Tobacco Facts.

Swedish Match AB plans to broaden U.S. availability of snus smokeless tobacco and increase marketing to target Wall Street workers and other smokers forced to leave the office to light up.

The company aims to double distribution of its General snus to about 1,200 U.S. stores, possibly by the end of the year, Richard Flaherty, president of Stockholm-based Swedish Match’s U.S. sales division, said yesterday in a telephone interview. He wouldn’t disclose projected spending on marketing, which includes handing out samples in New York, Chicago, Washington, Denver and Dallas.

“We are going after bankers, Wall Streeters, people who work in offices and take the elevator down and stand out in the cold for cigarettes,” Flaherty, 51, said from Richmond, Virginia, where Swedish Match’s U.S. division is based. “A perfect place for that is in New York, and the big banks.”

Snus is finely ground tobacco that doesn’t require spitting, unlike traditional smokeless tobacco. Traditional snuff is more popular in the U.S., selling about 1.2 billion cans last year, compared with about 20 million cans of snus, Flaherty said.

Swedish Match, Europe’s largest maker of smokeless tobacco, is playing catch-up in the U.S. Altria Group Inc., the largest tobacco producer, is distributing Marlboro snus nationally this month. No. 2 Reynolds American Inc. began selling Camel snus across the country a year ago.

Swedish Match collected 30 percent of its 14.2 billion kronor ($2 billion) in 2009 revenue from snus and snuff, according to a securities filing Feb. 24. North America accounted for 37 percent of total sales.

Bars, Ski Resorts

“Snus is a whole new category in the U.S.,” said Thomas Russo, a partner with Gardner Russo & Gardner in Lancaster, Pennsylvania. “In light of the limited venues for smoking, there is an opportunity to attract the people who use a variety of tobacco products.” Russo manages more than $3 billion in assets, including Altria shares.

Swedish Match is giving away samples of General snus at New York bars such as the Red Lion, Dempsey’s Pub and Tonic, as well as at ski resorts in Colorado, Vermont and other U.S. states, Flaherty said. He wouldn’t disclose sales projections for General snus.

The company sells General in cigar stores and specialty tobacco shops, as opposed to convenience stores where shelves can be “cluttered” by a variety of tobacco products and clerks aren’t trained to explain the differences between snus and traditional snuff, Flaherty said. The average retail price for General snus is about $5 a can, he said.

In a joint venture with Philip Morris International Inc., the company will start selling smokeless tobacco in an Asian country this year and plans to enter about five additional test markets, Swedish Match Chief Executive Officer Lars Dahlgren said in an interview March 12 in Stockholm. He wouldn’t specify the test market, except to say it won’t be China.

Swedish Match advanced 1.30 kronor to 167.4 kronor at 1:36 p.m. in Stockholm trading. Shares of Altria, based in Richmond, Virginia, rose 17 cents to $20.37 yesterday in New York Stock Exchange composite trading. Reynolds, based in Winston-Salem, North Carolina, climbed 53 cents to $52.84.

Bloomberg
March 16, 2010

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