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Year: 2023

  • Sales Down at Turning Point

    Sales Down at Turning Point

    Photo: crizzystudio

    Turning Point Brands reported consolidated net sales of $103.4 billion the fourth quarter of 2022, down 1.8 percent from the comparable 2021 quarter. Gross profit decreased 1.5 percent to $49.6 million. Net sales for the Zig-Zag and Stoker products increased 0.9 percent and 2.6 percent, respectively, while sales of new-generation products declined by 11.1 percent.

    For the full year, consolidated net sales decreased by 6.8 percent to $415 million. Gross profit was down 5.6 percent to $205 million. Net sales for Zig-Zag and Stoker’s products increased 7.9 percent and 5.3 percent, respectively, while sales of new generation declined by 35.2 percent

    “The fourth quarter operating results finished in-line with our expectations with solid execution across our segments,” said TPB President and CEO Graham Purdy in a statement.

    “The Zig-Zag segment grew during the quarter despite the impact of a previously disclosed pull-forward in the prior quarter, benefitting from continued market share gains and the contribution from a full quarter of CLIPPER lighters. We are pleased with the ongoing roll-out and strong channel receptivity to the world’s No. 1 reusable lighter. Stoker’s MST experienced strong share gains as consumer trade-downs to value accelerated, consistent with the current inflationary and economic backdrop.

    “The challenging regulatory environment continues to negatively affect the NewGen segment which was down materially vs. 2021, but with declines moderating in the back half of the year. In addition to returning capital to our shareholders through share repurchases, we opportunistically purchased $10 million notional of our convertible notes during the fourth quarter while maintaining a strong cash balance.

    ”Over the last few months since taking on the CEO role, my primary objective has been to re-direct our focus and energy towards driving organic long-term growth. This starts with allocating resources to products, initiatives, and channels best positioned towards this goal. Our organization is now better aligned towards capitalizing on the opportunities in front of us and we look forward to delivering against our long-term plans going forward.”

  • Hong Kong Hikes Cigarette Prices

    Hong Kong Hikes Cigarette Prices

    Photo: B Photography

    The average price of a pack of cigarettes in Hong Kong increased to HKD73.75 ($9.40) on Feb. 22, following a 31 percent tax hike, reports the South China Morning Post.

    With the increase, the city government aims to boost its coffers and cut the number of smokers by 100,000 in the next three years.

    “Increasing tobacco duty is recognized internationally as the most effective means to reduce tobacco use,” Financial Secretary Paul Chan Mo-po said in his budget speech. “A rise in cigarette price will increase the incentive of smokers to reduce or quit smoking.” 

    The government estimates the price increase would bring in an extra HKD1 billion a year in revenue. 

    The prevalence of smoking in Hong Kong has dropped from 23.3 percent of the population in 1982 to 9.5 percent at present. With the new measure, authorities hope to bring the figure down to 7.8 percent by 2025, or reduce the number of smokers from about 580,000 to 480,000. 

    Tobacco taxes now account for 68 percent of the pack price. This is higher than the 62 percent prior to the tax hike but still lower than the 75 percent rate recommended by the World Health Organization. 

    By comparison, tax makes up 67.1 percent of the price of a pack of cigarettes in Singapore, 73.9 percent in Australia and 82 percent in New Zealand, according to figures from 2020. 

    A government representative said that an increase in tobacco tax had led to more inquiries to the Department of Health’s smoking cessation hotline in the past. After the tobacco tax was raised by 50 percent in 2009, calls to the hotline rose by 257 percent. 

  • Scandinavian to Acquire Alec Bradley Cigars

    Scandinavian to Acquire Alec Bradley Cigars

    Scandinavian Tobacco Group has agreed on the terms and conditions for the acquisition of substantially all assets of Alec Bradley Cigar Distributors Inc. and associated companies, according to a company press release.

    The transaction is valued at $72.5 million (DKK500 million) on a debt and cash-free basis (the enterprise value) and is expected to be closed shortly. The acquisition will be fully financed by cash at hand and debt.

    The Alec Bradley brand is a material addition to the company’s portfolio of premium cigars.

    Based in Fort Lauderdale, Florida, Alec Bradley reported annual net sales in 2021 of $25 million and an EBITDA margin before special items of 24 percent. Both net sales and EBITDA margin improved during 2022.

