Swedish Match, Snus, & Smokefree Tobacco Products

Former Managing Director at Swedish Match

Print

Executive Bio

Fredrik Laurell

Former Managing Director at Swedish Match

Frederik is a Former Managing Director at Swedish Match and has over 10 years experience in the smokeless tobacco industry. He was responsible for re-launching snus in the US for Swedish Match and led the JV with Philip Morris to commercialise smokefree products outside of Scandinavia. Frederik is now the CEO of Niccocino, a nicotine pouch company on a mission to reduce global cigarette consumption.Read more

View Profile Page

Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Can you provide some context to when you were re-launching snus for Swedish Match in the US?

Swedish Match is one of the oldest snus companies, building initially from a monopoly on the Swedish market for oral tobacco. It has been in the US for 30 years selling snus in very few select stores around the country, for expats, ice hockey players and others who know about the category product. The discussions we had at that time was what the key things were for us to be able to expand and grow the category in the US. At the same time, Camel was launching snus in the US in a novel metal can which was a bit of an innovation. The market for moist snuff is huge and still growing in the US.

Swedish Match should theoretically have a huge potential for a more modern pouch product which is not wet and does not drive saliva and spitting. Those was the major drivers and the situation we were in. The MST market was moving from loose MST into pouches and it was growing at double digits at that time, so it was a clear sign of consumer demand to sophisticate the products. There was demand for a product which was more discrete versus traditional chewing tobacco and MST. Many US Swedish Match US staff were interested in growing the business because they were doing traditional MST with Red Man as well as machine made cigars, but both those segments were not seeing any growth, so this was an opportunity for them to get a product which would sell better.

Why is the moist snuff market so big in the US and snus so small?

Tobacco, in every market, is both a traditional and a conservative market. Consumers find their favorite product and stick to it for a long time, perhaps a lifetime. Tobacco companies make very healthy margins so there is no demand or cost pressure to innovate and create new products when everything is working out well. Tradition is a very important part of it which is why you still see that the US MST market is very healthy and has huge margins. Looking at consumer demographics, many MST consumers mirror the traditional snus consumers in Scandinavia.

They tend to be more rural than urban, and have conservative values. In a situation where both companies and traditional conservative consumers are happy with what they have, it is hard to create a new product niche. The US MST market remains a conservative one. That is what the consumer base looked like in Scandinavia and the US.

What were the biggest barriers to US consumers adopting snus?

The first one was to get the message across about the difference between snus and pouched MST. The key difference – not going into the production technology which is a slightly different because it is pasteurized versus fermented tobacco – from a consumer standpoint, snus does not drive saliva so there is no spit. This was the key communicative message we put across, which Camel also did with their snus. You can go into a meeting or have drinks with friends without the need for spitting. The challenge was getting that message across to consumers with conservative and traditionalist values, and who like to spit.

A lot of hunting and fishing happens in areas where MST is popular, so spitting is part of the ritual that many MST consumers appreciate. The other challenge was getting the message across generally, because consumer communication is extremely expensive in the US. In the very limited areas you could communicate directly with consumers, it is a challenging space to be in. Swedish Match is a small player, with limited resources and limited ambition to invest.

Do moist snuff consumers enjoy spitting and using the product?

Sign up to read the full interview and hundreds more.

Audio

Swedish Match, Snus, & Smokefree Tobacco Products(September 2, 2021)

00:00
00:00
Sign up to listen to the full interview and hundreds more.

FORUM

Company Channels

PARTNER

Speak to Executive

Join waiting list for IP Partner
Did you like this article ?