Swedish Match is the leading producer of snuff products in Northern Europe and in the South African market and one of the leading producers in North America. Gustavus (founded 2001) is expanding rapidly and will soon be launched globally. Snuff consumption is increasing, particularly in northern Europe and North America.

MARKET INFO

In 2001 the positive trend of sales volumes continued in northern Europe and the US, where market shares were strengthened. Swedish Match (which is the market leader in Sweden) efforts over a number of years to develop Swedish snuff (snus) as an alternative to cigarette smoking, with a documented lower health risk, gained international attention.

The consumption of (moist) snuff has strong traditions primarily in the Nordic region and North America, but also in Africa and Asia. Swedish Match maintains operations in these markets and follows an international strategy for its smokeless tobacco products.

Northern Europe
The consumption of snuff in northern Europe has shown a stable rate of growth during the past decade. This increase has occurred in conjunction with a decrease in the consumption of cigarettes. During 2001, volumes continued to grow. In 2001, the total volume amounted to slightly more than 198 million cans. Swedish snuff, or snus as it is called in Sweden, has become established as the most important alternative to cigarette smoking. A study conducted by the Swedish Cancer Foundation shows the consumption of snus to be twice as effective as NRTs (nicotine replacement therapies, such as nicotine chewing gum) in helping smokers to quit their habit. The background to the transition from cigarettes to snus involves increased health awareness and increasing restrictions on smoking in a growing number of places in our society. In Sweden, which is the largest market in northern Europe, with almost a million snus consumers, about half of them are former smokers. The consumption of snus is growing most rapidly among consumer categories with higher educational and income levels than the population average. Slightly more than 10 percent of the consumers are women. An important explanation behind the trend is Swedish Match’s development of portion-packed snus, which today accounts for almost half of the total consumption.

Swedish Match is the bearer of a 200-year-old snus tradition and is the leading player in the Nordic market. For 30 years, the Group has conducted intensive research on tobacco, with the aim of reducing and eliminating the health risks that tobacco consumption may involve. The Group has developed new methods, including guidelines to growers regarding varieties, and techniques for cultivation, harvesting and storage, as well as creating preparation and production methods that are unique in the world. To ensure the best possible levels of hygiene and quality, the same standards have been adopted as those applied in the food industry, all the way to the consumer, including recommended refrigerated storage in retail outlets. The Group’s research and product development has resulted in an in-house product category with a unique quality standard, Swedish snus by GOTHIATEK®.

North America
The North American market is the world’s largest, approximately four times the size of the Nordic market, in terms of the number of cans. Swedish Match is one of four players and holds the most rapidly expanding market share, which amounted to in average approximately 8.5 percent in 2001. Swedish Match’s largest trademark is Timber Wolf. The range also includes Renegades portion-packed snuff. During the year, the Group was able to continue reaping the successes of its enlarged sales team and wider geographical coverage.

South Africa
The consumption of snuff in the South African market remained stable during 2001. Since 1999, when the Group acquired the snuff and pipe tobacco company Leonard Dingler, Swedish Match has been a leading producer with its local, market-leading brand, Taxi.

EU
The sale of moist snuff was banned by the EU (then known as the EC) in 1992, primarily on the assumption that the product could cause cancer. Sweden was exempted from this ban upon its entry into the EU in 1995. Several Swedish studies have shown that suspicions concerning the carcinogenic effects of snus lack scientific support. During the year, the EU authorities therefore decided to remove cancer warnings from packages of smokeless tobacco, including snus. This should be a step in the direction of the EU ban being lifted by political means, particularly since its legal foundation is highly questionable. However, this may take a considerable time. It is therefore Swedish Match’s intention to bring the issue of the ban before the European Court as soon as possible..