Stockholm city officials have revoked the sales permit for traditional snus of a Haypp Group subsidiary, thus affecting a fifth of the company’s total sales. Following the news, Haypp shares on the Nasdaq First North Growth Market, a platform for smaller European companies, plunged 7%.
Details
The Licensing Committee of Stockholm’s Social Welfare Department has revoked the tobacco sales permit of Snusbolaget Norden, a subsidiary of the Swedish snus and nicotine pouch retailer Haypp Group.
The dispute centers around age verification during tobacco deliveries in Sweden. Haypp verifies customers’ ages at physical points of sale using BankID, a digital identification system linked to bank accounts.
However, with online sales, some of the delivery methods do not entail age verification. As a result, Haypp reported that in 40% of cases, verification does not take place. Moving forward, the company vows to offer only delivery methods that include age checks.
The government’s decision concerns traditional snus, a product responsible for approximately one fifth of Haypp’s net sales in the second quarter of 2024. In that period, total revenue came in at SEK942.8 million (about $93.3 million), up 23% year over year.
Haypp intends to appeal the committee’s decision and will continue operations as usual until the appeal is reviewed.
Market reaction
Immediately after the announcement, Haypp Group stock on the Nasdaq First North Growth Market (a division of Nasdaq Nordic for small European companies) fell almost 7.0%. At the time of this writing, it was trading 6.2% lower than the previous close of SEK86.40 per share on Tuesday, September 24. According to Yahoo Finance, the average target price from two analysts covering Haypp is SEK111.00 per share, indicating significant upside.
About Haypp Group
Founded in 2009 in a garage in south Stockholm, Haypp Group sells snus and nicotine pouches. It is the brainchild of two then-19-year-old friends, Henrik Nordström and Linus Liljegren, avid snus users, who were disappointed with the selection at local stores. This led to the creation of Snusbolaget, which later evolved into Haypp Group. The company’s target market includes individuals looking to quit smoking, offering what it says are “safer alternatives.” The World Health Organization, however, claims that there is no safe form of tobacco. According to its data, over 8 million people die annually from tobacco,” including 7.0 million directly from use and 1.3 million from exposure to secondhand smoke.
