New Categories Leading to Big Results

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    “We are raising our outlook for the full year and now expect to deliver pro forma adjusted growth in net revenues of 6 percent to 8 percent, on an organic basis, and diluted EPS of 10 percent to 12 percent, excluding currency, underpinned by pro forma heated tobacco unit shipment volume of 90 [billion] to 92 billion units,” Olczak announced in PMI’s half-year financial report.

    PMI expects its purchase of Swedish Match to close during the fourth quarter of 2022. It is not expecting Swedish Match to have any contribution to the company’s operations this year.

    Swedish Match (SWMA.ST)
    Swedish Match saw its group sales and operating profit increase during the first half of 2022. This was mostly driven by the continued growth of Swedish Match’s smoke-free and lights segments. Sales for the company’s cigar segment reportedly declined.

    “Our cigar business has faced operational challenges for some time, and while shipment volumes and the operating profit were well below the prior year second quarter, we are hopeful that we will be able to deliver improvements going forward,” Lars Dahlgren, CEO of Swedish Match, shared in his company’s half-year report. “Our supply chain organization has made good progress in production levels of natural leaf varieties, and though demand in the overall cigar category was notably lower than [the] prior year’s elevated level, we are encouraged by our share gains within the more attractive natural leaf segment, resulting in Swedish Match regaining the No. 2 position in the U.S. mass market cigar category (excluding little cigars), according to [Management Science Associates] data.”

    Swedish Match’s smoke-free business, driven mostly by ZYN, a nicotine pouch product, saw the greatest gains in the second quarter and overall first half of 2022. The company’s smoke-free category saw double-digit growth in terms of volume in Scandinavia following the introduction of several new nicotine pouch products, including the VOLT brand, developed using patent-pending PEARLS technology.

    During the second quarter of 2022, Swedish Match reported an increase in operating profit of 2.23 billion Swedish crowns, or $22.47 million. Due to growth experienced in the U.S., Swedish Match’s operating profit was above market expectations during the second quarter of 2022.

    Vector Group (VGR)
    Vector Group reported consolidated revenues of $699.2 million during the first half of 2022. This accounts for a 14.9 percent increase, or $90.7 million increase, compared to the prior year. During the first half of 2022, Vector Group saw its tobacco segment revenues increase by 14.3 percent to a total amount of $683.4 million compared to the prior year period.

    “Vector Group delivered strong tobacco revenue performance in the second quarter as we capitalized on favorable market opportunities to substantially increase value and market share,” commented Howard M. Lorber, president and CEO of Vector Group, in a press release. “Our price-fighting Montego brand is now our largest brand and the third-largest discount brand in the United States. This strong performance demonstrates our commitment to optimizing long-term profit through the effective management of volume, pricing and market share growth.”

    The retail market share of Liggett Group increased to 5.5 percent during the second quarter of 2022, up from the 4.1 percent reported during the second quarter of 2021. For the first half of 2022, Liggett also saw its retail market share increase to 5.3 percent. In 2021, its first half of the year market share was 4.1 percent, according to data provided by Management Science Associates.

    Vector Group is a holding company for Liggett Vector Brands, Vector Tobacco Inc. and New Valley. It is the fourth-largest cigarette manufacturer in the U.S. The company is the manufacturer of such national cigarette brands as Pyramid, Liggett Select and Eagle 20’s.

    This story first appeared in the September/October 2022 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.