Swedish Tobacco Specialty Snus Sets Sights on U.S. Market

Source from:  Reuters 11/10/2014

For Scandinavians snus is as Swedish as IKEA or ABBA, a popular and now elegantly-packaged smokeless tobacco that has transformed its image from a farmers' staple to a habit of slick executives and Stockholm hipsters.

But the future for main manufacturer Swedish Match may hinge on efforts to convince U.S. authorities these small pouches, banned on health grounds in the rest of the European Union, are less harmful than most other tobacco products.

The strategy, closely watched by the tobacco industry eyeing alternatives to traditional cigarettes, may be key for an iconic 99-year-old Swedish company seeing its dominance challenged in its domestic market, where some 285 million cans were consumed last year in a country of 10 million people.

"It could potentially be an important catalyst," Swedish Match CEO Lars Dahlgren told Reuters, referring to an application with the U.S. Federal Drugs Administration (FDA) to reclassify one of its premium products as a lower health risk for consumers than cigarettes.

"We consider it a milestone. It is an essential part of our strategy."

Swedish Match is pushing for the "modified risk" status created by a 2009 U.S. law, the first application to be considered for such a designation.

Snus differs from snuff, a dry powder often sniffed through the nose. Snus is popular in Norway and Sweden and has grown from almost nothing to some 50 million cans sold in the United States last year. However, it has been banned in the European Union due to concerns over mouth cancer.

Wedged under the upper lip for a nicotine hit, it is part of Swedish culture. When Sweden joined the EU in 1995, it was granted exemption from an EU snuff ban. Voters may never have accepted membership if any snus ban had extended to Sweden.

The U.S. push is part of a move by the company to promote products like snus -- and possibly e-cigarettes -- under a banner of "harm reduction", having sold its own cigarette business 15 years ago.

With profits sliding at home over the last two years because of cheap foreign competition, the U.S. market has become more important as the EU shows no signs of lifting its ban.

"We've been waiting for growth there for a long time but this may be the catalyst to give them the edge," said Erik Bloomquist, a Berenberg Bank analyst. "The problem is that it could take two to three years and that could blunt the impact." Enditem