2023 - Tobacco Reporter

Traders Hit With Tax-Evasion Charges

The Philippines’ Bureau of Internal Revenue (BIR) has filed 69 complaints for tax evasion worth PHP1.8 billion ($32.25 million) against tobacco traders, reports Business World.

During a nationwide raid in January, authorities confiscated numerous countless cigarette products.

“This is a warning against all illicit traders,” Internal Revenue Commissioner Romeo D. Lumagui Jr. was quoted as saying. “The BIR will not only raid your stores and warehouses, but we will also file criminal cases against you. This will not be the last.”

According to Lumagui, the widespread peddling of illegal tobacco products is hampering government efforts to meet its excise tax collection target of PHP352.9 billion this year.

Lumagui said his agency would partner with online platforms and merchants to impose stricter guidelines on illicit cigarettes.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the state should enforce stricter tax collection measures to reach its collection target this year.

“Through intensified collections based on current tax laws, the government can further structurally increase its recurring tax revenue collections,” he said in a Viber message.

The BIR set a collection target of PHP2.6 trillion this year, 11 percent higher than last year.

May 26, 2023

Waiting Period Expires for Njoy Purchase

The waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired for Altria Group’s acquisition of Njoy Holdings.

This means no further regulatory review by the federal antitrust authorities is required in connection with the Transaction.

“Subject to the satisfaction of other customary closing conditions, we expect to complete the transaction in the second quarter of 2023,” Altria wrote in a statement.

May 26, 2023

VCF to Distribute EPC Cigars in Italy

VCF will start distributing EPC cigars in Italy.

Fred Vandermarliere of VCF and EPC founder Ernesto Perez-Carrillo will officially announce the partnership on June 23 in Florence.

EPC’s cigars include acclaimed brands such as Encore Celestial, Majestic (voted cigar of the year by Cigar Aficionado in 2018), Pledge Prequel (Cigar Aficionado cigar of the year in 2020) and Pledge Sojourn, along with a sampler of three cigars called Triumph.

Each of these was created by Perez-Carrillo, who VCF describes as one of the best master blenders in the world

Created out of the merger between J. Cortes and Oliva in 2016, VCF has cooperated with EPC in the past. For example, Perez-Carrillo helped VFC resurrect the cult hero brand Aliados by recreate the original blend from his mentor Rolando Reyes Sr.

VFC has great expectations of the partnership between its leaders. “It is no coincidence that these titans share a vision and cooperate on several projects,” the company wrote in a press release. “It reflects a similarity in the way in which both parties look at the craft and its heritage, at the industry that is built on it, and on the answers that may guide its future.”

May 25, 2023

Universal Reports ‘Good’ 2023

Universal Corp. reported sales and other operating revenue of $2.57 billion in 2023, up 22 percent over that recorded in the previous fiscal year. Operating income rose 13 percent to $181.1 million. Tobacco operations contributed $2.26 billion to the company’s sales and operating revenues compared with $1.84 billion in 2022. Operating income for the tobacco operations segment increased by $15.1 million to $172.9 million.

“Fiscal year 2023 was a good year for Universal,” said Universal chairman, President and CEO George C. Freeman III in a statement. “Tobacco shipments were strong as logistical constraints eased in fiscal year 2023, and despite tight tobacco supply conditions, we were able to secure the leaf tobacco needed by our customers. Our plant-based ingredients platform continued to perform well, and we are excited about our progress in integrating our ingredients companies and executing our strategies.

“During fiscal year 2023, we enhanced and increased the scope of our platform by adding sales and research and development resources, and we recently announced plans to expand our plant-based ingredients platform’s manufacturing capabilities.

“Our results for fiscal year 2023 and the quarter ended March 31, 2023, included a favorable final ruling on a legal case involving one of our subsidiaries in Brazil regarding the exclusion of certain tax credits on exported goods in the calculation of taxable income. As a result of the favorable ruling, we recognized $5 million of interest income and a $24.2 million net income tax benefit in the quarter ended March 31, 2023.”

May 25, 2023

Switzerland to Ban Youth Advertising

Switzerland will ban advertising of tobacco and vapor products to young people, the government announced on May 24, report Reuters and Swiss Info.

In February 2022, Swiss voters backed a proposal to limit tobacco promotions seen by minors. Following the referendum, the government had to adjust Switzerland’s tobacco product law to incorporate the proposal.

The new law will come into force from mid-2026 and will also strengthen restrictions on packaging and advertising on tobacco and e-cigarettes due to take effect from next year.

In the future, no advertising for tobacco products or e-cigarettes will be allowed in print media, shops or events that can be visited by minors. In addition, sponsorship of events that people under 18 attend will be banned. Online advertising will still be permitted provided that age control systems are in place.

The tobacco industry will also be made to collectively disclose its advertising expenditure, but companies will not be required to individually reveal this information. The government believes advertising plays an important role in the decision to start smoking.

Smoking remains relatively widespread in Switzerland with 9,500 people dying prematurely every year as a result of tobacco consumption, according to the government. In 2022, 6.9 percent of Swiss 11-year-olds to 15-year-olds had smoked cigarettes in the past 30 days while 5.7 percent of youths aged 15 to 24 had used electronic cigarettes at least once a month, the government said.

Switzerland is home to several tobacco multinationals, including Philip Morris International and Japan Tobacco International.

