The Story of Swedish Match

If you've struck a match in Europe, South America or Australia, chances are you struck a Swedish Match. A Swedish company founded in the early 20th century, [1] Swedish Match has grown to become one of the top manufacturers of smokeless tobacco products in much of the world [1]. The tale of Swedish Match is more fascinating than the humble match and involves government takeovers, monopolies, and pyramid schemes.

Why matches?

Based in Stockholm, Swedish Match is a leading manufacturer of smokeless tobacco, cigars, matches, and lighters [1]. It has played a significant role in Swedish (and European) economy since the early 20th century and [1] sells products in 100 countries worldwide. It is the number one manufacturer of snus in Scandinavia and chewing tobacco in the US, and holds a large market share of lighters and matches in Latin America, Europe and Asia Pacific [1].

Swedish Match began life as two separate companies: the Svenska Tandsticks Aktiebolaget (STAB), a match company headed by Ivar Kreuger, and the Svenska Tobaksmonpolet, a tobacco monopoly [1]. After a long and insidious history, the two merged into the Procordia Group in the early 1990s and was rebranded as “Swedish Match” in 1994.

The tale of the match king

Its riveting history lies in the founder of one of its parent companies, Ivar “Match King” Kreuger. A Swedish man alternatively considered a great businessman and a ruthless scam artist, he remains an enigma to this day [2]. During the first several decades of the 20th century, Kreuger built an industrial empire based on matches and lies; forging bonds from the Italian government, erroneously inflating accounts and ultimately creating business losses that totaled more than his country’s national debt [3].

A pyramid scheme underlay it all.

After traveling the world and establishing himself in the engineering industry, Kreuger took over his family’s match factories in 1911 [2]. By the 1930s, he controlled most of the match production worldwide and was the sole producer in 33 countries by lending money to war-torn and bankrupt nations in exchange for a national match monopoly [3]. He ran a massive pyramid scheme, paying dividends from his acquired firms rather than profits and keeping his balance sheets under lock and key to keep investors unaware about his companies’ massive debt [2].

After all was said and done, Kreuger spent about $400 million (in 1930s dollars) of investors’ money over 15 years [3] and was the reason behind America's Securities Act of 1933, the first major federal legislation of the stock market, which established disclosure requirements for publically traded companies [3].

Despite his dubious business practices, Kreuger’s match business benefited Europe during the post-World War 1 era. He helped Germany pay its war debts and mediated reparations between France and Germany [3]. The International Match Company (IMCO) he organized in New York raised almost $150 million to finance government loans in Europe. On the other hand, he bought extravagant art and houses across the globe and gave stock options to his lovers as gifts [2].

The end of an era

As they say, "all good things come to an end," and when his dubious business practices and forgery of millions in Italian bonds came to light, Kreuger ended his life in his Paris apartment [3].

After his suicide and the discovery of his outright fraud, his companies’ assets were quickly liquidated and its market share of matches fell drastically. In the 1950s, as the sale of matches dropped precipitously, the company diversified, acquiring new companies in diverse markets. Under a new direction and leadership, it also started manufacturing lighters [1].

The tobacco side

The other half of Swedish Match, Svenska Tobaksmonpolet, was founded in 1915 and headed by Oscar Wallenberg, a much tamer figure in Swedish history [4]. The company was created as a tobacco monopoly in Sweden, raising money for military defense and the pension system, a sign of the codependence of Swedish state and financial interests.

During WW2, the Swedish supply of tobacco became tenuous and American cigarettes skyrocketed in popularity [1]. In the 1950s, as research revealed the ill effects of smoking, leading to the 1964 Surgeon General’s warnings against cigarettes, [5] Svenska Tobaksmonpolet voluntary limited advertising and developed a medical counsel on the health effects of smoking.

This led to an increasing demand for snus, as a “healthier” tobacco product, benefiting the company. It opened a manufacturing plant and acquired the leading US manufacturer of chewing tobacco and a large Dutch cigar company. More recently, in 2013, the number of young snus users ballooned from 9% of men and 2% of women to 33% and 22%, respectively causing Norway to consider snus use “almost an epidemic.” [6]

What is in Swedish snus?

