Taboca A/S Bloodbath: CEO Darren Quinn fired; Tom Ruud leaves

BREAKING: Oslo Norway: Huge Upheaval at Taboca A/S: CEO Darren Quinn fired; Founding Partner Tom Ruud abruptly leaves, and there’s a new Chairman of the Board.

It’s no secret that a great deal of tension has existed between the Taboca A/S Board of Directors and CEO Darren Quinn. The primary source of this tension was Nordic American Smokeless (NAS), an American snus company Quinn had championed and also serves as President of.

The Taboca Board and shareholders grew increasingly uneasy as Quinn began to focus more and more on Nordic American and their Klondike and Nordic Ice snus brands. Quinn diverted a considerable amount of funds from Taboca’s Norwegian brand expansion and development into building Nordic American. Taboca’s brands include Taboca Snus, and the licensed production of Montecristo Snus and Romeo y Julieta Snus for the Swedish and Norwegian markets.

As Quinn became more fixated on NAS, he rebuked a request by the Taboca Board to return to Norway; choosing instead to remain of CEO of Taboca and President of Nordic American Smokeless from the United States. Tension rose as Taboca’s market share remained relatively static with only one new product introduction with Taboca Strong Mini Portion.

Quinn had hired long-time friend Richard Cutler as VP of Business Development and William Eder as VP of Sales at proportedly very substantial salaries. The Klondike and Nordic Ice marketing strategy was to focus on the distributor chain through trade-shows and virtually ignore consumer advertising.

At Tobacco Plus Expo 2009, Eder was quoted as telling a perspective private labeling client that Nordic Ice was made in Gotland, Sweden. The original recipe was created at Taboca’s Gotland factory by the very talented Director of Manufacturing, Ingvar Tillman. What Mr. Eder neglected to mention that Richard Cutler; not Tillman, was responsible for the flavor and consistency of Klondike and Nordic Ice. Once the recipe was to Culter’s liking, the actual manufacture of both Nordic American product lines was subcontracted out to Swisher Tobacco of West Virginia. Swisher is known for Kayak, Redwood, Applejack, and Bowie; lower tier American moist snuff and chew products.

More controversial, Swisher’s focus is on low-priced, machine made flavored cigars and cigarillos; Swisher Sweets and the infamous “blunts” are among their offerings. FDA recently stated that especially concerning the cigarillos, they consider them as “cigarettes” for purposes of flavor and ingredients regulation. This would have a catastrophic impact on Swisher. Here is the Swisher response to FDA.

Meanwhile, Klondike and Nordic Ice have been non-starters in the US. Some Retailers are reported to have tried contacting Nordic American to return product, but their calls were never returned. Retail prices range between $4/can to $0.99/can.

The original Nordic American website consisted of a page with Press Release .pdfs attach. Richard Cutler was fired and the press release concerning him was removed. Bill Eder made a point of that when I commented their site only had four .pdf’s. “No, three now” he replied with a smile. Nordic American no longer brags that their snus is pasteurized and produced “just like Swedish Snus”; they now state they use a “heat process LIKE pasteurization” and talk of the “Swedish Method”.

The Nordic American website was upgraded to an “under construction” page and that’s what you will see if you go to http://nordicamerican.com. HOWEVER, if you go to http://www.nordicamerican.com./about-us.php, you will see the real Nordic American/Klondike/Nordic Ice website. The parsing of words and factually challenged information is reminiscent of the original Camel SNUS website and sadly for RJRT, the current version of the Camel SNUS website. Both are over-due for a detailed reexamination such as this article on the the Camel SNUS website I wrote in August of 2008.

Back in Norway, Taboca was losing patience as was Swisher. Swisher as sitting on well over a million dollars in tobacco and Nordic Ice/Klondike cans for which there apparently was no demand for. Quinn was instructed to sever the relationship with Swisher and take ownership of the Nordic American dedicated inventory.

Sources commenting on condition of anonymity have said Quinn has been actively shopping Nordic American to other companies, trying to forge joint ventures, and if you’ll notice on the secret Nordic American Website under “CONTACT“, there is information for those looking for an “Investment Opportunity” Ironically, the only section of the site which says “Coming Soon” is the menu item marked TRADE. Industry sources state off the record that Imperial Tobacco had been contacted by Quinn, but they had no interest in acquiring or partnering with Nordic American.

Darren Quinn- fired as CEO for Taboca A/S; still President of NAS All of this finally came to a head. In a Friday afternoon blood bath, Darren Quinn was fired as CEO of Taboca A/S. He was replaced by the Finance Director, who was responsible for cleaning up Taboca’s books; highlighting the cash diverted from the Scandinavian market to launch and maintain Nordic American Smokeless.

Tom Ruud, a Founding Partner of Taboca, abruptly left the company he helped start. The revolving door of Taboca Chairman of the Boards of late has been reportedly been filled by a former executive from Swedish Match. Luis Paulsen is gone.

Challenges remain ahead for both Taboca and Nordic American Smokeless. Quinn and Ruud were the face of Taboca A/S to Habanos. As Andrew Romeo revealed in his article on Imperial Tobacco, through Habanos, Imperial also now control the Montecristo and Romeo y Julieta licenses currently issued to Norway’s Taboca AS for snus. A new expansion, product and marketing plan for Taboca in Sweden and Norway has to be created……..or not.

