Other tobacco products

Swedish Match is a major player in the US market for mass market cigars and the largest manufacturer for chewing tobacco. Nearly all the products are sold exclusively on the US market.

Production of cigars takes place in Santiago, Dominican Republic and Dothan, Alabama. Production of chewing tobacco takes place in Owensboro, Kentucky. Chew bags are produced in Sweden (and Denmark following V2 Tobacco acquisition in September 2017). 

Key data, MSEK201620152014
Sales4,2833,8292,832
Operating profit1,7051,5541,109
Operating margin, %1)39.840.639.2
Investments in property, plant and equipment1919533
Average number of employees23961,9751,848

1) Excluding larger one-time items.

 

Swedish Match shipment volumes20162015Change, %
Cigars, millions of sticks1.4721.25617
Chewing tobacco, thousands of pounds
(excl. contract manufacturing volume)
6.7097.39-9

 

Share of Group total:
Sales: 26%
Operating profit: 41%

Main brands:
Cigars: Garcia y Vega, Game, 1882, White Owl, Jackpot
Chewing tobacco: Red Man
Chew bags: General CUT, Thunder

Main markets:
the US, Europe
Production units: the US, the Dominican Republic, Sweden, Denmark

Strategy

In the product area Other tobacco products, Swedish Match works to maximize long term profitability, leveraging its strong market presence and trusted brands.

For cigars, the Company 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, 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.

Financial development

In local currency, sales for Other tobacco products were up by 10 percent, while operating profit was up by 8 percent, attributable to the strong performance for US cigars.

Cigar volumes increased by 17 percent and sales in US dollars increased nearly in line with volumes. The volume growth was primarily attributable to natural leaf cigars but HTL cigars also experienced volume growth. Operating profit also increased sharply.

For chewing tobacco, sales and operating profit in local currency declined on lower volumes which were only partly compensated by higher prices. Volumes (excluding contract manufacturing volumes) were down more than in recent years following some market share declines and a weak finish to the year. Operating profit was down on lower volumes and also negatively impacted by investments related to chew bags outside of the US.

See financial tables by product area for more financial information.