The city of Stockholm has proposed revoking the Swedish sales permit for traditional snus from a Haypp Group subsidiary, the company reported. Snus in Sweden accounts for a fifth of total sales. Today, Wednesday, September 4, Haypp shares opened lower on the Nasdaq First North Growth Market for smaller European companies.
Details
Citing concerns over age verification, the Licensing Committee of Stockholm’s Social Welfare Department has proposed revoking the sales permit for traditional snus from Snusbolaget Norden, a subsidiary of Sweden’s Haypp Group, which retails snus and nicotine pouches. In the second quarter of 2024, traditional snus accounted for about 20% of its total net sales, which were SEK942.8 million (approximately $91.3 million) in the period, for 23% year-over-year growth. The European market in general and the Scandinavian market in particular is the company’s focus, with the U.S. currently accounting for only 3% of sales (though the company expects growth there).
Haypp has pledged to submit its response to the proposal by September 13. It sees “no basis” for revoking Snusbolaget’s sales permit for tobacco products but is willing to comply with any additional age verification requirements from the Licensing Committee.
Investor reaction
Haypp Group shares retreated at the open of the Nasdaq First North Growth Market (a division of Nasdaq Nordic for smaller companies in Europe). In less than an hour, Haypp lost more than 6% of its value, with the share price dropping to SEK105.5. Since the beginning of the year, the stock has more than doubled, gaining 121%.
The average target price for Haypp from two analysts is SEK111 per share, according to Yahoo Finance.
About Haypp Group
Haypp Group sells snus and nicotine pouches. The story began in 2009 in a garage in south Stockholm. Two 19-year-old friends, Henrik Nordström and Linus Liljegren, avid snus users, were disappointed with the selection at local stores and decided to take matters into their own hands. Today, their company has a market capitalization of SEK3.2 billion (approximately $310 million).
Haypp considers people looking to quit smoking as its target audience. “We focus on public health and want people who consume more harmful forms of tobacco, especially cigarettes, to switch to safer products,” said company CEO Gavin O’Dowd in an interview with Breakit.se.
The World Health Organization claims that there is no safe form of tobacco. According to its data, over 8 million people die annually from what it calls the “tobacco epidemic,” including 7.0 million directly from tobacco use and 1.3 million from exposure to secondhand smoke. European Union countries have laws on the books to curb smoking. Haypp Group acknowledged in its IPO prospectus that it operates in a highly regulated market but did not see any threat to its business.
