No 1, 2000 PDF - Swedish Match

8 A MAGAZINE FOR SWEDISH MATCH’ S SHAREHOLDERS AND OTHER INTERESTED PARTIES NO 1 · FEBRUARY 2000
ACQUISITION OF LEONARD DINGLER IN SOUTH AFRIKA
South African tobacco company Leonard Dingler Ltd has been part of the Swedish Match Group since
last autumn. The South Africa in which Swedish Match has invested is a country in a process of
change – a South Africa characterized by hope and belief in the future, undeterred by the size of the
obstacles and difficulties along the way. The acquisition has major strategic importance for Swedish
Match, which sees South Africa as the gateway to other markets in southern Africa.
Profitable company with long tradition
– is starting-point for expansion
Managing director
Mark Wraith is the
great-grandson of the
company’s founder
Leonard Dingler.
“Once we had decided
to sell, Swedish
Match was the best
option,” he says.
“Once we had decided to
sell the company, which
has been in our family
for a hundred years,
Swedish Match was the
best choice of purchaser.
The two companies form
an ideal match, since
both have the same
product orientation,” says
Mark Wraith, managing
director of South African
tobacco company
Leonard Dingler.
Our first few months
together have gone
very well, with earnings
continuing at a
favorable level,” he adds.
Leonard Dingler Ltd is located in the Boksburg
industrial area on the outskirts of Johannesburg,
a city with well over a million inhabitants.
On the lawns outside the gates sit a
number of job-seekers. It is unlikely that their
perseverance will be rewarded, since few of
Leonard Dingler’s employees leave their jobs
voluntarily. Many of
Leonard Dingler’s employees
have been with
the company for more
than 20 years, and a
few for more than 30
years.
A rich aroma of
tobacco pervades the interior of the plant,
where more than 300 employees carry on the
company’s 100-year-old tradition.
Since the company was founded in 1904,
Leonard Dingler has been producing and selling
pipe tobacco and snuff in South Africa and
its neighboring countries. Today, the company
has annual sales of approximately SAR 300 M,
with good profitability.
“South Africa is a large and interesting
market for smokeless tobacco products and
therefore fits in well with our strategy,” says
Ingemar Olsson, head of the Overseas Division,
of which Leonard Dingler is now part.
South Africa is a large and stable tobacco
market. The consumers are loyal to their
brands and, despite the constantly increasing
levies and taxes on tobacco and the increasingly
hostile climate with which the tobacco
industry as a whole has to contend, the total
market is growing slightly every year. However,
the increasing weight of anti-smoking
opinion is a cause for concern. While the trend
has not advanced as far in South Africa as in
Europe, it is still likely
that various types of
restrictions will be imposed
in the long term.
Other causes of concern
include the growing
tax and excise
duty on tobacco products.
However, the inevitable consequence of
such impositions – the increased incidence of
cigarette smuggling – does not represent a threat
for Leonard Dingler, since the company does
not sell cigarettes.
“Our greatest challenge at present is to
increase our already large market share and
develop new products. Other possibilities
include expanding the market for our Boxer
pipe tobacco by increasing our presence in
more countries in Africa,” says Chad Limbert,
the company sales manager.
Both Chad and his colleague Ivan McQueen
began their careers with Leonard Dingler as
traveling sales representatives – Chad 10 years
ago and Ivan 30 years ago. But sales methods
have changed dramatically.
“Today, our products are sold exclusively
via distributors, and none of our sales personnel
handle cash,” explains Chad. “We also make
less and less use of vehicles carrying the company
name. Just about everybody here is familiar
with the Boxer and Taxi brand names, and
tobacco is a highly prized target for thieves.”
Boxer and Taxi
– top-selling brands
Leonard Dingler’s top-selling product is its
Boxer brand pipe tobacco, which accounts
for more than 70 percent of the company’s
sales. Boxer is the clear market leader
among pipe tobaccos in South Africa, with
about 70 percent of the market.
The snuff brand Taxi accounts
for about 20 percent
of sales. Taxi is available in
three different flavors and is
sold in small red, green or blue
plastic cans, depending on the
flavor.
Leonard Dingler’s other
products include 1904 pipe
tobacco, Magnet snuff and
Black&White pipe tobacco. The
latter is exported to Namibia,
where it is the market leader.