A magazine for Swedish ’s shareholders and other interested parties · NO 1 · FEBRUARY 2000

South Africa – platform for new markets

The acquisition of Leonard Dingler provides Swedish Match with access to new and exciting markets, in both South Africa and its neighboring countries. More than 300 persons are employed at the snuff and pipe plant. PAGES 8–10

Partnership “Structural changes Detailed strategy characterized 1999” behind success General Holdings and Swedish Match AB recently announced, that they have “Swedish Match’s sales increased by 15% to Swedish Match’s big cigar success is La Paz. signed definitive agreements for Swedish SEK 9,420 M in 1999 Ð a year characterized by Behind its success lies a carefully thought-out Match to acquire a 64% interest in General structural changes,” says Sven Hindrikes, branding strategy. Maaike Oomen, Interna- Cigar. Executive Vice President and Chief Financial tional Brand Manager for La Paz, knows how PAGE 2 Officer. important details are. PAGE 3 PAGE 12 2 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000 Swedish Match to make major investment in General Cigar Holdings

Swedish Match to acquire 64% of General Cigar common stock. The Cullman family will continue its management responsibility of the company and retain ownership of the remaining 36%. Partnership with General Cigar strengthens Swedish Match position as a leading global cigar company.

eneral Ci- gar will provide the remainder of the financing spring. With the cigar market becoming more gar produ- required for the transaction. Following the global, Swedish Match’s interest in our pre- ces the num- transaction, General Cigar’s shares will no mium cigar business has now resulted in this ber one sel- longer be publicly traded. transaction and allowed us an opportunity to Gling premium cigar in The transaction is subject to the vote of improve significantly shareholder value. Indeed, the United States, Ma- General Cigar’s stockholders at a meeting anti- our family will be selling approximately one- canudo, and several cipated to be held in the spring, including a vote third of our holdings along with all the share- other strong premium of a majority of the publicly-held shares. The holders,” said Edgar M. Cullman, Jr., General brands sold in the US, Cullman family has agreed to vote all of its Cigar’s Chief Executive Officer. including Partagas, shares of General Cigar stock in favor of the Lennart Sundén, Swedish Match’s Presi- Punch, Hoyo de Mon- transaction, which has been recommended by dent and CEO said, “In General Cigar and the terrey, and Cohiba. the unanimous vote of an independent com- Cullman family we are associating ourselves nsson

ö The company, which mittee of the company’s Board of Directors. with one of the most respected and experien- traces it roots to 1906, Edgar Cullman, Sr., the Chairman of the ced cigar management teams in the world. This has been managed by Board, and Edgar Cullman, Jr., the President provides an opportunity to jointly develop and the Cullman family and CEO of General Cigar, will both continue expand our global position for some of the Photo: Peter J since 1961 and is in their existing roles. General Cigar corporate world’s greatest cigar brands. Our worldwide Lennart Sundén, recognized as a world headquarters are in New York City, New York, strength in cigar distribution, and General CEO, Swedish Match. leader in the premium with production facilities in Santiago, Domi- Cigar’s outstanding market position in the US cigar business. General Cigar reported sales of nican Republic; Kingston, Jamaica; San Pedro provide both parties with exciting growth $108 million for the nine-month period ended Sula and Danli, Honduras; and Tampa, opportunities. We also believe that this trans- August 28, 1999. Florida. General Cigar is one of the leading action is an important step in the consolidation Swedish Match will invest approximately suppliers of high-quality Connecticut shade of the world cigar business.” $170 million to buy certain family-owned wrapper to the world. The transaction is subject to a number of shares and to provide part of the financing to “We have formed a strong business rela- conditions including receipt of requisite share- allow all of the outstanding non-family shares tionship with Swedish Match following the holder consent, regulatory approvals, and to be acquired in the transaction. General Ci- sale of our mass market business to them last other customary conditions.

Swedish Match has decided to become a co-sponsor of a global match-racing Swedish series to be known as the Swedish Match Grand Prix Sailing Tour. Match he Swedish Match Grand Prix Sailing Tour will be The Swedish Match Grand Prix is a natural exten- Tone of the three major sailing events in the world,” sion of the Group’s previous involvement in sailing, with maintains Pierre Tinnerholm, who is in charge of spon- the same purpose of creating external goodwill and Grand Prix sorship within Swedish Match and is president of the internal solidarity. new competition. The fact is that sailing has become a classic Swedish Sailing Tour The other two major contests are, of course, the Match sport. The company has been involved with the Americas Cup and the Ocean Race (formerly the Swedish Match Cup in Marstrand since 1994 and gets under Whitbread Round the World Race). But while both of participated in the Whitbread Round the World Race in those races only take place once every four years, the 1997–1998. The timing of the Whitbread race coincided way Swedish Match Grand Prix will be an annual contest, with the restructuring and stock exchange listing of starting in March. Swedish Match. Suddenly, some 7,000 employees from The contest will be of the type most popular with all parts of the world were to be gathered under one spectators – match racing. This is the same type of banner. competition as Swedish Match already sponsors in Mar- Jointly following the fortunes and adventures of the strand on the west coast Swedish Match crew during suc- of . Two boats at a To date, eight countries have signed up to cessive legs of the race had a bond- time compete against each participate: ing effect on the company’s em- other for a period of Date Location ployees. Participation in the Whit- about 20 minutes. The March 21Ð25 Auckland, New Zealand bread also provided the company entire contest can be March 27Ð April 2 Perth, Australia with the opportunity to develop watched from the main- May 23Ð27 Split, Croatia closer ties with business contacts. A land. The winner is the June 7Ð12 Lake Constance, Germany total of some 2,500 specially invi- boat that crosses the line July 3Ð9 Marstrand, Sweden ted guests enjoyed Swedish Match’s first, after rounding all the July 11Ð16 Ravenna, Italy hospitality in the various harbors marks. The Marstrand August 15Ð20 Skovshoved Harbor, visited by the race. event was watched by one Denmark “The same idea underlies the hundred thousand specta- October 22Ð29 Hamilton, Bermuda Swedish Match Grand Prix Sailing tors in July of last year. Tour,” says Pierre Tinnerholm. NO 1 á FEBRUARY 2000 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES 3

