Author: Staff Writer

  • Zimbabwe Auction Season Closes

    Zimbabwe Auction Season Closes

    Photo: Taco Tuinstra

    Zimbabwe’s tobacco auction season ends tomorrow while contract sales remain open until further notice, said the Tobacco Industry and Marketing Board (TIMB).

    The golden leaf is being sold through auction and contract arrangements with the selling season traditionally beginning in March.

    This year’s selling season began in April because of the adverse impact of the Covid-19 pandemic. The delay required TIMB to make adequate preparations to curb the spread of the deadly disease.

    So far, about 176 million kg of tobacco have gone under the hammer generating close to US$440 million.

    Zimbabwe exports 98 percent of its tobacco leaf with tobacco receipts from the foreign markets expected to reach $1,2 billion this year, up from $904 million last year.

  • Smoore Thrives Amid Difficult Environment

    Smoore Thrives Amid Difficult Environment

    Photo: Timothy Donahue

    Smoore International Holdings, the world’s biggest maker of e-cigarettes, posted a 40 percent year-on-year jump in underlying net profit for the first half of 2020, to CNY1.3 billion ($188.8 million), reports The South China Morning Post. Revenue rose 18.5 percent to CNY3.88 billion.

    The increase comes despite the challenges of the coronavirus, the U.S.-China trade war and tougher regulations.

    Smoore, which recently listed in Hong Kong, held a 16.5 percent share of the $763 billion global vapor devices market last year, up from 10 percent in 2018, said Wang.

    While only half its production capacity was used in the first six months, the company plans to double capacity by next year. Additional expansion will boost production by a further two-thirds by 2023.

    Global e-cigarette sales are projected to see compound annual growth of 25 percent between last year and 2024 compared to 5.2 percent for traditional cigarettes, according to Frost & Sullivan.

    China produces 90 percent of the world’s e-cigarettes, of which 90 percent are exported, according to Smoore’s listing prospectus. The industry is concentrated in Shenzhen, the country’s technology hub, which hosts more than 600 e-cigarette manufacturers.

    The U.S. accounted for around half of Smoore’s sales, while 18.6 percent came from mainland China and 12.5 percent came from Japan and Europe each.

    Since 2018, its U.S. customers have had to pay a 25 percent additional import tariff as part of the fallout from the trade spat between Washington and Beijing. The firm said the tariff has not stopped U.S. demand from growing since its products are “technologically superior.”

  • Fita Drops Appeal in Tobacco Ban Dispute

    Fita Drops Appeal in Tobacco Ban Dispute

    Photo: David Carillet – Dreamstime.com

    The Fair-Trade Independent Tobacco Association (Fita) has dropped its bid to appeal an earlier court ruling that upheld South Africa’s temporary ban on tobacco sales.

    In a statement issued on Wednesday, Fita chairman Sinenhlanhla Mnguni said the association will withdraw its pending appeal before the Supreme Court of Appeal in Bloemfontein.

    The move comes after Minister of Co-operative Governance and Traditional Affairs Nkosazana Dlamini-Zuma promised to consult the public should she at any stage seek to reinstate a temporary prohibition of the sale of tobacco and related products.

    Fita had criticized the government for not seeking public input when it banned tobacco sales on March 27 as part of its coronavirus lockdown. South Africa lifted its ban mid-August, but the legal action was not immediately halted.

    Both parties agreed to pay their own legal expenses incurred during the tobacco ban litigation.

  • Pyxus Emerges From Chapter 11

    Pyxus Emerges From Chapter 11

    Pieter Sikkel
    Photo: Pyxus International

    Pyxus International has successfully completed its financial restructuring and emerged from Chapter 11 with its debt reduced by more than $400 million and maturities extended. The company announced that the Amended Joint Prepackaged Chapter 11 Plan of Reorganization of Pyxus International and its Affiliated Debtors confirmed by the U.S. Bankruptcy Court for the District of Delaware on Aug. 21, 2020, has become effective.

