From Winston Salem Journal:
By Richard Craver | Journal Reporter
Published: March 15, 2009
R.J. Reynolds Tobacco Co. doesn't need a crystal ball to forecast the likely outcome of its accelerated push into smokeless tobacco.
As the leader in next-generation smokeless products, the company knows that a higher profile, whether for the discount moist-snuff Grizzly brand or Camel Snus, is going to create a bigger bull's-eye for federal and state politicians looking to fill budget shortfalls with a larger tax on those products.
Smokeless tobacco is taxed in North Carolina at 10 percent of the wholesale price of a product, but the N.C. General Assembly is unlikely to pass a higher tax on smokeless tobacco in this year's session, said Rep. Hugh Holliman, D-Davidson. Holliman is a supporter of banning tobacco in virtually all workplaces and buildings open to the public in the state.
Holliman said he believes that the federal State Children's Health Insurance Program bill, which raised the federal excise tax on cigarettes by 62 cents to $1.01 a pack, diminished current interest in raising the state's cigarette tax beyond 35 cents a pack.
But an increase in the state's smokeless-tobacco tax is on the table, said Marc Basnight, the Senate president pro tem.
The amount of tax revenue that can be raised from smokeless tobacco is small compared with cigarettes. That's because compared with 20 percent of adult Americans who smoke cigarettes, about 6 percent of male adult Americans and less than 1 percent of female adult Americans use smokeless-tobacco products.
However, smokeless products are rising in popularity as an alternative to smoking, according to some anti-smoking advocacy groups.
For example, Grizzly had an 18 percent increase in cans sold last year to nearly 280 million. Grizzly's market share in shipments also rose 2.2 percentage points to 23.3 percent.
Camel Snus comes in a small pouch similar to a tea bag that is placed between the lip and gum. The tobacco is pasteurized, not fermented, and it contains less moisture and salt than moist snuff. It also does not require the consumer to spit, Reynolds said.
"Snus makes up about 1 percent of smokeless-tobacco sales, so clearly it has a ways to go before having an impact," said Bill Godshall, the executive director of SmokeFree Pennsylvania, a group that advocates smokeless products as a way to wean smokers off cigarettes.
Nevertheless, Reynolds is plowing ahead with its smokeless-tobacco initiatives as part of what Susan Ivey, its chairwoman and chief executive, calls its transformation into becoming a "total tobacco company."
That includes running high-profile advertisements for Camel Snus recently in magazines such as Car & Driver, People, Rolling Stone and Sports Illustrated. By comparison, Reynolds has not run print ads for its cigarettes brands for the past 15 months.
The tag line for the Camel Snus ad is "Your cigarettes may get jealous." The company also is running special ads in test markets for next-generation smokeless products such as orbs, sticks and film strips similar to clean-breath products.
Most tobacco taxes are geared toward recouping the cost to society of health-care expenses related to its use. Unlike cigarettes and the second-hand smoke they produce, there is no indirect harmful aspect to the use of a smokeless tobacco product.
Basnight supported raising the tax on smokeless tobacco in 2007 to help pay for cancer research, according to Schorr Johnson, the spokesman for the senator.
"Because of the billions of dollars tobacco costs our state each year in health-care expenses, Sen. Basnight is in favor of increasing all taxes on tobacco products, including smokeless tobacco," Johnson said. "He has not endorsed a specific increase for cigarettes or smokeless tobacco yet."
But the Tax Foundation, a nonprofit research group, said that special taxes on tobacco products "should exist only if those products impose significant costs on third parties."
"Smokeless tobacco, however, imposes no such harm. Other costs unfairly imposed on society from tobacco consumption have been cited, such as the unattractiveness of witnessing certain behavior associated with chew tobacco, and the message children receive as a result of viewing adult tobacco consumption.
"A government official who merely desires to influence individual consumption decisions because of his own anti-tobacco sentiment cannot be justified by an appeal to principles of sound tax policy," according to the foundation.
Some anti-tobacco groups fiercely support taxing smokeless products at the same rate as cigarettes.
The groups, having won the day with bans on smoking in most public venues after a 16-year fight, are gearing up their efforts and rhetoric to try to prevent smokeless products from taking root.