On Sep 25th 2009, the Norwegian E24 business news feed stated that Taboca had yet to turn a profit and lost 28.6MM kroner EBITDA in 2008. The then-Chairman of the Board Luis Paulsen stated “The market in the United States is enormous, but we need after just realize that it was too tough for us.” Paulsen went on to state that he felt Tobaca would be profitable within 1-2 years.

That was two weeks ago and Paulsen is now out as Board Chairman. Taboca is broke, and the speculation is that bringing on the former Swedish Match executive as Chairman and promoting the Financial Director to CEO means the company is being positioned for acquisition or liquidation.

As for Darren Quinn and Nordic American Smokeless, they are a completely stand-alone company with no control, association with, or access of resources from Taboca. Their relationship with the manufacturer of Klondike and Nordic Ice, cheap flavored cigarillos and machine-made cigar manufacturer Swisher International is still at a very low point. Quinn has been quietly trying for months to either fund his own factory, be acquired, or partner with a stable snus manufactuer to replace Swisher.

Darren Quinn made had a vision of conquering the American snus market. He bet both his and Taboca’s future on it. He lost.

Unfortunately, the dream of TRUE Swedish Snus made in America was quickly watered down by Rich Cutler in designing the taste. Their marketing strategy was flawed and under-supported: designed by an “old cigarette guy” with little to no understanding of snus marketing, and Nordic American was marred by extravagant salaries and other unnecessary expenses. Combine that with assertions made to Taboca in Norway to justify the concentration on the American market which were little more than wishful thinking. Growth results promised for the Scandinavian market never materialized. How could they with Quinn’s thoughts and efforts being laser-focused on Nordic American at the expense of Toboca product growth in Scandinavia? There are only so many hours in a day. And so we arrive at where we are today.

Taboca A/S is now a question mark. They either need the creative vision and capital to advance their brands in Scandinavia or be closed down. As to Nordic American Smokeless, Klondike, and Nordic Ice….. The Wizard of Oz has been revealed. The American snus manufacturing community has privately complained that Klondike and Nordic Ice are hurting their marketing efforts by turning off both consumers and retailers to American snus. With the fall of Taboca, Darren Quinn’s standing in the tobacco industry has taken a huge hit….right at the time he is actively trying to sell himself, his expertise, his vision, and NAS as investment, JV or acquition worthy. NAS and it’s future is a big question mark now too.

On the flip side, sales of Swedish Match snus products in the United States continue to rapidly increase. So far Swedish Match is only using it’s tobacco store network for over-the-counter sales in the US. What happens when they judge the time to be right to add snus to their huge American moist snuff and dip distribution network….convenience stores, gas stations, food markets, and more?

Swedish Match Distribution controls the marketing of 99% of all tobacco products in Sweden. They very clearly understand product placement and the importance of keeping on top of it. When I visited my local 7-Eleven yesterday, there was a poster for Camel SNUS but the Camel SNUS fridge was gone….either under the counter or in the back, I assume. In it’s very prominent place, there are now boxes of Red Man and other Swedish Match American snuff products.

Beyond what I’ve stated above, the future of Taboca A/S I leave for Andrew Romeo and his Insider’s Perspective column. During the birth of Nordic American Smokeless, Andrew was an executive at Taboca A/S and reported to Quinn. His perspective will indeed be unique.

As to NAS, Klondike, and Nordic Ice? I selfishly wish them well as they continue to drive American smokers and dippers into the arms of Swedish Snus and, added bonus, at the expensive of their other American snus manufacturing comrades.

Swedish Snus IS REAL SNUS. Swedish Snus is 98%+ less harmful to a smoker than cigarettes. Some studies rank it with coffee and grilled hotdogs in terms of health risks. American smokers deserve Real Swedish Snus with it’s undeniable health and social advantages. Until/if American ‘snus’ manufacturers produce a product with the quality of ingredients, manufacturing, regulation, and disclosure equaling that of Sweden, Darren Quinn’s vision was and is a pipe dream. (intentional tobacco pun). He is not alone in that pipe dream, but is the most under-capitalized without a real future for Nordic Ice or Klondike anywhere in sight.

The truly sad thing is that it didn’t have to turn out this way. Swedish Snus has been around for over 200 years and government regulated since 1970. All American tobacco would have had to do was create a product of equal quality and value compared to Swedish snus. Reverse engineering in the tobacco world is not the easiest, but Americans don’t give up easily. Big American Tobacco could have even bought a Swedish Snus Manufacturer for the expertise, recipes, and production techniques. Imperial (UK, but 4th largest tobacco manufacurer in the world) bought Skruf for their snus expertise. Skruf is also profitable today.

In this case, they intentionally never even tried either. After all, if you manufacturer cigarettes, why would you create a competing product? Better and more profitable to create a complementary product with a very high profit margin so that your smokers will use both of your nicotine-manipulated, sugar-rich products. Especially in the United States where 99.9% of the population never even heard of snus until 2006. So easy to create “American Snus” for people unfamiliar with REAL snus.

Sincerely,

LARRY WATERS
Swedish Snus Ambassador to the United States
Reporting for SnusCENTRAL.org