Snus Off to a Good Start in Scandinavia

Source from:  tr.itsmyiq.com Apr 28, 2008 04/29/2008

Swedish Match's volume sales of snuff and snus in Scandinavia during the first quarter of this year were up by eight per cent on those of the first quarter of 2007. This increase was achieved in the face of a 37 per cent increase in Sweden in the excise tax on snus, which raised it to SEK336 per kg from the start of this year. But the company reported that sales volumes were unusually low during the first quarter of both 2007 and 2008 due to destocking. Excluding the destocking effects, net sales and operating profit in Scandinavia increased as strong volume growth in tax-free channels and improved price levels more than offset the underlying volume decline in the Swedish market. In the US, sales volumes during the first quarter were up by 22 per cent. Volumes of Red Man moist snuff were said to have contributed significantly to the volume increase as that brand began to be rolled out nationally. At the beginning of the year, the Triumph brand of Swedish style snus was launched in a test market in Ohio as part of a joint venture with Lorillard. Overall, snuff and snus sales increased by 24 per cent to SEK821 million, and operating profit increased by 38 per cent, to SEK318 million. Cigar sales at, SEK757 million, were up from SEK735 million, while operating profit, at SEK112 million, was down from SEK164 million. Currency factors were said to have affected the comparisons for both sales and operating profit negatively. In local currencies, sales in the first quarter increased by nine per cent, while operating profit declined by 28 per cent. Sales of chewing tobacco declined by 12 per cent, to SEK210 million, though, in local currency, sales of chewing tobacco on the North American market declined by only one per cent. As a result of the weaker US dollar, operating profit declined by four per cent, to SEK69 million. Sales of pipe tobacco and accessories declined by three per cent to SEK198 million and operating profit declined from SEK56 million to SEK51 million. Both sales and operating profit were said to have been affected by the depreciation of the South African rand. Sales of lights (matches and lighters) were up from SEK340 million to SEK347 million, while operating profit was down from SEK57 million to SEK54 million. Overall, SM's net sales for the first quarter, at SEK2,818 million, were up from SEK2,663 million. Operating profit was up from SEK534 million to SEK543 million, and net profit was up from SEK332 million to SEK341 million. Enditem