What do you chose Snuff or Cigarettes?
Published on September 29, 2008 4:52 AM
Cheap online tobacco in our shop
Researchers reported that the last independent Smokeless Tobacco Company, Swedish Match, can very easy to attract a bid from a cigarettes maker as is Altria.
In a study was shown that snuff consumption is rising in United States while cigarette smoking in the mature markets of Western Europe and the United States is declining.
Snuff, a smokeless tobacco product that it is not as harmful as cigarettes, prompting two takeovers in the last two years.
Snuff is a moist tobacco placed under the upper lip rather than smoked and is Swedish Match's biggest and most profitable product. But in United States this kind of smokeless tobacco is largely limited.
Scientists said that Lorillard, the third-largest U.S. cigarette maker, which unlike some potential buyers already has a large U.S. distribution network.
Martin Sikorski, an analyst at Cheuvreux, said: "I think that Lorillard could want to buy Swedish Match. If they start to believe that this category could take off, which Altria believes, I think they could come to the conclusion that a lot of money could be saved on co-distribution of snuff and cigarettes."
Other scientists said that Swedish Match will be a subject for to bid speculation because of its relatively small size, with an equity value of 31 billion Swedish kronor, or $4.6 billion, at a current share price of 121 kronor.
The large cigarette makers like Lorillard, Philip Morris International, Japan Tobacco and Imperial Tobacco have no exposure to smokeless tobacco.
"We do not believe that the proposed acquisition of UST by Altria makes a move on Swedish Match any more imminent," said David Tovar, an analyst at Merrill Lynch.
Swedish Match gets about half its earnings from snuff and the rest from cigars, pipe tobacco and chewing tobacco in addition to matches and lighters.
While smoking is increasing in places like Asia, U.S. cigarette consumption has fallen because of the messages about its health hazards and because of the smoking bans which were implemented in public areas.
In different countries snuff has a different wrapper. For example in Europe snuff comes in pouches much like tiny tea bags.
The European Union banned snuff sales in 1992 amid concerns about oral cancer and other health problems and also because it might encourage smoking, but when Sweden joined the EU in 1995, the nation was given an exemption from the ban.
Last week, the biggest cigarette company in the United States, Altria Group, whose No. 1 brand is Marlboro, agreed to pay $10.3 billion for the largest U.S. smokeless tobacco maker, UST, whose most popular brand is Skoal. That deal will join Altria's 51 percent share of the cigarette market with UST's 58 percent share of the smokeless tobacco market in the United States.
According to a study, Swedish Match has 11.8 percent share of the U.S. snuff market, as against 87.5 percent in Sweden, while Lorillard has around 11 percent of the U.S. cigarette market.
