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Month: February 2024

  • Philippines Urged To Support Farmers at COP

    Philippines Urged To Support Farmers at COP

    Photo: Phiilip Morris Fortune Tobacco Co.

    Filipino tobacco growers are asking their government to advocate for their livelihoods at the 10th Conference of the Parties (COP10) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC), which is scheduled to take place Feb. 5-10 in Panama.  

    “Our lives are deeply intertwined with tobacco farming,” Leonardo Montemayor, a former agriculture secretary and board chairman of the Federation of Free Farmers, told The Manila Standard. “It is a way of life and our means of survival amid harsh economic headwinds. With the Department of Agriculture roadmap affirming its long-term support for tobacco farming, we hope that the Philippine government will take that commitment to heart when championing our industry in this upcoming COP. 

    The National Tobacco Administration (NTA) recently launched the Sustainable Tobacco Enhancement Program (STEP), an initiative aimed at boosting indigenous tobacco cultivation, particularly in Mindanao.

     Saturnino Distor, president of the Philippine Tobacco Growers Association, said STEP would improve tobacco farmers prospects, especially with the regulation of safer alternatives to cigarettes like vapes and e-cigarettes. “Studies and science show these are better than cigarettes. That’s where the industry is headed, so we have hope that tobacco farming will continue,” he said.  

    “Tobacco farming sustains millions of farmers and their families, as well as workers in the industry,” Distor said. “Switching crops requires significant investment in new infrastructure. If the future of alternative products is uncertain, what about the future of farmers? We appeal for compassionate and humane policies.” 

    The Philippine tobacco sector employs more than 2.1 million people and contributes significantly to government income, with PHP160 billion ($2.86 billion) collected in excise taxes in 2022, according to the NTA.

  • PMI and BAT Settle Patent Disputes

    PMI and BAT Settle Patent Disputes

    Photo: ASDF

    Philip Morris International and British American Tobacco have settled their ongoing intellectual property disputes relating to heated tobacco and vapor products.

    The cigarette makers had been fighting a multi-front patent battle. BAT, which makes Vuse vapes and Glo heated tobacco devices, was ordered to pay PMI millions of dollars after losing one case, while PMI has been blocked from importing its flagship heated tobacco device IQOS into the United States as part of another.

    The settlement includes non-monetary provisions between PMI and BAT that resolve all ongoing global patent infringement litigation, encompassing all related injunctions and exclusion orders, and prevents future claims against current heated tobacco and vapor products. The settlement also allows each party to innovate and introduce product iterations.

    “We are pleased that this matter has been resolved to the mutual satisfaction of both parties,” said PMI CEO Jacek Olczak in a statement. “There is a clear and growing global desire from adults who smoke to choose from a range of smoke-free products, and we believe continued reduced-risk category innovation can accelerate declines in the harms associated with smoking to the benefit of consumers and public health at large as we continue PMI’s journey to end the sale of cigarettes.”

    “This agreement is an important step forward for BAT and all our stakeholders,” said BAT CEO Tadeu Marroco in a statement. “Having already built two £1 billion [$1.28 billion] brands in Vuse and Glo, the potential for their continued impact on tobacco harm reduction is clear. I am delighted that this settlement will allow BAT to focus on developing innovative solutions that provide adult consumers with a greater choice of reduced risk products in support of our ‘A Better Tomorrow’ purpose. By doing so, we will help build a smokeless world for the benefit of consumers, investors and society as a whole.”

  • Song Young-jae to Lead BAT Korea

    Song Young-jae to Lead BAT Korea

    British American Tobacco has appointed Song Young-jae as its new country manager in Korea, reports The Korea Herald.

    A marketing and finance expert, Song will be tasked with promoting BAT’s combustible products.

    “Song is an expert in the global tobacco industry and the right person to spearhead the company’s future innovation,” a company official was quoted as saying.

    A graduate from the London School of Economics and Political Science, Song started his career at the BAT headquarters in London in 2008. In 2010, Song moved to BAT’s Netherlands office, where he nurtured his specialty in marketing and finance.

    Following a first stint at BAT’s Korean unit between 2014 and 2020, Song was appointed general director of the BAT-Vinataba joint venture in Vietnam.

    “I feel heavy responsibility taking the country manager post at BAT Rothmans amid the rapidly changing market environment,” Song said. “I will introduce innovative and sustainable business strategies so that BAT Rothmans can lead the market in the future and solidify its status in the global tobacco industry.”

  • Quebec Urged to Crack Down on Flavored Vapes

    Quebec Urged to Crack Down on Flavored Vapes

    Eric Gagnon, Vice-President of Corporate and Regulatory Affairs at Imperial Tobacco Canada, urges the government to buckle down on enforcing its law during the press conference. (Photo: Imperial Tobacco Canada)

    Imperial Tobacco Canada is urging the government of Quebec to crack down on illegal flavored vaping products.

