Tobacco.org

Tobacco in Sweden 

Another year of declining volume sales

The Swedish tobacco market saw another year of falling sales in 2008 as all sectors posted a decline in volume terms. On the one hand, tax increases in early 2008 had a negative effect on volume sales, while social opposition to smoking, on the other, is also growing, underpinned by a booming health trend. As a result, the market’s consumer base is shrinking. The economic financial turmoil towards the end of 2008 also pushed many consumers to try to quit the habit or trade down to economy brands.

Tax rises across the industry in 2008

The major event affecting the Swedish tobacco market in 2008 was increased taxation on tobacco products. The tax increases were felt across the industry, making, for example, retail prices of cigarettes, cigars and cigarillos on average 3% more expensive, while smoking tobacco retail prices increased by almost 40% compared to 2007. The reason behind the significant increase on smoking tobacco was to eliminate tax differences between smoking tobacco and traditional cigarettes. As a result of the tax increases, the market posted stronger current value growth in 2008 compared to the review period CAGR.

Multinationals dominate the Swedish tobacco market

Tobacco in Sweden is rather consolidated and led by multinationals and their local subsidiaries. The major players are JTI Sweden AB, House of Prince AB, Philip Morris AB as well as domestic company Swedish Match AB. The leading multinationals have achieved their strong positions thanks to acquisitions of local operators as well as economies of scale, giving them advantages in terms of product development and ability to invest in advertising and promotional support for their products. Domestic player Swedish Match AB’s strength can be explained by its strong position in Swedish-style snus, which it completely dominated in 2008, despite increasing international presence and competition. Due to tax increases on tobacco as well as market entries such as Lidl, economy cigarette brands expanded their presence in Sweden over the review period. As a result, almost all of the leading multinationals lost share over the last five-year period.

Grocery retailers the most important distribution channel . . .

Declining volume sales but positive constant value growth

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