SWM - Mark Moore

Industry AnalysisSchweitzer-Mauduit International, Inc. is the largest tobacco related paper productsproducer nationwide. The company has been producing paper dating back to 1545, and notuntil the early 1900’s did they start producing tobacco related paper. This new venture hasbecome a major factor in its operations and consumes 90% of its sales. With operations in theUnited States, France, Brazil, Indonesia, the Philippines, a joint venture in China, and a recentlyadopted expansion in Asia, SWM has captured a highly successful market structure, whichconducts sales in 90 different countries. Considering how cigarettes have continuously stayedhigh in demand, differentiation is a major factor in SWM’s products. They differ from theircompetitors, Alliance One and Universal Corporation, in the tobacco area. While Alliance Oneand Universal maintain a steady leaf tobacco production, SWM has provided innovative servicesby being the sole producer of reconstituted tobacco leaf (RTL). They are also the leadingmanufacturer of lower ignition propensity (LIP) cigarette paper, which has grown over 50% in2009 due to regulatory-mandated adoptions. SWM’s technology, research and developmentexpertise for RTL and LIP has significantly lowered their operating costs, and has also providedsafer cigarettes by reducing tar, carbon monoxide, and the amount of nicotine.It is difficult to compare SWM to its competitors because Alliance One and Universalboth only sell, package, store, and supply leaf tobacco, while SWM specializes in many differentareas of the tobacco industry. All three companies do not make cigarettes, they simply produceand supply the tobacco, and in SWM’s case, tobacco related paper products. By evaluating thefive forces model, a clearer picture of competition among the industry is created.10