    “Over the last two months, we have been keenly focused on enhancing the company’s financial flexibility, and the completion of our financial restructuring process is a significant step forward,” said Pieter Sikkel, Pyxus’ president and CEO. “We are now a stronger and more competitive company with a foundation that bolsters our position in targeted markets and enables us to drive long-term value for all of our stakeholders. I want to thank our exceptional team at Pyxus for their commitment and continued focus through this process. We are also grateful for the support of our vendors, suppliers, customers and partners, and we look forward to working together for years to come.”

    Under the terms of the plan, Pyxus has completed a comprehensive balance sheet restructuring that includes but is not limited to extending the maturity of its existing first lien debt, eliminating $635 million in principal amount of existing second lien debt, while adding a $213 million exit term loan, which replaced the debtor-in-possession financing incurred in connection with the Chapter 11 cases, and a $75 million exit asset based revolving facility. The elimination of the second lien debt and access to new working capital lines of credit, including foreign credit facilities, substantially strengthens the company’s balance sheet.

    A series of corporate transactions resulted in the company being a new corporation renamed Pyxus International, which through its subsidiaries continues to operate the company’s businesses, while the corporation formerly known as Pyxus International has changed its name to Old Holdco All outstanding shares of Old Holdco were canceled.

  • PMI Names New Senior Vice President External Affairs

    PMI Names New Senior Vice President External Affairs

    Illustration: Skypixel | Dreamstime

    Philip Morris International (PMI) has appointed Gregoire Verdeaux as senior vice president of external affairs effective Sept. 1, 2020. Verdeaux will report to the company’s CEO, Andre Calantzopoulos.

    “Gregoire’s range of experiences—from working for national and EU parliaments and governments, the UN, WHO [World Health Organization] as well as private companies undergoing significant transformation—has given him a unique understanding of how political decisions are made,” said Calantzopoulos. “This makes him an ideal candidate to join us at PMI and help adapt the regulatory environment applicable to reduced-risk products as we continue our transformation to a smoke-free company.”

    Verdeaux joins PMI from Hering Schuppener where he was a partner. Prior to that, he served as group international policy director at Vodafone. Prior to Vodafone, he served as European policy director at Electricite De France. He also served at the local level as deputy head of the cabinet of the French president, as administrator to the French senate and cabinet adviser to the minister of foreign affairs and to the European Commission. Additionally, he held the positions of director of strategy and finance at Unitaid for the WHO and manager in the United Nations Development Program.

    Verdeaux holds degrees from Universite D’Auvergne, the University of Oklahoma and Sciences Po.

    His appointment follows the previous announcement of long-serving executive Marc Firestone’s intention to retire from the dual roles of president of external affairs and general counsel and the appointment of Suzanne Rich Folsom as senior vice president and general counsel.

  • FDA Accepts Vaporesso’s PMTA

    FDA Accepts Vaporesso’s PMTA

    Photo: Bacho | Dreamstime

    Vaporesso received an acceptance letter for its first round of premarket tobacco product applications (PMTAs) from the U.S. Food and Drug Administration (FDA) on Aug. 20, 2020.

    The acceptance letter came three days after the company submitted its PMTAs. The application received positive comments from the FDA on its preparation, according to the company’s U.S. scientific CRO agent.

    “A successful acceptance has boosted the confidence of Smoore to keep investing in bringing more vaping products into PMTA in the future,” the company wrote in its press release. “Our commitment to vapers in the USA remains the same: We will make vaping as easy as possible, and we will consistently provide high-quality vaping experiences for vapers all over the world. So the first round of application accomplished by Smoore is merely the start with more products to come.”

  • Philippines-Thailand trade dispute reignites

    Philippines-Thailand trade dispute reignites

    Photo: hectorgalarza from Pixabay

    The Philippines has asked the World Trade Organization (WTO) dispute settlement body (DSB) to suspend the country’s concessions to Thailand for products such as motor vehicles exported to Manila.
     
    Thailand has continued to avoid compliance with the WTO ruling that it must align its unfair tax treatment on Philippine cigarette exports, according to the Philippines.
     