1999 A year of structural changes

Sven Hindrikes, Executive Vice Sales by product area of volume was approximately 6 percent during 1999. MSEK 1998 1999 % In the US, market growth during 1999 was just over President and Chief Financial 1068 1068 0 3 percent. Swedish Match’s growth rate was substan- Officer, sums up 1999 as a year 902 1438 59 tially higher. With a volume increase of fully 44 per- 735 662 Ð10 cent, the Group’s share of the US snuff market amoun- characterized by structural 1573 1673 6 ted to about 6.5 percent. Pipe Tobacco & accessories 218 420 93 Operating income for snuff increased by 29 per- changes. Snuff 1337 1688 26 cent to SEK 828 M. It is worth noting that during the ”The Group’s opera- Other operations 893 1742 most recent five-year period, operating income for Subtotal 6726 8691 29 snuff has increased by an average of 30 percent per tions were sold, a number of Divested business 1468 729 year. Total 8194 9420 15 “It is clear that snuff is a growth product,” says companies were acquired, and Hindrikes, who anticipates a continuation of the po- operations were rationalized Operating income by product area sitive trend during the current year. MSEK 1998 1999 % The Group’s sharp sales and earnings increases in and made more efficient, while Chewing Tobacco 331 297 Ð10 the cigar and pipe tobacco product areas were mainly Cigars 117 206 76 attributable to the acquisitions made during the year. cost-consciousness increased Lighters 18 14 Ð22 The rationalization program, including plant shut- throughout the entire organiza- Matches 134 107 Ð20 downs, that the Lighters product area has undergone, Pipe Tobacco & accessories 38 109 187 is now apparent in the results. tion,” notes Hindrikes. Snuff 641 828 29 “Lighters showed improved profitability for the Other operations Ð228 Ð127 fourth quarter,” says Hindrikes. ”We are now proceed- Subtotal 1051 1434 36 ing with a rationalization program aimed at increasing roup sales increased by 15 percent to SEK Divested business 438 255 profit margins, for matches as well as lighters. SEK 9,420 M. Operating income before items Items affecting comparability Ð108 3707 395 M was earmarked for the program in the year-end affecting comparability rose 13 percent to Total 1381 5396 report for 1999. However, since write-downs of fixed SEK 1,689 M. assets account for more than half of the appropria- G“The fact that operating income did not increase at pany El Credito, which operates in the premium cigar tions, cash flow is affected only to a limited extent. The the same pace as sales was due to the sale of Swedish segment, was also acquired. In January 2000, an planned rationalization measures will extend over a Match’s cigarette operations agreement was signed for the acquisition of 64 percent three-year period.” to Austria Tabak during the of the shares in General Cigar Holdings, that is, the third quarter,” explains remaining portion of General Cigar, with operations Capital structure Hindrikes. “We still retain in the premium cigar segment. As from the fourth Despite the acquisitions during the year, the consoli- distribution of tobacco quarter of 1999, South African snuff and pipe tobacco dated balance sheet continues to be extremely strong. products, including ciga- company Leonard Dingler is also included in the “As a result of our strong balance sheet and cont- rettes, in Sweden, but since Group’s accounts. inued favorable cash flow, we have sufficient capaci- the profit margin in distri- “The acquisitions have considerably strengthened ty both for additional acquisitions and the transfer of bution is lower than in pro- our position,” says Hindrikes. “We are second in the surplus funds to shareholders,” says Hindrikes. ”In duction, the total operating world in the cigar segment, and the recent acquisition order to achieve a more optimal capital structure and margin shows a decline. of General Cigar Holdings increases our annual sales improve earnings per share, the Board of Directors is Sven Hindrikes. The sale of the cigarette to nearly SEK 3.5 billion if we include our part- proposing a share redemption program to the Annual operations contributed an ownership in Arnold André in Germany.” General Meeting, whereby SEK 1,000 million will be additional SEK 4.8 billion to liquid funds. Portions of Swedish Match is also among the world leaders in transferred directly to shareholders, and a long-term this additional amount were utilized to finance the pipe tobacco segment, while in the snuff segment program for the repurchase of shares, with the amount acquisitions within segments that, in our view, have the Group is the leader in the Nordic region and one involved varying from year to year. If the share-repur- better future prospects than the cigarette operations.” of the leaders in the US. chase proposal is accepted by the Annual General Meeting, it will provide an entitlement to repurchase Acquisitions Product areas up to 5 percent of the outstanding shares up to the next “Smokeless and brown tobacco products are the All of the Group’s prioritized product areas – snuff, Annual General Meeting. market segments on which we are focusing, because cigars and pipe tobacco – show improved operating “During the coming year, we plan to devote consi- we regard them as having the best growth potential. income figures compared with the preceding year. derable attention to integrating and consolidating the The acquisitions made during the year were in these The market for snuff is growing both in the Nordic acquisitions implemented during 1999 and those areas,” notes Hindrikes. region and in the US. In the Nordic region, Swedish announced at the beginning of 2000,” says Sven Hind- General Cigar’s operations in machine-produced Match is the dominant player and the Group’s growth rikes in conclusion. cigars were acquired in May. In September, US com- is keeping pace with market growth. Growth in terms

Joint venture to new company. Gum Tech will contribute intellectual- property rights, while Swedish Match plans to inject PUBLISHER market gum-based USD 10 million as start-up capital. “So far, our operations in the tobacco area have SWEDISH MATCH, a magazine for shareholders nicotine products focused on smokeless tobacco. This initiative will also and other interested parties wedish Match and Gum Tech International have enable us to examine the potential for broadening our is published by Swedish Match AB, agreed in principle to establish a joint venture to core operations to include nicotine products that are Rosenlundsgatan 36, S-118 85 , Sweden S Telephone +46(0)8 658 02 00, www.swedishmatch.com investigate new business opportunities for non-tobacco- not based on tobacco,” says Lennart Sundén. The publisher responsible under Swedish law is Bo Aulin based nicotine products. A few months ago, Swedish “The joint venture will give us the chance to see Editor: Lena Olofsdotter Match and Gum Tech International formed an inde- what additional business opportunities exist in terms Accent, Bellman, Borkum Riff, Caravelle, Clubmaster, Cortez, pendent company to develop, produce and market the of offering alternative products to people who cannot De Heeren van Ruysdael, England’s Glory, Ettan, Feudor, Fiat Lux, Frans Suell, Garcia y Vega, Generalsnus, Granger Select, products. smoke or do not wish to smoke.” Grovsnus, Hamiltons Blandning, Half and Half, Inside, J.D’s Gum Tech International, which has its headquar- “Swedish Match possesses impressive knowledge Blend, Justus van Maurik, Jackpot, Korona, La Paz, Montague, Palmtree, Picanell, Priima, Poppell, Quinas, Red Man, ters in Phoenix, Arizona, specializes in the develop- and expertise in the areas of global marketing and Renegades, Rolling, Robert Burns, Smokeless, Solstickan, ment and production of “functional” chewing gum. distribution of high-turnover consumer goods, parti- Swallow, Timber Wolf, Union, Velvet, White Owl, Willem II William Penn are trade marks of Swedish Match. Under the terms of the agreement, Swedish Match cularly those aimed at tobacco consumers,” says Gary will own 51 percent, and Gum Tech 49 percent, of the Kehoe, president of Gum Tech. 4 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000 Brands – Swedish Match’s

