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Month: October 2024

  • Ispire Launches New Vape Filling Machine

    Ispire Launches New Vape Filling Machine

    Image: Luluraschi

    Ispire Technology is launching a new vapor device filling machine. Scheduled to be unveiled at the Benzinga Cannabis Capital Conference in Chicago Oct. 8–9, the I-80 can fill and seal 4,000 0.5 mL vapor devices per hour.

    According to Ispire, the machine is 10 times faster than traditional manual methods and twice as fast as current automated systems. It is also cost-effective, saving $1,000 for every 10,000 units produced, the manufacturer wrote in a press release.

    Ispire says its self-sealing devices remove the need for separate capping, boosting overall workflow efficiency by 1,000 percent over manual methods and 100 percent over other automated systems.

    “The I-80 isn’t just a machine; it’s a game-changing solution to the capacity challenges that have hindered cannabis operators for years,” said Ispire Co-CEO Michael Wang.

    “We’re not just improving productivity—we’re leading a paradigm shift in cannabis production efficiency. This innovation aligns with our mission to push the boundaries of technology for the benefit of our customers and the adult consumers they serve.”

  • Switzerland Implements National Age Restrictions

    Switzerland Implements National Age Restrictions

    Photo: Lucia

    Switzerland has enacted a new federal law requiring all cantons to restrict the sale of tobacco products to adults, reports SWI.

    The new tobacco products act ends the cantonal patchwork of rules on cigarettes and tobacco-related products.

    Before Oct. 1, when the new law took effect, the cantons of Schwyz and Appenzell Innerrhoden had no age restrictions on tobacco sales. In other cantons, potential buyers had to be 16 or 18 years old.

    The new federal law also restricts advertising. Tobacco advertisements are no longer permitted on public property, and on private property only if they cannot be seen from public property. Events aimed at minors are no longer permitted to have tobacco sponsors. Free promotional gifts related to tobacco consumption are also no longer permitted.

    Public smoking restrictions now apply to all tobacco products.

    It remains unclear however how the federal law will be implemented as enforcement remains the responsibility of individual cantons.

  • Illegal Factory Raided in Bulgaria

    Illegal Factory Raided in Bulgaria

    Photo: Interior Ministry

    Bulgarian authorities uncovered a large illegal cigarette factory near Sofia, reports the Bulgarian News Agency.

     The facility, which produced fake versions of well-known cigarette brands, was capable of producing some 2,400-2,800 cigarettes per minute. The police also found some 20 tons of processed tobacco, designated to be packaged and branded as cigarettes.

    Pre-trial proceedings have been initiated and a witness has been questioned. The operation was conducted under the Customs Agency’s direct supervision.

  • Lithuania Takes Aim at Cigarette Balloons

    Lithuania Takes Aim at Cigarette Balloons

    Photo: andrei310

    Lithuania may permit its border guards to shoot down balloons carrying contraband from Belarus or Russia when they cross the border, reports The Baltic Times.

    “In my opinion, border guards should have the right to shoot them down in the air,” Defense Minister Laurynas Kasciunas told reporters on Sept. 30.

    The minister’s comments came after a balloon, suspected to have come from Belarus and carrying smuggled cigarettes, fell within Vilnius Airport’s airfield on Sept. 28.

    Rustamas Liubajevas, the commander of the Lithuanian State Border Guard Service (SBGS), said that border guards have neither the necessary weapons nor the legal authority to shoot down objects that illegally cross the Lithuanian border by air.

    He explained that border guards use assault rifles, which do not have the technical capability to shoot down higher-flying objects.

    The SBGS has recorded around 250 incidents involving such balloons in the past month.

    Poland too has recorded increased attempts to smuggle cigarettes into its territory by air.

  • Battery Law Forces IQOS from Kiwi Store Shelves

    Battery Law Forces IQOS from Kiwi Store Shelves

    Photo: vfhnb12

    Philip Morris International pulled its IQOS tobacco heating device from New Zealand store shelves after a new law took effect requiring vaping devices to have removable batteries, reports RNZ. Tobacco heating products (THPs) are classified as e-cigarettes in New Zealand.