    CEO of Scandinavian Tobacco Group Niels Frederiksen said, “The acquisition of the Alec Bradley cigar business is another important step toward our ambition of becoming the undisputed and sustainable global leader in cigars.

    Through this bolt-on acquisition, we will expand our portfolio of highly regarded premium cigars in the U.S. and international markets, delivering material value to our shareholders. We will also leverage the Alec Bradley brand portfolio to deliver increased excitement to the handmade cigar category through product innovation and brand activations, benefitting both the cigar enthusiasts and our trade partners.” 

    The transaction is expected to be margin accretive, EPS accretive and ROIC accretive when fully integrated. The company leverage ratio (net interest-bearing debt/EBITDA) will, when the transaction proceeds to completion, increase by less than 0.2x.

    At the end of the third quarter of 2022, the company’s leverage ratio was 1.9x. Further details of the expected financial impact of the acquisition will be communicated in connection with the announcement of Scandinavian Tobacco Group’s full-year 2022 results on March 8, 2023.

  • Vaporesso Launches Luxe XR Max

    Vaporesso Launches Luxe XR Max

    Vaporesso, one of the largest open-system vaping hardware manufacturers in the world, launched its new 80W Pod Mod, the Luxe XR Max during this year’s Total Product Expo (TPE) 2023 in Las Vegas, held from February 22 to 24 at the Las Vegas Convention Center.

    The China-based subsidiary of Smoore International, the largest vaping company in the world, said that the XR Max is the latest member of Luxe X family and is fully compatible with other Luxe X products.

    The Luxe products combine the core features SSS leak-resistant technology, and COREX, an innovative heating and flavor-boosting technique developed by Vaporesso, and is powered by the company’s signature Axon Chip,

    The Luxe XR MAX offers an easier-than-ever user interface to help vapers get the best possible performance out of their vaping devices. The chip also equips Vaporesso’s products with a smart use mode.

    As part of the new design, the Luxe XR MAX adopts the classic clear, futuristic shape of the Luxe X series, and offers users a heightened vaping. Its SSS leak-resistant design, coupled with the brand’s COREX heating technology effectively increases the flavor and the lifespan of GTX coil.

    The new model also has a longer battery life, making it an ideal fit for direct-to-lung (DTL) users, according to Vaporesso.

  • PMI Struggles to Sell its Russian Business

    PMI Struggles to Sell its Russian Business

    Photo: alex83ch

    Philip Morris International’s attempts to sell its Russian business have stalled due to the challenge of leaving the country on favorable terms, according to an article in the Financial Times.

    Discussions with at least three “serious” potential buyers have gone nowhere in part because of the strict government requirements, according to PMI CEO Jacek Olczak.

    Kremlin rules make it difficult for companies to exit Russia without taking a huge financial hit. Among other provisions, the government reserves the right to dictate the valuation of foreign companies’ Russian assets as well as the new owners’ dividend and access to cash flow.

    Olczak told the Financial Times he had a duty to shareholders to recover value, adding he would “rather keep” the business in Russia than sell on stringent Kremlin terms. While the asking price was not disclosed, PMI has $2.5 billion worth of assets in the country, according to company filings.

    Many western companies vowed to exit Russia immediately after last year’s invasion of Ukraine, but less than 9 percent of EU and G7 groups in the country had left by the end of December, according to research by the International Institute for Management Development.

    Russia has historically been a huge market for the tobacco industry because of high smoking rates and consumer willingness to switch to vapes and heated-tobacco products. Together with Ukraine, it accounted for 8 percent of PMI’s $31.7 billion revenues last year.

    Imperial Brands sold its Russian operations to a local partner soon after the invasion, taking a $463 million hit to annual profits.

    Japan Tobacco does not plan to leave and BAT has struggled to get a sale over the line, although it said this month it was in “advanced talks.”

  • ‘Thailand to Legalize Vaping After Elections’

    ‘Thailand to Legalize Vaping After Elections’

    Asa Saligupta

    Activists are confident that Thailand will legalize vaping after the likely general elections in May. Vaping is currently prohibited in the kingdom, but discussions are ongoing to end the ban, according to ENDS Cigarette Smoke Thailand (ECST).