Nothing better represents this also means that it is risky to modernize or “For Group management, the brands and reposition brands. Loyal consumers may be their positions are a crucial variable in deci- Swedish Match’s shareholder lost in the hunt for new ones. sions relating to acquisitions. During the past value than the Group’s brands. The tobacco brands are, in many cases, year, the Group has deliberately used acquisi- extremely old. Swedish Match has some tions to secure a leading position in the cigar Behind some of the brands lie brands that are more than 100 years old, and segment in the US,” continues Peter Strüber. quite a number that have existed for 50 years The status of brands must constantly be centuries of investments in or more. Justus van Maurik was introduced in monitored and evaluated. Brand managers production and marketing. Above 1794 and La Paz in 1813. Both are cigar control developments with the help of matrix- brands. The Swedish snuff brands have a es that show the position and movements of all, the brands symbolize the loy- history dating back to the 1890s. brands vis-à-vis consumers and in relation to Another unique factor is that marketing is competing brands. Ongoing surveys identify alty and trust of millions of con- strictly regulated in many countries and that gaps in the market, the characteristics of sumers Ð the Group’s most im- consumption is restricted. The places where competitors and consumer preferences. A smoking is allowed are becoming fewer and strategic and tactical game develops, which portant success factors. fewer. This is having a significant effect on the may involve new launchings, repositionings value of brands. It is difficult to introduce new and intensified marketing efforts, including oyalty and trust are so-called “soft” tobacco brands when there are so few market- customer support and education. values, just as difficult to put a price ing channels to consumers in the western coun- “Brands are, and will continue to be, one of tag on as they are to develop and nur- tries. Few new brands are introduced, which Swedish Match’s most important strategic ture. means that the value of areas of competence,” says Lennart Sundén. L“The way I see it, Swedish Match today has existing brands is ris- “All of our work is based on the trust and loy- the most valuable and the most complete brand ing. alty we earn by ensuring that our brands stand portfolio of any tobacco company in the “In view of these for quality, satisfaction and enjoyment. They tobacco segments that are growing, namely factors, working with symbolize the values we can create for our smokeless products and cigars,” says Lennart brands at Swedish shareholders.” Sundén, CEO of Swedish Match. “In Match is one of the addition, we have the most challenging jobs Review of snuff portfolio world’s best-selling you can have,” says Pe- Three years ago Swedish Match began a review pipe tobacco, ter Strüber, Vice Presi- of all the snuff brands in the company’s snuff Borkum Riff, dent Marketing and portfolio. and a number of Business Development. Peter Strüber. “We felt that we needed a better under- brands in the mat- ”It is a combination of standing of the changes in consumer preferen- ches and lighters seg- subtle interpretations of consumer psychology ces and that we needed to moder- ments that are known and hard-headed cost/revenue calculations.” nize and strengthen our snuff throughout the world.” Tobacco is not only something to be brands,” says Anna Neiås, To put a valuation on enjoyed, it is also an expression of the user’s strategic brand manager for this portfolio is extreme- personality and social stature. Consumers the General brand. “In Swe- ly difficult because to- seldom make rational choices about flavor, den, snuff is a product that bacco brands are not size, color and price. It also has to do with is steeped in tradition. How- like other brands. giving out signals to others as to how you want ever, a lot has happened First and foremost, they are to be perceived. For example, the cigar is a clas- during the past 10–15 years, unusually stable. The degree of brand loyalty sic symbol of status and wealth. with new consumer groups is unique. Once consumers have made their Swedish Match’s brands are handled by the who are turning to snuff in choice, they remain loyal for many years. This respective divisions, with competence centers pace with the decline in smok- is an unusual strength – Swedish Match can for the products, and brand managers who are ing. Snuff and the use of snuff were capitalize on for a very long time. However, responsible for the different brand families. spontaneously changing, so to speak.”

Swedish Swedish Match is relaunching its General brand, with new Match packaging and a new logotype launches for General snuff. A new whisky Ð General Pure General Malt Scotch Whisky is to be Whisky launched simultaneously. e have been working on our brands for Wsome time,” says Caroline Löfgreen at Swedish Match. “We plan to strengthen and clarify the values that are already associated with Generalsnus and also utilize the potenti- al to further capitalize and develop the brand.” General Malt Whisky, a specially distilled 12-year-old pure malt whisky, will be launched simultaneously with the brand relaunch, which is part of the company’s program to strengthen the existing positions of a number of snuff brands, including Ettan, Catch and Grov, as well as Generalsnus. kan Lindgren å Why whisky in particular? “The idea of matching whisky and snuff

Photo: H came in a meeting with the head of marketing Anna Neiås, Swedish Match, Kevin McGurk, Caroline Löfgreen, Christer Karlsson, of a Swedish wine wholesaler,” relates Patrik Bibendum and Patrik Hildingsson, Swedish Match. Hildingson, marketing manager for snuff. NO 1 á FEBRUARY 2000 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES 5 main success factor