    RNZ says it has seen PMI emails sent to suppliers saying IOQS is “unavailable for purchase due to a regulatory change on 1 October 2024 affecting vaping devices.” In a statement, the multinational said it always complies with all necessary regulations, including on electronic devices.

    IQOS consumables, known as Heatsticks, remain available for sale in New Zealand.

    The news follows controversy about Associate Health Minister Casey Costello’s July announcement of a 50 percent cut to THP excise taxes—a move that critics say benefits only PMI, which is the sole supplier of the products in New Zealand.  

    Costello argues the tax cut will encourage smokers to switch to THPs, which are believed to be less harmful than combustible cigarettes. Costello’s plan is to have more than 7,000 people switch to THPs, which she sees as a tool to achieve New Zealand’s smoking reduction targets.

    Prime Minister Christopher Luxon has backed Costello, telling RNZ the excise tax cut plan was a 12 month trial to “see how it goes” with HTPs lowering smoking rates.

    Health advocates have accused the ruling coalition of caving to pressure from tobacco lobbyists. In late 2023, the government scrapped the country’s controversial generational tobacco ban, which would have prohibited tobacco products for people born after 2009.

    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 tobacco industry.

  • FDA clears RespiRx IND

    FDA clears RespiRx IND

    Image: Qnovia

    The U.S. Food and Drug Administration has cleared an Investigational New Drug (IND) application for Qnovia’s RespiRx nicotine inhaler (QN-01).

    According to Qnovia, the RespiRx is the first truly inhalable nicotine replacement therapy (NRT) to assist smokers attempting to quit smoking.

    The company will initiate a Phase 1, randomized, crossover, open-label trial to determine the pharmacokinetics, safety and tolerability following self-administration of nicotine-containing products in up to 24 healthy adult subjects who currently smoke combustible cigarettes.

    “The FDA clearance of our IND application for QN-01 marks a significant achievement for Qnovia as we transition to a clinical-stage therapeutics company,” said Qnovia CEO Brian Quigley in a statement.

    “Our U.S. clinical development plan is derisked by the positive first-in-human data we generated last year in support of advancing QN-01 in the United Kingdom where we demonstrated pulmonary delivery and a superior pharmacokinetic profile for the RespiRx when compared to existing nicotine replacement therapies,”

    “The next step for our U.S. program is to initiate a randomized Phase 1 trial that evaluates QN-01 compared to the Nicotrol Inhaler and combustible cigarettes in a head-to-head comparison. We remain on track to dose our first patient in the fourth quarter of 2024 and in parallel will be advancing to a pivotal clinical trial in the U.K. to support an MAA submission [Marketing Authorization Application] to the MHRA [ Medicines and Healthcare products Regulatory Agency] in 2026.”

    Qnovia’s proprietary drug/device combination already demonstrated dose-dependent pharmacokinetics, pulmonary delivery and was well tolerated in a first-in-human study conducted to support advancing QN-01 in the U.K., according to the company.

    “There have been no treatment options for smoking cessation approved in the U.S. in over 20 years. As a result, attempting to quit ‘cold turkey’ remains the most popular method of quitting smoking,” said Mitch Zeller, Qnovia’s policy and regulatory strategy advisor.

    “There is an extraordinary public health need for truly innovative products to help health-concerned smokers stop using cigarettes. Any effort to reduce the death and disease caused by tobacco use must include new and better tools in the treatment toolkit,” Zeller added.

  • The Long Road to Zero

    The Long Road to Zero

    Photo: monticellllo

    Efficiency will be the key to decarbonizing the EU transportation sector by 2050.

    By Stefanie Rossel

    To achieve its Green Deal goal and make the European Union climate-neutral by 2050, the European Commission aims to decarbonize transportation in the common market by that same date. It’s a mammoth task because the transportation sector is the EU’s biggest source of greenhouse gas (GHG), currently accounting for more than 1 billion tons of carbon dioxide (CO2) emissions annually, which is equivalent to the total emissions of Germany and the Netherlands combined.

