Cigarette Companies Investing in Snus

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To secure the tobacco industry’s medium to long-term future, in light of growing tobacco regulations and a rapidly shrinking cigarette market, transnational tobacco companies (TTCs) have been diversifying into alternative tobacco and nicotine products.12 They are also increasingly marketing these products in low and middle income countries (LMICs).3Three of the ‘big four’ TTCs (BAT, JTI and Imperial) have invested in a certain type of smokeless tobacco, called Swedish-style snus.4 This is a key product of Swedish Match, which does not sell cigarettes.

This page gives an overview of the global snus market, looks at the snus products owned by TTCs. It also links to further information on their developing interests in snus variants: tobacco leaf-free nicotine pouches.

The tobacco industry often uses the ‘Swedish Experience’ to support its harm reduction narrative: that Sweden experiences low rates of smoking and tobacco-related disease because snus is available in the country. However, TCRG researchers have argued that this is the result of effective tobacco control regulation, rather than being necessarily attributable to the wider availability of snus.4

This page does not cover the potential health benefits/risks of snus. We discuss whether such products can help advance public health on our page on Next Generation Products (NGPs).

The Global Snus Market

Data from Euromonitor International shows that the global market for snus steadily increased in size from 7,000 tonnes in 2008 to nearly 10,000 tonnes in 2019.5 This represents a global increase in snus of over 40%.

Sweden remained by far the biggest single market, accounting for nearly 70% of the global market in 2019 (nearly 7,000 tonnes) and making up 80% of the European market. Although a much smaller market than Sweden, sales in the US have shown by far the fastest growth in the last decade, growing from 350 tonnes in 2009, to nearly 1,400 tonnes in 2019. In the more established Norwegian market, sales rose from 1,000 to over 1,500 tonnes over the same period. In Sweden, the increase was only around 20%.5

However, the rate of increase appears to have been slowing in all countries, rising by fewer than 100 tonnes globally between 2018 and 2019.5 This might help explain tobacco companies increasing interest in non-leaf nicotine pouches (see below).

Regulation of Snus

In European Union (EU) countries other than Sweden, the sale of (tobacco derived) snus is illegal under the Tobacco Products Directive. TTCs have unsuccessfully tried to lift the EU sales ban on snus since 2008.67

It is likely that post-Brexit, those tobacco companies with an interest in snus, as well as EU based retailers, will push for the UK government to reverse the snus ban.

A detailed summary of regulation of snus and nicotine pouches (as of April 2020) in Europe, the US, Australia and New Zealand can be found in a Policy Brief produced by The European Centre for International Political Economy.8

For information on tobacco regulation generally, see the Tobacco Control Laws website, published by the Campaign for Tobacco Free Kids (CTFK).

Cigarette Company Investments in Snus

From 2002, TTCs started buying up small Swedish snus manufacturers and developing and marketing their own snus. After 2008, snus investments slowed down and tobacco companies focused on e-cigarettes and heated tobacco products (HTPs) instead. Since 2018, TTCs have shown renewed interest in snus-type products, in particular tobacco-free nicotine pouches.9

Japan Tobacco International

In 2002, Gallaher, now part of Japan Tobacco International (JTI), became the first TTC to add snus to its product portfolio in Europe by acquiring Swedish snus manufacturer Gustavus.10 Initially, JTI sold three brands of snus in Sweden only: LD in the value segment; mid-priced Gustavus; and premium Camel snus, which it launched in 2009.11 In 2013, JTI’s parent company, Japan Tobacco briefly trialled ZeroStyle snus in Osaka, Japan, but with little apparent success.12

Since 2017, JTI has been selling snus in Norway and Sweden through its wholly-owned subsidiary, Nordic Snus.13 It sells two brands: LD and Nordic Spirit, the latter being tobacco-free nicotine pouches.1415

British American Tobacco

In May 2005 British American Tobacco (BAT) commenced trial markets of snus in South Africa and Sweden, followed by trials in Norway and Canada, plus a “limited consumer test” in Japan.16

Then in July 2008 it acquired Swedish snus manufacturer Fiedler & Lundgren.4 Initially, BAT sold snus under cigarette brands Lucky Strike, Peter Stuyvesant, and du Maurier, and snus brands Granit, Mocca, and Knekt snus, in South Africa, Canada and Scandinavia. But in March 2011 BAT announced that it had “scaled back” its snus trial markets “to review our BAT’s approach to developing new reduced risk product categories”, and in addition, cancelled a test market planned for 2011.17

From 2012, the company sold snus in Sweden and Norway only. In 2017 BAT’s snus activity picked up again. Following its acquisition of Reynolds American Inc (RAI) in the United States (US), the company now owns Camel snus in the US. In December 2017, RAI submitted Modified Risk Tobacco Product Applications (MRTPA) to the US Food and Drug Administration (FDA) for Camel snus (see below). In Europe in the same year, BAT acquired Swedish snus company Winnington AB, adding Epok snus to its portfolio.1819

In 2019, BAT introduced tobacco-free nicotine pouches to its portfolio, marketing them as Lyft in the UK and Velo in the US.202122 It promoted sales of its nicotine pouches across Europe, Africa and in Pakistan. For more information see Nicotine Pouches.