In order to identify these trends and obtain education and practical training, the sales he has to handle as conscious control over the positioning of its team will visit thousands of stores in Vice President Mar- brands, Swedish Match initiated a compre- person and make telephone keting and Business hensive program aimed at clarifying the socio- calls to other stores. It is a Development. Here, logy and psychology of snuff-taking. major operation that not on a map of Euro- “We conducted in-depth interviews with a only involves marketing di- pe, consumers’ big number of snuff users and gained a valuable rected at the consumer in the demographics picture of consumers’ values and preferences. store but also the preparation are part of the We are now utilizing this data to develop an of sales materials and sales ar- equation, accurate profile of each brand,” guments, the replacement together states Patrik Hildingsson, marketing of logotypes on packag- with their manager for snuff. ings and promotional ma- buying One important discovery was terial in the stores, and the power that snuff users lack an effective way redesign of all the refrigera- and atti- of expressing their enjoyment and tion units at the retail level. tudes. the experience of using snuff. Such “We have simultaneously “A certain terminology exists for cigars, with advertised in trade publications amount of discre- the flavor, quality, types and forms and sent out letters about the tion is necessary – competi- of cigars providing the basis for a change in design. We have also had tors scrutinize every conceivable piece conversation in a similar manner to meetings with all the major central of information about branding strategies,” wine connoisseurs. Marketing was retailers’ organizations.” explains Peter Strüber. “But to keep it simple, characterized by this situation. The messa- The positions of the main brands, you could say that we promote and are deve- ges of the various brands were largely directed Catch, Ettan and General, have now been loping four brands on a global scale. Then, we to the same types of values and people. strengthened and clarified. Now it is the turn have about ten other brands that we support Branding work now focuses on differentia- of Grovsnus and Göteborgs Rapé. at the local and regional level. In addition to ting and distinguishing the different snuff “Through these measures, we have created these, we have a number of brands that will be brands for different categories of consumers. a strategy and tool to enable us to actively pro- expanded either on a selective basis or locally The largest brand, General, with close to 40 mote brand development,” concludes Patrik or regionally.” percent of the Swedish market, has Hildingsson. The geographical dimension is only one. In always had a stamp of quality, an air addition, there is a broad spectrum of sociolo- of masculinity, and global potential. Chess game over cigars gical and psychological factors that must be The same applies to the Catch brand. becomes global strategy game interpreted. “We have been working intensi- In the cigar segment, brand positioning is a “La Paz is our best example – a local qua- vely on the General brand for almost regional chess game, which, thanks to Swedish lity brand that we transformed into a world two years in order to strengthen it and make Match’s aggressiveness, has become a global brand in less than 20 years. It was a bold un- it more distinctive,” continues Anna Neiås. strategic contest. With the recent acquisition of dertaking, involving a new logotype, new “We have developed a strategy and updated the majority holding in General Cigar, there is packagings, new sizes and a totally new brand the visual appearance. This type of work is very no question that the Group now has an extre- image of masculinity, vitality, independence detailed. It is important to make exactly the mely valuable brand portfolio within the cigar and daring.” right choices regarding how much black and segment. The repositioning of La Paz was a ground- how much gold to use in the brand’s visual For a very long time, cigar brands have been breaking project in the conservative cigar design, as well as which style and font to use a delicate matter, with demanding consumers industry. The result was the industry’s first for letters, the shape and material for the cans, who are extremely sensitive to changes. modern brand, strictly controlled by Swedish and so on. Too much gold or too bright a gold, Peter Strüber unfolds his “game plan” with Match’s brand managers on their “chessboard” for example, would give a ‘cheap’ impression, boxes representing various positioning possi- matrix. It has become a classic example of which would be completely wrong.” bilities and arrows indicating branding strate- ”brand extension,” where Swedish Match has Now General is out in the market. After gies for the approximately 30 different brands succeeded in maintaining the initiative and making La Paz a leading brand in its niche in nearly 100 countries. Numerous imitators “Detailed surveys of the interests of snuff whisky. Accordingly, Swedish Match will own have attempted to capitalize on this success. consumers have shown that there are strong the General brand while the Swedish wine For a very long time, the brand war within common core values relating to snuff and wholesaler Bibendum will assist with product the cigar area was primarily a regional and whisky. These values include masculinity, development of the whisky, as well as assuming local battle except for the most exclusive pre- tradition and folksiness. Both products involve responsibility for importing, distributing and mium segment. About a year ago, however, refinement processes that require specialized marketing it. Swedish Match threw down the gauntlet by knowledge and experience, as well as being “This will be a new way for us to make our- changing its strategy and prioritizing efforts in associated with countless traditions, rituals selves visible,” adds Patrik. “The bottle stands the two segments that are showing growth: the and an aura of mystery.” out in the bar. Exclusive brands of whisky smokeless segment and brown tobacco pro- There are also differences, however. Whis- are also sold in tax-free stores, and this ducts, primarily cigars. ky appeals to a somewhat older age group, gives our brand the right cachet.” With a couple of acquisitions, the Group among whom it is a common trait to wax phi- General Whisky is produced at a well- has acquired a leading position both in the US losophical about flavor, aroma and charac- known distillery in Scotland. It will occupy and globally. The acquisitions of ter, in a manner that would be unusual for the equivalent premium segment to Gene- El Credito and the majority snuff users. ralsnus. Beginning in February, it will be holding in General Cigar “On the other hand, snuff users do en- on sale in Sweden’s state-controlled have brought Swedish joy talking about snuff, and there is sco- liquor stores, as well as in restaurants, Match several of the pe for refining the language used in this bars and tax-free stores. most outstanding context, ‘verbalizing’ snuff and helping brands in the US: the consumer to become a snuff con- La Gloria Cuba- noisseur,” continues Patrik. Kevin McGurk, British branding na, Garcia y Vega, Initially, however, Patrik had diffi- expert, wanted to give the White Owl, Tiparillo culty getting anyone to take the idea new whisky its own integrity, and Tijuana Smalls. seriously. while at the same time Swedish Match now “I knew that the project was viable matching it with Generalsnus. covers all the price from a strategic viewpoint, but my col- The result was a simple segments in the leagues emphasized that the area in but exclusive-looking North American which we are experts is tobacco, not transparent bottle. market. 6 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000

The people who manage Swedish Match

Swedish Match’s management group comprises Lennart Sundén and ten other people. But who are they, what types of backgrounds do they have, and what are their duties?