    Not only is transportation responsible for more than a quarter of the EU’s total GHG emissions, but it is also the only major economic sector in Europe where GHGs have increased since the 1990s. Demand for transportation continues to grow steadily in the EU. According to the Alliance for Logistics Innovation through Collaboration in Europe (ALICE), demand for transportation in Europe increased by more than 20 percent between 2000 and 2019, with freight transportation growing 22 percent. Although the Covid-19 pandemic disrupted this trend, leading to a drop in GHG emissions from transportation of 13.5 percent between 2019 and 2020, according to the European Environment Agency, emissions quickly resumed their upward trend, growing by 2.7 percent in 2022. International transportation emissions, such as those from ships and airplanes, are also projected to continue increasing.

    Complicating matters, a recent analysis by Transportation and Environment (T&E), a European advocacy group for clean transportation and energy, shows that transportation has been decarbonizing more than three times slower than the rest of the EU economy since peaking in 2007. Under current climate policies, the group says, its share could reach 44 percent of all GHG emissions in the common market by 2030, up from 29 percent today.

    According to the evaluation, the EU’s current climate regulations will reduce transportation emissions by just 25 percent compared to 1990 levels in 2040 and by 62 percent in 2050 as the new CO2 standards fall short on several measures, according to the organization. For starters, T&E argues, the rules lack a 100 percent zero-emission target. Furthermore, they leave 13 percent of heavy-duty vehicle sales unregulated and define trucks running partially on diesel as “zero-emission.” Cars, vans and trucks with combustion engines bought between now and the mid-2030s, the group argues, will still be driving on European roads while shipping operators have little incentive to increase their operational efficiency. Meanwhile, demand for air travel, spurred by increasing airport capacity, will offset any gains from green fuel this decade.

    More Measures Needed

    T&E therefore calls for additional efforts complementing Green Deal policies to fully decarbonize transportation. Next to halting new airport and motorways capacity expansion and introducing binding electric vehicle sales targets for companies owning large fleets, the organization stresses the importance of direct electrification of road transportation, which, the group says, is two times more efficient than hydrogen power and four times more efficient than using e-fuels. Trucks are responsible for 25 percent of climate emissions from road transportation in Europe while accounting for less than 2 percent of the vehicles on the road, the group says.

    A study T&E commissioned in 2022 concluded that it was possible to transition all new freight trucks to zero emission cost-effectively and in time to meet Europe’s climate targets. Long-haul trucks, the study suggested, would initially have a slower increase in uptake potential but grow quickly to 80 percent by 2026 and to 99.5 percent by 2030. Held against the reality of zero-emission truck sales in the EU, this might be wishful thinking: Of the 11,000 new zero-emission heavy-duty vehicles sold in the EU-27 in 2023, only 0.9 percent were heavy trucks and 5 percent light and medium trucks, according to the International Council on Clean Transportation. In the fourth quarter of 2023, the sales share of zero-emission vehicles (ZEVs) in the heavy truck segment exceeded 1 percent for the first time.

    Reducing CO2 emissions by 50 percent will require a minimum of 465,000 ZEVs, the European Automobile Manufacturers’ Association estimates. These vehicles will need to be supported by 53,000 and 65,000 charging points as well as around 2,900 H2 fueling stations.

    Increasing Logistics Efficiency

    Logistics account for 11 percent to 12 percent of Europe’s total CO2 emissions, according to ALICE vice chair Sergio Barbarino. “The problem is that while most industry sectors since the 1980s or 1990s have managed to decrease their carbon footprint, transportation has been completely unbound,” he says. “Transportation has a huge struggle to decarbonize.”

    While thorough electrification of vehicles or use of sustainable aviation fuels are important factors in the journey toward zero emission, ALICE prefers a more holistic approach, leveraging opportunities for increased logistics efficiency.

    ALICE was set up to develop an industry-led strategy for research, innovation and market deployment of logistics and supply chain management, and to provide an overarching view on logistics and supply chain planning and control.

    The not-for-profit association has more than 180 members and represents all logistics key stakeholders as well as retail companies, information and communication technology providers and research and technology centers. ALICE supports, assists and advises the European Commission in the implementation of the EU Programs for research, Horizon 2020 and Horizon Europe.

