Swedish Match & Philip Morris International Announce Joint Venture: a Match made in….Sweden?

Since February 3rd, 2009 I’ve been investigating the shocking yet exciting announcement from Swedish Match and Philip Morris International that they were entering into a joint venture to market snus and smokeless tobacco products. Lets start with the Official Press Release from Swedish Match:

Swedish Match and Philip Morris International announce global joint venture to commercialize smokefree tobacco products

Swedish Match AB [publ] and Philip Morris International [NYSE/Euronext Paris: PM] (PMI) today announced that they have entered into an agreement to establish an exclusive joint venture company to commercialize Swedish Snus and other smokefree tobacco products worldwide, outside of Scandinavia and the United States.

The joint venture will utilize the strong combination of Swedish Match’s product development and manufacturing expertise in the smokefree category and PMI’s extensive sales and distribution infrastructure to develop business opportunities worldwide. Under the agreement, each company will own a 50% stake and will license their respective trademarks and intellectual property to the joint venture.

“PMI is the ideal strategic partner for Swedish Match in the smokefree category. This agreement provides us with the opportunity to bring our quality products to consumers across a broader geography,” said Lars Dahlgren, Swedish Match President and CEO. “The smokefree category has demonstrated substantial growth in Sweden and Norway over a number of years and we believe that smokefree tobacco products, and especially Swedish Snus, have potential outside of their current markets.”

“We are delighted to join forces with Swedish Match and are confident that this exclusive partnership will over time generate strong results for the benefit of our respective shareholders,” said Louis Camilleri, Chairman and CEO of PMI.

Snus has been recognized by many in the scientific and public health community to be significantly less harmful than cigarette smoking. Both companies believe that there is a role for snus to play in tobacco harm reduction.

The joint venture will be based in Stockholm and the board of directors will consist of six members, with three nominated by each company.

Five paragraphs that really don’t say much beyond the headline. Details are actually pretty tough to come by but some are available, both publically and from Mr. UNZ’s Secret Sources. I’m going to skip the innocuous and concentrate on some of the more interesting/sometimes disturbing/sometimes exciting information. I’m also going to dispel some of the mis-information already appearing in Snus Chat Rooms, on Snus Forums, in articles and on websites around the globe.

First, lets establish the Players. Philip Morris International (PMI) was spun off from Altria; the owner of Philip Morris USA. Altria is the new owner of UST Inc, America’s largest smokeless tobacco company. UST owns among other things, the American Smokeless Tobacco brands Skoal, Husky, Grizzly,and Copenhagen.

Swedish Match AB (SMAB) is the largest producer of Swedish Snus in Scandinavia.When I say largest producer, that means a 95% market share. How that came to be is a story unto itself. Its on my list of interesting things to write about.

Swedish Match North America (SMNA) is owned by Swedish Match AB but is not affected or involved in the Joint Venture, according to SMAB. To those unaware, Swedish Match is no stranger to the American Chewing Tobacco and Dip market. They make and own the brands Red Man , Timber Wolf, and Longhorn.

In fact, Swedish Match North America and Kevin Harvick Inc. (KHI) announced back on January 20th that Longhorn will be the primary sponsor of the No. 33 Chevrolet Silverado driven by three-time NASCAR Camping World Truck Series (NCWTS) champion Ron Hornaday . The Longhorn colors will be featured on No. 33 for 10 of the 25 race events in 2009. Enough NASCAR trivia for American Chew users (Profiling Alert!!!). Lets talk about what the joint venture between PMI and SMAB is AND is not.

Despite Internet chat to the contrary, the joint venture does NOT mean Swedish Match Snus is going to be available at American Gas Stations and Convenience Stores. Sorry, American Swedish Match Snus fans.

Despite Internet chat to the contrary, it does NOT mean that Swedish Match is now a division of PMI. The joint venture is just that. SMAB and PMI each own a 50% share of the venture and each will nominate three Board Members of the ventures six Board Members. Read the above Press Release again. I don’t make this stuff up.

The Joint Venture is a realization by both parties that cigarette smoking; not only in the EU, but in the Asian and other emerging markets is on the decline due to stricter government regulation. What you will see is an effort to expand into the Russian market, the Asian market and even the African market. What you will also hopefully see is the power of PMI used to push for the overturning of snus bans in the EU, New Zealand and Australia. While Swedish Match has the manufacturing expertise and the brands, they don’t have the clout outside of Scandinavia to affect these bans significantly on their own.

Even with the combined strength of SMAB and PMI, the above is not going to be accomplished any time soon. Both parties recognize this and say they are in for the long term. Many reputable and distinguished publications and authors in Europe in particular are still parroting the same old mis-truths about Swedish Snus; even in their articles reporting this joint venture.

They say Swedish Snus may be 50% less dangerous than cigarettes. False: Swedish Snus is 98% less dangerous than cigarettes. I’ll even bet it’s 150% safer than French cigarettes! <not a confirmed fact: I’ve had issues with the French since De Gaulle tried to wipe out US gold reserves during the Nixon administration. I’m not even going to bring up the ingratitude the French Government showed America even after we rescued them from their remarkably quick surrenders to Germany in WWI and WWII. It’s a good thing for me that the Swedish invented Snus, not the French. Otherwise I’d still be smoking cigarettes or doing commercials for Camel SNUS.>

In Thomas Muilier’s excellent article on the Swedish Match-Philip Morris International venture, he writes “The EU has said there’s evidence that snus helps some smokers quit and is less likely to lead to lung cancer than cigarettes, though all tobacco products contain carcinogens, may cause other cancers and may make heart attacks more deadly.” Hardly a ringing endorsement from the EU.