    Three months after the law banning flavors in vaping products came into force, flavored e-cigarettes remain available at a large number of retail outlets that either infringe on the law or are using a variety of tactics to circumvent the law, according to Imperial Tobacco Canada, which is part of British American Tobacco.

    “We are aware of the growing concern with the proliferation of products that circumvent the regulations, resulting in the creation of an illicit market,” said Imperial Vice-President of Corporate and Regulatory Affairs Eric Gagnon in a statement.

    “We recently identified over 200 sales outlets that sell non-compliant vaping products. These stores have not adjusted to the new regulations and continue to offer a wide range of flavored products, including those that exceed the maximum permitted quantity of 2 ml.”

    According to Imperial, these stores now also sell flavor enhancers as a way to circumvent the new regulation. “Given that these enhancers are not intended to be vaped, they can pose serious risks to consumers who use them,” the company wrote in a press note. “It is also because of a similar illegal market that a wave of lung diseases spread between 2019 and 2020 in the U.S., claiming 68 lives.”

    Imperial says that instead of meeting its objective of tackling vaping among young people, the government has created a thriving illicit market.

    During a Jan. 21 appearance on the talk show Tout le monde en parle Health Minister Christian Dubé blamed tobacco companies for the situation.

    Imperial Tobacco Canada said it strongly refutes the allegations. “As a responsible company that fully complies with the regulations in place, we denounce these abuses and reiterate our call for stronger enforcement of the law,” said. Gagnon. “We warned the minister’s office several months ago about the inevitable collateral damage that would result from such a regulation being implemented. Unfortunately, nothing was done, and the situation persists as a result.”

  • EU: Tobacco Meetings are Transparent

    EU: Tobacco Meetings are Transparent

    Photo: artjazz

    The European Commission insists it has sound transparency measures in place, despite EU Ombudsman Emily O’Reilly’s findings of maladministration in an inquiry of the Commission’s interactions with representatives of the tobacco industry.

    “The Commission has been uncompromising in delivering the highest standards of transparency—on who we meet and who seeks to influence us,” a Commission spokesperson told Euractiv.

    In December, O’Reilly concluded that the Commission had failed to “ensure a comprehensive approach across all its departments to transparency of meetings with representatives of the tobacco industry,” including “failure to ensure a systematic assessment, across all directorates-general, as to whether potential meetings are needed with representatives of the tobacco industry.”

    Article 5.3 of the World Health Organization’s Framework Convention on Tobacco Control instructs parties, such as the EU, to protect public health polices from the tobacco industry’s commercial and other vested interests.

    Despite the finding, the Commission spokesperson insisted that there is a “very solid baseline consisting of horizontal rules on ethics and integrity for Commission staff.”

    Tobacco Europe, an industry organization, confirmed that it is difficult for tobacco lobbyists to arrange meetings with the Commission in any directorate-general. Its director of EU affairs, Nathalie Darge, said that FCTCs Article 5(3) is often “misinterpreted” and used as an excuse not to meet industry representatives.

  • Profits Up at Indian Cigarette Makers

    Profits Up at Indian Cigarette Makers

    Image: RODWORKS

    ITC’s reported a profit of INR55.72 billion ($670.3 million) for the three months that ended Dec. 31, up nearly 11 percent over the comparable 2023 period, the company announced on its website.

    The consumer goods giant benefited from higher demand for its cigarettes as a crackdown on the smuggling of international cigarette brands reduced competition. A sharp escalation in costs of leaf tobacco and certain other inputs, along with increase in taxes were largely mitigated through improved mix, strategic cost management and calibrated pricing.

    The company’s cigarette business, which contributes more than 40 percent of ITC’s top line, grew 3.6 percent over the period. Its paperboards, paper and packaging business, by contrast, struggled with competition from China and sluggish economic conditions in some of its export markets. The segment’s revenue declined almost 10 percent.

    ITC’s hotel business, which the conglomerate plans to spin off into a separate entity, reported  an 18 percent jump in revenue, driven by a strong revival in domestic tourism and heightened demand from corporate bookings.

    ITC competitor Godfrey Phillips India (GPI) also reported improved performance for the third quarter, according to Reuters. The company posted a consolidated net profit of INR2.12 billion, up 6.6 percent over the comparable 2023 quarter. Total revenue from operations rose 34 percent to 14.88 billion rupees, with the company’s core cigarettes segment registering a growth of 37 percent.

