Trends
The global tobacco market is undergoing a significant shift in consumption trends, most notably away from cigarettes.
Consumer demand for safer products and products without the disadvantages of smoke or inhalation is increasing. There is also increased demand for transparency and demonstrated progress with regard to sustainability. Tobacco regulations are becoming increasingly restrictive, while at the same time more regulators recognize differences in risk profiles among tobacco and nicotine containing products.
Health awareness and risk reduction
Trend
Many consumers are becoming increasingly aware about harm reduction and the continuum of risk concept with regard to tobacco and nicotine products. Cigarette smoking is the leading cause of preventable death in the world, and there can be dramatic public health benefits by providing smokers with viable products that are recognized as safer alternatives to cigarettes. Smokeless tobacco and nicotine products meet the growing consumer demand for safer products and products without the disadvantages of combusted tobacco.
Commentary
By developing attractive products that are recognized as safer alternatives to cigarettes, such as snus and nicotine pouches, Swedish Match can contribute to significantly improved public health. The Company’s focus on such reduced risk products has contributed to an unprecedented low cigarette prevalence in both Sweden and Norway compared to most other countries. In Sweden, the risk of dying from a tobacco-related illness among men is lower than in any other European country, although Swedes consume nicotine containing products on a comparable level to other European countries. Researchers refer to this phenomenon as “the Swedish Experience”.
In the US, the Company’s leadership within nicotine pouches provides a platform for further growth in response to consumer needs.
Nicotine pouches and other smokefree products can play a similar role in markets in outside the US and Scandinavia for which Swedish Match can be an active participant in promoting health awareness and risk reduction.
Shift away from "one-size-fits-all" regulations
Trend
The global tobacco market is exposed to ever increasing levels of restrictions and regulations, and most notably in regulators’ efforts to reduce cigarette consumption. However, some regulators and governments are increasingly taking into account the concept of harm reduction and continuum of risk, moving away from “one-size-fits-all” regulation.
Commentary
Swedish Match is of the opinion that regulation must be evidence-based, taking into account the relative risk among different tobacco and nicotine products. Regulation for smokeless tobacco and nicotine products should be based upon standards which strive to ensure that consumers receive attractive products with high product quality and low levels of risk i.e. product standards based on the same principles as food regulation. Swedish Match monitors relevant regulatory developments and is actively engaged with stakeholders in various ways, recognizing that regulatory decisions will ultimately be at the discretion of the lawmaker.
Heightened focus on sustainability issues
Trend
Stakeholders are increasingly demanding companies’ efforts within sustainability and improved transparency. Consumers are making more informed choices in their consumption of goods and services. Consumer demand for transparency means that tobacco companies need to be open about how they operate throughout their value chains and about what goes into the products they sell.
Commentary
Swedish Match’s approach to sustainability and the Company’s development go hand in hand. Pursuing our vision represents a great commercial opportunity as well as a potential to make significant positive impacts on society. While our sustainability efforts cover a broad range, we target 5 specific focus areas where we believe we can have the greatest positive impact, and which are well aligned with issues identified through stakeholder engagement as part of our materiality process. We purchase raw tobacco from large international suppliers and monitor our supply chain closely, covering a number of issues, including human rights and child labor as well as areas of environmental concern. We employ thorough testing at several stages of the value chain, including the selection of raw tobacco and other materials. We are transparent with regard to the content of our products and engage in responsible marketing practices. For packaging, we continuously work to reduce the use of materials associated with our products, as well as look for alternative materials that are partly renewable and/or recycled, and with lower carbon intensity. We have made significant strides in increasing the use of both recyclable and recycled materials for production inputs and consumer use.
Adaptation to evolving consumer demand
Trend
Today’s nicotine consumers are seeking convenient, enjoyable, and less harmful alternatives to cigarettes that best suit their lifestyles. They expect high quality products that deliver consumer enjoyment whenever and wherever they choose to use them.
Commentary
At Swedish Match, tobacco harm reduction is at the core of what we do, and we have a long history in providing products that are recognized as safer alternatives to cigarettes. We use a structured approach to consumer insight and to assess trends in the marketplace. Over the years, our product portfolio has adapted and renewed to address these ever-changing needs. Innovations in production methods, packaging, and product composition have been employed in the development of both the existing portfolio and new products.
