Snuff and snus
Growing markets and innovative product development
Swedish Match is by far the largest producer of snus in the Nordic markets, and is also well positioned in the US snuff value segment. The Company continually strives to meet consumer demands for freshness, quality and taste.
Both the United States and Scandinavia are experiencing exciting changes in their growing snuff markets, and Swedish Match is well positioned to capitalize on these changes. In the US, the market has experienced accelerated growth, a pouch segment is emerging, the value-priced segment continues to grow, and the potential for Swedish-style snus is being explored. Traditional cigarette companies have recently entered the US snuff market, and are testing new products. In Scandinavia, the market for value-priced snus has been growing at a rapid rate, new product launches have accelerated, and new categories are being developed. Swedish Match has been active in launching a number of new products.
Sales and earnings
Sales during the year increased 7 percent to 3,363 MSEK (3,131). Sales volumes increased by 9 percent in Scandinavia. In Sweden, volumes grew by 8 percent. Volume growth was positively affected by year-end hoarding, due to anticipated excise tax increases in January. Volumes in Norway, as well as tax-free sales, increased. In the US, volumes increased by 13 percent. Volumes of the value-price brand Longhorn grew by 28 percent, while volumes for Timber Wolf grew by 4 percent. Operating profit for the year rose 7 percent to 1,604 MSEK (1,504).
In the Scandinavian market, operating profit increased as a result of higher volumes. In the US, a strong volume growth, especially for the value-price brand Longhorn, drove an increase in sales, and the operating margin declined slightly. The combined operating margin for snuff for the year amounted to 47.7 percent (48.0).
Market
Scandinavia and the US are the world’s largest markets for moist snuff. In Sweden and Norway, there are well over a million consumers – both men and women – who regularly use snus. Consumption in Scandinavia totals approximately 250 million cans of snus per year. Consumption in the US is estimated at more than 1 billion cans per year.
As restrictions on cigarette smoking intensifies, and smoking is increasingly perceived as negative in a social context, moist snuff has become a more popular alternative. The transition from cigarette smoking is aided by the fact that research and medical science continue to observe and report on the differences in effects on health between smoking and snus consumption. This “Swedish Experience” supports the transition from cigarettes to snus and snuff in both Scandinavia and the US.
Scandinavia
Sweden is the largest market in the Nordic region, and snus sales amounts to more than 200 million cans, corresponding to a value exceeding SEK 5 billion at the retail level. During the past few years, sales of portion-packed snus have increased sharply and now account for about 60 percent of sales. Of the approximate 1.1 million snus consumers in Sweden, there are approximately 200,000 women who use snus and the number of women using snus is increasing.
The Swedish snus market is growing, with growth estimated by Swedish Match to be more than 3 percent during 2006. Swedish Match is by far the largest manufacturer, with a volume share of 90 percent* at the end of 2006. Competitors in the Swedish market include Skandinavisk Tobakskompagni (STK), Gallaher and Imperial Tobacco. Of these companies, STK is the largest competitor by volume in Sweden, with a market share of 5.1 percent* at the end of the year.
During 2006 consumption in the other large Scandinavian market, Norway, amounted to approximately 20 million cans of snus, and Swedish Match has a 87.4 percent volume share* in this market. Consumption is increasing rapidly, by more than 10 percent during the year. Competitors in Norway include STK and Imperial Tobacco.
The most important sales channels for snus in Scandinavia are supermarkets, convenience stores, and gasoline stations. Snus is also sold in tobacconists’ stores, bars, restaurants, and on ferries. The sales price is set by the retailers, with the result that prices can vary widely. Snus is stored in and sold from coolers to preserve its freshness and quality.
The largest brands are General, Ettan, Grovsnus, Göteborgs Rapé and Catch. General Onyx, a unique premium pouch snus in the General family, was launched during autumn 2005. During 2006, the Company expanded the distribution of General Onyx, as well as the distribution of Kronan pouch, a value priced product. During 2006, a line extension of Kronan in loose form was launched.
*Source: ACNielsen
| Production units |
| Sweden, US and South Africa. |
| Main brands |
| General, Ettan, Catch, Grovsnus, Göteborgs Rapé, Timber Wolf, Longhorn and Taxi. |
| Key data, MSEK |
2006 |
2005 |
2004 |
| Sales |
3,363 |
3,131 |
3,081 |
| Operating profit |
1,604 |
1,504 |
1,376 |
| Operating margin, % |
48 |
48 |
45 |
| Investments in property, |
|
|
|
| plant and equipment |
118 |
157 |
242 |
| Average operating |
|
|
|
| capital |
1,359 |
1,166 |
1,079 |
| Average number of |
|
|
|
| employees |
954 |
916 |
924 |
| Living abroad? |
| |
| Order Swedish snus on the internet, |
| www.swedishsnus.com |
Consolidated Income Statement