    GPI attributed its performance to growth in its core segment and easing expenses. The company manufactures and distributes Marlboro-branded cigarettes under a license agreement with PMI.

    The growth in the cigarette segment was led by the Marlboro Compact, which is priced at INR10 apiece.

  • Zimbabwe Exports Up

    Zimbabwe Exports Up

    Photo: Taco Tuinstra

    Zimbabwe earned nearly 3.5 times as much from tobacco exports in January than it did in the same month of 2023, reports The Herald.

    The country exported leaf worth $274.7 million last month, compared with $80.9 million a year ago. The golden leaf raked in just over $1.2 billion from the more than 233 million kilograms exported in 2023.

    According to the Tobacco Industry and Marketing Board, exporters shipped 37.8 million kg to date this year, with the bulk of leaf going to China, which has so far imported 30.2 million kg valued at $248.8 million. The average price was $8.24 per kg.

    African countries imported the second largest amount of Zimbabwean tobacco at 3.2 million kg worth $9.3 million at an average price of $2.89 per kg.

    European Union countries imported 1.3 million kg of tobacco from Zimbabwe valued at $2.6 million at an average price of $2.09 a kg.

    For next season, Zimbabwe’s tobacco growers have thus far planted 113,101 hectares, compared to 117,645 ha in the same period last year.

    The decrease in tobacco planting is largely attributed to the delayed start of the rainy season.

  • China Tobacco Manager Pleads Guilty to Corruption

    China Tobacco Manager Pleads Guilty to Corruption

    Image: waldemarus

    A former deputy manager of China Tobacco Yunnan Industrial Co. pleaded guilty on Jan. 25 to taking more than CNY354 million ($50 million) in bribes, reports China Daily.

    Prosecutors accused Gu Bo of taking advantage of his positions from 1999 to 2018 to assist others in their business activities in return for illegal payments.

    Gu was placed under disciplinary review and supervisory investigation in January 2023. He is the fourth China Tobacco Yunnan Industrial official to be investigated for corruption since last year.

    In 2023, authorities probed the activities of Zhang Shuichang, Zhu Shaoming and Wu Yi.

  • Kiwi Ministers Asked to Disclose Tobacco Links

    Kiwi Ministers Asked to Disclose Tobacco Links

    Photo: slexp880

    Health activists have asked New Zealand’s government ministers do disclose any links to the tobacco industry, noting that the politicians’ rhetoric is strikingly similar to the industry’s key talking points, reports the New Zealand Herald.

    The call comes follows the dramatic reversal of New Zealand’s generational tobacco ban legislation by the country’s recently installed coalition government. Last week, said Associate Health Minister Casey Costello drew fire for suggesting a temporary halt to tobacco tax increases in consideration of smokers’ socioeconomic backgrounds—an argument that has also been raised by tobacco allies on occasion.

    In a briefing published Jan. 31 by the Public Health Communications Center, three University of Otago public health academics highlight links between government members of parliament and the industry and similarities between their public statements.

    The paper points out that the government is a signatory to the World Health Organization’s Framework Convention on Tobacco Control, which requires member states to engage with tobacco companies only for regulatory purposes, while recording and disclosing any interactions.

    Janet Hoek, the co-director of smoke-free research group Aspire2025, stressed she and her colleagues were not accusing ministers of a conflict of interest. “Our call is simply for full transparency,” she was quoted as saying.

    According to Hoek, there is little popular support for the government’s repeal of the smoke-free legislation, which would have reduced the number of retailers selling tobacco, reduced nicotine levels in cigarettes and banned sales to anyone born after 2009.

    The paper lists the government’s past and current links to the industry, including two former NZ First staffers, David Broome and Apirana Dawson, who had gone on to work at tobacco giant Philip Morris International.

    Under questioning in Parliament on Jan 30, Prime Minister Christopher Luxon said he was not aware of any ministers receiving donations from anyone associated with the tobacco industry. He added he expected all ministers would comply with their obligations to report potential conflicts.

  • Setting It Fre

    Setting It Fre

    Image: Turning Point Brands

    Turning Point Brands prepares to roll out its FRE nicotine pouch nationally in the U.S. this year.

    By Timothy S. Donahue

    It’s looking like a FRE market in 2024. Turning Point Brands (TPB) is expected to release its 2023 financial results in late February. While the Louisville, Kentucky, USA-based nicotine product conglomerate remains one of the best stock bets in the tobacco sector, its 2024 goals are taking a more “modern” approach. TPB is getting ready to go full force with its premium modern oral nicotine product and is expecting that this year more consumers will trade in their combustible sticks for its FRE white pouch nicotine product.

