Snus prices set to skyrocket

Snus prices set to skyrocket
Devotees of snus, the popular Swedish form of moist snuff, are to face a rude shock in the new year, after market leader Swedish Match announced plans to increase prices and reduce portion sizes.

Swedish Match has a near-monopoly on the snus market, accounting for 90 percent of sales in Swedish stores. The proposed price rises follow increases tobacco duty, but the size of the price hike is double the size of the tax rise.

A box of General Portion snus, one of the biggest selling brands, will cost 34 kronor, compared to 30 kronor today. The loose snus version will rise in price from 35 kronor to 43 kronor, while the amount in each box will fall from 50 grammes to 45 grammes. The price rise will therefore in reality be 37 percent, according to a source in the industry.

The price rises are so far just a proposal from the company used by Swedish Match to negotiate with retailers, but Swedish Match’s dominant position means it will be hard for traders to reject the rises.

“We are in negotiations with Swedish Match, but do not wish to comment further,” said Staffan Ekengren, spokesman for supermarket chain ICA.

The price rises come as the company faces trouble with sales on the Swedish market. A shock rise in tobacco tax at the beginning of 2007 led to a ten kronor increase in the price of a box of snus. This resulted in a large drop in sales and a 150 million kronor fall in profits for Swedish Match’s snus division in the first quarter.