    “This work has been several years in the making. It hasn’t stopped. In fact, draft vaping legislation awaits Thailand’s parliament to debate and ratify,” said ECST Director Asa Saligupta.

    Saligupta notes that while anti-vaping campaigners appear to have the ear of the public health minister, most politicians and the public remain supportive of lifting the country’s vaping ban.

    “I remain fully confident that safer nicotine products will be regulated in Thailand. Regulation will give consumers better protection, encourage more smokers to quit deadly cigarettes, and ensure we have much better control over youth vaping with a strict purchase age,” he said.

    ECST says smoking kills about 50,000 Thai people every year.

    “If we want to substantially reduce smoking-related illnesses and premature deaths, we must lift Thailand’s harsh ban and penalties on vape products,” said Saligupta.

    According to ECST, nearly 70 countries have adopted regulatory frameworks on safer nicotine products, leading to dramatic declines in their overall smoking rates.

  • Gotham Rebrands as NGG Capital

    Gotham Rebrands as NGG Capital

    Kelly Michols

    Gotham Cigars has changed its name to NGG Capital, reflecting the growing portfolio of e-commerce businesses that make up the NGG Capital family.

    Along with the name change, NGG Capital is building a high-end management team to support the growth of the organization. It has hired Kelly Michols, an industry executive in both the tobacco and nutritional supplements business, as chief operating officer.

    While serving as the president of STG Lane, Michols oversaw the successful redevelopment of heritage tobacco brands such as Captain Black and Bugler, along with the introduction of Talon, one of the most successful new tobacco products in the past decade.

    Michols also served as the chairman of the Pipe Tobacco Council. While in the nutritional supplement industry Michols was a senior executive with Rexall Sundown, METRx and Celsius, bringing multiple successful brands to market.

    Michols will manage NGG Capital’s day-to-day activities and work with owner and CEO Manny Balani on future expansion opportunities.

    “I am very excited to work together with Kelly. His background and knowledge is a perfect fit for our current portfolio of products, and his expertise in growing business, brands and organizations will be extremely valuable as we grow NGG Capital”, says Balani.

    “The name change to NGG Capital is in response to our company’s growth and is in alignment with our corporate vision. While growing Gotham Cigars and A1 Supplements will continue to be our focus, we plan to add additional on-line retail businesses to our portfolio as we identify them. NGG Capital provides a foundation that will allow us to easily integrate these new opportunities into our current business in a seamless and efficient way. We are very excited about our future.”

    NGG Capital is actively looking for acquisition targets and invites interested parties to contact it with potential portfolio addition opportunities

  • Civil Money Penalty Complaints Against Vape Companies

    Civil Money Penalty Complaints Against Vape Companies

    Photo: vetkit

    The U.S. Food and Drug Administration has filed civil money penalty (CMP) complaints against four tobacco product manufacturers for manufacturing and selling e-liquids without marketing authorization. The targeted companies are VapEscape, Great American Vapes, Vapor Corner and 13 Vapor.

    This is the first time the FDA has filed CMP complaints against tobacco product manufacturers to enforce the Federal Food, Drug, and Cosmetic (FD&C) Act’s premarket review requirements for new tobacco products.

    It is illegal to manufacture, sell, or distribute e-liquids in the U.S. that the FDA has not authorized. The FDA previously warned each of the companies that, by making and selling their e-liquids without marketing authorization from the FDA, they were in violation of the FDA’s premarket requirements for tobacco products and that failure to correct these violations could lead to an enforcement action, such as a CMP. Despite the agency’s warning, these companies continue to make and sell their unauthorized e-liquids to consumers.

    “Holding manufacturers accountable for making or selling illegal tobacco products is a top priority for the FDA,” said Brian King, director of the FDA’s Center for Tobacco Products, in a statement. “We are prepared to use the full scope of our authorities to enforce the law—especially against those who have continued to violate the law after being warned by the agency.”

    Currently, under the FD&C Act, the maximum CMP amount is $19,192 for a single violation relating to tobacco products. The FDA typically seeks the statutory maximum allowed by law and is doing so in these four cases. The companies the FDA has filed CMP complaints against can pay the penalty, enter into a settlement agreement, request an extension of time to file an answer to the complaint, or file an answer and request a hearing. Companies that do not take action within 30 days after receiving the complaint risk a default order imposing the full penalty amount. 

