News; Apr 11, 2003 CET

New company formed to boost sales in Norway

There is still something of a pioneering spirit in the office at Brynsall謠4 on the outskirts of Oslo. Not all the desks have been occupied and only nine of the projected 14 employees are on the scene at the brandnew sales company, Swedish Match Norway Sales. Operations were formally launched on January 1, 2003.

This feels like a real entrepreneurial venture,” says company president Sven-Erik Steffenrud. Although he has many years of experience of marketing and sales from the building supplies and convenience goods industries, this experience was gained in positions as president of established operations, whereas in this case the task is to build something new from scratch - from securing office space to recruiting qualified personnel, formulating a strategic plan and “buying paper clips,” as he jokingly remarks.

Norway is of course not a new market for Swedish Match products. The company has been a leading player in the Norwegian snus market for some time. To date, however, distribution and sales have taken place via other channels. The new aspect is that Swedish Match is now handling its own affairs in the Norwegian market. The purpose, naturally, is to boost sales, particularly of snus.

“The Norwegian snus market is highly dynamic and it is primarily in this light that we need to approach this project,” says Sven-Erik Steffenrud.

Norweigans have, of course, used snus for many years. Their consumption has steadily increased, amounting last year to around nine million cans sold in the Norwegian market. In addition, roughly the same number of cans of snus reached Norwegian consumers through tax-free sales and cross-border purchases in Sweden. The largest brand name is General. Other Swedish Match brand names in the Norwegian market are Ettan, Catch and Grovsnus.

Until fairly recently, the general picture has been that snus appeals mostly to men with jobs and interests related to the outdoors. But an attitude shift is now taking place. Just as in Sweden, new groups - the well-educated, high income earners and women - are starting to switch from cigarette smoking to snus.

Portion-packaged snus has played a key role in this trend, as has increased health awareness. As in the rest of the industrialized world, smoking restrictions are becoming increasingly widespread. In Norway, for example, a total ban on smoking in restaurants is to be introduced as of January 1, 2004.

The fact that Norway has a relatively large proportion of smokers, at least compared with Sweden, also points to a growth potential for snus as an alternative to smoking.

The number of daily cigarette smokers comprises about 30 percent of the population, while the corresponding proportion in Sweden is 19 percent. Moreover, 47 percent of Swedish users of snus are former smokers. Cigarette smokers are also the primary target group for the snus campaign in Norway.

The opportunities for marketing and brand exposure are, if anything, even more limited in Norway than in Sweden. Not even shop signs are allowed to carry brand names. However, Swedish Match’s focus on snus has attracted considerable attention in the Norwegian media.

“Our main strategic goals are to market fresh snus and achieve increased sales of portion-packed snus. To guarantee a high level of freshness, we are currently working on distributing coolers and optimizing distribution,” Sven-Erik Steffenrud explains.

“We already have a high level of distribution and good market coverage. The disadvantage in this regard is that it means many sales points with low sales at each of them. However, we have decided to take a broad-based approach, combined with selective major campaigns focused on as complete a range as possible in areas where we see the greatest sales potential.”

To steer consumption toward portionpackaged snus, it was decided to introduce price differentials favoring this product.

During the year, the company plans to install 500 of its own coolers at Norwegian sales points.

However, there is more to Swedish Match Norway than just snus, although snus has to date accounted for 75 percent of sales and is the product category that has grown by far the most.

The range on offer also includes lighters, matches, cigars and pipe tobacco, and the trend for these products has been similar to the trend in many of Swedish Match’s other markets - that is, a slight decline in sales volumes in 2002. Swedish Match is still the market leader in match sales in Norway, however, with 95 percent of the market.

“Our long-term goal is to also become the market leader in sales of cigars and lighters,” says Sven-Erik Steffenrud.