Bureaucracy—AKA the art of making the possible impossible—is alive and well in Sweden. The Licensing Unit of the City of Stockholm has threatened to revoke the Swedish sales permit for traditional snus manufactured by Swedish Match over differing interpretations of age verification rules for online deliveries. Let’s try and make sense of it all.
The major players explained
There are some complexities to this story. So, first up, let’s clarify the stakeholders involved so everything makes sense. The main groups involved are:
- The Licensing Unit of the City of Stockholm (Tillståndsenheten): A municipal body responsible for overseeing and administering various licences and permits within the city.
- Swedish Match: They make and distribute snus and supply Haypp Group with pouches.
- Haypp Group: A leading online retailer of snus and nicotine pouches.
- Snusbolaget Norden: A Nordic market-focused online retailer owned and operated by Haypp Group.
In essence, Swedish Match is a supplier to Haypp Group, and Snusbolaget Norden is one of the sales channels that Haypp Group uses to reach customers.
So, what is happening?
Swedish Match AB put out a press release on the 3rd of September. This communication details the Licensing Unit of the City of Stockholm's attempts to revoke “Snusbolaget Norden's sales permit for tobacco products on the Swedish market.”
Per the press release:
“The origin of the proposal is that the City of Stockholm's Social Welfare Department and Haypp Group have different interpretations regarding how customers should be age-verified when delivering tobacco products in Sweden.”
Age verification rules
This situation boils down to the Social Welfare Department's dissatisfaction with Snusbolaget Norden’s current approach to age verification.
If you want to buy snus or pouches in Sweden, you must be 18 years old. Retailers are responsible for verifying that consumers are age-appropriate, but buying online creates some complexities.
Stockholm's Licensing Unit wants stricter age-verification methods at the point of delivery. Haypp Group believes there is no credible legal basis for revoking its licence because its age verification procedures are adequate already.
The finer details will be discussed at the Licensing Committee's meeting on September 18, 2024.
Next steps
Haypp Group’s Markus Lindblad said, “We have received and are now analysing an unexpected proposal from the Licensing Unit. Together with legal advisors, we are working to find a solution to comply with the Licensing Unit's concerns.” He went on to reaffirm Haypp Group’s commitment to age-appropriate pouch sales.
The market has reacted to the news. Shares in Haypp Group AB have plunged by around 7%. If the licence is revoked, Haypp Group would lose about 20% of its revenues. Yet, they suggest that the sale of snus is not “strategically important” for the group, partly because sales are already declining as the market moves towards nicotine pouches. Year-over-year nicotine pouch sales grew by 43% last year, indicating a clear desire for this iteration of the harm-reduction product.
Final thoughts
There are several different ways for snus and pouch retailers to verify ages. Some options include Swedish BankID, Electronic identities (eIDs) or payment methods, or Mobile BankID. Some other existing solutions include restricted delivery lockers or requirements for point of sale at both purchase and delivery.
The real question here is how effective additional methods will be in keeping snus away from youths. “Unexpected” actions that slash 7% of stock price and 20% market share from a business at the flash of a bureaucrat's pen are genuinely terrifying.
While some regulations are essential, this is an unmistakable sign of government overreach.
I wonder why the Licensing Unit did not seek an amicable solution upfront. Under the guise of “protecting the kids”, regulators have inconvenienced the public and a tax-paying, employee-generating business, but to what end?