    “These latest enforcement activities are part of a comprehensive approach to actively identify violations and to deter illegal conduct,” said King. “These actions should be a wakeup call that all tobacco product manufacturers—big or small—are required to obey the law.”   

    Between January 2021 through Feb. 17, 2023, the FDA has issued more than 550 warning letters to firms for manufacturing, selling, and/or distributing new tobacco products without marketing authorization from the FDA. After receiving warning letters, a majority of these companies have complied and removed their products from the market.

  • Parkside Posts Strong Results in Difficult Year

    Parkside Posts Strong Results in Difficult Year

    Photo: Parkside

    Flexible packaging expert Parkside has reported strong year-on-year growth despite a challenging 12 months for the industry.

    Reaping the rewards of significant recent investments made to its global operations, the company says it is on track to achieve its five-year objectives after reporting year-on-year growth of 28.1 percent, returning to pre-pandemic levels.

    “With continued supply chain chaos, a lack of raw materials, labor shortages and a string of complex new laws hitting many national markets, we know times are tough for many in the packaging industry,” said Parkside Managing Director Robert Adamson. “Against that backdrop we remained resolute in our commitment to innovation, and we could not be happier with these results which show the company continues to go from strength to strength.”

    In the face of ongoing global concerns, Parkside has significantly invested in both its U.K. and Asian capabilities.

    The company’s most recent investments include an Allstein printing press and a Universal slitting machine in its Normanton, U.K. factory. The two machines improve the capacity, efficiency and energy consumption of the facility while ensuring its print quality standards remain ahead of the curve.

    The company’s operations in Malaysia were also boosted by the recent appointments of Paula Birch as managing director of Asia, and Business Unit Manager Ian Dewar, who has formidable knowledge of the APAC market and the plastics industry.

    “This growth would not be possible without the hard work, passion, and endless creativity of all our staff, who drive this company to new heights every day,” added Adamson. “So many long-serving team members have come along on this journey with us, and it is hugely rewarding to have seen the number of internal moves and promotions that we have this year, as we look to the future and explore new frontiers as a company.

    “We are developing new business within the tobacco market, crafting exciting new marketing strategies, and with our new MD for Asia we continue to open up new geographic markets and product applications.”

  • 22nd Boosts Cultivation for New Zealand

    22nd Boosts Cultivation for New Zealand

    Photo: Vasiliy Koval

    22nd Century Group has accelerated a major seed cultivation project for its proprietary reduced nicotine content tobaccos to support local authorities as they work to implement New Zealand’s new reduced nicotine content law starting from this year. The seed will be used to rapidly scale the availability of 22nd Century’s reduced nicotine content tobacco leaf to manufacture cigarettes compliant with New Zealand’s new reduced nicotine content law.

    “New Zealand’s groundbreaking new law will require a sizeable expansion of reduced nicotine content tobacco leaf production to address market needs,” said John Miller, president of tobacco products for 22nd Century Group, in a statement.

    “22nd Century’s ultra-low nicotine content tobaccos are the only commercial scale naturally grown tobacco varieties ready to meet the New Zealand law today. We are moving immediately to ensure sufficient leaf capacity of our reduced nicotine content tobacco to serve the entire New Zealand market as the new law is implemented.”

    22nd Century’s proprietary reduced nicotine content tobacco varieties grow with 95 percent less nicotine than the commercial tobaccos used in making cigarettes for the New Zealand market. Significantly, 22nd Century’s non-GMO tobacco varieties are already compliant with the New Zealand law, which requires all combustible cigarettes to contain less than 0.8 mg of nicotine per gram of tobacco, inclusive of testing variance.

    22nd Century’s expanded growing program, centered in the heart of the U.S. tobacco belt, will produce additional seed sufficient for approximately 2 billion sticks, the entire annual New Zealand cigarette market volume.

    “New Zealand has taken the global lead in tobacco control through its new law, which will reduce the harms of smoking and improve public health and health equity, particularly among minority communities that are disproportionately burdened with the health and economic harms of smoking,” said John D. Pritchard, vice president of regulatory science at 22nd Century.

    “As we increase quantities of our reduced nicotine tobacco seed, 22nd Century is demonstrating conclusively that the tobacco supply chain will pivot quickly to support the ramp up of the national-scale public health program,” Miller added.