    Graham Purdy, president and CEO of TPB, said during an earnings call that the company is excited about FRE’s U.S. national rollout in 2024. The product will compete in a billion-dollar-plus market that continues to grow rapidly. The company spent much of 2023 shoring up FRE’s supply chain to ensure consistent product quality, according to leadership.

    “[We have been] analyzing consumer feedback and testing online [and] select in-store marketing and merchandising programs to ensure a successful national rollout. Given our progress to date, we are now focusing on prudently ramping up our sales and distribution efforts to achieve steady growth over time,” said Purdy. “Our early learnings and performance in test markets have given us more confidence to now leverage our sales and distribution expertise to profitably expand FRE’s profile in-store count similar to what we achieved with Stoker’s Moist Snuff over time.”

    While confident about FRE’s prospects, Purdy expects market share gains to be “small and incremental.” “I think Q4 is sort of the time of the year where we [start] expanding out the foundation. I think our expectation for the product is to look similar to Stoker’s over time as we compete against the large players in the category,” Purdy explained. “It’s really a store output focus on the product, similar to some of the past practices we’ve had with other categories, specifically Stoker’s …. We focus on the stores that have the highest volume.”

    TPB reported a 5.6 percent drop in sales for the third quarter, ending Sept. 30, as it faces stiff challenges in a tight market. The company, known for its Zig-Zag and Stoker’s brands, reported a decline in consolidated net sales to $101.7 million, which is believed to be due to the current economic challenges faced by the consumer goods sector.

    Zig-Zag, a stalwart in TPB’s portfolio, suffered a 10.2 percent sales decrease compared to the same quarter last year. However, sales in the Stoker’s segment, TPB’s smokeless tobacco division, which includes FRE, rose by 10.1 percent. This illustrates modern nicotine’s growing popularity among consumers seeking traditional tobacco alternatives.

    It isn’t surprising that TPB is embracing FRE’s potential. The global modern oral market is booming. In a recent report, Polaris Market Research valued the worldwide nicotine pouches market at an estimated $1.6 billion in 2022 and projected the segment’s revenue to reach more than $26.8 billion by 2032.

    Summer Frein, chief revenue officer at TPB, said FRE has been well received in the marketplace and that consumer engagement has been encouraging. “We continue to focus on maximizing the value of our brands, executing against the plan we’ve established and growing our business with both our retail and end consumers,” she said. “We continue to focus on maximizing [the] value of our world-class brands and extensive distribution capabilities.”

    Asked during the conference call whether the company would go after stores with higher volumes and potentially higher price points, Frein said the company considers FRE a premium brand that can hold its own against bigger brands.

    “We have a strong belief in our point of difference … which is higher nicotine strength options available for our consumers, which we continue to see resonate both in-store and there’s been a strong response online, and [we] plan to profitably compete in the segment against those big brands,” she said.

    Purdy added that despite this year’s challenges, which included navigating wholesale inventory reductions at Zig-Zag Canada, and continuing with some additional difficult comparisons, he feels good about 2024. “Particularly our progress in the [alternative] channel and FRE,” he said. “We remain focused on demonstrating further progress for the balance of the year and into 2024.”

    TPB is also going to continue expanding into the alternatives markets, such as cannabis products. Purdy said that as additional states greenlight medical and recreational cannabis, his company will focus on providing a better shopping experience for consumers. In addition to more legal dispensaries and manufacturing and processing facilities, other retail outlets like head shops are drafting off this trend, he explained. “Our alternative B2B business saw Zig-Zag sales accelerate, growing over 40 percent during the quarter,” he said. “We also continue to be proactive in optimizing our capital structure.”

    Frein said the company’s future isn’t based exclusively on next-generation nicotine products. Online sales are also growing. While it may be making progress on its multiyear roadmap to establish FRE and continue Zig-Zag as lifestyle brands, it’s particularly focused on the cannabis market with Zig-Zag. After all, Zig-Zag continues to increase its brand awareness, and TPB’s leadership wants to build on Zig-Zag being well-known in the alternative market segment.

    The company is also focusing firmly on FRE being a premium product and continuing to boost its growing online sales segment. Frein said the nicotine market can be challenging and often takes a company in multiple directions simultaneously.

    “In our B2B alternative segment, we had a strong quarter with increased sales of Zig-Zag papers and cones. We also saw a double-digit rise in both the number of customers and orders on our alternative platform, with an increase in average order size. We made significant progress across the business this past quarter as we saw growth in every subcategory with the alt channel, which includes head shops, smoke shops, dispensaries, including … distributors, cultivators and manufacturers and processors,” Frein emphasized. “Additionally, we are seeing increased engagement across our digital platforms. The total online traffic sessions on our dedicated B2C site are up 33 percent [compared] to a year ago.”

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.