TobaccoReporter logo

Year: 2023

  • KT&G Authorized as “Economic Operator”

    KT&G Authorized as “Economic Operator”

    Kim Yong Beom, head of the KT&G Finance Office (left), and Jeong Seung Hwan, head of the Seoul headquarters of the Korea Customs Service, during the certification ceremony at the Customs’ service Seoul headquarters in Gangnam-gu on May 17. | Photo: KT&G

    The Korea Customs Service has certified KT&G as an “Authorized Economic Operator” (AEO).

    AEO is an international standard certification system in which the Korea Customs Service recognizes companies based on their performance in terms of export and import safety management, legal, internal control systems, financial soundness and safety management.

    The AEO certification provides KT&G with benefits, such as speedy customs clearance and reduced inspections of imported and exported goods.

    The certification will help the company accelerate its global expansion program as major export destinations such as the United Arab Emirates, Indonesia and Tunisia will receive similar customs clearance benefits under a mutual recognition arrangement between those countries and Korea.

    “We expect to be able to deliver products to our domestic and foreign customers more quickly under challenging trade conditions, such as rising protectionism and non-tariff barriers,” KT&G said in a statement. “In the future, we will acquire additional local AEO certifications for our foreign subsidiaries to strengthen our import and export competitiveness and accelerate our leap to becoming a global top-tier company.”

  • Universal Announces Expansion at Shank’s

    Universal Announces Expansion at Shank’s

    George Freeman

    Universal Corp. has announced an approximately $30 million expansion project at its subsidiary Shank’s Extracts, a specialty ingredient, flavors and botanical extracts company, headquartered in Lancaster County, Pennsylvania.  

    As part of this multi-year project, Shank’s Extracts will expand its facilities to support anticipated requirements for additional liquid and dry manufacturing, packaging and refrigerated storage. The project also includes installation of other manufacturing capabilities.

    “We are excited to announce this expansion in our facilities at Shank’s Extracts that will enable us to enhance and expand the product offerings of our plant-based ingredients platform,” said Universal Chairman, President and CEO George C. Freeman, III in a statement.

    Universal expressed appreciation for the support of the Commonwealth of Pennsylvania’s Department of Community and Economic Development (DCED) and the City of Lancaster for their coordination and support of this project. “Shank’s Extracts has a long and impressive history in Lancaster County, and DCED is proud to have worked with the company to ensure they continue to grow right here in Pennsylvania,” said DCED Secretary Rick Siger. “The Commonwealth has a lot to offer to food manufacturers, from our strategic location to our dedicated and skilled workforce.”

  • Russian Tobacco Mogul Sanctioned

    Russian Tobacco Mogul Sanctioned

    Photo: Natalia Merzlyakova

    The United States has sanctioned Igor Kesaev, co-owner of the Mercury group, which manages Megapolis, a major Russian tobacco distributor, reports Interfax.

    Listed by Forbes as Russia’s 35th-richest person last year, Kesaev’s holdings have included a major stake in the V.A. Degtyarev factory, which makes machine guns, anti-tank and anti-aircraft weapons, some of which have been used in Ukraine, according to Metro.

    Until April 2022, Kesaev was also chairman Megapolis.

    Kesaev’s involvement in tobacco dates to the early 1990s. As the Soviet Union broke up into its constituent republics, he started an importing business that worked with international tobacco companies eager to get their products into the Russian market, according to a 2014 profile of the magnate published on Forbes’ Russian website.

    Over time, Kesaev built the largest tobacco distributor in Russia through acquisitions of regional competitors, according to Forbes’ Russian website. By 2022, Megapolis delivers to 160,000 retailers across the country, according to the firm’s website.

    Kesaev has also been involved with the tobacco business in Ukraine. Following the toppling of Ukraine’s pro-Russian president, Viktor Yanukovych, in 2014 and Russia’s subsequent annexation of Crimea, Ukrainian officials began scrutinizing the role of Russian companies in various sectors of its economy.

    At the time, Trading Company Megapolis-Ukraine controlled 99 percent of Ukraine’s tobacco distribution market, according to research from the Anti-Monopoly Committee of Ukraine.

    Kyiv sanctioned Kesaev in 2016 for unspecified actions that it said threatened Ukraine’s national security. A top Ukrainian prosecutor later accused Kesaev of supporting “terrorist organizations” by supplying arms to Russian-backed separatist groups that have been fighting for nearly a decade to carve out two independent states—Donetsk and Luhansk—in eastern Ukraine.

    Kesaev has also been sanctioned by the EU and the U.K. for aiding Russia’s invasion of Ukraine.

  • ITC Quarterly Profit up by a Fifth

    ITC Quarterly Profit up by a Fifth

    Timon Schneider/Wirestock

    ITC of India reported profits of INR50.87 billion ($622 million) in its most recent fourth quarter, up 21.4 percent from the same period in 2022, reports Reuters.

    In a press release, the cigarettes-to-hotels conglomerate credited solid demand for cigarettes and other consumer goods.

