Snus and regulations
Swedish Match believes that smokers should have access to viable, non-combustible tobacco and nicotine alternatives, such as Swedish snus, which is scientifically documented to have dramatically lower negative health effects than cigarettes.
Swedish Match believes that tobacco regulation will continue to become more global in character and steadily increase in scope. It is Swedish Match’s aspiration to see a move from “one-size-fits-all” tobacco regulation to an approach that takes into account the differences between product categories and their accompanying risk profiles. Smokeless tobacco regulation should ultimately be based upon standards which strive to ensure that consumers receive the highest possible product quality at the lowest possible risk i.e. product standards based on the principles of food regulation.
Truly effective regulation must be evidence based, and requires an exchange of knowledge and experience between governments and industry. The Company believes that better regulation is achieved by maintaining focus on those who are directly affected by the regulation – consumers, customers/retailers and producers. This is why Swedish Match is monitoring relevant regulatory developments and is actively engaged with stakeholders in various ways, while recognizing that regulatory decisions will ultimately always be at the discretion of the lawmaker.
Swedish Match monitors and evaluates the emerging scientific data, and interacts with the scientific community. Swedish Match considers itself accountable to all stakeholders in addressing and informing them about the established science and relevant product information.
Swedish Match is also committed to preventing the availability of tobacco products to minors. The Company is actively engaged with retailers to ensure that they properly understand the need to enforce required age-verification upon purchase of tobacco products.
Swedish Match also cooperates with retailers in order to reduce the growing volume of illicit products, which distort competition on the market.
Regulatory developments in the US
The Family Smoking Prevention and Tobacco Control Act (the Act), signed into law June 2009, empowered the Food and Drug Administration (FDA) to regulate tobacco products such as cigarettes, roll-your-own tobacco and smokeless tobacco. The Act also empowers the FDA to regulate other tobacco products, such as cigars, e-cigarettes and pipe tobacco. On May 8, 2016, FDA published its final deeming regulation for cigars. The regulation imposes a ban on product sampling after August 8, 2016, imposes new health warning schemes for such products (to take effect in 2018), and establishes a process which companies must follow to have new or modified products (introduced after February 15, 2007) approved for sale. Many within the impacted industry view the FDA’s 2016 deeming regulations as unlawful and beyond the scope of FDA’s authority and have brought legal actions to have the regulation declared invalid. Those actions, including the appeal process, will continue for some time.
Along with regulatory authority for the manufacture, sale and marketing of tobacco, the Act includes a provision that will enable a company to have one or more of its products classified as Modified Risk Tobacco Products. Products classified this way by the FDA Center for Tobacco Products (CTP) may then be marketed in a way that better reflects the risk profile agreed to by the FDA and may allow a company to make appropriate harm reduction claims. In August, 2014, FDA accepted Swedish Match’s Modified Risk Tobacco Product (MRTP) application as complete. As part of its MRTP application the Company has been seeking to have the warning labels for its snus products changed to better reflect that these products carry dramatically lower health risks than cigarettes. On December 14, 2016, the FDA denied the Company’s request to remove one of the currently required warning labels. With respect to the Company’s other requests to remove or revise two required warnings, the agency deferred final action and issued a response that offers the Company an option to amend its applications. In its decision the FDA recommended and highly encouraged the Company to meet with the CTP and discuss how the Company’s applications could be amended and the steps necessary for issuance of a modified risk order.
Regulatory developments in Scandinavia
Tobacco products for oral use, except those intended to be smoked or chewed, have been banned in the EU since 1992. As Swedish snus is neither smoked nor chewed, it is prohibited for sale. Upon Sweden’s entry into the EU in 1995, the country was granted a permanent exemption from the sales ban on snus. Cigarettes and other types of traditional smokeless tobacco products, including Asian/African types, chewing tobacco and nasal snuff can all be legally sold within the EU. On July 1, 2016, Swedish Match initiated legal proceedings in the UK in order to challenge the EU ban on snus. Swedish Match is of the opinion that the snus ban is both discriminatory and disproportionate. On January 26, 2017, the British High Court decided to refer the case to the European Court of Justice for preliminary ruling. The timing is unclear on when this case may be heard.
The Swedish parliament adopted the government bill for transposing the 2014 Tobacco Products Directive (2014/40/EU) on April 6, 2016. In Sweden, the EU Tobacco Products Directive was transposed into Swedish law with the effective date May 20, 2016. In addition to increased reporting requirements for the industry, the revised EU legislation includes increased and amended warning labels and a ban on nicotine content declaration on snus cans.
An additional report proposing tobacco control measures beyond what is stipulated in the EU directive was presented by a committee of inquiry to the Swedish government on March 1, 2016. The proposed measures in the report include retail licensing, a display and self-service ban, a ban on flavor-labeling on cans and a removal of snus from regulation under the Swedish Food Act. The report also favors plain packaging on snus while recognizing that such a measure violates the Swedish constitution which would have to be amended. Whether the government will adopt the proposals in the report in whole or in parts and submit a bill to the parliament remains unclear. If a bill is put forward, a parliamentary vote is not expected until the latter part of 2017.
On April 11, 2016, the Swedish Food Agency issued the long awaited regulations regarding maximum permissible levels of NNN and NNK (nitrosamines), as well as benzo(a)pyrenes with a transition period of 1.5 years (October 11, 2017). The GOTHIATEK® standard and hence the Swedish Match snus products have even lower permissible levels of these compounds.
Norway is associated with the EU through its membership in the European Economic Area (EEA). On December 9, the Norwegian Parliament approved a bill transposing the 2014 Tobacco Products Directive and also included a plain packaging requirement for all tobacco products including snus. It is expected that the requirement on plain packaging will be implemented at the retail level during 2018.
In January, 2016, Swedish snus excise taxes were virtually unchanged, and in January 2017 increased by less than 1 percent. In Norway, the excise tax on snus was raised by 2 percent in January, 2016, and by 2 percent in January, 2017.
Swedish Match's opinion on various regulations:
- Regulation must take into account the relative risk among different tobacco products.
- The EU ban on Swedish snus is discriminatory, disproportionate, violates the free trade and subsidiarity principles and distorts the function of the internal market.
- The new EU Tobacco Products Directive (2014/40/EU) violates the fundamental consumer right to be informed of content and product taste by banning product information disclosure on packages.
- All smokeless tobacco products should be subject to consistent and competition neutral product regulation based on product quality and consumer protection i.e. similar to food standards.