"All tobacco products should be taxed at the same rate to discourage use," said Dr. John Spangler, the director of the Tobacco Intervention program at Wake Forest University School of Medicine.
"Smokeless and cigars are gateway products to teen and young adult smoking, and as such there should be strong disincentive by taxing as high as cigarettes to avoid youth uptake of the tobacco habit."
The Campaign for Tobacco-Free Kids said it favors a higher tax on smokeless products in part "because moist snuff now comes in a wide variety of kid-friendly flavors such as grape, apple and vanilla. Because they are taxed -- and priced -- lower than cigarettes, they are more accessible than cigarettes."
"Just like there is no safe cigarette, there is no safe tobacco product," said Melva Fager Okun, the senior manager for N.C. Prevention Partners. "Spit tobacco and other smokeless products are harmful to your health and can cause cancer in the mouth and jaw and other illnesses. These diseases are painful, disfiguring and very expensive to treat."
However, other health-advocacy groups want to limit the amount of tax on smokeless tobacco to encourage smokers to quite cigarettes with a lower-cost product.
Brad Rodu, the chairman of the Tobacco Harm Reduction Research University at the University of Louisville, has been advocating implementation of tobacco harm-reduction products for 15 years. His research is supported by unrestricted grants from smokeless tobacco manufacturers UST and Swedish Match to the University of Louisville, and by the Kentucky Research Challenge Trust Fund.
"All smokeless products in the United States, including the new line from Reynolds, confer only about 1 percent to 2 percent of the health risks of smoking," Rodu said. "The development and marketing of vastly safer smokeless-tobacco products that appeal to adult cigarette smokers has the potential to transform tobacco use from a highly risky behavior to one that is as safe as consuming coffee."
The tobacco companies have a bull's eye on their backs "no matter what they do," said John Sweeney, the director of the sports-communication program at UNC Chapel Hill.
"While the taxing of products like tobacco and alcohol can be viewed as a way of getting extra taxes, this is hardly deemed a public service in the average citizen's mind. "Sin taxes are getting revenue from a convenient place, and part of the strategy is making tobacco products as expensive as possible," he said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
By Richard Craver | Journal Reporter
Published: March 15, 2009
R.J. Reynolds Tobacco Co. doesn't need a crystal ball to forecast the likely outcome of its accelerated push into smokeless tobacco.
As the leader in next-generation smokeless products, the company knows that a higher profile, whether for the discount moist-snuff Grizzly brand or Camel Snus, is going to create a bigger bull's-eye for federal and state politicians looking to fill budget shortfalls with a larger tax on those products.
Smokeless tobacco is taxed in North Carolina at 10 percent of the wholesale price of a product, but the N.C. General Assembly is unlikely to pass a higher tax on smokeless tobacco in this year's session, said Rep. Hugh Holliman, D-Davidson. Holliman is a supporter of banning tobacco in virtually all workplaces and buildings open to the public in the state.
Holliman said he believes that the federal State Children's Health Insurance Program bill, which raised the federal excise tax on cigarettes by 62 cents to $1.01 a pack, diminished current interest in raising the state's cigarette tax beyond 35 cents a pack.
But an increase in the state's smokeless-tobacco tax is on the table, said Marc Basnight, the Senate president pro tem.
The amount of tax revenue that can be raised from smokeless tobacco is small compared with cigarettes. That's because compared with 20 percent of adult Americans who smoke cigarettes, about 6 percent of male adult Americans and less than 1 percent of female adult Americans use smokeless-tobacco products.
However, smokeless products are rising in popularity as an alternative to smoking, according to some anti-smoking advocacy groups.
For example, Grizzly had an 18 percent increase in cans sold last year to nearly 280 million. Grizzly's market share in shipments also rose 2.2 percentage points to 23.3 percent.
Camel Snus comes in a small pouch similar to a tea bag that is placed between the lip and gum. The tobacco is pasteurized, not fermented, and it contains less moisture and salt than moist snuff. It also does not require the consumer to spit, Reynolds said.
"Snus makes up about 1 percent of smokeless-tobacco sales, so clearly it has a ways to go before having an impact," said Bill Godshall, the executive director of SmokeFree Pennsylvania, a group that advocates smokeless products as a way to wean smokers off cigarettes.
