Swedish Match, V2 Tobacco, and the Dirty Snus War

For me, Friday, 4 February 2011 began no differently than most days; coffee, snus, and reading the latest news.  That was changed very abruptly by the headline “Dirty Snuff to Stop” in DN.se.  Swedish Match, the largest Swedish snus manufacturer in the world, was accusing Danish V2 Tobacco of marketing bacteria-laded snus to the unsuspecting Swedish public.  Swedish Match even demanded that V2 remove its products from Swedish stores!  I was left completely speechless.

The rhetoric just went down-hill from there.  Big Tobacco has a long and unsavory history of  ruthlessly undermining their competition for marketshare.   In 1934 a rumor swept through America alleging that a leper had been found working in the Chesterfield cigarette factory in Richmond.  Sales of Chesterfield cigarettes plummeted as smokers, fearful of catching the dreaded disease, switched to other brands. Despite vigerous denials and a huge advertising campaign, Chesterfield was badly hurt.

They suspected a competitor of starting the rumor.  Some have mentioned RJRT but the source was never confimed.  A parallel rumor citing lepers was believed to have been started by religious groups opposed to cigarette smoking.

Our own beloved Swedish snus has and continues to be assaulted by deliberately false statements.  In 1992 when the EU jammed through their ban on snus, the false and silly rumor was that Swedish snus contained fiberglass to increase nicotine uptake.  There is no fiberglass in snus.  From a factual standpoint, fiberglass would accomplish exactly the opposite claimed but propoganda is about quickly acceiving a desired end result; not engaging in reality but creating it.

Throughout Swedish snus history, rumors of snus containing insect parts, arsenic, ground glass (before fiberglass was invented), battery acid, and bacteria-causing mold spores keep being recirulated by the anti-snus zealots.  If you repeat a lie enough, people believe it must be true.

The Dirty Snus War Swedish Match launched is unique.  In any industry from tobacco to automotive to even big pharmaceutical, I can not think of any major company who publicly, officially, and loudly attacked the integrity of a competing company and products by name and product specifics.  Sure, manufacturers of all industries plant rumors and and launch stealth campaigns to undermine the competition to one degree or another….its “business” and has been as far back as you can look.

However,  when an official spokesman for industry giant SwM says on the record that V2 Tobacco makes a “dirty”, “substandard” snus threatening the health of snus consumers in Sweden, that is shocking.  Worse, the attacks continued and more focused as the days progressed.  Swedish Match in my experience has always rightly highlighted the quality and strengths of their own products but until now, never went duck hunting with a bazooka like the attack on V2.

MANDATORY DISCLOSURES

Before proceecding any further, I must make some personal disclosures.  Four years ago, General portion snus by SwM saved me from a 30+ year unbeatable cigarette habit.  I am blessed to have business and especially personal friends employed by Swedish Match both in Sweden and the United States.  At their invitation, I toured the Swedish Match factories in Gothenburg and Kungälv in 2009.  That trip ranks as one of the highlights of my life.

Swedish Match is fiercely protective of all their brands; both the ones they inherited when the last Swedish tobacco monopoly was dissolved as well as their newer brands and products.  The quality of their products is the finest in Sweden and the rest of the planet.  Swedish Match is the 200+ year legacy of Swedish snus and that pride is evident at all levels of the company.

V2 Tobacco’s story is incredible in its own right.  When I discovered snus in 2007, V2 Tobacco was a name familiar with any snus lover with internet access.  Their Phantom Snus brand; especially the legendary Phantom Blue, inspired an almost cult-like following.  I was shocked years later to discover that in 2010, V2 had just turned four years old.

V2 and the brothers Vogel are also extremely proud of their products.  I know snus and other NRT product manufacturers who have jumped on the smokefree bandwagon purely for profit and protecting shareholder value.  V2 Tobacco is not one of them.

Neither was skruf snus when it was formed.  The incredible rise, expansion, and marketplace popularity of both skruf AB and V2 Tobacco A/S should be required reading in any credible MBA program.  Both exemplify a dream, identifying a unique way to position their products, and creating a top quality business plan to achieve success.

Patrick Vogel has become a very close personal friend.   My wife and I are going to spend our 25th wedding anniversary with Patrick’s family in Denmark.  We’re also going to tour V2’s new state-of-the-art snus factory currently under constrution.  I’m going to finally meet Marc Vogel and verify he exists.  At least that is the plan.  I hope after publishing this, it still is the case.

Am I biased?  Absolutely, but towards both companies.  Is the rest of this article just a watered down ‘he says; she says; you decide for yourself ‘ puff piece?  I wish it could be but  sadly it’s not.  It is the hardest article I’ve ever had to write.  My relationship with Swedish Match and V2 will most probably never be the same as a result of this.  This is one of those times where it really sucks being me.