    ITC’s revenue from operations rose about 6.6 percent to INR175.06 billion, boosted by a 14 percent jump in its cigarettes business, which includes the Classic and Gold Flake brands.

    During the quarter, ITC’s cigarette sales climbed as the broader tobacco industry stayed away from price increases due to a lower-than-expected tax increase on cigarettes in the central government’s budget.

    Sales of its nontobacco consumer goods have also improved as consumers in rural India are buying more amid easing inflation. ITC’s other consumer goods unit, which includes its foods and stationery businesses, rose 19.4 percent

    Revenue from the hotels business, meanwhile, nearly doubled as leisure and business travel picked up during the quarter.

  • Juul and Altria to Pay $60.5 Million in Minnesota Deal

    Juul and Altria to Pay $60.5 Million in Minnesota Deal

    mehaniq41

    Juul Labs and Altria Group will pay more than $60 million to settle Minnesota litigation relating to Juul’s marketing practices, according to Law360.

    Minnesota Attorney General Keith Ellison sued Juul in 2019, alleging its marketing was deliberately targeted to minors and that the company failed to adequately verify customers’ ages, as required by law.

    In April, the parties announced a settlement without disclosing the terms pending public filing of the papers.  

    Under the terms of the consent judgment filed with the Hennepin County District Court, Juul and Altria—a one-time Juul investor—will jointly pay $60.5 million to the state over an eight-year period. Altria will foot $5 million of the bill, according to the agreement.

    The deal is front-loaded and will require the companies to pay nearly 60 percent of the settlement in less than one year, according to the Attorney General’s office.

    The agreement also prohibits Juul from marketing or selling to children and young adults, restricts the company’s ability to sponsor certain events and use outdoor advertising in the state, prevents it from distributing product samples and requires that it accurately disclose the nicotine content of its products, according to the judgment.

    The deal with Minnesota follows a $438.5 million settlement with more than 30 states and territories in September, a $255 million deal in December to end economic loss claims in multidistrict litigation and a $23.8 million deal in March to resolve the city of Chicago’s suit, among others.

    And Juul last month agreed to pay $462 million to settle claims with California, Colorado, Illinois, Massachusetts, New Mexico, New York and Washington, D.C., over youth marketing claims.

  • FDA Denies Marketing of 250+ E-liquids

    FDA Denies Marketing of 250+ E-liquids

    The U.S. Food and Drug Administration on May 18 issued marketing denial orders to Mothers Milk WTA for more than 250 flavored and tobacco-flavored e-liquids.

    After completing initial acceptance review and subsequently proceeding to and completing a substantive scientific review of the company’s premarket tobacco product applications (PMTAs), the FDA determined that the applications lacked sufficient evidence to show the products are appropriate for the protection of public health.

    For example, the applications did not provide sufficient evidence to show comparative health risk data relative to other tobacco products on the U.S. market, information assessing the abuse liability of the new products, or that the new products could be manufactured consistently.

    “One of our most important responsibilities is to ensure new tobacco products undergo scientifically rigorous premarket review,” said Matthew Farrelly, director of the Office of Science within the FDA’s Center for Tobacco Products, in a statement. “We remain committed to evaluating these applications based on a public health standard that considers the risks and benefits of the tobacco product to the population as a whole.”

    To date, the agency has received premarket tobacco applications for more than 26 million deemed products, the majority of which are e-cigarettes. The agency says it has made determinations on 99 percent of these applications. This includes more than 1 million applications for non-tobacco nicotine products, including those containing synthetic nicotine, after Congress clarified FDA’s authority to regulate these products in April 2022.

    Further, FDA has authorized 23 tobacco-flavored e-cigarette products and devices, which are the only e-cigarettes that currently may be lawfully sold or distributed in the U.S. FDA has also denied marketing applications for millions of products that did not meet the requirements in the law. 

  • Altria Holds 2023 Annual Meeting

    Altria Holds 2023 Annual Meeting

    Photo: Altria Group

    Altria Group held its 2023 annual meeting of shareholders on May 18. During the meeting, CEO Billy Gifford provided brief remarks and addressed shareholder questions.

    During the meeting, shareholders  elected to a one-year term each of the 12 nominees for Altria’s board of directors (board) named in the company’s 2023 proxy statement; ratified the selection of PricewaterhouseCoopers as Altria’s independent registered public accounting firm for 2023; approved, on an advisory basis, the compensation of the Altria’s named executive officers (NEOs); approved, on an advisory basis, that future advisory votes on the compensation of Altria’s NEOs should be held annually; and rejected two shareholder proposals.

    Following the annual meeting, Altria’s board declared a regular quarterly dividend of $0.94 per share, payable on July 10, 2023, to shareholders of record as of June 15, 2023.

  • FDA to Seize Illegal Vapes

    FDA to Seize Illegal Vapes

    Photo: N Felix

    The U.S. Food and Drug Administration has issued “Import Alert 98-06” that states the regulatory agency will detain new tobacco products such as e-cigarettes without marketing authorization at the border.