Lennart Sundén, President and CEO special emphasis on shareholder value, Lennart Sundén was hand-picked in 1998 to lead which he defines as generating value for the Swedish Match into the 21st Century. After earning money invested by shareholders in a com- degrees in engineering and economics, he started his pany’s shares. professional career with . He held several Today, Sven Hindrikes works primarily international management positions, including global with other members of corporate manage- responsibility for Electrolux vacuum cleaners and ment in coordinated efforts to establish and small appliances from 1993 to 1998. He is accustomed implement Swedish Match’s revised and to working under fire, which provides an excellent more focused business strategy, which also qualification for his present position as President and includes an action plan to achieve impro- CEO of a tobacco company. In the late 1980s, while ved earnings in the short term. serving as Vice President in charge of the Electrolux Group’s Refrigeration and Freezer Division, he was Göran Streiffert, Senior Vice thrust into the public debate surrounding CFCs and President Human Resources played a leading role in the development that eventu- Göran Streiffert recognizes the correlation ally led to the world’s first CFC-free refrigerator. between sound personnel policies and suc- As new President and CEO of Swedish Match, he cessful companies. His academic back- started at a hectic pace by introducing a new, more ground lies in behavioral sciences and eco- cost-efficient organization and conducting a compre- nomics, and he has worked with personnel hensive review of Group strategies in preparation for issues in the past for Gullspång, PLM and the new millennium. Prioritization and focus are im- Scancem. He believes strongly in the perso- portant concepts for Lennart Sundén, and his priority nal development of management personnel goals include business growth and shareholder value. and other employees, and he supports the theory that companies with well-managed Bo Aulin, Senior Vice President Corporate personnel policies are usually efficient and Affairs and Legal Counsel profitable companies. Göran Streiffert joi- Of all the members of Swedish Match’s corporate ned Swedish Match in 1997, attracted by management, Bo Aulin is the one who has had to face the rapid market feedback in the consumer the most brickbats in the media when challenged to products sector. explain why the company sells tobacco products. In He believes his most important job at countless discussion programs and interviews, he has present is to assist in developing a high-per- represented Swedish Match and the formance corporate culture through mana- in a manner that has earned him the respect of even gement development programs, structural the most outspoken critics of the industry. reorganization, the renewal of incentive Bo Aulin holds a law degree from Uppsala University. systems and other measures. His legal career has included work in a lawyer’s office and as a corporate lawyer at the Swedish National Fo- Massimo Rossi, Executive Vice rest Enterprise. The breadth of experience needed to President and Deputy CEO combine corporate affairs and law was acquired when It’s impossible to present Massimo Rossi he worked in the management of an advertising agen- without mentioning two things: his re- cy and as chief legal counsel for the Swedish Associa- markable career and his extensive experi- tion of Wholesalers. ence in international business. He came to Sweden sector, which comprises cigars, snuff products, pipe Bo Aulin joined Swedish Match in 1990. His work from Italy in the 1960s, worked for a while as a chef, tobacco and chewing tobacco. within Group management encompasses issues such enjoyed the Swedish lifestyle and eventually earned a as negotiations, agreements, contacts with politicians bachelor’s degree in business management, economics Stefan Gelkner, Head of and the media, internal and external communications and sociology. Massimo Rossi has worked for Swedish North Europe Division and image development and profiling. Match for 25 years. Since 1975, he has taken part in If you mention Mr. Snuff in Swedish Match, very few more than 60 acquisitions and divestments. During people would not readily identify the title with Stefan Sven Hindrikes, Executive Vice President the most hectic restructuring period, he implemented Gelkner. He has been linked closely with snuff since and Chief Financial Officer strategic sales of 25 match companies in 25 developing his appointment as Vice President responsible for snuff Sven Hindrikes is a native of Sweden’s Dalarna region nations within a period of only two years. Moreover, products in the mid-1980s. He was highly instrumen- who never wanted to leave Sweden but spent 12 years he has experienced six ownership changes during his tal in winning Sweden’s exemption when the EU plan- on foreign contract assignments in Mexico and Canada. career with Swedish Match. In 1994, he was awarded ned to introduce a general ban on snuff products in the He worked for ABB and various ABB subsidiaries the Royal Order of the North Star in recognition of his early 1990s. He practically lived in Brussels for two during his years abroad. He eventually moved back to contributions to Swedish industry and humanitarian years. His lobbying efforts yielded favorable results Sweden to accept a job as Chief Financial Officer and, efforts, including a donation to Solstickan, a founda- and thousands of Swedish snuff consumers breathed later, Executive Vice President of Linjebuss, before tion for the support of handicapped children. a sigh of relief. joining Swedish Match in 1998. He is now working Today, Massimo Rossi oversees Group acquisi- Stefan Gelkner joined Swedish Match in 1977. To- again in a global business atmosphere. tions, ensuring that they support Group strategies by day, he is responsible for the North Europe Division, One of his first assignments was to formulate conc- providing sound geographic coverage and business with responsibility for both snuff products and ciga- rete improvement targets for every business area, with expansion in the Other Tobacco Products (OTP) rette operations in Sweden. NO 1 á FEBRUARY 2000 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES 7

De Beers Prospecting Ltd in Central and East Africa, and three years as an accountant with Arthur Ander- son & Co, during which time he qualified as an aut- horized public accountant. He then switched to the food industry, working first for confectionery compa- ny Mars and subsequently for Scot Bowyers Ltd. In 1984 he began working for Bryant & May Ltd., which was acquired by Swedish Match in 1987. His two most important tasks at present are to integrate and make profitable the recently acquired match operations and to revitalize the European match range.

Frans Vogels, Head of Continental Europe Division Dutchmen are a ubiquitous feature of the business world – if there isn’t a Dutchman around, there isn’t any money to earn. The words are those of Frans Vogels, the Dutch representative in Swedish Match’s corporate management. He is a graduate in economics and business administration, but has also worked in the human resources area in the telecom sector. In 1985, he began his career with Swedish Match by becoming marketing manager for the La Paz cigar operation in the Netherlands. Today he is in charge of Swedish Match’s operations in all markets in Conti- nental Europe, a region covering almost the whole of Europe except for the Nordic countries and Eastern Europe. He sees his most important task at present as being to further strengthen Swedish Match in the cigar segment and to make the Group “the world’s leading and most resourceful cigar company.”

Lennart Freeman, Head of North America Division Another veteran of many years with Swedish Match, Lennart Freeman spent a year with Saab Cars before joining Svenska Tobaksbolaget as a trainee in 1975. He briefly abandoned his career in the tobacco industry, however, to work for three years as Exxon’s advertising manager in Stockholm. He has served as marketing manager of several Swedish Match subsidiaries in the U.S., in addition to assignments with the Group busi- ness development staffs in Brussels and Nyon. Among his tasks in Brussels was the integration of Svenska Tobaksbolaget into Procordia, its owner at that time. Lennart Freeman was head of the Cricket lighters ope- ration and, most recently, Vice President in charge of the Group’s cigarette operations. Today, he is respon- sible for all Swedish Match operations in the U.S. He sees his main tasks at present as being: The integration of General Cigar’s mass-market opera- tions, the development of the Timber Wolf brand and to reverse the trend for chewing tobacco

Ingemar Olsson, Head of Overseas Division Ingemar Olsson is a native Swede, but he has worked kan Moberg å in Sweden for only a brief period of time during his career with Swedish Match. His first job within the