WHY THE DIRTY SNUS WAR BEGAN

Did Swedish Match (SwM) launch this unpredidented action out of fear for the safety of Swedish consumers of snus;  to cut off a potential future competitor in especially the Norwegian and US strong snus friendly market;  to protect the historical integrity of Swedish snus from an assault by foreign profiteers; or to wield their power as Big Swedish Tobacco in an attempt to influence current and future Swedish and EU law to their corporate advantage?  The answer to all the following is yes.

Did SwM intentionally single out V2 Tobacco based on scientific and product issues or because V2 is on their corporate radar as a potential threat; or subconsiously because V2 is a Danish company?  The answer to the last question is probably; to the first two, yes.

Is there a certain tension between V2 and SwM based on past legal encounters and national pride?  Yes.  Did V2 have any idea SwM had prepared a blitzkriegh style attack of the one they unleashed on that fateful Friday?  No they didn’t.  Should they have? No.   Even the SnusCIA was caught completely off-guard by this unprecidented public scorched earth sneak attack.  We knew there was some bad blood between both companies.  During the December meeting in Lidkòping which was attended by both SwM and V2, the tension was at times palpable.

Conversely, both companies also talk to each other and enjoy good professional relationships.  The phone lines to certain people on both sides were not cut on February 2nd.  I even attempted to mediate a truce with both parties but to no avail.

THE SWEDISH MATCH ATTACK:  ADAPTING TO CONDITIONS

IT DEPENDS WHAT THE MEANING OF “IS” IS

A lack of data or access is certainly not the issue in the Dirty Snus War; especially laboratory test results and legal precedents.  Neither company has been shy in its remarks concerning the other; either privately and very publicly.  China – Taiwan and North Korean – South Korea rhetoric is tame in comparision.  Fortunately, neither Swedish Match or V2 has nuclear weapons.  Well, at least the SnusCIA doesn’t think they do.

Unfortunately, facts can mean different things to different people depending on their adjenda.  We all know that first hand from the 45+ war on cigarettes and all tobacco products by the ideological zealots, politicians trying to win votes through political correctness, and how Big American Tobacco has comported itself since 1900, especially from the 1950’s through the 1970’s.

Facts and data can be distorted, manipulated or selective just as statistics can mean anything the one compiling them intends.  How former President Bill Clinton used semantics in defining “sexual relations” and questioned what the meaning of the word “is” showcases this in a different context.  Ironiclly I find myself missing the Clinton years today.  Just shows how standards change and change downward.

THE DIRTY SNUS WAR: BEHIND THE SCENES OF WEEK ONE.

The Dirty Snus War propoganda from both sides has changed since that fateful Friday.  When the war began, bacteria seemed to be the focus in all the news articles. I knew that couldn’t be the whole story.

The point man for SwM on the Dirty Snus War is Henrik Olsson; Director of Public Affairs Nordic. An introduction was made and Henrik and I had a lengthy phone interview as well as a number of emails going back and forth. On 8 Feb,  I asked him why the focus on this unnamed bacteria, dirty snus, and the demand by Swedish Match that V2 remove their products from Sweden?

Mr. Olsson responded ”  It’s a little bit unfortunate that the perception is that we are out to get V2, which is not the case, as far as I understand it they are not doing anything illegal in Denmark or anything that violates the current EU-Tobacco Directive that is the main legislative body that regulates production and marketing of tobacco products in Europe.

Or concern is mainly that according to our own several analysis of their portfolio – the same 100 000 tests as we do on all our own products annually – all point to the same results; high levels of bacteria. You seem to know your snus, and volatile environment with high bacteria content affects the water quality that over a rather short period of time alters the content, for instance Nitrate turns into Nitrite, which in high doses is quite harmful to the consumer.

The quality issues and the difficulties I assume v2 is experiencing is to some extent quite similar to the issues Swedish Match faced in the early eighties with sharp drops in Ph due to unstable water content, and I am positive that the quality issues can be worked out with proper knowledge and will to invest in a more developed manufacturing process, but today it is substandard and this effects the entire industry in Scandinavia.

I want to be clear that this is not an commercial issue – as market leader and creator of the wide spread GothiaTek standard that we think I the main reason behind the success story of overall high amongst all Swedish producers regardless of brands – we are concerned that the standard can be eroding and as I was quoted saying in the article; this shifts the responsibility from the manufacturers to the consumer whom I think is unable to tell the quality of one brand from another in the chillers.

I don’t think there is anything to gain from a development of the Scandinavian snus market that allows substandard products to spread without the issue being addressed by the industry itself. The function of GothiaTek as self regulation of a controversial market is entirely dependent on all producers regardless of country to take full responsibility for what they put in their cans.

Now it’s up to V2 to address their quality issues, and it’s unfortunate that this attempt to make sure all consumers buy high quality snus is disregarded as an attempt to bad mouth a minor manufacturer, since that is not the case. The Swedish food act and EU norms for recommended daily intake of certain substances must be there for a reason, and I leave it to V2 to explain why these should not apply to their manufacturing processes.

