In Process - Swedish Match prepares to put its snus on the U.S. map..

December 10, 2008 -

The company has a 90 percent market share in Sweden and Norway, and its General brand has dominated those markets for decades.

Swedish Match’s CEO, Lars Dahlgren, says smoking bans and regulations have created more “usage opportunities” for smokeless tobacco products. “And those trends are basically true in the entire world,” he says. “So I think smokeless is a product category with a future.” Because snus is banned in most of the European Union, Swedish Match is preparing to take its product into the North American smokeless market, which is growing rapidly. UBS analyst Nik Modi expects sales of moist snuff to go up 6 to 8 percent a year through 2010.

North America’s largest market, the United States, has a relatively strong smokeless tobacco segment already. Swedish Match’s Red Man brand of chewing tobacco has been popular in the U.S. for decades. Snus differs from traditional American moist snuff because of its preparation process, which is similar to pasteurization and results in a product that is virtually sterile. According to Swedish Match, its own moist products in the U.S. are similar in quality to Swedish snus.

After testing the American waters in a limited deal with Lorillard, Swedish Match can enter the U.S. market with nine different varieties of snus, with different flavors, strengths and blends. The company is well positioned for the move. It spent the past several years restructuring its cigar and lighters operations and making acquisitions that added to the bottom line. Today, the company is in good financial position, unaffected by the world’s current financial volatility, says Dahlgren.

Swedish Match understands that launching a new tobacco product in the U.S. will not be easy in the current social and regulatory climate. The U.S. Congress is expected to give the Food and Drug Administration authority to regulate tobacco products, a move that could result in additional product and marketing restrictions.

While targeting America, Swedish Match continues to keep an eye on Europe, which has kept its doors firmly shut to snus.