Photo: H Group (which he joined in 1983) was an assignment as plant manager and chief technician at the Fosforera Swedish Match’s management group Ð front row, from left, seated: Graham Jones, Match Division match production plant in Bogota, Colombia. After a and Ingemar Olsson, Overseas Division. Second row, from left: Frans Vogels, Continental Europe few years, he advanced to become manager of the Division, Lennart Sundén, CEO, Sven Hindrikes, Chief Financial Officer, and Peter Nilsson, entire operation. He moved back to Sweden in the Division. Back row, from left: Massimo Rossi, Deputy CEO, Lennart Freeman, North America early 1990s as head of Swedish Match Industries, with Division, Bo Aulin, Legal Counsel and Corporate Affairs, Göran Streiffert, Human Resources, responsibility also for other match production plants and Stefan Gelkner, North Europe Division. in Europe and for Arenco, whose products include match machines. From 1993 to 1995 he was head of Match Division Europe and in 1995 he was appointed head of Swedish Match in Brazil. Two years later he Peter Nilsson, Head of Lighter Division His greatest challenge today is to strengthen Swe- was named head of the entire Latin American sales Peter Nilsson began his career with Swedish Match at dish Match positions in the highly competitive market region. In his present assignment as head of Overseas the House of Blend in 1987. He has since worked with for disposable lighters. The strategy includes establish- Division, he is responsible for Group activities in Latin nearly every product group made by Swedish Match. ing a more competitive cost structure for the Group’s America as well as Africa, the Middle East and Asia. The only exception is match operations. Peter Nilsson lighter operations. The Overseas Division is a relatively new unit with- has also familiarized himself with all of the Group’s in Swedish Match, and the most important items on main market areas: Scandinavia while working for Graham Jones, Head of Match Division Ingemar Olsson’s agenda at present are to consolidate House of Blend, the European markets while working Swedish Match’s international match operations are the division’s organizational structure and study for the former EBAS Group (cigars) in the Nether- headed by English-born Graham Jones. Graham holds expansion potential in the division’s area of responsi- lands, and the U.S. while working with American degrees in geology and economics. His career to date bility. lighter operations. includes two years working for diamond merchants 8 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000

ACQUISITION OF LEONARD DINGLER IN SOUTH AFRIKA South African tobacco company Leonard Dingler Ltd has been part of the Swedish Match Group since last autumn. The South Africa in which Swedish Match has invested is a country in a process of change Ð a South Africa characterized by hope and belief in the future, undeterred by the size of the obstacles and difficulties along the way. The acquisition has major strategic importance for Swedish Match, which sees South Africa as the gateway to other markets in southern Africa. Profitable company with long tradition – is starting-point for expansion

“Once we had decided to voluntarily. Many of Europe, it is still likely sell the company, which Leonard Dingler’s em- that various types of ployees have been with restrictions will be im- has been in our family the company for more posed in the long term. for a hundred years, than 20 years, and a Other causes of con- Swedish Match was the few for more than 30 cern include the gro- years. wing tax and excise best choice of purchaser. A rich aroma of duty on tobacco pro- The two companies form tobacco pervades the interior of the plant, ducts. However, the inevitable consequence of an ideal match, since where more than 300 employees carry on the such impositions – the increased incidence of company’s 100-year-old tradition. cigarette smuggling – does not represent a threat both have the same Since the company was founded in 1904, for Leonard Dingler, since the company does product orientation,” says Leonard Dingler has been producing and sel- not sell . Mark Wraith, managing ling pipe tobacco and snuff in South Africa and “Our greatest challenge at present is to its neighboring countries. Today, the company increase our already large market share and director of South African has annual sales of approximately SAR 300 M, develop new products. Other possibilities tobacco company with good profitability. include expanding the market for our Boxer Leonard Dingler. “South Africa is a large and interesting pipe tobacco by increasing our presence in market for smokeless tobacco products and more countries in Africa,” says Chad Limbert, therefore fits in well with our strategy,” says the company sales manager. ur first few months Ingemar Olsson, head of the Overseas Divi- Both Chad and his colleague Ivan McQueen together have gone sion, of which Leonard Dingler is now part. began their careers with Leonard Dingler as very well, with ear- South Africa is a large and stable tobacco traveling sales representatives – Chad 10 years Managing director nings continuing at a market. The consumers are loyal to their ago and Ivan 30 years ago. But sales methods Mark Wraith is the favorable level,O” he adds. brands and, despite the constantly increasing have changed dramatically. great-grandson of the Leonard Dingler Ltd is located in the Boks- levies and taxes on tobacco and the increas- “Today, our products are sold exclusively company’s founder burg industrial area on the outskirts of Johan- ingly hostile climate with which the tobacco via distributors, and none of our sales personnel Leonard Dingler. nesburg, a city with well over a million inha- industry as a whole has to contend, the total handle cash,” explains Chad. “We also make “Once we had deci- bitants. On the lawns outside the gates sit a market is growing slightly every year. How- less and less use of vehicles carrying the com- ded to sell, Swedish number of job-seekers. It is unlikely that their ever, the increasing weight of anti-smoking pany name. Just about everybody here is fami- Match was the best perseverance will be rewarded, since few of opinion is a cause for concern. While the trend liar with the Boxer and Taxi brand names, and option,” he says. Leonard Dingler’s employees leave their jobs has not advanced as far in South Africa as in tobacco is a highly prized target for thieves.”

Boxer and Taxi – top-selling brands

Leonard Dingler’s top-selling product is its Boxer brand pipe tobacco, which accounts for more than 70 percent of the company’s sales. Boxer is the clear market leader among pipe in South Africa, with about 70 percent of the market.

he snuff brand Taxi ac- Tcounts for about 20 per- cent of sales. Taxi is available in three different flavors and is sold in small red, green or blue plastic cans, depending on the flavor. Leonard Dingler’s other products include 1904 pipe tobacco, Magnet snuff and Black&White pipe tobacco. The latter is exported to Namibia, where it is the market leader. NO 1 á FEBRUARY 2000 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES 9

PHOTO: VIKTOR LENSON BROTT

Enock Ntombela is a tobacco loader. Innosence Mtuli wheels bales of tobacco into a special steam room.

Packaging quality is also important. Juba Buthelezi (left) and Koos “I began working here when I was 20 and have been here Mndebele check packaging material for Boxer pipe tobacco. for 17 years. I get on well with my work colleagues and enjoy working here,” says Kenny Matlaisane.

Leonard Dingler’s sons was an amateur boxer. To this day, Immigrant with the packaging bears a picture of a boxer. An interesting sidelight is that all the flavorings at this a feeling for tobacco early stage in the brand’s history were shipped to the plant from the Netherlands. During The company’s history began when a World War II, this source dried up and Leonard Dingler was forced to Dutch immigrant named Leonard Dingler ration the amount of flavoring in began selling pipe tobacco to British his products. This resulted in in- soldiers in Transvaal during the Boer War. creased sales – the slightly milder flavor clearly suited South African The only assets he possessed were his consumers better! experience of the tobacco industry and a In 1957, the plant moved to the simple cutting machine. premises it now occupies, and 1971 saw the introduction of Taxi snuff, hen the war ended, his customers disappeared and he the company’s second largest-sel- Wmoved his base of operations to Johannesburg – ling product. where gold fever was raging. People streamed into the area The father of the current manag- by the tens of thousands – every one of them a potential ing director, Mark Wraith, was the Sam Sibanyoni works in customer. Today’s best-selling product, Boxer, was intro- nephew of the two sons of Leonard quality control. duced in 1937. The name derived from the fact that one of Dingler, Leonard and Fritz.