    The alliance’s defining rationale is the Physical Internet (PI), an open-method approach that maximizes the use of existing data in infrastructure. The PI involves sharing resources with business partners, for instance, transportation means or storing space, which reduces costs, increases efficiency and contributes directly to reducing traffic and therefore emissions. The PI aims to seamlessly connect organizations by means of an overarching network system to external sources and capabilities so that they can collaborate and share transportation routes as well as logistics nodes, such as distribution centers, inland terminals or airports and ports.

    For the future, ALICE has identified several pillars. The first deals with how freight demand growth is managed, focusing on the question of how much stuff really needs to be moved and whether it would be more efficient to manufacture closer to the point of consumption.

    The second pillar stresses that all modes of transportation should be used as efficiently as possible. “Our problem today is that traditionally shaped supply chains are highly individual and diverse,” Barbarino said. “This lack of standardization makes the supply chain inefficient.” Choosing the most efficient energy mix between diesel-powered trucks with 100 g GHG per ton-kilometer, ZEVs (which still emit around 80 g GHG per ton-kilometer), trains (25 g GHG per ton-kilometer) or ships (10 g GHG per ton-kilometer) can make a huge difference.

    Pillar No. 3 calls for managing fleets and assets as efficiently as possible. In Europe, a truck is on average used with 50 percent of capacity. “As long as you only ship single-type products, you can never fill a truck efficiently. To achieve this, you will need combined products of different companies.”

    If enhanced efficiency is achieved in pillars one through three, Barbarino emphasized, this would lead to a 50 percent to 60 percent reduction in emissions. In addition, ALICE expects a $100 million to $300 million cost relief for the European industry.

    Removing Regulatory Barriers

    Several EU directives currently in preparation are expected to significantly facilitate the realization of more sustainable transportation solutions, according to Barbarino. The revised Weights and Dimension Directive will remove barriers for the uptake of ZEVs and energy-saving technologies and harmonize the rules on maximum weight and dimension of heavy-duty vehicles in cross-border operations. Among other things, it will allow for the extra weight of the batteries for ZEVs, enable a European modular system between member states with trucks heavier than 40 tons and will streamline procedures and requirements for indivisible loads.

    The new Combined Transportation Directive will support the shift from road freight to lower emission transportation modes such as inland waterways, maritime transportation and rail. It will entail the obligation on terminals to publish information about available services and facilities.

    Apart from policies, automation could be a revolution for freight transportation, Barbarino pointed out, and also for sustainability. He reported about an experiment in which companies had tried out “silent delivery,” i.e., delivery before six a.m. and thus outside the usual morning rush hour. This way, the companies could save 30 percent of fuel.

    “To decarbonize transportation, it is important to push the boundaries of technology and regulation,” Barbarino concluded. “Often, the most complex part of a project is not the technology or the innovation but the permitting.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Testing the Waters

    Testing the Waters

    Photo: Adobe Stock

    Tobacco companies are slowly gaining their footing in the cannabis business.

    By Stefanie Rossel

    Eight years after the first tobacco company invested in a cannabis firm, hardly a month passes without news on the progress of cigarette makers’ ventures into this field. On Sept. 5, Organigram Holdings, BAT’s first major investment in the cannabis sector, announced that it had closed the second of three tranches of a CAD124.56 million ($92.2 million) follow-on equity investment by BAT’s BT DE Investments subsidiary.

    As part of the transaction, Organigram in 2023 created a strategic investment pool, Jupiter, to be funded with CAD83.1 million. According to a press release, Jupiter is targeting investments in emerging cannabis opportunities that enable Organigram to apply industry-leading capabilities to new markets, thus expanding its global footprint.

    Organigram’s first Jupiter investment, in March, was in Open Book Extracts, a Roxboro, North Carolina, USA-based manufacturer of legal cannabinoid ingredient production, formulation and finished goods. The $2 million investment was Organigram’s second into the U.S. market. In June, the company invested €17 million ($18.8 million) in Sanity Group, a leading German cannabis company.

    Meanwhile, on Aug. 1, Aurora Cannabis announced a commercial collaboration with Cogent International manufacturing, a subsidiary of inhalation and oral delivery systems provider Vectura Fertin Pharma, which is associated with Philip Morris International. Through the arrangement, Cogent will launch its Luo CBD lozenge on Aurora’s Canadian medical cannabis patient platform, giving it access to patient feedback that will be used for building data for future analysis.

