Source: Reuters.com

STOCKHOLM, Feb 22 (Reuters) – Tobacco products group Swedish Match will step up promotion of moist Swedish-style snuff, called snus, in the United States this year where it expect the market to grow faster than its Scandinavian home territory.

Snus, a tobacco product put under the lip and sucked, mostly in pouches, is the group’s main cash cow, sold mainly in Scandinavia.

Swedish Match wants to differentiate itself in the larger U.S. market by growing sales of snus, which is pasteurized and has a different texture and taste to fermented U.S.-style snuff.

“During 2012, we will continue to invest for growth. In the U.S. we will expand distribution and invest further in marketing activities …,” said Swedish Match, which is the largest producer of snus in Sweden. The product is banned in the rest of the European Union.

Swedish Match, a rival to Altria Group Inc, Reynolds American Inc and BAT., also makes cigars.

Marketing costs for snus in the U.S. weighed on fourth-quarter profit, the group said on Wednesday. Operating profit fell to 1.02 billion crowns ($153.6 million) from a year-earlier 1.42 billion, against a mean forecast for 1.03 billion in a Reuters poll of analysts.

It said significantly higher international snus investments weighed on the profit margin for snuff and snus, which make up more than half of profit. The margin fell to 45.9 percent from 48.1 percent, well below a forecast for 47.6 percent.

As well as aiming at the U.S. market, its venture with Phillip Morris , SMPM International, planned to trial snus in at least one more market this year, after tests in the Russian city of St Petersburg, Taiwan and Canada.

Chief Executive Lars Dahlgren told Reuters he expected the U.S. snuff market to grow 5 percent this year, against 6 percent in 2011, and the Scandinavian market to grow by at least 3 percent, against 5-6 percent in 2011.

He said the group would spend 60-100 million crowns more this year on marketing snus outside Scandinavia. Swedish Match said volume at its second key business, U.S. mass-market cigars, was up 14 percent.

“In the U.S. mass market cigar business … we expect to continue to grow faster than the overall market and generate increased sales and profits in local currency,” it said.

Swedish Match increased it dividend slightly more than expected, to 6.50 crowns. Its shares were up 3 percent by 0950 GMT, while the broader market in Stockholm was down. ($1 = 6.6396 Swedish crowns) (Reporting by Anna Ringstrom; Editing by Erica Billingham)

This news story was resourced by the Oral Cancer Foundation, and vetted for appropriateness and accuracy.