2023 - Tobacco Reporter

Exports Boost KT&G Profit

KT&G reported a net profit of KRW274.23 billion ($206 million) for the first quarter of 2023, up 4 percent over the comparable 2022 period, reports Yonhap News Agency.

The South Korean cigarette maker credited increased exports for its improved numbers.

“Increased tobacco sales in emerging markets, such as Indonesia, Africa and Latin America helped the quarterly bottom line,” KT&G wrote in a statement.

However, quarterly operating profit fell 4.9 percent year-on-year to KRW316.55 billion, due in part to higher leaf tobacco and other raw materials costs. Sales were down 0.5 percent to KRW1.4 trillion from KRW1.403 trillion during the cited period.

In January, KT&G signed a 15-year supply contract with Philip Morris International, the allows the South Korean cigarette maker to distribute its Lil tobacco-heating products through the multinational’s extensive global sales network.

KT&G aims to earn more than half of its sales from overseas businesses in 2027. It targets sales of KRW10 trillion won in 2027, compared with KRW5.9 trillion in 2022.

KT&G has exported its tobacco-heating products to more than 30 countries since 2020 through the PMI’s distribution network.

The South Korean company earns 90 percent of its overall sales from the cigarette business division and 10 percent from its tobacco-heating products division.

KT&G has four tobacco manufacturing plants, one each in South Korea, Russia, Turkey and Indonesia, whose combined capacity amounts to 13.6 billion cigarettes a year.

May 12, 2023

Top Court Asked to Review Avail Case

Avail Vapor has asked the U.S. Supreme Court to examine a lower court’s refusal to review a marketing denial order issued by the Food and Drug Administration to Avail products.

In its petition, known as a Writ of Certiorari, Avail asks the Supreme Court to consider the lower court’s legal reasoning and decision.

Among other things, Avail argues in its petition that the FDA’s decisionmaking was arbitrary and capricious; that another court sided with a different petitioner against the FDA on the same basic arguments; and that the case is significant not only for Avail but for the entire industry and its customers.

The Supreme Court has not yet decided whether it will hear Avail’s case.

May 12, 2023

BAT to Upgrade Bangladesh Factory

British American Tobacco Bangladesh plans to invest BDT607 million ($5.65 million) in equipment and a centralized uninterrupted power supply device, reports The Daily Star.

In Dhaka Stock Exchange filing, the multinational company said its board has approved the investment decision.

The company will use the money to purchase winnower tobacco recovery equipment, a hinge-lid cigarette making and packing line, and a centralized uninterrupted power supply device.

The investment would enhance the capacity and productivity of the company and would be funded from internal sources and bank financing, the filing said.

May 12, 2023

Zimbabwe Sales Surpass Half a Billion

Through the first 40 days of the 2023 marketing season, Zimbabwe tobacco leaf growers have sold 168 million kg of flue-cured tobacco leaf for $500 million, generating an average leaf price this season is $3 per kilogram, reports The Herald.

At the same corresponding point of the 2023 marketing season, growers had sold 116 million kg of leaf for $348 million, generating an average leaf price of $2.99 per kilogram.

Leaf sales on contract floors this marketing season totaled 153 million kg for $461 million while leaf traded on the auction floors totaled 14 million kg for $39 million.

The highest sales price recorded this season was $6.20 per kilogram while the lowest was $0.10 per kilogram.

This marketing season, leaf growers will retain 85 percent of their earnings in hard currency, up from last season’s mark of 75 percent. The remainder of the earnings will be in local currency pegged at the current interbank exchange rate.

Total tobacco leaf sales for the entire season are expected to reach 230 million kg compared to 212 million kg sold last season.

This season, tobacco growers planted on 112,293 hectares of land, down from 116,454 hectares last season.

The Zimbabwean government aims to create a $5 billion tobacco industry by 2025 by boosting leaf production and moving up the value chain.

May 12, 2023

Finland and Estonia Investigate Smuggling

Finland and Estonia are investigating a criminal case involving the illegal import of millions of cigarettes into Finland from Estonia and Latvia, reports The Baltic Times.

By failing to declare imports and pay taxes, Finland missed out on approximately €2 million ($2.18 million) in revenue, according to fiscal authorities.

Finnish and Estonian law enforcement officers recently seized two freight consignments containing a total of almost half a million cigarettes. The seizures are part of a criminal case estimated to involve the illegal import of about 6 million cigarettes spread over more than 20 different occasions between March and December 2022.

Some of the cigarettes were found to be counterfeit products.

During the criminal investigation, five persons have been apprehended in Finland and Estonia.

Sanctions on Russia and the sharp fall in traffic across Finland’s eastern border have shifted many illegal imports to postal and express freight transport, the Finnish customs authority reports.