Back in December, Finland blamed Sweden for not cracking down on snus use and threatened all kinds of ugly things. Incomprehensible. Nordic-Style snus is so much safer than cigarettes and IS a proven smoking cessation tool for those who wish to not only quit smoking, but quit using tobacco altogether.

No one; even I, dispute the dangers the 3000+ carcinogens and other dangerous substances combustible tobacco (cigarettes, for those in Paris) creates are not a good thing. But as a former 30+ year cigarette smoker and nicotine addict, I can state categorically that nicotine patches, nicotine pills, nicotine gum, nicotine orbs, or nicotine tooth-picks are no substitute to a die-hard smoker for cigarettes.

Nordic-Style Snus is. It’s discreet, can be used anywhere without offending anyone, is (Lord, I hate this word) spit-less, has great taste, has a variety of great tastes: well over a hundred, and truly is a Reduced Harm Tobacco Product. In plain English, it’s the safest tobacco product on the planet. My lawyer just had a heart attack reading that last statement and he doesn’t use any tobacco products.

If the EU, Australia, New Zealand and the rest would simply look at the FACTS in regards to Swedish / Nordic-Style Snus, this would be a non-issue. But they don’t.

The EU ban back in 1992 was hasty and justified by old wives tales of glass in Swedish Snus among other ridiculous centuries old falsehoods. The fact is for some unknown reason, a lot of countries don’t like Sweden. I have no idea why. I LOVE Sweden. I think it’s a GREAT country with great people. I would even retire there except I can’t speak Swedish, my wife and I don’t ski, and frankly hate the cold.

I’m sure the reason goes back centuries and has to do with someone marrying the wrong person or making a misunderstood comment at a dinner party. I’m convinced the French are involved but I’m not sure how. They have to be; every silly, inane law, policy, or hurt feelings always somehow leads back to the French.

What else does the partnership bring to the table? For better or for worse, the right to license the Marlboro brand name on their products. Lets just hope the products are like the very tasty offerings Swedish Match already produces and PMI’s 1847 Swedish Snus; not the embarrassing American Marlboro snus.

From one of my legion of Secret Sources, I’ve also been told:

PMI’s 1847 Snus is being transferred to Swedish Match for production in Gothenburg.
PMI’s ‘Rocker’ factory may be converted by SM for non-round can products (Nick&Johnny,female targeted products) or shuttered.
The JV includes South Africa, Russia and India, markets where SM has previously, or currently, invests in production and/or distribution of snus.

His highly encrypted email also included his thoughts on the Joint Venture. “Obviously, the jewel in the crown is the EU. Swedish Match is a bit player outside of Sweden and Norway, so having PMI to represent the JV in Brussels is akin to making friends with Superman. The pace of change will most definitely quicken.”

This view differs from many of the “expert” opinions popping up in various publications. Once of the more inane was the argument oft-repeated by anti-snus elitists in Europe. No less than Jonathan Fell, an analyst at Deutsche Bank AG, stated the following: “It’s a very difficult thing to persuade people to put tobacco in their mouths and suck. It will be a long haul for everybody and probably won’t have a meaningful effect on profit for five to ten years.”

Mr. Fell then proceeded to put a “Hold” rating on Swedish Match stock; this despite the fact the markets greeted the JV announcement by purchasing both SMAB and PMI, causing both stocks to climb. Perhaps Mr. Fell is unaware that Swedish Snuff was a favorite of the French Court during the reign of Louis XIV (who opposed smoking), Napoleon, and even Pope Benedict XIII who issued an edict allowing the use of oral snuff even in St. Peter’s Cathedral.

Most importantly, to my absolute amazement, he is apparently unaware that I, Mr. UNZ, who once almost vomited trying American Chewing Tobacco, had no problem putting “tobacco in my mouth and sucking” Actually, I don’t really suck on snus: no one does. Another myth which also shows Mr. Fell is not only not a snus user, but never bothered to research it beyond old wives tales like “sucking”. Why? I took the time to learn the FACTS about Nordic-Style Snus visa-vie tobacco-specific carcinogen levels, pasteurization, ingredients, and the fact that the Government of my beloved Sweden strictly regulates Swedish Snus as a food product. I also learned you don’t “suck” on it.

I had NO HESITATION in putting Swedish Snus into my mouth. The great taste, longevity, discretion, and my friend nicotine keeps me putting it in my mouth and I will until I die….of old age or getting run over by a bus: NOT because of Snus!

What I never put in my mouth again was another cigarette. What I will never put in my mouth is the current Marlboro snus, Skoal snus, Klondike snus, Nordic Ice snus, or the evil Camel SNUS….except for maybe an American Snus Review and only with a doctor on-call. I’m terrified of swallowing a Camel SNUS pouch; what with the red flags they throw up even on the NEW snuscamel.com. I also have 3 tins of Skoal Snus I was sent for a review that I just couldn’t bring myself to use; not even for a review. Same with Marlboro snus.

I’m very optimistic that the joint venture will be a success, contribute to a steady decline in cigarette use while not impinging on the rights of citizens around the world to enjoying tobacco taste and nicotine, and hopefully will have a positive legislative impact for Nordic-Style Snus Users and current nicotine-addicted cigarette smokers in the United States as a side benefit.

There are clouds on that horizon already, and Altria’s attempt to dictate the snus tax by product weight in Virginia is a blatent attempt to price Swedish/Nordic Style/REAL Snus out of the market. But that’s for another article coming soon.

Will PMI eventually absorb Swedish Match? Would that be a good or bad thing? Who knows at this point. Lets see what develops out of the JV. I do know that anything which advances Nordic Style Snus around the world at the expense of cigarettes is a good thing. And when I say “around the world”, I’m including the United States in that group.

Sincerely,

Larry Waters
Activist Snus Guru
Shining the Light of Truth from SnusCENTRAL.org