CIGARETTES: The most popular cigarette of Danish smokers, Prince, is to become part of British American Tobacco. Scandinavian Tobacco Company will concentrate on pipe tobacco and cigars in the future
Denmark has cultivated proud traditions in the tobacco industry for several hundred years. But now Denmark’s – and northern Europe’s – largest cigarette brand, Prince, has capitulated. Scandinavian Tobacco Company’s cigarette division, House of Prince, has been sold to British American Tobacco (BAT), which was already a large shareholder in the company. The deal comprises three of Scandinavian Tobacco’s cigarette-related companies.
PIPES AND CIGARS
Since summer 2007, when Denmark became one of the last countries in Europe to introduce smoking restrictions in workplaces, restaurants and in public spaces, the number of smokers has dropped drastically. And now the national production of cigarettes has also come to an end. After having sold House of Prince, whose main brands are Prince and Kings cigarettes, Scandinavian Tobacco Company will concentrate on the production of pipe tobacco and cigars. The Danish tobacco group is the world’s largest manufacturer of pipe tobacco. In cigar production, the group is the largest in Europe and No.3 worldwide.
The price tag for BAT’s acquisition of Scandinavian Tobacco Company’s cigarette activities is approx. EUR 2.7 billion.
Three old independent Danish tobacco dynasties, Færch, Obel and Augustinus, formed the backbone of Scandinavian Tobacco Company. The three tobacco manufacturers merged in 1961 through the establishment of Skandinavisk Holding. They had a combined share-ownership of 65% of the tobacco company, while BAT held the remaining 35%.
In Denmark, the Prince and Kings cigarette brands have a dominant market share. The Prince filter cigarette in particular is so popular that BAT’s international counterparts, Lucky Strike, Dunhill, Kent and Pall Mall, have never really caught on in Denmark. Prince on the other hand has achieved increased popularity in most of northern Europe and the Baltic States. In total approx. 31 billion cigarettes produced by Scandinavian Tobacco Company are smoked annually. In comparison, BAT sells approx. 250 billion cigarettes in Europe alone and almost 700 billion worldwide.
The acquisition of House of Price is subject to approval by the competition authorities. The deal is expected to be in place in 3-6 months.