Thursday, 08 October 2009 11:39


Written by Andrew Romeo
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Swedish snus consumers in the United States are educated consumers.  They have to be.  They are bombarded with locally available products called “snus” which are geared toward current smokers with EDITORS NOTE: this Skruf Ad poster is pure pandering and not essential to Andrew's article.numbed taste-buds, and regularly have their favorite products removed from their Internet shopping carts due to murky inter-company territorial policies.

Snus consumers want to know. About companies and trends.  About flavors and ingredients, nicotine levels, pH, TSNAs, can materials, and the people who make it.

In that spirit, I will present here on SnusCentral, from time to time, profiles of the players involved, and specifically look at their treatment of snus as a part of their tobacco portfolios.

To start, I have chosen an unlikely subject:  UK's Imperial Tobacco, owners of Skruf in southern Sweden.  Skruf was marketed by its founding partners as a sexy alternative to Swedish Match's black cans in the early part of the decade, with magazine ads showing a round can shape in the back pocket of a shapely woman's jeans.  Imperial Tobacco purchased the company in stages, and now fully owns it.  Imperial is poised today to make an impact on the turbulent US market.  They are truly Big Tobacco, and they are coming.  Here is how I see it.


Imperial-logo214x148Imperial Tobacco is the fourth largest tobacco company in the world.  

Based in Bristol, UK, Imperial has spent the last decade acquiring major, and not-so-major regional tobacco companies around the Western world.

2003: Imperial purchases Germany's Reemtsma
2005: Imperial purchases a 43.5% stake in Skruf AB for US $10.8 million
2005: Imperial purchases Norwegian tobacco distributor Gunnar Stenberg AS
2007: Imperial purchases Commonwealth Brands (USA) for $1.9 billion
2008: Imperial purchases Altadis SA, the company formed from the combined former French and Spanish tobacco monopolies.  Included in the deal is Altadis's 50% ownership of Cuba's Habanos SA cigar and Altadis USA, which sells classic Cuban cigar brands in the US with Dominican tobacco
2008:  Imperial purchases remaining shares in Skruf AB

The company's current brand portfolio includes West, Davidoff (cigarettes), Gitanes, Gauloises, Montecristo, Romeo y Julieta, Cohiba (outside the US), Rizla papers, Skruf/Knox snus, Superkings, Regal, Richmond, Lambert & Butler, John Player, Fortuna, Drum rolling tobacco, and USA Gold and Sonoma cigarettes.

The company signed on to the US Master Tobacco Settlement Agreement in 2006.

So, the fourth largest tobacco company (in the world) is sitting on the US market selling cheap fags and Dominican cigars, right?


Somewhere in that list of acquisitions should be the purchase of the full rights to the name Davidoff as a cigarette brand from Germany's Tchibo in August, 2006 for EUR 540 million.  A super-high margin ultra-premium product, the US and Scandinavia are now among many prime markets for proper launches and long-term growth for the Davidoff portfolio.

Additionally, the inevitable end to the US trade embargo with Cuba will undoubtedly invigorate the US  legal cigar market (while killing the illegal one.  Sorry, Canada.).

Gareth Davies, CEO of Imperial TobaccoImperial CEO Gareth Davies has mentioned in the past his interest in the US as a future market for smokeless products.   Where do they stand today as a smokeless producer?

Now the full owners of Skruf AB, Imperial has a top-flight Swedish snus production facility and corresponding expertise.  They are slowly growing in sub-premium in Sweden, and have a solid number two position in Norway at over 10% market share. Through Habanos, they also now control the Montecristo and Romeo y Julieta licenses currently issued to Norway's Taboca AS for snus.

Both Skruf in Sweden and Gunnar Stenberg AS in Norway were acquisitions meant to establish small stable cigarette businesses in Scandinavia and maintain a healthy rolling paper business via existing distribution platforms in both countries.  Skruf's founding partners Jonas Engwall and Adam Gillberg were paid well to leave (Jonas introduced himself to us at the Swedish Manufacturing Association as Imperial, refused membership on their behalf, and said goodbye, leaving midway through theSkruf Founders Jonas Engwall and Adam Gillberg meeting).

Most likely in the process of consolidating both the Commonwealth and Altadis USA businesses, Imperial is in possession of a full distribution network in the US, but lack brands and production. Like all players, they are most likely watching RJR and Camel carefully, waiting for pricing to become an issue in the market, as opposed to the the current deep discounts and giveaways which keep competitors on the sidelines.

Imperial could “buy” some smokeless heritage, purchasing a smaller player such as Swisher, which produces traditional dip products such as Kayak, and makes Nordic American's US snus portfolio of Klondike and Nordic Ice.  Yet, none of those brands are recognized national players.

Or they could simply plant a factory somewhere cheap and do it themselves.  

“Skruf” and “Knox”
are certainly not household words in the US, and should be avoided.  There are most likely a host of protected brands in the US to choose from.  This will not be an issue.  Davidoff snus?  Not yet.

As a market player, Imperial is tough, and can be ruthless.  They are well-known in Europe for never having been quite able to admit that smoking can harm health outside of the required pack warnings and usual consumer lip service.  Smokeless will, hence, not be looked at by them as a reduced harm product in the US, but as a complementary product to cigarettes.  With no real smoking portfolio in the US outside of the Commonwealth brands, they will have to justify that position with an expanded cigarette range beginning with USA Gold at the bottom, and Davidoff at the top.

Due to their size and stature on the world tobacco stage, it stands to reason that, with so much invested in the US, this “sleeping giant” will awaken soon.  And when that happens, consumers of snus will most definitely find themselves part of the equation.

Until next time,

Live from New York on

Snus Central Founding Member

Read 5084 times Last modified on Saturday, 09 November 2013 03:08

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