Smoking is forbidden inside the plant. Dorington Sits- Mabasa Mncunu takes a break Elias Mosire moves a ready-packed carton of Boxer pipe hetshe Ð he has worked here for more than 20 years. His from driving his forklift to tobacco. Elias has been an employee of Leonard Dingler shirt carries an advertisement for Taxi snuff. enjoy a pipe. for 32 years. 10 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000

ACQUISITION OF LEONARD DINGLER IN SOUTH AFRIKA High expectations of social reforms

The social reforms that are expected to characterize South African business during the next few years will also be of crucial importance for the operations of Leonard Dingler Ltd. The Employment Equity Act of 1998 stipulates that companies have only five years to create a better balance in the work force, concer- ning gender, race or impairment.

he responsibility for ensuring that this Toccurs rests with corporate managements. Negotiations with the unions are currently under way at Leonard Dingler to prepare the action plan required by the government, which Personnel manager David Masina (left) and company president Mark Wraith have a number of pro- is intended to show that companies are blems to resolve before they will be able to satisfy government demands for greater equality in the working actively to fulfill the equal-rights workplace. The aim is that the composition of the workforce should reflect that of the country’s requirements laid down in the legislation. population. This means, for example, more women on the factory floor and more black supervisors. “Now people are impatient to see results. They expect greater openness, a better work that our workforce reflects the composition of as well as common benefit systems. environment and improved development the population in South Africa,” explains Ma- David Masina predicts that the next few opportunities,” notes newly appointed human sina. “In our case, for example, we must take years will be a period of upheaval for everyone resources manager David Masina. steps to employ more women in production and in South Africa, but he takes a positive view of He is the first non-white in corporate appoint more colored people as supervisors.” developments. management, and is fully aware that high Discussions are also under way regarding “Most people I know, regardless of their expectations are also riding on him. other changes, such as clearer career-advance- skin color, have accepted the inevitability of “Under the terms of the Act, we must ensure ment paths and descriptions of responsibilities, social change,” he says. Language skills important for job

Leonard Dingler’s products are sold throughout South Africa and in the neighboring countries. Simon Malekutu, who has worked for the company for 18 years, is in charge of distribution.

like my job,” says Simon. “Al- from knowing several languages. I ways plenty to do and lots of They spend their working days on contacts with customers.” the factory floor and have their He takes a highly positive view office in the heart of the plant. of the change of owner. “We apply an open-door poli- “I hope to see the company cy,” says André. “All employees grow, so that we can create more are welcome to drop in and dis- job opportunities in due course. cuss whatever is on their minds, There is an urgent need for jobs in regardless of whether it concerns Simon Malekutu (cen- South Africa.” the job or their private life.” ter) is Leonard Dingler Nowhere else in Africa is there André Oosthuizen’s responsi- Ltd’s only black fore- such a complex population mix as bilities include the purchase of man. He is in charge in South Africa. Blacks, whites, tobacco, as well as production and of distribution for the coloreds and Asians are the largest product quality in the factory. entire company. groups, and each of these groups ”I hope the change of can be divided into a number of ownership will increa- subgroups. Blacks represent the se Leonard Dingler’s bulk of the population and whites growth potential so are the second largest population that we can create mo- group. It is quite usual for a South re job opportunities,” African to speak several different says Simon. languages on a daily basis. Simon Malekutu is fluent in eight langu- Foreman Apie Putter ages: English, Afrikaans, North discusses tobacco Sotho, Zulu, Xhosa, Venda, Tswa- quality with plant ma- na and Swazi. nager André Oosthui- “I need all these languages to zen. About half of the be able to communicate with my tobacco used at the colleagues,” he explains. plant comes from Simon’s white colleagues, and “Hardly anyone quits their job he- South Africa; the immediate superiors, plant mana- re,” says Deon Putter, deputy remainder is from ger André Oosthuizen and his plant manager, whose father also South America. assistant Deon Putter also benefit works at the plant. NO 1 á FEBRUARY 2000 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES 11

PROFILE: LENNART FREEMAN

e are a complete and head of the division during the last independent division of those years. After making a loss in a growth market. in 1994 and 1995, lighters turned We are a good team. around and made a profit in 1996. WI like the U.S. – there is scope for ini- “I have the “Those were important years, tiative, plenty going on, and you during which I learned to be extre- quickly and clearly see the effects of mely cost-conscious and also learned your own actions.” the importance of having everybody While it is true that there is a best job” support you if you are hoping to go powerful anti-tobacco lobby in the from loss to profit,” recalls Lennart. U.S., Swedish Match is involved in 1996 he was appointed head of the Other Tobacco Products (OTP) ”I have the best job anyone could have at Swedish Match’s Cigarette Division. segment, which includes snuff, Swedish Match just now,” says Lennart Freeman, Johan Wallin is now responsible chewing tobacco and cigars, and for business development under Lennart Freeman is confident that head of North America Division. Lennart’s management in the U.S. these products will be increasingly After having Lennart as his manager well received. Another factor that for a total of three years, Johan gives contributes to his general sense of the following assessment: well-being is that he enjoys being a “Although Lennart has spent so manager. much time living outside Sweden, he His associates describe him as is a typical Scandinavian manager, the very image of cheerfulness and who delegates a lot and has a steady vitality: “inspiring, laughs a lot, and agreeable temperament. For easily wins people over, like a bre- someone who is used to another ath of fresh air, dynamic, there are type of leadership, this can take a only two speeds – fast and fast,” but while to get used to. While it is true also “good at forward planning that he expects the employees under (both large-scale and small-scale – him to be able to think and act in- he tells you well in advance if you dependently, he is a good sounding- are required to work overtime, and board when you talk to him after is also far-sighted in terms of busi- you have done your job.” ness strategy), efficient and structu- Lennart himself notes that he red (his desk is always clear, with no prioritizes communication and in- heaps of papers).” formation: His own way of expressing it is “If all employees are in agree- that he loves life and likes people, ment regarding the strategy, they but that he perhaps tends to talk too can also act in a manner that aids its much and can be impatient. He also implementation.” admits to being more than a little The word “love” recurs frequ- stubborn. But he is capable of ently when people are conversing changing, at a pinch, and promises about or with Lennart Freeman. He to try to listen to people. loves doing business, for example. Lennart’s career at Swedish “I have traveled with him in ma- Match began already in 1975, when, ny countries and observed how he after finishing his degree in econo- puts the other negotiating party at mics and business administration ease,” relates Johan Wallin. “He and working at Saab for a while, he will eat turtle soup, make a speech began work as a trainee at what in a discotheque, and so on, all in the was then Svenska Tobaksbolaget. same warm-hearted manner. No- Following an interlude of a few thing is impossible for him.” years during which he worked as But at times he can get a bit car-

