News; May 15, 2003 CET

Snuff heads east

As Swedish Match directs its attention to new markets for snus, the focus is on Russia. The test sales activities of the past year have now been intensified. As Swedish Match directs its attention to new markets for snus, the focus is on Russia. The test sales activities of the past year have now been intensified.

Test sales of snus were initiated in the Russian capital, Moscow, slightly more than one year ago. The favorable results of the trial prompted a decision in autumn 2002 to continue with the test launch, but on a somewhat larger scale.

“Although the project is still in its infancy, we have already noted highly promising results,” says īe Viktorsson, area manager for Eastern Europe and the Balkan region and the person with operational responsibility for the snus launch in Russia. “In particular, repeat sales have already attained a very satisfactory level. This pattern established itself more rapidly than expected, despite the fact that we still have only a limited number of sales outlets.”

THE INITIAL LAUNCH PHASE, which is under way at present, will continue to be restricted in scope, with about 100 sales outlets. This reflects the insistence that sales should be conducted in the traditional Swedish Match manner, with the company’s own coolers installed in the stores. It is also essential to be able to follow up handling meticulously. Initially, the product is being sold via tobacco retailers, supermarkets and BP service stations in Moscow and the surrounding area. The snus was also recently introduced in a limited number of stores in Saint Petersburg. The brands spearheading the launch are three flavor variants of Click, which is also sold in India, as well as General and Ettan.

The target group is the same as in other markets - smokers who want to quit. In Russia, smokers make up 33 percent of a population of 150 million people.

“Since Russia has no prior snus tradition, it is a matter of marketing an entire new behavior pattern and teaching consumers,” explains īe Viktorsson. “At the same time, development in Moscow, as in other major cities, is proceeding extremely rapidly. People are becoming more health-conscious and restrictions on smoking are increasing, which suggests to us that the timing is ideal for smokeless tobacco products.” Although snus is a new product in the Russian market, Swedish Match is no stranger to Russia.

“In fact, we will be celebrating our tenth anniversary in June this year,” says īe Viktorsson. “Lighters paved the way, and without Cricket’s good name and reputation we would not have achieved success so rapidly with snus.” The background is Swedish Match many years of cooperation with the distribution company Neska, through which it has built a network of around 150 wholesalers and thousands of retail outlets that sell the Group’s products, particularly lighters.

“This has been enormously valuable, now that we want to actually move refrigerators into their stores. They already know us and what we stand for.”

NOW THE COOPERATION with Neska is continuing with the snus launch, and an employee is now working full-time to assist with the launch and follow-up. īe Viktorsson believes strongly in the future of the Russian market.

“The Russians are interested in and receptive to new products. There is also a strong anti-smoking trend, which works in our favor. People generally are also well educated - the level of education is in fact higher than in many other markets in Europe. This also works to our advantage, since it makes it easier for us to publicize our arguments for snus.”