Swedish Match: Interim Report January - March 2009..

May 3, 2009 - Scandinavian snus volumes grew considerably, aided by the fact that there was no destocking effect in Sweden in 2009 unlike the first quarter of 2008. In the US the increase of federal excise taxes (FET) effective April 1 affected trade buying patterns, with on the one hand trade loading of machine made as well as premium cigars, but on the other hand sharp destocking of snuff towards the end of the quarter. The result of this unusual stocking situation was a stronger than average performance for cigar sales and margins, and a weaker than normal performance for snuff sales and margins.

Scandinavian snus sales were up 16 percent compared to the first quarter of the prior year while volumes measured in number of cans increased by 14 percent. Snus sales and can volumes in the first quarter of 2008 were unusually low as a result of destocking following excise tax and price increases in January 2008.

For cigars, sales increased by 56 percent during the first quarter. US cigar sales grew by 43 percent in dollar terms, with sales and volume growth for machine made cigars, and premium cigars positively impacted by hoarding activity in anticipation of FET related price increases. In Europe, sales declined somewhat in local currencies, while volumes increased. As a result of trade destocking related to the increased Federal Excise Tax (FET) as well as higher pipeline volume in the previous year for the Red Man moist snuff national rollout, volumes in the US declined by 5 percent.

Sweden is the world's largest snuff market measured by per capita consumption. A substantially larger proportion of the male population uses the Swedish type of moist snuff called snus compared to cigarettes. The US is the world's largest snuff market measured in number of cans and is approximately six times larger than the Swedish market.

As a result of trade destocking related to the increased Federal Excise Tax (FET) as well as higher pipeline volume in the previous year for the Red Man moist snuff national rollout, volumes in the US declined by 5 percent.

Reference: http://www.foxbusiness.com/story/markets/commodities/swedish-match-interim-report-january---march/, foxbusiness.com, 4/30/2009.