Swedish Match is a global manufacturer of matches and other tobacco products. It produces various types of tobacco products such as cigars, pipe tobacco, chewing tobacco, snus, and nicotine pouches. It was among the first companies to establish a global presence during the early 1900s. Its products are still sold worldwide, with particularly strong markets in Europe and North America. The United States, Germany, France, and the Netherlands are Swedish Match’s top markets.
International affairs and Ivar Kreuger
Ivar Kreuger founded Swedish Match. He was an internationally known industrial magnate who was referred to as a scoundrel by some. He was born in 1880 in a South-East town called Kalmar in Sweden. His grandfather started a match factory where the family worked and operated. The match industry was still very young when the company was founded but boomed shortly after. One of the reasons was that matches were used to light kerosene lamps and gas stoves. By the late 1800s, the Swedish match industry produced 40,000 tons of matches annually. Germany and England were the largest export markets for Swedish matches and about 85% of all matches produced were exported.
Ivar studied engineering at the Royal Institute of Technology in Stockholm and graduated with a combined master’s degree covering both mechanical and civil engineering, at the age of 20. After school, he had little interest in the family business and was more interested in overseas adventures. He worked in South Africa, Canada, Germany, and the United States. Meanwhile, his brother Torsten Kreuger was operating the family business which at the time was struggling because of the popularity of electric lightning.
When Ivar Kreuger returned to Sweden in 1908, he started a real estate and construction company with his fellow engineer friend Paul Toll. Ivar had worked with concrete abroad and was now ready to bring this knowledge to Sweden. Kreuger & Toll was successful however Ivar was soon more attracted to the family business.
When he got involved in the business in 1910, Sweden had a global dominance in the industry but the family company was only a small player struggling for market shares at the time. Ivar got intrigued by the challenge to become Sweden’s largest match company and overcome Jonkoping & Vulcan’s dominance in the market at the time. He, therefore, brought most of the smaller Swedish match companies together, including his family’s, into a single organization called United Match Factories. After he managed to inflate the value of the organization by artificially making it look like United had more capital than it had, he succeeded to take over Jonkoping & Vulcan in 1917 and establishing a monopoly in Sweden.
World War I was about to end a year after the takeover and Kreuger’s focus shifted to the newly formed holding company, The Swedish Match Company. Ivar started an aggressive buying spree all over Europe to get possession of match factories for a bid on world dominance in the match industry. By the late 1920s, Ivar controlled a significant portion of the match business in Holland, Switzerland, Denmark, Norway, Hungary, Yugoslavia, and other East European countries. The company also diversified into telecommunication, pulp and paper, and mining. By 1929 The Swedish Match Company produced and sold 2,8 million cases of matches annually making up about 40% of total world match output.
After World War I, Ivar Kreuger became an international figure. He made loans to governments that were severely affected by the war. The majority of these were used to secure Swedish Match’s approval to establish a monopoly in these countries, despite that, many observers regarded Kreuger’s actions as magnanimous. By 1930 more than 350 million dollars were doled out to dozens of countries.
For a decade, Kreuger had transformed his business empire into one of the world’s largest and achieved legendary status. Hundreds of millions of dollars flowed through his companies. After he loaned out 30 million dollars to Germany to help pay for war reparations he earned the title ”the savior of Europe” from some politicians. Presidents and ministers asked for his advice and assistance, his capacity seemed immense.
The general public in Sweden and United States invested large sums in Kreuger shares. As Ivar gained a larger market share of the match business he promised rapidly rising share prices and dividends. When The Wall Street crash in 1929 was a fact, Kreuger’s foundation for operations was destroyed and he found himself in a liquidity crisis. In March 1932 the world was shocked when Ivar Kreuger shot and killed himself. He had the past two years tried to keep his business glued together.
Picking up the pieces
It took four years for a large number of attorneys, bankers, and accountants to sort out Kreuger’s affairs, and finally, they found out that Ivar had inflated the earnings of his companies by more than 250 million dollars between 1917 and 1932.
The Wallenberg family was able to gain control over the enterprise and save it from the ruins. The company lost a lot of its monopoly contracts but was able to sustain market leadership in the match industry. Throughout World War II and up to the mid-1900s Swedish Match tried to expand the match business with acquisitions in the cigarette lighter industry and was able to reach 15 percent of that global market.
Expanding into other arenas
Swedish Match controlled about 25 percent of the global match industry in the 80s and employed more than 25,000 workers around the world. At this time the company went into other industries like floor coverings, kitchens, doors, and razor blades. In 1990 Volvo bought Swedish Match, but not for long, in 1996 the company went public in a deal worth about $1 billion.
Going all in on niche tobacco products
Under the leadership of Lennart Sunden, the company started to focus on non-cigarette tobacco products like smokeless tobacco, cigars, matches, and lighters. In the late 90s, Swedish Match’s leading product in America was chewing tobacco with the top product being Red Man. The company acquired a couple of more competitors in the US and was able to reach about a 50 percent market share in the chewing tobacco industry.
One of the key products in the Swedish Match stable was snus. In Sweden, there were about 900,000 snus users in 2000 and more than half were former smokers. Swedish Match started to market snus as a safe, neat, and effective way to enjoy tobacco while cutting down or quitting cigarettes.
Snus going viral
In the last decade, snus has blown up in Sweden and its nordic neighbors. In 2021 the sale of snus and nicotine pouches reached an all-time high. At the same time, cigarette users have reached an all-time low. Swedish Match’s products are gaining ground in the US and becoming more and more popular. The big tobacco companies in America have noticed this and in the spring of 2022, Philip Morris made an offer to buy Swedish Match from its shareholders for $16 billion. The offer hasn’t been accepted.
Us snus users have a lot to thank Swedish Match and its founder, Ivar Kreuger, for. The history of the company is very exciting to read about and if you found this little summary interesting you should read more about it, there are a lot of good books out there.
Some of my favorite Swedish Match products:
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Photographer: Peter Knutsson