Swedish Match Eyes Entry To New Snus Market In 2011

Source from:  Fox Business 06/23/2011

STOCKHOLM -(Dow Jones)- Swedish tobacco company Swedish Match AB (SWMA.SK) is pressing ahead with plans to expand internationally and aims to launch Swedish snus tobacco in at least one new market in 2011, Chief Executive Lars Dahlgren said. "We're planning on adding at least one major test market… maybe even a couple before the end of the year," Dahlgren said in an interview with Dow Jones Newswires. Swedish snus, small pouches of moist powdered tobacco which are placed under the upper lip to absorb the nicotine, has been popular for over 200 years in Sweden and other Nordic countries where Swedish Match is the market leader. The sale of snus is banned in the European Union, but Dahlgren is looking at other regions, with U.S. growth expected to expand dramatically. Through the company's joint venture with Philip Morris International (PM), Swedish Match has also started selling snus in limited launches in Canada and Taiwan. In the U.S., Swedish Match primarily sells moist snuff, another type of smokeless tobacco. The company estimates the U.S. moist snuff market amounted to 1.3 billion cans last year while the U.S. snus market was 30-40 million cans. However, Dahlgren said snus has the potential to outpace moist snuff in the U.S. in a couple of years. The firm is increasing marketing investments in snus there and elsewhere outside Scandinavia by SEK50 million to SEK100 million. "I believe growth in the moist snuff segment will fade. I think that the really large growth in 10 years time will come from Swedish snus," he said. "The U.S. snus market could be as large or bigger than the U.S. moist snuff market in 10-15 years." Rising demand for snus is part of an upswing in overall U.S. smokeless-tobacco sales, stemming partly from a rise in public smoking bans and higher cigarette taxes. Also, the country also has a long tradition of chewing tobacco making consumers receptive to the concept of oral tobacco. In addition, the European Commission is revising its tobacco products directive for the first time in 10 years and the Swedish government is lobbying for the right to export its tobacco product to the rest of the EU. Dahlgren said countries like Slovenia, Germany, Austria, and the Czech Republic are particularly interesting. "The Alps hold a huge long-term potential, but then I mean long-term," Dahlgren said and added that it takes time to change tobacco consumption patterns. At 1342 GMT shares traded 0.7% higher at SEK210.60. Enditem