advertising manager in the Stock- Brott Photo: Victor ried away, as on the occasion when, holm office of the Exxon oil com- during a visit to Russia, he heard pany, he returned to his “home base” in 1983 as international that it was the birthday of one of the table guests. Without a marketing manager. PERSONEL moment’s hesitation, he organized the singing of Happy Birth- During the period 1987–1990, he was stationed in the U.S. FACTS day, only to realize at the crucial line that he had forgotten to From 1990 to 1993 he worked in Brussels, where his assign- find out the person’s name! ments included the integration of Tobaksbolaget with Pro- Age: 48 years old. “I have a tendency to speak before I think,” says Lennart. cordia, which was the owner at that time. Family: Three children. “But I am slowing down a bit as I get older, so the problem The next stop was Nyon in Switzerland, where he from Lives: In Richmond, Virginia. should take care of itself.” 1994 to 1996 focused on the Group’s disposable lighters – as Hobbies: Golf, skiing and sailing

Spanish Pipe-Smoking Championship in the best Borkum Riff spirit

he best Borkum Riff spirit pre- qualified. Each contestant is given pipe can be kept burning depends Tvailed when the Spanish Pipe- three grams of pipe tobacco with on the quality of the tobacco – and Smoking Championship was held which to fill their pipes. naturally also on the smoker’s in Barcelona. The host of the pre- For this year’s contest, both the technique. stigious event was the Barcelona pipe tobacco – Borkum Riff Malt Swedish Match is among the Pipa Club, and the 65 contestants, Whiskey – and the Savinelli pipes market leaders in the Spanish including 10 women, represented were supplied by Swedish Match. pipe-tobacco market, with Bor- various pipe clubs in Spain. This year’s winner managed to kum Riff as its largest brand. The object of the contest is to keep his pipe burning for slightly try to keep a pipe burning for as more than two hours. The best Maria Nicholl, product manager for long as possible. The contestants female contestant, a twenty-one- Borkum Riff, reports that “the si- are allowed three matches to light year-old from Barcelona, puffed lence was almost as palpable as their pipes. Contestants who use away for one hour and ten minu- the smoke was thick. The men and up the three matches without ma- tes. The world record is about women in this contest take their naging to light their pipes are dis- three hours. The length of time a pipes very seriously indeed!” 12 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 á FEBRUARY 2000

wooden box previously used for the La Paz Wilde cigars was replaced by a slightly more rough-textured variant – which had the effect of increasing sales overnight. A totally new type of packaging was also launched – click- cans, with snap-on lids that better preserve the freshness of cigars that are sold individually. One of Maaike’s special favorites is the totally new king-size cigar, La Paz Corona Superior, which is easy to smoke despite its size and has become so popular that the production plant cannot keep up with the demand.

First cigar with an uncut end The origins of the La Paz brand date from 1813, when the La Paz company was founded by a Dutchman named Pasch. The brand’s claims to fame include Wilde, the first cigar to be sold with an uncapped end. History relates that the Wilde range arose at the end of the 1960s when the workers at the plant were loo- king for a cigar that could be smoked suffici- ently quickly and easily to fit into their short breaks. Their choice fell on the unfinished ci- gars that were still ”raw” at one end, because with these they experienced the full aroma as from the first puff. These cigars became so po- pular that they were offered for sale exactly as they were. The success of the new product was assured when students seized upon the La Paz Wilde Havana cigar as a new trend that repre- sented a break with the past.

Nearly one fourth of cigar sales Today, La Paz accounts for more than 20 per- cent of Swedish Match’s cigar sales by volume and makes a proportionally even larger con- tribution to earnings. La Paz is sold in some 90 countries and is world-wide market lea- der in the “short filler” cigar category made from 100-percent genuine to- bacco. Thus La Paz profits from Swe- aaike always begins the day at dish Match´s global network of sales Future of her office in Valkenswaard in organizations. the Netherlands with a cup of All of this ensures that the prospects coffee and a good cigar – La Paz for continuing to build on the strength of the popular Mof course, and preferably a Panatela. La Paz brand are excellent. And this is exactly “The first thing I did when I was offered the what Maaike Oomen has in mind. In particu- job at Swedish Match was to try one of the lar, she plans to continue with international ex- brand in company’s cigars,” relates Maaike. “Although pansion, to strengthen the position for certain I had not actually smoked for ten years, I felt products in the range and increase the appeal that it was important for me to form my own of La Paz to 30–40 years old cigar smokers. good hands impression of the products with which I would be working and become familiar with the opi- Price a sensitive issue nions of consumers. As luck would have it, they The largest markets for La Paz are France, the Her enthusiasm for the brand is tasted fine!” Netherlands, Belgium, Spain, Luxemburg and Maaike has considerable experience of pro- Germany. The La Paz family of products be- boundless, and she knows the moting and marketing brands in the consumer long to the more exclusive part of the segment, importance of every detail of goods sector, partly as a result of several years which means that they are of higher quality with Unilever. and correspondingly slightly higher- presentation, such as packaging priced than the mass of the market. Changes enhance emotional appeal “Price is a sensitive issue,” affirms and color tones. She is aware of “We have to assume nowadays that most pro- Maaike. “Our competitors have laun- how even a small change can ducts on the market are ‘good’ in one way or ched cigars in the same category, but another, and that they satisfy different tastes. at lower prices. One alternative for us boost sales overnight, and she has This explains the importance of strong brand was to look for ways to follow their pricing strategies based on a brand’s special emotional strategy, but instead we decided to maintain the figures to prove it. Maaike appeal,” explains Maaike. our price level while strengthening our advan- Oomen is the International Brand She cites La Paz as an example: tages. Essentially, we are placing our faith in “Previously our marketing strategy focused acting the role of the clear market leader that Manager for Swedish Match’s primarily on the fact that La Paz is a natural ci- we are, rather than resorting to defensive gar made from 100-percent genuine tobacco. tactics. In this way we preserved credibility best-selling cigar brand: La Paz. But today we are far from being unique in that with our retailers and we further tied our loyal regard, so in both our advertising and our consumers to the brand.” packaging strategies we changed our focus to “However, it is important to always bear in strengthen the association between La Paz and mind that in this business strength can also turn an image of adventure and manliness.” out to be a weakness – the pressure is always Since she started working for Swedish on to stay in the lead and come out with new Match in 1994, Maaike has also made a num- products. But at the same time, living with a ber of other changes, all of them meticulously threat can also create new opportunities. It is planned. The color of the packaging was chan- all a question of making the best use of the ged to a slightly more muted brownish-yellow situation,” concludes Maaike Oomen. shade, and the increasingly common smooth