Tobacco.org

• Swedish Match under fire in secret snus substance investigation  

Tobacco company Swedish Match has been accused of adding a substance to moist snuff or 'snus' to purposely increase user dependency and, in turn, boosts sales of their products.

Since 2005, the company has introduced eight new snus products with higher than average nicotine levels.

The usual level for snus is eight milligrams per gram. In one product, levels have almost doubled that figure.

”Certain consumer groups have shown demand for a high nicotine content,” the company’s production director Torbjörn Åkeson explains.

Allegations that the company adds a substance, known as E500, to purposely increase the amount of so-called ‘free’ nicotine – which increases dependency – are presented in a new report by investigative news programme Kalla Fakta. . . .

Yet, Professor Greg Connolly at the Harvard School of Public Health believes that Swedish Match is consciously using the substance to increase addiction and their profits.

”In a study in 2008 he concluded that we are manipulating the pH value, something that we consider hugely speculative,” Brehmer adds.

”It never led to demands from any authority that we need to change something.”

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Swedish Match Shares Jump on Speculation of Philip Morris Bid - Bloomberg.com 

Swedish Match AB, Europe’s largest maker of smokeless tobacco products, jumped in Stockholm trading on speculation Philip Morris International Inc. will bid for the company.

The shares rose as much as 8.9 percent, the most in almost a year, and were up 9 kronor, or 6.2 percent, at 155 kronor as of 3:45 p.m. local time. They’re set to close at their highest since January 2008. Swedish Match’s market capitalization is 38.7 billion kronor ($5.5 billion).

“There is a rumor that Philip Morris is showing interest in Swedish Match, and the level mentioned is 182 kronor,” said Michael Arnhuvud, a trader at Sweden’s Swedbank AB. Philip Morris spokeswoman Marija Sepic declined to comment, as did Swedish Match spokeswoman Rupini Bergstroem.

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• Swedish Match soars on bid talk 

Swedish Matchrose sharply on Friday afternoon on speculation Philip Morris of the US was planning a bid.

The shares initially rose as much as 9 per cent but the stock fell back to close 3.8 per cent higher at SKr151.50.

An analyst in Stockholm, quoted by Reuters, noted this was not the first time the two tobacco groups had been linked. But he added: “Given the consolidation in the tobacco industry and given the size [of Swedish Match] you wouldn’t rule it out.” Swedish Match declined to comment.

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Company Profile for Swedish Match AB 

Swedish Match produces and sells market-leading brands in smokefree tobacco products, cigars and lights products. Sales for 2008 amounted to 12,611 MSEK and the Company sells products across the globe, with production units in 10 countries. The Swedish Match share is listed on the NASDAQ OMX Stockholm (SWMA).

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Swedish Match: Half Year Report January - June 2009  

* Sales for the second quarter increased by 16 percent to 3,666 MSEK (3,164)*

* In local currencies, sales for the second quarter increased by 2 percent*

* Operating profit for the second quarter increased by 30 percent to 899 MSEK (691)*

* In local currencies, operating profit for the second quarter increased by 13 percent*

* EPS (basic) for the second quarter amounted to 2.51 SEK (1.89)*

* EPS (basic) including discontinued operations for the second quarter, amounted to 2.68 SEK (2.04)

* Amounts exclude Swedish Match South Africa, which is separately reported as discontinued operations

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Philip Morris International Announces Agreement to Acquire Swedish Match South Africa for $222 Million  

Philip Morris International Inc. [NYSE / Euronext Paris: PM] (PMI) announced today that the company has entered into an agreement with Swedish Match AB to purchase its South African affiliate, Swedish Match South Africa (Proprietary) Limited (SMSA) for ZAR 1.75 billion (approximately $222 million).

SMSA is the market leader in the South African pipe tobacco and snuff categories, which represent an estimated 31% of total tobacco consumption. In 2008, SMSA reported net revenues of ZAR 687 million. Its principal brands include Boxer, Best Blend and Taxi.

“This financially attractive acquisition represents an excellent strategic fit for our business in South Africa,” said Jean-Claude Kunz, President of PMI’s Eastern Europe, Middle East & Africa Region. “We firmly believe that merging the two businesses will provide us with the talent, infrastructure and expertise to further build and grow our portfolio of strong brands in this important market.”

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UPDATE 1-Swedish Match sells S.African ops to Philip Morris 

* Sells S. African ops to Philip Morris for 1.75 bln rand

* Says deal to be complete in the second half of 2009

* Says capital gain on sale about 500-600 mln SEK

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Philip Morris to buy Swedish Match South Africa 

Philip Morris International Inc. said Thursday it has agreed to buy Swedish Match AB's South African operations for 1.75 billion South African rand, or roughly $222 million.

Swedish Match South Africa Ltd. reported sales of 687 million South African rand last year. Its brands include Boxer, Best Blend and Taxi.

Philip Morris estimated that Swedish Match South Africa's pipe tobacco and snuff products represent about 31 percent of total tobacco consumption in South Africa.

In a statement, Jean-Claude Kunz, president of Philip Morris' Eastern Europe, Middle East and Africa region, said the deal "represents an excellent strategic fit for our business in South Africa," which he called an "important market."

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• Tobacco regulation could lead to more competition 

One of the real tests of how federal regulation will affect tobacco use could be something you'll spot at a convenience store counter.