    The companies impacted would include all importers, manufacturers and transporters of vaping product brands such as ELFBAR, EBDESIGN, Eonsmoke, Esco Bar and Stik that are on the agency’s “Red List.”

    The alert covers China, South Korea and the United States.

    “Divisions may detain, without physical examination, the tobacco products identified on the Red List of this Import Alert. If the division is not sure whether a tobacco product is the same product as one identified on the Red List, the division should consult with the Center for Tobacco Products (CTP)” the alert states. “CTP concurrence is required to add a product to the Red List.”

    In order to remove a firm’s product from the Red List, companies must provide information to the FDA that adequately demonstrates that the firm has resolved the conditions that gave rise to the appearance of the violation.

    “The purpose of this is so that the Agency will have confidence that future shipments/entries will be in compliance with the Federal Food Drug and Cosmetic Act (FD&C Act). For further guidance on removal from detention without physical examination, refer to FDAs Regulatory Procedures Manual (RPM), Chapter 9-8, ‘Detention without Physical Examination (DWPE),’” the alert states.

    The FDA states that the import alert is to prevent the sale of potentially illegal goods in America; Releasing agency resources to inspect other goods; provide uniform coverage across the country; shift the blame back to the importer to ensure that products imported into the United States comply with FDA laws and regulations, according to the agency.

    In June 2009, the Family Smoking Prevention and Tobacco Control Act gave the FDA the authority to regulate tobacco products, recognizing that it is the primary federal regulator for the manufacture, marketing, and distribution of cigarettes, cigarette tobacco, and smokeless tobacco.

    The designation rule, published in the Federal Register on May 10, 2016, and effective August 8, 2016, extends FDA’s authority to designated tobacco products, such as e-cigarettes, cigars, hookahs, and pipe tobacco, as well as their components and parts, but not their accessories.

  • STG Reports Modest Sales Increase

    STG Reports Modest Sales Increase

    Photo: STG

    Scandinavian Tobacco Group (STG) reported net sales of DKK1.96 billion ($285.53 million) in the first quarter of 2023, up 1.3 percent from the comparable 2022 period. EBITDA before special items was DKK474 million with an EBITDA margin of 24.1 percent.

    During the quarter, STG completed the acquisition of Alec Bradley, a leading player in the U.S. handmade cigar category. In April 2023, following the close of the quarter, the company announced the acquisition of XQS, a brand active in Sweden within the next-generation product category space.

    While still struggling with uncertainties relating to consumer behavior, the company expects year-on-year impacts from inflation to decline over the coming quarters. “Consumer demand for handmade cigars in the U.S. in the quarter is still perceived as resilient, although volume declines remained above its structural decline trend as overflow from the exceptionally strong two years during the pandemic trails off,” the company wrote in a statement.

    “STG remains on track to deliver on the 2023 guidance with results for the first quarter being up against strong comparisons in 2022,” said CEO Niels Frederiksen. “We have stabilized our production issues, but we are still recovering from this impact as well as cost inflation into 2023, affecting margins negatively. The group is making good progress on our ambition to grow the size of the company with two transactions announced within the last few months.”

  • Bill Threatens Menthol and Nicotine Plans

    Bill Threatens Menthol and Nicotine Plans

    Photo: Rechitan Sorin

    The U.S. House Committee on Appropriations may spoil the Food and Drug Administration’s plans to ban flavored cigars, ban menthol cigarettes and limit nicotine levels in cigarettes, reports Halfwheel.

    On May 17, the committee, which is responsible for allocating funds to various government entities, including the FDA and the Department of Agriculture, unveiled the draft of the Agriculture, Rural Development, Food And Drug Administration, And Related Agencies Bill.

    The proposed language says that FDA cannot use any of the money Congress allocates for it to ban menthol or set nicotine levels, effectively preventing the agency from carrying out the regulations.

    The relevant passages are:

    SEC 768. None of the funds provided by this Act or provided from any accounts in the Treasury of the United States derived by the collection of fees available to the agencies funded by this Act, may be used by the Secretary of Health and Human Services to finalize, issue, implement, administer, or enforce any rule, regulation, or order setting a tobacco product standard that mandates a maximum nicotine level for cigarettes.

    And:

    SEC 769. None of the funds provided by this Act, or provided from any accounts in the Treasury of the United States derived by the collection of fees available to the agencies funded by this Act, may be used by the Secretary of Health and Human Services to finalize, issue, or implement any rule, regulation, notice of proposed rule- making, or order setting any tobacco product standard that would prohibit menthol as a characterizing flavor in cigarettes or prohibit characterizing flavors in all cigars and their components and parts.

    Anti-tobacco activists were aghast. “This bill is a special interest gift to the tobacco industry that would result in more kids addicted to tobacco and more lives lost, especially Black lives,” wrote Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, in a statement. “These shameful provisions give the tobacco industry everything it wants from Congress in exchange for its campaign contributions.”

    The bill is in its early stages and is likely to undergo many modifications.