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Snuff and snus
Growing markets and a high pace of product innovation
Swedish Match is by far the largest producer of snus in the Scandinavian markets, where snus is a highly popular tobacco product. Moist snuff is the fastest growing category in the US tobacco market and is well positioned in the value segment. Through innovative products, new and repositioned brands, Swedish Match strives to maintain and enhance its market positions wherever it competes. These product categories offer significant growth potential for Swedish Match.
  • Continued strong volume growth in Norway and duty free
  • Lower volumes in Sweden on doubling of excise tax
  • North American snuff volumes up 21 percent
  • Red Man moist snuff launched in the US
    • Operational highlights
    Financial development
    Sales during the year decreased 2 percent to 3,289 MSEK (3,363). Operating profit for the year declined by 15 percent to 1,366 MSEK (1,614).
    In the Scandinavian market, Swedish Match sales declined by 4 percent, as improved pricing and strong growth in Norway and duty free sales offset sales declines in Sweden. Sales volumes declined by 9 percent in Scandinavia. In Sweden, volumes declined, impacted by a doubling of the weight based tax for snus. Volumes in Norway, as well as duty free sales, increased.
    In the US, sales grew as the Company gained market share in a market that grew by more than 7 percent*. Swedish Match shipment volumes increased by 21 percent.
    The operating margin was 42 percent for the year (48). The lower operating margin results from a combination of factors including lower volumes in the first part of the year in Scandinavia, a mix shift toward value price products, and higher expenses for marketing and product launches.
    Market
    Scandinavia and the US are the world’s largest markets for snuff. In 2007, the US moist snuff market grew by more than 7 percent* in volume terms, with the value priced and pouch segments demonstrating the strongest growth. Growth in the US market has accelerated in recent years, as more consumers entered the category, including those having made the transition from cigarettes. A broader range of brands, product varieties, and price points have further fuelled this market growth.
    * Source: Swedish Match and industry estimates. ACNielsen estimates 2007 market growth of 10 percent.
    OPERATING PROFIT
    1,366 MSEK
    KEY DATA, MSEK 2007 2006 2005*
    Sales 3,289 3,363 3,131
    Operating profit 1,366 1,614 1,504
    Operating margin, % 42 48 48
    Investments in      
    property, plant and      
    equipment 233 118 157
    Average operating      
    capital 1,652 1,478 1,166
    Average number of      
    employees 974 954 916
    * Operating capital for 2005 has not been restated in accordance with the new definition of net debt and includes net pension liabilities.