Swedish Match to boost investment in nicotine pouches as profits rise

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Tobacco products group Swedish Match said it plans to increase investment in the United States and Scandinavia for its fast-growing tobacco-free nicotine product after posting an increase in quarterly profits.

Swedish Match derives most of its profit from its Swedish-style snuff “snus” which is placed under the upper lip and drawn in, mostly into pouches.

Its relatively new segment of tobacco-free nicotine pouches, ZYN, is growing rapidly, although it faces stiffer competition in the United States.

Fourth quarter operating profit increased to SEK 1.90 billion (€180 million) from SEK 1.65 billion (€160 million) a year earlier, with sales growth of 15 %, which is roughly in line with market expectations according to Refinitiv.

Solid financial performance

“ZYN in the US drove the strong financial performance, further bolstered by robust developments in Scandinavia as well as the traditional US smoke-free wallet,” Swedish Match said.

The Smokefree division, which includes ZYN and snus, increased profits in Scandinavia and the United States despite significantly higher market-related investments for ZYN in both geographies.

ZYN, however, lost market share in the United States compared to the previous year.

“Swedish Match plans to further increase its investments in 2022 to take advantage of growth opportunities, particularly for nicotine pouches,” he said.

Cigar sales and profits fell due to production constraints in the last three months of the year.

American cigar company

The company reiterated that it expects to complete the spin-off and listing of its U.S. cigar business in the second half of 2022 at the earliest, and said transaction-related costs would negatively impact group profits this year.

This would see it exit the combustible tobacco products segment having already sold its cigarette business in 1999.

Swedish Match proposed a dividend of 1.86 crowns per share for 2021 paid in two installments, against 1.50 crowns and slightly above expectations.

Read more: BAT sticks to forecast as demand for tobacco alternatives grows

News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to register ESM: European Supermarket Magazine.

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