Philip Morris International’s (PM.N) $16 billion bid for smaller rival Swedish Match highlights the urgency among cigarette makers to tap new and potentially less harmful alternatives as regulation and health concerns snuff out traditional smokes.
Marlboro maker Philip Morris agreed on Wednesday to buy Swedish Match, one of the world’s biggest makers of oral nicotine products.
These include Snus – a sucked tobacco product the firm says is less harmful than smoking – as well as Zyn nicotine pouches, which are used the same way and tobacco-free.
Both are niche products, but are growing, with Swedish Match’s (SWMA.ST) almost 50% share of the global tobacco-free oral nicotine market putting it ahead of both British American Tobacco (BATS.L) and Altria Group (MO.N) in that category.
Thomas Russo, managing partner at Gardner Russo & Gardner which owns shares in both Philip Morris (PMI) and Swedish Match, welcomed the tie-up as opening a “new field” for PMI’s smoke-free products, which include iQOS tobacco heating devices.
“It’s a deal that would continue industry consolidation that’s been underway for the past decade,” he said.
Russo’s U.S. investment firm has a 0.47% stake in PMI and a 0.09% holding in Swedish Match, according to Refinitiv data.
Tobacco companies have scrambled over the past decade to find new markets as regulators crack down on cigarettes and more people quit smoking due to the health risks.
Snus – a Swedish-style snuff – is a moist, smoke-free tobacco product that is placed behind the upper lip, either loose or in portioned sachets. The global market for snus increased from 7,000 tonnes in 2008 to nearly 10,000 tonnes in 2019, according to data firm Euromonitor.
In 2019, the U.S. Food and Drug Administration approved the marketing of Swedish Match’s Snus as less harmful than cigarettes.
Richa Naidu – Reuters – 2022-05-12.
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