BAT distinguishes Epok, Lyft and Velo from traditional snus and has allocated them to a new product category, which it calls “modern oral products”.20

Imperial Tobacco

Imperial Tobacco, the second largest cigarette company in Europe, entered the snus market in September 2005 when it acquired a 43% share in Swedish Skruf snus, taking full control of the company in 2008.423 Imperial has sold Skruf, its main premium brand, in Sweden and Norway, and Knox, its value brand, in Sweden only.

At Imperial’s 2010 Investor Day, Marcus Diemer, General Manager for Central Europe North, credited snus as a “sizeable, and highly profitable business, and less vulnerable to growing regulatory pressures”.24

In May 2018 the company launched a tobacco-free version of Skruf, called Skruf Super White, in Sweden and Norway.25 This product appears to have been rebranded ZoneX for the UK market in August 2019.2627 For more information see Nicotine Pouches.

In their 2021 strategy review, Imperial announced they would stop expanding their oral nicotine market, while continuing to invest in their existing markets in Europe.28

Philip Morris International

Of all TTCs, Philip Morris International (PMI) has had the least invested in the snus product category.

In 2006 the company briefly sold 1847 by Phillip Morris on the Swedish market following the company’s acquisition of snus manufacturer Rocker Productions.29 In 2009 it sold Rocker Productions to Swedish Match as part of a deal that saw PMI and Swedish Match set up a joint venture, SMPM International, to “globalise snus”.30 However, the joint venture was not a success and was dissolved in 2015. This also ended PMI’s brief involvement in snus.

However, in February 2021, PMI said it was planning develop a nicotine pouch product.3132

Altria

In 2019, Altria announced that it was acquiring an 80% share in nicotine pouch on!, from Swiss tobacco company Burger Sohne.3334

Altria & BAT interests in Lexaria Bioscience

Altria and BAT have connections with Canadian company Lexaria Bioscience,  relating to its drug and nicotine delivery technology ‘DehydraTECH’.35 For details see Nicotine Pouches.

Company Shares

According to Euromonitor International in 2010 Swedish Match, the only listed snus manufacturer without cigarette interests, held a share of over 80% of the market in Western Europe, with most of that share in Sweden and Norway (see Figure 1).36 TTC entry into snus saw the company’s market share fall by over 10 percentage points in two years in Sweden and by 5% in Norway.36  This trend continued through the decade, with Swedish Match losing further snus market share to Imperial Tobacco and BAT. By 2019, Swedish Match had just under 60% in Sweden and 56% in Norway Genuine competition between snus and cigarettes on the Scandinavian markets has thus slowly been reduced. However, Swedish Match continues to hold the largest share of the Western European snus market.36 The share of small independent snus manufacturers has always been, and remains, relatively insignificant.

Line graph

Figure 1: Companies’ snus market share in Western Europe between 2010 and 2019 by retail volume, % (source Euromonitor International)36

Despite these TTC snus investments, smokeless tobacco use is not well established in Europe, other than in Norway and Sweden. This partly reflects the fact that the sale of tobacco-derived snus is prohibited in EU member states other than Sweden.

In the US, BAT continues to hold by far the greatest share of the market (around 80%) after taking over Reynolds in 2017. Swedish Match has around 10%, Altria 6% and the remainder held by other independent companies.36

Promotion of Snus-type Products for Harm Reduction

From 2012, TTC alternative investments shifted to e-cigarette and HTPs. As with snus, TTCs looked to the these categories to ensure their long-term future, should regulation further constrain the cigarette market or reduce its pricing power, and to reassure investors that TTCs have potential for revenue growth.4 However, from 2019, interest in snus-type products grew again as tobacco companies became more interested in their potential role in their ‘harm reduction’ or ‘reduced risk’ strategies.

FDA Authorises Swedish Match to Advertise Snus as Less Harmful in the US

In October 2019, Swedish Match was the first company to have its application approved by the US Food and Drug Administration (FDA) to advertise eight of its snus products (sold under the ” General” brand) as less harmful.37 Swedish Match had submitted the original application in August 2014, so the whole approval process took five years.38 This is the first tobacco and nicotine product that the FDA has authorised as less harmful. Specifically, the approved health warning on the snus can state “Using General Snus instead of cigarettes puts you at a lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.”37 The FDA does not consider the products as ‘safe’ and the products will continue to carry the generic health warnings required for smokeless tobacco.37 The approval to advertise as reduced risk has a time limit of five years, after which Swedish Match will have to put in an application requesting renewal.

It is likely that the FDA’s decision on Swedish Match’s snus will affect TTCs’ strategy on NGPs and snus, in the US and perhaps globally. Industry analysist Bonnie Herzog, at investment bank Wells Fargo, was quoted as saying that it was “a huge positive” and “game changer”:39

“We view this as very good news for the broader tobacco/nicotine industry as it demonstrates the FDA’s commitment to a ‘continuum of risk’ strategy and provides viable pathway/process for manufacturers”.39

She also argued that “less harmful” products should be taxed “less onerously” than other tobacco products.39

As of March 2021, the only other TTC that has an FDA modified risk application pending for its snus products is BAT(Reynolds). BAT submitted 6 Camel snus products for review on 18 December 2017.40 As of March 2021, these products were still under FDA ‘substantive review’. 41

TobaccoTactics Resources

TCRG Research

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

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