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.

Snus prices set to skyrocket

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.


Illegal snus operations a growing problem in Sweden

Sweden’s status as the only country in the EU where snus is legal has created a growing underground manufacturing operation, broadcaster SVT reported on Saturday.

Illegal snus operations a growing problem in Sweden
More popular than cigarettes in Sweden, snus is a moist tobacco product either bought loose or in small parcels and placed under the lip. Its export to and sale within other EU countries is banned, and the EU has consistently opted to maintain that restriction, with Sweden granted an exception and allowed to sell the product within its borders.
But demand for snus beyond Sweden’s borders is growing. So too is the number of Swedish operations apparently willing to break the law to meet the demand by producing and selling snus in secret. According to SVT, some snus manufacturers skirt the export ban by running illegal snus sales alongside their legal activities. But the broadcaster said there is also a flourishing black market in which snus is sold under fake labels. 
“The knowledge is here since we have a long history of production. That makes Sweden a good starting point for the production of illegal snus,” Magnus Råsten of the Swedish Economic Crime Authority (Ekobrottsmyndigheten – EBM) told SVT. 
EBM has reported an uptick in illegal snus production in recent years, particularly in Gothenburg. But the agency does not have an overview of how much of the tobacco product is being manufactured and sold illegally. 
“Illegal manufacturing can in some cases be part of serious criminality but there are also manufacturers who are primarily engaged in legal activities,” Råsten said. “In contrast to drugs or weapons, it’s not as risky to get into the snus business because it is not illegal in Sweden. That also makes it harder for us to assess whether the activity is legal.” 
According to Råsten, much of the foreign demand for snus comes from Norway, Finland and Russia.
“There is a market that people want to reach,” he said. “When there is money to be made, criminality often follows.”