Nevertheless, Reynolds is plowing ahead with its smokeless-tobacco initiatives as part of what Susan Ivey, its chairwoman and chief executive, calls its transformation into becoming a "total tobacco company."
That includes running high-profile advertisements for Camel Snus recently in magazines such as Car & Driver, People, Rolling Stone and Sports Illustrated. By comparison, Reynolds has not run print ads for its cigarettes brands for the past 15 months.
The tag line for the Camel Snus ad is "Your cigarettes may get jealous." The company also is running special ads in test markets for next-generation smokeless products such as orbs, sticks and film strips similar to clean-breath products.
Most tobacco taxes are geared toward recouping the cost to society of health-care expenses related to its use. Unlike cigarettes and the second-hand smoke they produce, there is no indirect harmful aspect to the use of a smokeless tobacco product.
Basnight supported raising the tax on smokeless tobacco in 2007 to help pay for cancer research, according to Schorr Johnson, the spokesman for the senator.
"Because of the billions of dollars tobacco costs our state each year in health-care expenses, Sen. Basnight is in favor of increasing all taxes on tobacco products, including smokeless tobacco," Johnson said. "He has not endorsed a specific increase for cigarettes or smokeless tobacco yet."
But the Tax Foundation, a nonprofit research group, said that special taxes on tobacco products "should exist only if those products impose significant costs on third parties."
"Smokeless tobacco, however, imposes no such harm. Other costs unfairly imposed on society from tobacco consumption have been cited, such as the unattractiveness of witnessing certain behavior associated with chew tobacco, and the message children receive as a result of viewing adult tobacco consumption.
"A government official who merely desires to influence individual consumption decisions because of his own anti-tobacco sentiment cannot be justified by an appeal to principles of sound tax policy," according to the foundation.
Some anti-tobacco groups fiercely support taxing smokeless products at the same rate as cigarettes.
The groups, having won the day with bans on smoking in most public venues after a 16-year fight, are gearing up their efforts and rhetoric to try to prevent smokeless products from taking root.
"All tobacco products should be taxed at the same rate to discourage use," said Dr. John Spangler, the director of the Tobacco Intervention program at Wake Forest University School of Medicine.
"Smokeless and cigars are gateway products to teen and young adult smoking, and as such there should be strong disincentive by taxing as high as cigarettes to avoid youth uptake of the tobacco habit."
The Campaign for Tobacco-Free Kids said it favors a higher tax on smokeless products in part "because moist snuff now comes in a wide variety of kid-friendly flavors such as grape, apple and vanilla. Because they are taxed -- and priced -- lower than cigarettes, they are more accessible than cigarettes."
"Just like there is no safe cigarette, there is no safe tobacco product," said Melva Fager Okun, the senior manager for N.C. Prevention Partners. "Spit tobacco and other smokeless products are harmful to your health and can cause cancer in the mouth and jaw and other illnesses. These diseases are painful, disfiguring and very expensive to treat."
However, other health-advocacy groups want to limit the amount of tax on smokeless tobacco to encourage smokers to quite cigarettes with a lower-cost product.
Brad Rodu, the chairman of the Tobacco Harm Reduction Research University at the University of Louisville, has been advocating implementation of tobacco harm-reduction products for 15 years. His research is supported by unrestricted grants from smokeless tobacco manufacturers UST and Swedish Match to the University of Louisville, and by the Kentucky Research Challenge Trust Fund.
"All smokeless products in the United States, including the new line from Reynolds, confer only about 1 percent to 2 percent of the health risks of smoking," Rodu said. "The development and marketing of vastly safer smokeless-tobacco products that appeal to adult cigarette smokers has the potential to transform tobacco use from a highly risky behavior to one that is as safe as consuming coffee."
The tobacco companies have a bull's eye on their backs "no matter what they do," said John Sweeney, the director of the sports-communication program at UNC Chapel Hill.
"While the taxing of products like tobacco and alcohol can be viewed as a way of getting extra taxes, this is hardly deemed a public service in the average citizen's mind. "Sin taxes are getting revenue from a convenient place, and part of the strategy is making tobacco products as expensive as possible," he said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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