Tobacco Regulation Opens Better Communications Opportunities

On June 12 Congress approved the Family Smoking Prevention and Tobacco Control Act (the "FDA bill"), giving the Food and Drug Administration the authority to regulate the production, marketing, and sale of tobacco products.

Swedish Match North America is a Richmond-based company that has been in the smokeless tobacco business in the United States for more than 100 years -- our brands include Red Man chewing tobacco and Timber Wolf and Longhorn moist snuff. The company has been one of the major players in the growing U.S. value-priced moist snuff segment, as well as an active participant in an emerging U.S. subcategory of smokeless tobacco, Swedish snus. Swedish snus have more than a century-old tradition in Sweden.

Swedish Match supports meaningful and effective regulation of its tobacco products, believing that manufacturers and regulators should provide consumers with information about tobacco products, so that consumers can make educated choices about which products to purchase.

It is our belief that the FDA bill, which we supported, calls for a regulatory scheme that, if appropriately implemented and administered, would allow adult tobacco consumers to make such choices.

For example, the FDA bill requires that manufacturers provide consumers with ingredients and nicotine levels in their products.

The bill directs the FDA to adopt regulations that allow smokeless tobacco manufacturers to engage in certain direct modes of communication with adult consumers, including product sampling in age-restricted venues and direct-toconsumer marketing in the form of brand newsletters.

As part of the FDA regulatory process, Swedish Match will encourage the FDA to adopt marketing rules that do not prevent the adult tobacco consumer from receiving truthful information about the tobacco products they are considering to purchase.

Congress also has directed the FDA to establish a "modified-risk" tobacco-products scheme. Specifically, the FDA is to establish rules by which a manufacturer may apply to have a product categorized as a modified-risk tobacco product and thereby communicate to adult tobacco consumers that the product presents fewer risks than other tobacco products.

In the process, our company would like to share with the FDA evidence supporting a concept that has been referred to in various scientific journals and other publications as the "Swedish Experience." The Swedish Experience is described as a pattern of tobacco consumption behavior in Sweden whereby more consumers use smokeless tobacco (Swedish snus) than cigarettes -- and the result is that adult male cigarette smoking rates in Sweden are the lowest in Europe (and far lower than cigarette consumption in the U.S.).

In addition, the rates of tobacco-related diseases, including oral cancer, are among the lowest in the Western World, despite the fact that overall tobacco usage is comparable to other countries. In light of this, we believe that our smokeless products, including our Swedish snus, have the potential to fit the criteria that will be established by the FDA for modified-risk product status.

Without a doubt there are certain provisions of the bill that will be arduous.

For example, the bill directs the FDA to require that all retail point-of-sale advertisements be black and white only. Additionally, the FDA will adopt rules that require all smokeless tobacco, cigarettes, and roll-your-own tobacco to be merchandised behind the retail counter.

In light of these new requirements, retailers must make important decisions regarding the space they choose to dedicate to smokeless tobacco within their stores -- especially in light of the fact that moist snuff (particularly value-priced moist snuff) is a growing segment of the tobacco products category.

Swedish Match is prepared to work closely with retailers to make sure that adequate, visible shelf space is maintained to allow adult tobacco consumers to make educated choices about which product they want to purchase. By doing so, our company believes that retailers have the greatest opportunity to experience continued growth of the moist snuff category.

In summary, while Congress has completed its work on federal tobacco legislation, the FDA will have to go through an extensive process to establish the specific rules that govern the production, sale, and marketing of smokeless tobacco, cigarettes and roll-you-own tobacco.

Swedish Match looks forward to the opportunity to work with the FDA to ensure that there remains a competitive and robust market for the sale of smokeless tobacco to adult consumers.

Gerry Roerty is vice president, general counsel, and secretary for Swedish Match North America, a global smokeless tobacco, cigar, and pipe tobacco company with its North American headquarters in Richmond. Contact him at (804) 302-1700.