May 12, 2023

Portugal to Further Restrict Public Smoking

The government of Portugal plans to ban smoking near schools and hospitals, as well as in covered outdoor seating areas, reports Channels TV. The law would also prohibit smoking in all indoor spaces, including areas currently set aside for smokers in cafes. In addition, venues would not be allowed to sell tobacco products in the covered locations.

The European Commission intends to decrease tobacco use in the 27-country bloc, which includes Portugal, to less than 5 percent of the population by 2040.

“With this law, we hope that young people can live in an environment without tobacco, reduce the incentive to smoke and allow smokers to overcome their addiction,” Health Minister Manuel Pizarro was quoted as saying on May 11.

“Our objective is to have a generation living without tobacco by 2040… this law is in line with the EU’s anti-tobacco stance, but we wish to go further,” he added.

In addition to the recently announced measures, the government wants to require manufacturers to print health warnings on new nicotine products, such as e-cigarettes.

In 2019, 13,500 Portuguese dies from tobacco-related diseases, according to Lisbon.

May 12, 2023

PM to Pay $36 Million in Massachusetts Suit

A Massachusetts unanimous state Supreme Judicial Court ruling awarded $37 million to a plaintiff in a lawsuit against Philip Morris USA.

Issued Tuesday, the justices’ opinion found enough evidence to support a prior jury verdict and lower court judge’s rulings against the company in a case that claimed that the company’s cigarettes — and the company’s claims about them — resulted in the plaintiff’s cancer, reports WBUR.

In the high court opinion, written by Justice Scott Kafker, the justices found the company failed to disclose its own research to customers, which showed that filtered cigarettes were even more damaging to human DNA than regular cigarettes.

The opinion noted Philip Morris did not dispute that cigarettes are harmful to health. Instead, the company claimed there was no evidence linking its advertisements to Greene’s personal decision to take up Marlboro Lights as a safer alternative.

May 11, 2023

Tobacco Industry Gathers in Bologna

The TABEXPO trade exhibition opened May 10 in Bologna, welcoming representatives of tobacco companies and their suppliers from around the world.

According to Tony Crinion, managing director of Quartz Business Media, the first day of the show exceeded expectations in terms of both visitors numbers and visitor quality.

Interest in the event, he said, was driven by the industry’s relentless focus on innovation, which has resulted in a compelling portfolio of products and services. Crinion also credited Bologna as a location for the event. The region is home to many tobacco-related businesses and continues to attract new tobacco investments, such as Philip Morris International’s state-of-the-art heated-tobacco factory and BAT’s innovation hub.

Quarts Business Media’s global portfolio of industry events, including its shisha and vape exhibitions, have all been performing equally well, according to Crinion, who again credited the industry’s innovation for the widespread interest.

In addition providing to a platform to showcase new products and services, TabExpo 2023 also featured a thought-provoking Congress during which experts shared their insights into the latest industry trends and developments.

May 11, 2023

Altria Settles Multiple Juul Cases

Altria Group has reached agreement on terms to resolve at least 6,000 Juul-related state and federal cases for $235 million.

“While we continue to believe the claims against us are meritless, we believe this settlement avoids the uncertainty and expense of a protracted legal process and is in the best interest of our shareholders,” said Murray Garnick, Altria’s executive vice president and general counsel, in a statement. “This settlement brings to a close the vast majority of our pending Juul-related litigation.”

In October 2019, the U.S. Judicial Panel on Multidistrict Litigation ordered the coordination or consolidation of federal individual and class action lawsuits related to Juul in the U.S. District Court for the Northern District of California for pretrial purposes. These cases include approximately 50 economic class actions, approximately 4,500 personal injury actions and approximately 1,500 government entity actions, including approximately 1,400 school district cases. These cases are covered by the agreement as well as cases in a related state court consolidated proceeding involving 750 cases.

This settlement does not apply to three cases brought by attorneys general, 35 cases brought by Native American tribes, 17 antitrust cases or three Canadian cases.

The settlement remains subject to the parties entering into one or more final settlement agreements approved by the relevant courts.

Altria expects to record a pre-tax charge of $235 million in the second quarter of 2023 and intend to treat such amount as a special item and exclude it from our adjusted diluted earnings per share.

May 10, 2023

Logic Challenges Marketing Denial Of Its Menthol Product

E-cigarette maker Logic filed papers in court on May 9 that challenge the U.S. Food and Drug Administration’s marketing denial orders (MDO) that it issued against two brands: Logic Pro Menthol E-Liquid Package and Logic Power Menthol E-Liquid Package, reports Bloomberg Law.

Logic called the FDA’s MDOs “arbitrary and capricious.”

The 3rd Circuit Court entered a stay on the FDA’s MDOs in December 2022. The MDOs were the FDA’s first-ever MDOs directed at menthol e-cigarette products.

May 10, 2023

Year: 2023