Significant market shifts toward modern products
Swedish Match is at the forefront of the global market for tobacco harm reduction with its portfolio of snus and nicotine pouches, supporting its vision of a world without cigarettes. The continuously growing interest from consumers and many important policymakers in tobacco harm reduction is well aligned with the Group’s vision.
The tobacco and nicotine market
Smokeless tobacco products are found worldwide, but with considerable product differentiation. Smokeless tobacco products primarily include snus, moist snuff, various forms of chewing tobacco, such as traditional US chewing tobacco, chew bags and tobacco bits, as well as niche products, such as nasal tobacco and dissolvables. Smokeless tobacco is a growing tobacco category consumed in many parts of the world in different types and formats but is still a small category compared to cigarettes.
In Scandinavia, the dominant form of smokeless tobacco is snus. In the US, snus is an attractive niche segment, while the dominant forms of smokeless tobacco are moist snuff and chewing tobacco. In other parts of the world, such as in India and certain countries in Africa and Asia, local variants of oral and nasal smokeless tobacco products are consumed in relatively large volumes. In the EU (outside of Sweden) and certain other markets, the sale of snus is prohibited while nearly all other tobacco products are allowed to be sold.
In recent years, new markets have developed for innovative smokeless products that rely on nicotine derived from tobacco, such as nicotine pouches without tobacco (a market where Swedish Match actively participates). While the category for nicotine pouches is nascent, it has gained considerable ground in certain markets, including in Scandinavia and the US. Markets for innovative smoking products, including heated tobacco products and e-cigarettes/vaping products, have also been growing.
Large global tobacco companies rely on cigarettes for the bulk of their revenues and profits, and cigarettes account for roughly 90 percent of all tobacco consumed globally.1) Swedish Match does not produce cigarettes. Generally, cigarette consumption has been declining over the past decade in most developed countries, while in many emerging markets, cigarette consumption has continued to increase.1) Other smoking products sold globally include fine-cut and roll-your-own tobaccos, cigars, and pipe tobacco. Of these product categories, Swedish Match only participates with its machine made mass market cigars in the US.
The global tobacco market is exposed to ever increasing levels of restrictions and regulations, as governments and other regulatory and non-governmental organizations seek to reduce tobacco consumption, and, most notably, traditional cigarette consumption. These regulations, along with taxation measures, have had impacts on tobacco growing, production, product availability, packaging and labeling, consumer pricing, and location of use.
1) Source: Euromonitor.