A new law signed by President Barack Obama yesterday will, among many changes, move all tobacco products -- snuff and cigars as well as cigarettes -- behind the counter.

How they share space back there could clear the way for more competition in a market now dominated by Henrico County-based Altria Group Inc.

It's competition that Chesterfield County-based Swedish Match North America is hoping for, and a rule it believes could lead to something it's long wanted: more space on retailer's shelves for its snuff and chewing tobacco.

"It's back to old fashioned blocking and tackling, how to be more competitive -- including against cigarettes," said Gerry Roerty, Swedish Match's president and general counsel.

Both Richmond-area tobacco companies broke with most of the rest of the tobacco industry in supporting the regulation of tobacco by the U.S. Food and Drug Administration. . . . .

"This puts Philip Morris absolutely in control of the American market," said Alan Blum, director of the Center for the Study of Tobacco and Society at the University of Alabama. "This means Marlboro is king."

It is also likely to make oral tobacco -- snuff and similar products -- a major public-health issue, he said.

Swedish Match thinks regulation could open up the market, especially for its oral tobacco, Roerty said.

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• ROERTY: Tobacco Regulation Opens Better Communications Opportunities  

Swedish Match North America is a Richmond-based company that has been in the smokeless tobacco business in the United States for more than 100 years -- our brands include Red Man chewing tobacco and Timber Wolf and Longhorn moist snuff. . . .

Swedish Match supports meaningful and effective regulation of its tobacco products, believing that manufacturers and regulators should provide consumers with information about tobacco products, so that consumers can make educated choices about which products to purchase.

It is our belief that the FDA bill, which we supported, calls for a regulatory scheme that, if appropriately implemented and administered, would allow adult tobacco consumers to make such choices. . . .

Swedish Match is prepared to work closely with retailers to make sure that adequate, visible shelf space is maintained to allow adult tobacco consumers to make educated choices about which product they want to purchase. By doing so, our company believes that retailers have the greatest opportunity to experience continued growth of the moist snuff category.

In summary, while Congress has completed its work on federal tobacco legislation, the FDA will have to go through an extensive process to establish the specific rules that govern the production, sale, and marketing of smokeless tobacco, cigarettes and roll-you-own tobacco.

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Tobacco industry moves toward federal oversight 

Many details of the FDA's implementation of the new regulations still are to be determined, setting up a potential ongoing battle between supporters and opponents of tougher restrictions on the industry.

"The devil is going to be in the details," said Gerry Roerty, vice president and general counsel at Swedish Match North America, a Chesterfield County-based maker of smokeless tobacco and cigars.

Roerty said the company was "comforted" that the FDA legislation, while cracking down further on some advertising, still leaves room for the company to market its products by providing samples to adults at venues where minors are not allowed.

Other issues, such as setting product-manufacturing standards, could be more tricky.

"If [the FDA] takes a sensible approach and sticks to the language that is in the bill that says they must adopt technologically feasible standards, then that is something we will be able to work with," he said. . . .

Philip Morris' parent company, Altria Group Inc., said yesterday that the legislation is, on balance, "an important step forward to achieve the goal we share with others to provide federal regulation of tobacco products."

However, the company said the bill "is not perfect" and that it had First Amendment concerns about some of the restrictions. The company declined further comment.

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Swedish Match: cigar margin may top expectations  

* CEO says market may be too pessimistic on cigar margins

* Says plans to raise prices in Sweden in last week in June

* Expects some pressure on margins for snuff

* Credit markets improving, plans more buybacks this yr

Swedish Match's cigar business may be more profitable in the second quarter than analysts expect, its CEO said, after a strong first three months of the year when buyers hoarded supplies to beat a U.S. tax hike.

Lars Dahlgren, chief executive of the tobacco products maker (SWMA.ST), said destocking would add pressure in the second quarter but margins might not fall as sharply some feared.

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Swedish Match Cancellation of Treasury Shares  

In accordance with the resolution at the Annual General Meeting, Swedish Match (STO:SWMA) has on 18 May 2009 decreased the Company’s share capital by 6,110,045.76 SEK through cancellation of 4,000,000 treasury shares and has through a bonus issue increased the share capital with the equivalent amount without issuing new shares.

After the cancellation and further repurchase of shares, the Company’s number of treasury shares amount to 3,750,000. The total number of shares outstanding, including shares held in treasury, amounts to 251,000,000 shares equivalent to the same amount of votes.

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UPDATE 2-Swedish Match's Q1 tops forecast, snuff disappoints 

Tobacco products maker Swedish Match posted first-quarter pretax profit above market expectations on Thursday but disappointing snuff sales in the United States sent the share price lower.

A new federal tax in the key U.S. market to take effect from April 1 spurred buyers to stock up on cigar supplies, but the company said snuff sales underperformed in the first quarter due to destocking.

"The cigar margin, which exceeded expectations, is a one-off and we won't see these margins in Q2," said Rolf Karp, analyst at Ohman Fondkommission.

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Company Profile for Swedish Match AB 

Swedish Match produces and sells market-leading brands in smokefree tobacco products, cigars, pipe tobacco and lights products. Sales for 2008 amounted to 13,162 MSEK and the Company sells products across the globe, with production units in 11 countries. The average number of employees during the year was 11,866. The Swedish Match share is listed on the NASDAQ OMX Stockholm (SWMA).

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