    There is, however, also less upbeat news from the sector. Altria’s Cronos Group, which has been struggling to find its footing in the Canadian recreational market, ended last year with a $168.7 million loss; in mid-2023, Cronos was even reviewing sales options.

    In June this year, Imperial Brands’ Oxford Cannabinoid Technologies (OCT) delisted from the London Stock Exchange, where it had been one of the first cannabis companies to start trading in 2021. Since its listing, the company’s share price had fallen by 97 percent, with its market capitalization plunging to £1.5 million ($1.96 million). OCT stressed that it had no immediate cash flow concerns but said that, as an unlisted company, it expected to have access to a larger pool of capital.

    Room for Experimenting

    Deepak Anand

    Deepak Anand, principal of Vancouver-based ASDA Consultancy Services, describes the challenges tobacco companies are encountering in the cannabis sector as part of the natural progression for businesses entering a new industry. “For most tobacco companies, these early-stage investments are not particularly significant from a financial standpoint; this is certainly true for Altria,” he says. “Their involvement in cannabis is more about gathering intelligence. By holding stakes in cannabis companies, tobacco firms gain insights into the market, including product trends and production methods, in case they decide to scale up their operations in the future.”

    According to Anand, Organigram is a prime example of this approach. “What’s notable about Organigram is their product development collaboration—a center of excellence focused on next-generation cannabis products,” he says. “As a result, we see many personnel from BAT actively involved at Organigram’s Moncton, New Brunswick facility. They are conducting extensive R&D on cannabinoid products, immersing themselves in different sectors of the cannabis industry, leveraging the federally legal market to experiment and innovate.”

    In August 2024, Organigram announced preliminary results from its clinical pharmacokinetic study on nano-emulsion technology. Branded as FAST (fast-acting soluble technology), this patent-pending innovation aims to offer faster onset, improved bioavailability and a more predictable duration of cannabis effects. Organigram expects to launch FAST in the fall, starting with gummies.

    Anand explains why many tobacco companies are zeroing in on CBD, pharmaceutical or medical cannabis segments. “Tobacco firms have realized they must prioritize consumer safety and navigate complex legal frameworks. For instance, the U.K.’s Proceeds of Crime Act presents a unique challenge. Since nonmedical cannabis remains illegal in the U.K., investing in cannabis companies—even in jurisdictions where it is legal—can be legally complicated.”

    Potential New Market

    Cannabis continues to be legalized for medical and recreational use in more jurisdictions, albeit at a slower pace than in recent years. On April 1, Germany became the third country in the European Union after Malta and Luxemburg to authorize recreational cannabis, although under EU pressure it stopped short of the originally envisioned full legalization. The first phase allows consumers to cultivate cannabis for personal consumption in social clubs; in a second step, Germany will test legalization in selected regions.

    Six months into partial legalization, recreational cannabis is hardly flourishing: The social clubs are just getting going while Bavaria continues to fight cannabis consumption with new local laws. Nevertheless, Anand sees opportunity in Germany. The country’s 2017 legalization of medical cannabis coincided with the introduction of telemedicine. Telemedicine providers specialized in prescriptions for cannabis have mushroomed since. “Cannabis is now regarded as any other medical product,” says Anand. “That shift alone has created very strong market forces. Most people who want cannabis can get a prescription and obtain it.”

    He expects the cannabis landscape to experience another shift once the pilot projects under the second pillar of Germany’s cannabis law become operational. “Once consumers are able to access cannabis products in pharmacies or licensed stores, we’ll see a new phase in the market,” says Anand. In April, lawmakers released draft legislation to implement the second pillar of Germany’s cannabis law.

    Japan is another market worth watching. In 2023, the country passed a bill to amend its Cannabis Control Law for the first time in 75 years. The proposed revisions, expected to take effect as soon as this year, will bring much-needed clarity to CBD regulations and may accelerate legal use in areas like medicine, health, beauty, beverages and edibles. Citing Euromonitor International, The Japan Times noted that sales of CBD products in Japan have grown sixfold over the past four years, reaching ¥24 billion ($154 million) in 2023.

