Snus sales lift Swedish Match profits

Tobacco company Swedish Match reported pre-tax profits of 614 million kronor ($103 million) in the second quarter, beating analysts’ expectations.

Snus sales lift Swedish Match profits

The results represented a nearly 10 percent improvement on last year’s second quarter results of 563 million.

According to a survey by Reuters, analysts had forecast Swedish Match would post profits of 586 million kronor in the second quarter.

Overall sales came in at 3.28 billion kronor, up from the 3.09 billion kronor in sales recorded last year.

The popularity of snus played a major part in lifting profits at Swedish Match; sales of the wet tobacco popular among Swedes shot up 20 percent compared with a year ago.

Cigar sales figures also rose, but by a comparably modest 7 percent.

CEO Lars Dalhgren believes that both turnover and operating profits are going to beat 2007 results, primarily due to a “strong development” for snus.

“We expect that our Scandinavian snus operations will continue to show strong results during the remainder of the year and in the US we expect a continued increase in market share and volume,” Dahlgren said in a statement.


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.”