May 25, 2023

Zimbabwe Fights Land Reform Ruling

Zimbabwe has urged a Washington, D.C., federal judge to deny a German and Swiss family’s bid to enforce a multimillion-dollar arbitration award that stems from the country’s controversial land reform program, reports Law360.

After gaining independence in 1980, Zimbabwean officials looked to give land owned by white farmers back to the country’s indigenous communities.

When the white farmers refused to sell their land, Zimbabwe enacted legislation in 1992 that enabled it to seize control of properties in exchange for “fair compensation.” Frustrated with the slow progress of the land reform program, officials in 2000 unsuccessfully attempted to pass legislation that would allow them to seize land without compensation.

Ultimately, Zimbabwe enacted a “fast track” version of the program that required the government only to compensate landowners for “improvements” made to agricultural properties rather than for the land itself.

Before the reform program was enacted, the von Pezold family owned three estates in Zimbabwe comprising tens of thousands of acres, including the country’s largest tobacco growing and curing operation.

The family initiated arbitration in 2010 under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, also known as the ICSID Convention, claiming Zimbabwe’s reform program violated two treaties the country had signed with Germany and Switzerland.

In 2015, a ICSID tribunal issued the $277 million award in the family’s favor, finding that Zimbabwe had expropriated the von Pezolds’ property and breached international law through its land reform program.

After Zimbabwe’s failed to pay the reward, the family filed the current D.C. federal court enforcement action in July 2021.

Zimbabwe accuses the family of trying to increase its litigation burden and costs by filing a premature judgment motion.

May 25, 2023

Scandinavian Tobacco Reduces Share Capital

Scandinavian Tobacco Group will reduce its share capital from DKK93 million ($13.4 million) to DKK87 million by canceling some of its treasury shares, the company announced on its website. The board of directors resolved to complete the capital reduction on May 25, 2023, and the reduction of the share capital has been registered with the Danish Business Authority.

Following the capital reduction, the company’s share capital amounts to nominally DKK87 million divided into 87 million shares of DKK1 each. The total number of voting rights is 87 million.

May 25, 2023

Tobaccoville Announces Water Recycling Facility

Reynolds American Inc. will build a water reclamation plant at the Reynolds Operations Center in Tobaccoville, North Carolina, USA.

To be constructed by NextEra Energy Resources, the WaterHub facility is projected to reclaim more than 60 million gallons of water a year, equivalent to the annual water supply of approximately 550 average U.S. households.

“We are so proud to embark on the WaterHub project with NextEra Energy Resources at our flagship operations center in the U.S.,” said Bernd Meyer, executive vice president of operations at Reynolds, in a statement. “This project is not only a first for Reynolds but for the entire global BAT Group and is an important step toward reaching Reynolds’ water stewardship targets for 2025. Through the WaterHub, Reynolds is playing its part in the BAT Group’s progress against its goal of 35 percent less water withdrawn across global operations.”

NextEra Energy Resources’ WaterHub installation includes plans to break ground on the project in Tobaccoville in the fall of 2023. The project is forecasted to be finalized and fully operational by the end of 2024.

May 25, 2023

ITGA Confronts Tobacco Growing Critics

In the run-up to the World Health Organization’s World No Tobacco Day on May 31, the International Tobacco Growers Association (ITGA) is calling on the tobacco sector to raise awareness about the reality of tobacco growing to counterbalance the anticipated negative messaging.

“Our sector will once again become subject to unfounded and damaging claims,” the ITGA writes on its website, adding that growers have been unfairly excluded from discussions at the WHO Framework Convention on Tobacco Control.

“By ignoring tobacco growers’ legitimate concerns, the livelihoods of millions of people are put at stake,” the ITGA writes.

On its website, the organization has crafted retorts to common criticisms of the sector. For example, in response to the frequently aired accusation that tobacco growing is bad for the environment, the ITGA points out that tobacco covers only 0.25 percent of the world’s cultivated land. In response to the claim that tobacco growing is bad for growers’ health, it points out that the only health risk unique to tobacco crops is green tobacco sickness—a condition that is easily avoided with proper attire and training.

The ITGA also addresses criticisms about farmer debt and child labor on its website.

May 24, 2023

Innovator to Harness AI for Tobacco

Generative AI Solutions Corp. intends to build a large language model (LLM) dedicated to harnessing the power of artificial intelligence for the tobacco industry. For this purpose, it has incorporated a new subsidiary called GenAI Tobacco. The company intends to launch the LLM tobacco product under the brand name Tobacco Titan.

Tobacco Titan aims to provide AI-powered information about products, marketing and regulations, along with health and safety insights. The product could also make customized recommendations, such as new flavors, brands or smoking accessories that align with the adult user’s tastes and preferences.

“I have seen the need for innovation and data collection firsthand in the tobacco industry,” said GenAI Chairman and CEO Ryan Selby, who previously was co-founder and CEO of Poda Holdings, in a statement.

“Through my various contacts at some of the largest tobacco companies in the world, along with various other industry leaders, I believe we can build Tobacco Titan into an extremely valuable global enterprise system, providing utility to individuals and businesses alike.

“Our goal is to partner with certain companies in the tobacco industry that have access to various proprietary datasets which will give Tobacco Titan a competitive advantage based on the uniqueness of the data that is not generally available on the internet. We plan on working with our partners Metachain Technologies. to facilitate the development of Tobacco Titan and will finalize our arrangement with them in the coming weeks.”

May 24, 2023

Year: 2023