    “I believe this amendment will open up the CBD category, although the restrictions on THC content are strict compared to other markets,” says Anand. “That poses a challenge, but it’s significant that the Japanese government is moving away from its previous stance, where CBD was only allowed if derived from the seed and stalk of the cannabis plant, rather than the flowers, where the most active cannabinoids are found.”

    As for Japan Tobacco, the only major international tobacco company without a stake in the cannabis sector, Anand expects them to enter the space “sooner rather than later.” “The amendment of Japan’s Cannabis Control Law, along with increased activity from JT’s global peers, will likely prompt the company to explore opportunities in this field more aggressively,” he says. However, since JT is partially owned by government, any major business decision would require the approval of Japan’s minister of finance.

    Shifting Sector

    Statista expects the global cannabis market to generate $64.73 billion in 2024 and then grow at a compound annual growth rate of 3.01 percent until it reaches a value of $75.09 billion by 2029. With an anticipated revenue of $42.98 billion in 2024, the United States will continue to be the world’s largest market for cannabis, although the substance remains illegal on the federal level.

    Currently, medical cannabis is legal in 38 states and various U.S. territories while recreational use is permitted in 24 states and Washington, D.C. In April, the Drug Enforcement Administration (DEA) announced that it would reclassify the drug from the strictest Schedule I, which refers to drugs with no accepted medical use and a high potential for abuse, to the less stringent Schedule III.

    By rescheduling cannabis, the drug would be studied and researched to identify concrete medical benefits, opening the door for pharmaceutical companies to get involved with the sale and distribution of medical cannabis in states where it is legal. Reclassifying cannabis would also represent a first step toward narrowing the policy chasm between state and federal cannabis laws.

    On Aug. 27, however, the DEA postponed its cannabis reclassification hearing to Dec. 2, after the U.S. presidential election. The announcement sent cannabis stocks plunging. Asked to take a position on a ballot measure seeking to legalize recreational cannabis in Florida, Republican presidential contender Donald Trump on Sept. 9 said that if he wins in November, his administration would “focus on research to unlock the medical uses of marijuana.”

    The Democratic presidential candidate, Kamala Harris, too appears receptive. “Both sides supporting the cause is certainly good news for the cannabis industry,” says Anand. “But at this point, it is still uncertain what U.S. legalization might look like. What we have seen so far is the DEA comment on rescheduling, which will still involve cannabis to be considered like a pharmaceutical product. But then what happens on a state-by-state basis—will there be a Department of Justice memo forcing the government to leave the states alone because of the states’ rights?”

    The cannabis sector is undergoing a significant transition, according to Anand. “In North America, there was a surge of early interest and substantial investment in the sector, but much of that capital was misallocated or even wasted. Some early-stage founders mismanaged their companies, leading to inefficiencies. The challenge with cannabis legislation is that it often moves more slowly than anticipated, which leads to disappointment when milestones aren’t met, such as the DEA delaying hearings or Germany adopting a phased approach to legalization.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Smokeless Coup

    Smokeless Coup

    Marlboro remains the world’s most valuable tobacco brand, but cigarette alternatives are gaining ground.

    Contributed

    The total value of the world’s top 10 most valuable tobacco brands has decreased by 6 percent, with eight out of 10 brands experiencing a decline in brand value this year, according to the latest ranking by Brand Finance, a leading brand valuation consultancy. The ranking reveals a significant shift in the industry toward smokeless alternatives, driven by changing consumer preferences and increasing regulatory pressures. Despite these changes, traditional combustible tobacco brands remain the most valuable, supported by loyal customer bases and effective pricing strategies.

    IQOS (brand value up 8 percent to $3.5 billion) is the fastest-growing tobacco brand, driven by rising revenue from smoke-free products. Philip Morris International reported smoke-free products reached nearly 40 percent of total net revenues in the fourth quarter of 2023. This was driven by the continued growth of IQOS, which has now surpassed Marlboro in net revenues, solidifying its position as the leading premium nicotine brand less than 10 years after its launch.

    Despite a 6 percent drop in brand value to $32.6 billion, Marlboro retains its position as the world’s most valuable tobacco brand for the 10th consecutive year. It leads the sector by a significant margin, with a brand value more than five times that of L&M, which holds the second spot.

