Other tobacco products
Swedish Match holds the number 2 position in the US market for mass market cigars and is the largest manufacturer for chewing tobacco.
Other tobacco products mainly include cigars and chewing tobacco for the US market but also chew bags for certain markets in Europe. The product area experienced another growth year in both sales and operating profit.
Production of cigars takes place in Santiago, Dominican Republic and Dothan, Alabama. Production of chewing tobacco takes place in Owensboro, Kentucky and Odense, Denmark. Chew bags are produced in Denmark.
| Key data, MSEK | 2018 | 2017 | 2016 |
|---|---|---|---|
| Sales | 5,240 | 4,634 | 4,283 |
| Operating profit | 1,956 | 1,776 | 1,705 |
| Operating margin, % | 37.3 | 38.3 | 39.8 |
| Swedish Match shipment volumes | 2018 | 2017 | Change, % |
|---|---|---|---|
| Cigars, millions of sticks | 1.703 | 1.629 | 5 |
| Chewing tobacco, thousands of pounds (excl. contract manufacturing volume) | 6.093 | 6.341 | -4 |
Share of Group total:
Sales: 40%
Operating profit: 40%
Main brands:
Cigars, the US: Garcia y Vega, Game by Garcia y Vega, 1882, White Owl, Jackpot
Chewing tobacco, the US: Red Man
Chew bags, Europe: Thunder, General CUT
Tobacco bits, Europe: Oliver Twist
Main markets: the US, Europe
Production units: the US, the Dominican Republic, Sweden, Denmark
Strategy
In the product segment Other tobacco products, Swedish Match works to maximize long term profitability, leveraging its strong market presence and trusted brands.
For cigars, Swedish Match will drive profitable growth through strong sales and marketing execution, while maintaining strict cost discipline. The Company continues to adapt its assortment in order to maintain its leadership in offering high quality products with outstanding value with a focus on products in growing segments.
For chewing tobacco in the US, Swedish Match will capitalize on its leading position in the category and continuously drive productivity improvements. By mitigating the impact of volume declines through cost focus and price leadership Swedish Match can ensure good profitability in this declining category. For chew bags, Swedish Match will continue to grow and establish new international markets based on the Company’s strong capabilities and brands.
Financial development
(Note: Comments below refer to the comparison between full year 2018 vs. full year 2017).
In local currencies, sales for Other tobacco products were up by 11 percent, while operating profit was up by 8 percent, attributable to the strong performance for US cigars – from both rolled leaf and small natural leaf varieties.
Cigar volumes increased by 5 percent and sales in US dollars increased at a faster rate due to higher average pricing for rolled leaf varieties, along with a portfolio shift toward natural leaf cigars. Despite the volume decline in the fourth quarter, Swedish Match shipment volumes of rolled leaf cigars for the full year grew by 24 percent. Operating profit was also higher despite increased FDA related fees and costs.
For chewing tobacco, sales and operating profit in local currencies grew, principally due to the addition of acquired V2 and Oliver Twist chewing tobacco businesses. US chewing tobacco volumes declined by 4 percent, a more modest decline rate than the overall market.
See financial tables by product segment for more financial information.