Swedish snus is different from smokeless tobacco around the world. In Sweden, snus is regulated as food, and held to the same standards. It is also steam pasteurized, rather than fermented, which limits the highly toxic nitrosamines, heavy metals and polyaromatic carbons found in most smokeless tobacco [1]. These fermenting related toxins led the European Union to ban snuff sales in 1992, [7] after a WHO report indicated that North American and European snuff are carcinogenic [8].

Swedish Match has lobbied to lift this ban, [9] arguing that Swedish snus is a “safe” smokeless tobacco. In fact, in its mission statement, Swedish Match aims to offer “a safer alternative to cigarettes [to] contribute significantly to public health.” [1]

Yet, research underlying this safety claim is controversial [7]. Some research was funded by the snus industry, a cause for some skepticism [1]. Some studies indicate snus raises rates of oral and pharyngeal cancer, while others show no link. There is also an unclear link between snus and sudden cardiac death [7].

Less controversial is the much lower rates of lung cancer in snus users compared to smokers [7]. In fact, Swedish men have the lowest rate of lung cancer in Europe due to their low smoking rate, and high snus use. As such, in 2003, the European Union changed the cancer warning label to a vague statement that snus "can damage your health." [6]

What is the reality of Swedish Match?

Swedish Match credits itself an ethical and public health business, with the goal of “making the world a better place” [1] by replacing cigarettes with snus. Yet, its history belies its noble vision statement. While snus is likely less harmful than cigarettes, its overall effect on health is still unknown.

Snus still contains tobacco and is quite addictive, with users finding it just as difficult to quit as smokers. Also, snus could be a gateway drug to cigarette use, [7] going against the very core of Swedish Match’s mission statement. With all the unknowns, the jury is still out on the role of snus as a “safe” tobacco product.

References:

[1] “Company history,” Swedish Match [Online]. Available: https://www.swedishmatch.com/Our-company/  [Accessed Aug 24, 2018]

[2] A. Beattie, “Ivar Kreuger: Businessman or Scam Artist?,” Investopedia. [Online]. Available: https://www.investopedia.com/articles/financialcareers/09/ivar-kreuger.asp.  [Accessed Sep 8, 2018]

[3] “The Match King,” Economist. Dec 19, 2007. [Online] Available: https://www.economist.com/christmas-specials/2007/12/19/the-match-king [Accessed Sep 8, 2018]

[4] “Oscar Wallenberg,” Wikipedia. [Online]. Available: https://sv.wikipedia.org/wiki/Oscar_Wallenberg [Accessed Sep 8, 2018]

[5] Center for Disease Control and Prevention, “History of the Surgeon General’s Report,” Smoking & Tobacco Use. Dec 14, 2017. [Online]. Available: https://www.cdc.gov/tobacco/data_statistics/fact_sheets/youth_data/tobacco_use/index.htm [Accessed Aug 24, 2018]

[6] C. Nilsen, O. Fribog, K. Teigen, F. Svartdal, “Textual health warning labels on snus (Swedish moist snuf): do they affect risk perception?” BMC Public Health, vol 18 pp. 564. 2018.

[7] K. Asplund, “Snuff- how dangerous is it? The controversy continues,” vol. 250, pp. 457-61, Dec 2001.

[8]  “Tobacco habits other than smoking; betel-quid and areca-nut chewing; and some related nitrosamines. IARC Working Group. Lyon, 23-30 October 1984,” IARC Monogr Eval Carcinog Risk Chem Hum, vol 37 pp 1–268. Sep 1985.

[9] D. Levy, E. Mumford, K. Cummings, E. Gilpin, G. Giovino, A. Hyland. "The Relative Risks of a Low-Nitrosamine Smokeless Tobacco Product Compared with Smoking Cigarettes: Estimates of a Panel of Experts," Cancer Epidemiology, Biomarkers & Prevention, vol 13 pp. 2035–42. Dec 2004.