a distribution network that can make it difficult for new entrants. However, the increasing popularity of smoke-free alternatives may attract new entrants who wish to take advantage of the changing tastes.
• Bargaining Power of Suppliers:
  The bargaining power of the suppliers in the market for snus is relatively low. There are many suppliers of raw materials, such as tobacco and aromas, which makes it easy for manufacturers to change suppliers if necessary. This makes it possible to keep costs down and reduces the influence of a single supplier.
• Bargaining Power of Buyers:
  The buyers in the snus market have a high degree of power, because of the variety of brands and products. The consumers can easily switch between different products based on price, quality and taste. In addition, the increased awareness of the health risks associated with the use of tobacco products has led to a better informed and more demanding buyer.
• Threat of Substitutes:
  Threat of Substitutes: High—Smokeless tobacco is subject to a high threat of substitution from a variety of alternatives, such as vaping products, nicotine pouches, and conventional cigarettes. These alternatives, especially vaping products, are becoming increasingly popular among young consumers, which poses a significant threat to the market for smokeless tobacco. Health trends are also driving consumers to seek these alternatives.
• Competitive Rivalry:
  The competition in the snuff market is fierce, with several established companies fighting for market share. New products are constantly being launched to attract consumers. This leads to aggressive marketing and price competition. A large number of companies and small niche brands make the competition even more intense, which is why it is so important for companies to differentiate themselves.

SWOT Analysis

• Strengths:
  • A greater acceptance of smokeless tobacco as a less harmful alternative to smoking.
  • There is a wide variety of products such as pouches, snus and chewing tobacco that caters to different tastes.
  • Strong brand loyalty among existing users, leading to repeat purchases and stable revenue streams.
• Weaknesses:
  • Challenges and restrictions on the marketing and sales of smokeless tobacco products.
  • Public opinion, with the health problems associated with smoking, is a negative factor for new customers.
  • Limited awareness and education about the benefits of smokeless tobacco compared to smoking.
• Opportunities:
  • Expansion into emerging markets where smokeless tobacco consumption is on the rise.
  • Product development: the introduction of nicotine-free cigarettes and flavoured cigarettes to attract new users.
  • Partnerships with health organizations to promote smokeless tobacco as a harm-reduction tool.
• Threats:
  • Competition from nicotine pouches and vaping.
  • Potential for stricter regulations and taxation on tobacco products, affecting profitability.
  • The changing tastes of consumers, who are opting for a healthier life-style, have led to a decrease in the use of tobacco.

In 2024 the snuff market will be a mixed bag, with a lot of opportunities for growth in new markets and innovation. Threats come from regulation and competition from other nicotine products. To cope with this change, the companies must build on their strengths, such as brand loyalty and a wide range of products, and attack their weaknesses, such as the negative public image.