    “There are only two options under the reverse-consensus rule of DSU Article 22.6: the DSB granting authorization to suspend concessions or the DSB referring the matter to arbitration,” said the Philippines. “At this meeting of the DSB, the Philippines asks once again that the DSB grant the Philippines the authority it seeks.”
     
    The Philippines sought retaliation against Thailand from the WTO to force the country to align its tax treatment on Philippine cigarettes in February 2020. The WTO first ruled favorably in 2011 and the Philippines won subsequent appeals from Thailand. The Philippines requested from the WTO a suspension of $594 million in trade concessions.

  • Australia Rejects Tobacco Heating Products

    Australia Rejects Tobacco Heating Products

    Photo: Tobacco Reporter archive

    The Therapeutic Goods Administration (TGA) in Australia rejected an application from Philip Morris (PM) that would have allowed the sale of heated-tobacco products.
     
    This follows the Australian government’s ban on the import of nicotine-based e-cigarettes. Health Minister Greg Hunt planned to implement the ban beginning July 1 of this year, but the ban has now been pushed back to the beginning of 2021 to allow those who have been using e-cigarettes with nicotine to quit smoking combustibles to get prescriptions and end their addiction.
     
    The ban would make the import of vaporizer nicotine and e-cigarettes allowable only with a doctor’s prescription.
     
    There were 82 submissions in the TGA decision that supported heated-tobacco products, and the U.S. Food and Drug Administration concluded that PM’s tobacco-heating product “is expected to benefit the health of the population as a whole.” The TGA received submissions from the Lung Foundation, Cancer Council Australia, Australian Council on Health and Smoking, and the National Heart Foundation, though, that stated their concerns regarding public health risks of heated-tobacco products. The TGA ultimately decided there were “significant safety concerns with heated-tobacco products,” according to news.com.au.
     
    “Study after study shows that scientifically substantiated smoke-free products that do not generate smoke, while not risk-free, are a much better alternative for adult smokers who would otherwise continue to smoke cigarettes,” said Tammy Chan, Philip Morris managing director. “It’s time Australian authorities recognize that many adult smokers will continue to smoke cigarettes—the most harmful way of consuming nicotine—unless the government rethinks its tobacco control policy. Smoke-free products can play a role in reducing smoking rates.”
     
    According to Chan, Australia’s stance on smoke-free products is at odds with other countries; heated-tobacco products are available in 50 other countries.

  • Reynolds Submits First Velo PMTA

    Reynolds Submits First Velo PMTA

    Photo: RAI

    Reynolds American Inc. submitted a group of premarket tobacco product applications (PMTAs) to the U.S. Food and Drug Administration (FDA) seeking orders authorizing the marketing of Velo dissolvable nicotine lozenges. A grant of these marketing orders would allow these products to remain on the market after the FDA’s Sept. 9, 2020, deadline for PMTAs.
     
    Velo Lozenges—formerly sold under the Revel brand—were reintroduced under the Velo brand in 2020 by Reynolds subsidiary R.J. Reynolds Vapor Company. Velo’s dissolvable oral nicotine lozenge products are available in hard and soft forms and four flavor variants, dark mint, mint, berry and crema. Velo Lozenges are manufactured using tobacco-derived nicotine.
     
    The PMTAs for Velo Lozenges highlight key evidence demonstrating that the continued marketing of these products is appropriate for the protection of the public health. The applications include a range of scientific studies using established methodologies for the comparative assessment of tobacco products and associated health risks, including product analyses, information on human health risks and assessments showing the impact of Velo Lozenges on the health of the population as a whole—including users and nonusers of tobacco products.
     
    “Velo is an award-winning brand bringing consistently innovative products to adult tobacco users, and a potential marketing order for PMTA submission would help to ensure adult tobacco consumers have access to FDA-regulated, consumer-acceptable product alternatives to combustible tobacco,” said James Figlar, Reynolds’ executive vice president and head of scientific and regulatory affairs.

  • Decent Exposure

    Decent Exposure

    Illustrations: Pavel Losevsky and Milkos | Dreamstime

    Powered by new data-driven planning platforms, “out of home” is emerging as the media channel of choice for legal and effective tobacco advertising.

