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Falling cigarette sales prompt UST purchase

 Falling cigarette sales prompt UST purchase
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The US group Altria is to buy UST, the largest US maker of smokeless tobacco products, that is ground up tobacco – snuff – which people put in their mouths. The price is 7.25 billion euros.

The purchase is partly motivated by falling cigarette sales from smoking bans in bars and restaurants

Chris Proctor, Head of Science at British American Tobacco, said smokeless products could be the future: “Cigarettes were a novel thing at the beginning of the last century. Before then, it was actually snuff – taking tobacco up your nose – or cigars, and then cigarettes came along because it was the new, more popular thing to do. There could be a time where cigarettes are replaced by oral tobaccos.”

China, where smoking bans are not common, remains the world’s biggest smoking nation. China National Tobacco had almost a third of the world’s market share last year. Altria was second and British America third.

Analysts said the purchase makes sense and the price was high, but not too high.

Altria, which used to called Philip Morris, is predicting that its sales of cigarette in the United States will be down about 3.5% this year.

The deal has led to speculation of further consolidation in the industry, perhaps involving
Altria biggest rival, Reynolds American.