    Altria Group, which owns Marlboro in the United States, and PMI, which owns the brand elsewhere, have both faced declining revenue from combustible products. Altria has struggled with lower shipment volumes and increased promotional investments, including a recent $0.17 per pack price increase on Marlboro and other brands in the U.S. Similarly, PMI has reported a drop in revenue from combustible tobacco. Nevertheless, Marlboro retains its top position due to its loyal customer base and strong promotional strategies.

    L&M (brand value $6.2 billion) has climbed to second in the ranking, despite recording a 2 percent decline in brand value. It has overtaken Pall Mall, which now sits in third following a 9 percent loss in brand value to $5.9 billion. L&M’s brand value has taken a hit as shipment volumes have declined. L&M is the sector’s strongest brand with a Brand Strength Index score of 77 out of 100.

    “While Marlboro continues to lead as the most valuable tobacco brand for the 10th consecutive year, the industry is undergoing significant transformation,” said Richard Haigh, global managing director at Brand Finance.

    “The rise of smokeless alternatives like IQOS highlights shifting consumer preferences and changing market dynamics. Earlier this year, BAT’s announcement of a $31.5 billion impairment on the value of some of its U.S. cigarette brands marked the first significant write-down in a major market.

    “Acknowledging the reality that the market for traditional cigarettes is shrinking and taking action should be seen both as a bold and an important step in addressing an existential problem for the company. With eight out of the top 10 brands experiencing declines in value, tobacco giants must be brave in admitting market shifts and strategically planning their next moves to sustain global dominance and relevance.”

    Chesterfield (brand value $3.1 billion) has maintained its brand value year-on-year and advanced one position to seventh place. The brand has seen a rise in shipment volume, with an 8 percent increase in the fourth quarter of 2022 and a 14 percent increase for the full year, which has contributed to its stable brand value this year.

    The latest rankings highlight the dominance of U.S. tobacco brands, which make up a remarkable 92 percent of the total brand value in the ranking, totaling $61 billion. Only two brands in the ranking are from outside the U.S., the U.K.’s Rothmans (brand value down 8 percent to $2.9 billion) and Indonesia’s Sampoerna (brand value down 12 percent to $2.7 billion).

  • Global Synergy

    Global Synergy

    Photos: KTI

    Stuart Buchanan discusses KT International’s partnership with KT&G.

    By Marissa Dean

    As the tobacco industry changes and evolves, companies are adapting in different ways. Recently, KT International (KTI) and KT&G entered into a manufacturing license agreement, allowing KTI to manufacture and distribute KT&G’s products in Europe.

    KT&G is a leading tobacco manufacturer in South Korea and the fifth largest in the world by sales volume, with an annual sales revenue of approximately KRW6 trillion ($4.5 billion). KTI, established in 2008, has built its reputation as one of Europe’s fastest-growing independent tobacco companies. The company has also earned recognition for its strong and credible footprint across Europe along with world-class production facilities within the European Union.

    The agreement between the two companies was signed on Oct. 20, 2023. Under the terms of the deal, KTI received exclusive rights to manufacture and distribute KT&G’s products within the EU region for three years. The two companies have agreed to a market entry plan aimed at expanding into strategic markets within the Western European region, with a specific focus on KT&G’s Esse products. Esse, a flagship brand of KT&G, is renowned for its premium quality and holds the distinction of being the world’s bestselling super-slim cigarette brand. While the two companies will initially focus on Esse products, the product range expansion will be discussed and announced in due course.

    Tobacco Reporter recently discussed the arrangement with Stuart Buchanan, chief commercial officer of KTI.

    KTI is one of only a few companies that uses a single facility for all its production needs.

    Tobacco Reporter: Your company, KTI, entered into a partnership agreement with KT&G, one of the world’s largest cigarette producers. Why was KTI chosen as a partner of KT&G?

    Stuart Buchanan

    Stuart Buchanan: After three years of collaborative efforts leading to the signing of this agreement, we have developed a strong cultural fit between our two companies in terms of people and commercial objectives. We expect the synergy between our complementary brand portfolios to strengthen the market position of both companies. A significant amount of time has been taken to structure a competitive business model and to develop an innovative and consumer-relevant product portfolio that is consistent to the global objectives and standards of KT&G.