    By Shabnam Irilian

    In the advertising world, there is likely no more heavily regulated industry than tobacco, where restrictions are onerous and plentiful. The advertising of traditional tobacco products has been banned from U.S. radio and television airwaves since the 1970s. Online advertising opportunities are minimal, with the most popular destinations and social media platforms—Google and Facebook, to name just two—also banning tobacco ads. And while vapor products and some newer alternative tobacco products do not always fall under these bans, there is a general reluctance among media owners and platforms to allow advertising for fear of a public or legal response.

    With so few channels at their disposal, tobacco and nicotine brands often turn to “out of home” (OOH) advertising, which has long held strong appeal for companies operating within industries where marketing activities are restricted. They turn to OOH not just because of its availability but because of its ability to reach both larger mass audiences and smaller targeted ones as well. OOH is typically more cost effective, delivering greater cost per mille (the amount an advertiser pays a website per 1,000 views), which is ideal for emerging alternative tobacco brands that may not have deep pockets when it comes to advertising spend. Perhaps most importantly, OOH has a proven track record when it comes to influencing consumer attitudes and behaviors and spurring action.

    But advertising using OOH does not come without challenges. For one thing, the industry itself is highly fragmented with multiple forms of inventory owned by a myriad of different media owners. There are currently 1.5 million screens and displays in the United States. Navigating an inventory of this size and dealing with the various owners is enough of a challenge for any brand, let alone one in a restricted category.

    And speaking of restrictions, while OOH is certainly more available to tobacco and nicotine advertisers than other channels, brands and their agency partners must be aware of and operate within compliance of complex laws that govern where ads can be placed and content that can be displayed. These laws can vary dramatically from one state, city or municipality to the next, and they change with great frequency.

    With all this in mind, the question turns to how tobacco and nicotine brands can leverage the OOH channel in the most effective, and legal, way. Here are some tips:

    Combine compliance with sensitivity

    The emergence of data-driven platforms has improved the OOH planning and buying process for all brands. For tobacco and nicotine brands, optimized platforms help identify compliant inventory, making the planning process even easier and faster. That said, just because you can do something doesn’t necessarily mean you should. Even if a particular screen is approved and legal for tobacco advertising, consider the environment and use common sense to determine whether your ad might be off-putting or create more problems for your brand than new customers gained.  

    Confront issues as a team with shared responsibility

    As mentioned, the market for U.S. OOH inventory is highly fragmented, and the laws and restrictions governing advertising for tobacco companies are complex. Even with the best technologies and tools, it’s not impossible for problems to arise. Checking the box on compliant inventory during the planning process is not enough. Monitoring must and should continue throughout the duration of campaigns. Conduct drive-arounds where possible to visually confirm that your ads are properly placed within the context of the community. And work in tandem with your partners, from planners to buyers to creatives, to create an environment of shared accountability so that any problems that might arise can be addressed quickly and collaboratively.

    Capitalize on all that specialists can offer

    These days, it’s not uncommon to see stories of billboards being purchased by regular, everyday citizens for any number of reasons—marriage proposals, fundraising, congratulatory messages, etc. Yes, anyone can call a media owner and buy a billboard these days. But for brands that want to take a more strategic approach and drive real value from their investments in OOH, working with agency partners is the more advisable route, even more so for tobacco and nicotine brands that not only need to rely on the experience and expertise of industry experts but can benefit from the existing relationships agencies have with media owners to access premium inventory and favorable pricing. Plus, not only are OOH specialists equipped with the ability to select the compliant and legal inventory—they also have the data, tools and technology to overlay those selections with the inventory that will succeed in delivering the right message to the right audience at the right time, driving business outcomes.

    Think of OOH as strategic

    Finally, don’t think of OOH as the “nice-to-have” add-on to your broader strategic marketing efforts. OOH works well in concert with complementary campaigns and, when integrated with mobile and social media, can amplify the reach and value of your marketing efforts. Ensure that your OOH partners are involved in your strategic planning discussions at the very start of the process. 

    Shabnam Irilian is senior vice president of business operations for Talon Outdoor, an OOH agency delivering creative, technology-led and integrated OOH communications.