THE STORY BEGINS TO CHANGE

During a phone interview the next day, he elaborated on Swedish Match’s motives.  “If we (SwM) don’t protect Swedish Snus, who will?  Our focus is on minimizing the risks of snus as compared to cigarettes for the good of all.  Quality matters:  low price/low quality snus should not be sold or available in Sweden”.  As to V2’s position on quality, their products are the first to be distributed in Swedish which do not meet Swedish National Food Adminsitration limits and EU recommendations.”

Now SwM’s position had shifted from V2 not violating any Danish or EU quality standards/recommendations to that V2 was in-fact not meeting either Swedish Food statandards or EU or EU recommendations.

This may be in part to the frustration I expressed during our phone interview that the vague unquantified examples used made it impossible to compare apples to apples.  It sort of reminded me of the Anti-All-Tobacco Zealots with their “as everyone knows” blanket statements devoid of any substanciation.  I even expressed that this perception could be why the Swedish public opinion seemed to be writing this off as Swedish Match flexing their muscles against a small competitor.

Henrik contacted me later and agreed that Swedish Match needed to be more specific as to the charges they were leveling.  The following day, I received the latest Official Public Statement on V2:

Summary lab test data on V2 products

The concentration of some unwanted substances is higher in V2-products than in Swedish–produced snus. Our lab tests show that the levels of unwanted substances in some cases exceed the National Food Administration limits and EU recommended levels for TDI (Tolerable Daily Intake).

The content of the preservative and humectant Propylene glycol (E1520) exceeds the maximum level set by the NFA (4 %, as is), in some cases as much as threefold.

Levels of Ochratoxin exceed the EU TDI (Tolerable Daily Intake) for cereals. Ochratoxin is a mycotoxin – a toxin produced by a mold that may grow on food and other organic materials.

The bacterial count of V2 snus products were measured up to log 6.9 cfu/g as is, which corresponds to the concentration of bacteria (mostly Bacillus species) in raw tobacco. Swedish Match internal threshold for Bacillus species spores in snus is log 4 cfu/g as is.

The highest recorded value of nitrite in a Thunder product is 15 ug/g (dry weight). The nitrite levels (ug/g; dry weight) found in V2 products are within the following ranges:

• Phantom 2-120,
• Off Road 1-45,
• Fellini 18-21,
• Thunder 1-15.
• Snus products from Swedish Match contain 1-2 ug/g; dry weight).

Cadmium levels above the GothiaTek standard (1 ug/g; dry weight) has been found in several Thunder products.

BACK TO IT DEPENDS WHAT THE MEANING OF “IS” IS

The whole time this war has been going on, V2 was certainly not ignoring the situation.  They sent all their products to the highly respected Eurofins, the de-facto common independent 3rd party laboratory Swedish Snus manufacturers to establish a level playing field when it came to lab results.  I’m not going to include the Eurofin and Swedish Match lab reports here.  A thread on the SnusCentral Forum concerning the Dirty Snus War has them if you’re interested.

I did study them all, often having difficulty finding common substances to compare.  Both sets of test results did include Cadmium however.  The levels found by Eurofins were significantly lower than those in the Swedish Match lab reports.  I don’t question the accuracy of either but results can differ based on how the test is conducted.  Tobacco from the center of a 200 kilo bale can have significantly different readings from those taken from the corner of the bale.

I asked Henrik if Swedish Match would be willing to send their samples of V2 products to Eurofins so one lab would be evaluting all the products.  He was a little surprised at the question, I think and responded quite honestly “we already have the best labs in the industry.  We know our results are accurate so why would we need to do that?”

The American viewpoint on that statement would be ‘just what are you trying to hide?”  I’ve come to learn and experience over the years that in general, the business and cultural mentality differs greatly between Swedes and Americans.  Until I finally understood that, I spent a few frustrating years trying to figure out the different sense of urgency and philosophy of Sweden.  I believe Henrik’s statement to be completely sincere and his puzzlement at my asking it genuine.

The

WAS THIS A JUST WAR?

THE ROUND CAN ISSUE:  CAN YOU OWN A SHAPE?

CONCLUSIONS FROM THE SNUS FRONT LINES

WHO WON THE DIRTY SNUS WAR?

V2 TOBACCO:

It’s true V2 don’t have SwM’s financial resources or decades of experience making snus.  Henrik Olsson, Director of Communication Nordic for SwM compared some of their quality issues with V2 products as “ones we had similar issues with in the early 1980’s”.  The not at all subtle insinuation was that V2 was just too new in the business to really know what they were doing yet.

After exhaustively researching the Dirty Snus War, I don’t believe a young company automatically means a bad, evil, sloppy company.  I can only speak for myself, but in the end I continue to use the V2 products.  In this case, it certainly doesn’t mean dangerous.