    What necessitated this synergy?

    The KT&G partnership is certainly our most significant and strategic partnership; however, we have other partnerships with large global players, and in most cases, these synergistic partnerships have developed through taking time upfront to understand each other’s strengths and weaknesses. This in itself is a process as it takes time to develop trust and a collaborative working environment that is open and transparent, particularly in cases where we are competitors in other parts of the world.

    Why do you think more global players are forming partnerships with KTI?

    When we started our international expansion, we were an unknown company, and we found it very difficult to find importers and distributors in strategic markets. From the outset in our first three proper international markets, Spain, France and the Czech Republic, we committed to working with credible world-class importers and giving them the level of service they would expect from a major multinational. By maintaining our business standards and building our corporate reputation, we now work with some of the world’s best partners, like KT&G, and new business is self-generating as we are the first point of call for credible, reliable partners.

    Our corporate reputation extends beyond just how we operate externally in our markets but also how we operate internally through things like properly vetting our supplier base, health and safety for our employees and most recently our environmental and sustainability strategy where we have installed a 5 MW photovoltaic solar park to be sustainably self-sufficient for over 40 percent of our energy needs.

    This is probably also our biggest learning; in building our corporate reputation by doing things properly from how we manage our business partners, our brand and product development, our people development, through to our investment strategy, sometimes takes longer, but the payback is significantly higher.

    What is most important in your business? What is the strategic potential of your company and the key to your success?

    First and foremost, our people. In both our production and commercial business units, we have prided ourselves on building a world-class organization with locally developed talent.

    Operating across 70 countries, our commercial teams have developed not only the commercial acumen to compete with the world’s best, but we have embedded a culture where we understand and respect cultural differences. This applies not only to the professionalism with which our teams engage with many different countries and cultures but also in how we deploy our brand portfolio by being flexible to the consumer needs of different markets and consumer segments.

    Secondly, our production capabilities. We have one of the world’s most modern factories and service these 70 countries from one factory. We are one of the few global companies across any category that services their total demand from one production facility. Whilst creating a highly complex production environment, it provides for global brand consistency and quality standards and a single point of business contact, which is seen as a significant benefit to our partners.

    This is particularly relevant to European partnerships as we have a core production strength in being able to operate across this highly complex environment with multiple EU-driven product registration processes. This applies not only to physical production but also to logistics, product development, commercial contracts and market implementation.

    What is your outlook for the future of the tobacco industry?

    As a company, we fully respect and support sensible regulation for what is an adult category of choice. We do, however, recognize the role and growth of next-generation products (NGPs) and reduced-risk products and believe these will continue to become an integral part of a broadening category. We also support the recent moves across Europe to regulate these products along similar lines to traditional tobacco with regards to excise, legal age and product registration as it will provide higher levels of consumer protection against cheap, low-quality imports, particularly in the disposable vaping category.

    Now that, in general, across Europe there is a much clearer regulatory outlook, we have recently launched our own NGP range under our brand in Spain and Bulgaria and aim to follow across major European markets, including Germany, the U.K., France, Czech and Italy, where we have a strong presence in our traditional cigarette brands.

    Looking at the longer term horizon on the future of the category, I personally believe a natural consumer-driven balance will develop between cigars, pipe tobacco, rolling products, traditional cigarettes and NGPs, where each will have a place in the consumer repertoire.

    How is KTI adapting to changing markets and consumer needs?

    Tobacco and nicotine alternatives are a highly regulated category, and as such, it is difficult to provide the same level of consumer interaction as other categories, and to a large extent, price and brand value provide the key consumer drivers. That being said, in our traditional business, we have always believed in providing different and innovative formats that go beyond the traditional brand, price, value equation in driving purchase. It is one of the key reasons for our growth.

    Does KTI have any plans to expand into reduced-risk products or other types of tobacco products aside from cigarettes and traditional leaf tobacco?

    2023 saw the launch of our LIV brand, which is our noncombustible brand. We have launched a range of travel-friendly nicotine pouches as our first step into the noncombustible category.  

    Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor. Since that time, she has taken on additional responsibilities, including feature writing. Her skills span the publishing industry from layout and design to copy editing to content creation.