Author: Taco Tuinstra

  • Graphic Warnings Date Postponed Again

    Graphic Warnings Date Postponed Again

    Image: FDA

    The implementation date for graphic health warnings in the United States has been pushed back by another three months, to Oct. 6, 2023, reports the Winston-Salem Journal.

    On Aug. 10, a U.S. District Court Judge in Texas approved the most recent launch date postponement for cigarette manufacturers. It is at least the ninth judge-ordered delay.

    The FDA released its final rule requiring new graphic warnings for cigarettes in March 2020. The rule calls for labels that feature some of the lesser known health risks of smoking, such as diabetes. The graphic warnings must cover the top 50 percent of the front and rear panels of packages as well as at least 20 percent of the top of advertisements.

    In April and May 2020, cigarette manufacturers and retailers sued the FDA, arguing that the graphic warning requirements amount to governmental anti-smoking advocacy because the government has never forced makers of a legal product to use their own advertising to spread an emotionally charged message urging adults not to use their products.

    In a more recent challenge, tobacco companies argued that the deadline was too onerous due to the impact of the Covid-19 pandemic. They also pointed to the risk that they would lose their investments in new packaging if the graphic health warning requirement were to be thrown out in court.

    In March 2021, the Texas District Court granted a motion by the plaintiffs to postpone the effective date of the final rule to April 14, 2022. The move was followed by additional postponements.

  • Pyxus Reports First Quarter Results

    Pyxus Reports First Quarter Results

    Photo: Pyxus International

    Pyxus International reported sales and other operating revenues of $343.9 million for the fiscal quarter that ended June 30, 2022, up 3.2 percent over the comparable 2021 quarter. Net loss increased 27.8 percent to $14.7 million, primarily due to a $7.6 million decrease in income tax benefit. Adjusted EBITDA increased 17.1 percent to $17.3 million.

    “As expected, our first quarter was consistent with the prior fiscal year, with increased demand and more normalized timing of shipments from Asia, partially offset by the timing of shipments from Africa and South America,” said Pyxus President and CEO Pieter Sikkel in a statement.

    “As of June 30, 2022, our inventory increased $126 million compared to the prior year primarily due to higher new crop green tobacco prices and processing costs in South America, and accelerated new crop buying activities in certain key markets. In addition, our processed tobacco inventory continues to be more than 90 percent committed to specific customers.

    “The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand and we expect to see stronger shipments in subsequent quarters in fiscal 2023, consistent with historical trends. Despite higher green tobacco prices and processing costs in South America, we were able to effectively manage our working capital to meet our purchasing goals for the current crop cycle.

    “Crop sizes in certain markets in Africa, Asia and South America are below expectations due to the adverse impacts of prevailing La Nina weather patterns during the growing season, which has exacerbated supply shortages. We continue to engage with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business. In response to these and other market dynamics, we accelerated buying activities in certain key markets, and continue to invest in research trials, local programs, and additional training for our global agronomy team to further support our efforts to maximize grower efficiencies and yield despite unpredictable weather patterns.

    “We continue to expect fiscal 2023 sales to be between $1.75 billion and $1.95 billion and adjusted EBITDA to be between $130 million and $160 million. Moving forward, we are committed to recovering crop sizes, and aligning volumes in future years with customer expectations, as we work to deliver stakeholder value, and together, grow a better world.”

  • ‘FDA Took Shortcuts in Reviewing PMTAs’

    ‘FDA Took Shortcuts in Reviewing PMTAs’

    Image: smolaw11

    In establishing whether a nicotine product is appropriate for the protection of public health, the U.S. Food and Drug Administration held its Center for Tobacco Products (CTP) reviewers to a lower standard than the companies submitting premarket tobacco product applications, according to Alex Norcia writing in Filter.

    Citing documents obtained through the Freedom of Information Act, Filter describes procedures such as batching and bracketing, which allowed the CTP to apply conclusions to categories of products rather than evaluating them separately. “Despite imposing extremely onerous bureaucratic requirements on applicants, the agency was happy to find ways to cut through its own paperwork,” writes Norcia.

    “It’s clear that FDA allows itself efficient shortcuts that it has denied to applicants,” Clive Bates, director of The Counterfactual, told Filter.

    “The problem has always been that FDA’s extraordinarily burdensome process was obviously tremendously wasteful for applicants, but of course it was always going to be unmanageable for the assessors in FDA. Without this sort of shortcut, the PMTA process would have become a human resources nightmare. So FDA has allowed itself the kind of efficiencies it should have offered to the applicants—batching and bracketing thousands of near-identical products.”

  • Mativ Reports Second-Quarter Results

    Mativ Reports Second-Quarter Results

    Photo: SWM

    Mativ Holdings, the company that was recently created out of the merger between Schweitzer-Mauduit International (SWM) and Neenah, reported earnings results for the three months ending June 30, 2022.

    Including SWM legacy results, sales increased 13 percent to $426.4 million. Organically, sales grew 11 percent with strong demand and pricing actions across the business, driving top-line gains and offsetting cost increases.

    “With the completion of our merger in early July to form Mativ and the close of a strong second quarter for the legacy SWM and Neenah businesses, we are poised to carry our momentum into the rest of 2022 as a unified and more scaled global leader in specialty materials,” said Mativ Holdings CEO Julie Schertell in a statement.

    The company’s Engineered Papers segment sales were up 10 percent, to $138.3 million, driven by volume growth and price increases. Volumes benefited from broad-based gains across the portfolio, highlighted by continued rapid growth in heat-not-burn reduced-risk products.

    GAAP operating profit was $22.4 million, down 7 percent. Adjusted operating profit was $21.5 million, down 19 percent. While contractual and market price increases and negotiated volume gains more than offset higher pulp and other material costs, operating profit and margin percentage reductions resulted mainly from rapidly escalating energy costs, particularly in Europe.

    Mativ Holdings expects semi-annual contractual price increases, additional market price increase and surcharges to mitigate the impacts of escalating pulp and energy costs during the second half of the year.

  • FDA Starts Reviewing Menthol and Flavored Cigar Feedback

    FDA Starts Reviewing Menthol and Flavored Cigar Feedback

    Photo: Bits and Splits

    The U.S. Food and Drug Administration has received nearly 175,000 comments on its proposed Tobacco Product Standard for Menthol in Cigarettes and approximately 71,000 comments on its proposed Tobacco Product Standard for Characterizing Flavors in Cigars.

    On May 4, 2022, the FDA published the proposed tobacco product standards in the Federal Register. Initially, the FDA provided a 60-day comment period for the rules, but the FDA later extended the comment period to a total of 90 days. On Aug. 2, the comment period closed.

    In addition to accepting written public comments, the agency convened public listening sessions on June 13 and June 15.

    The agency stressed that it would take a while to review the submitted comments, scientific data, expert opinions and facts. “FDA is committed to completing the rulemaking process as quickly as possible; however, the agency will need ample time to comprehensively review and analyze all of the comments,” wrote FDA Public Health Analyst Beaza Yeheyes in an email.

  • World Tobacco Asia: The Countdown is on!

    World Tobacco Asia: The Countdown is on!

    Photo courtesy of Quartz Business Media

    World Tobacco Asia is returning Sept. 7-8, 2022, to Surabaya, Indonesia, co-located with the award-winning World Vape Show. The first major tobacco event to take place in the region for over three years, WT Asia is a unique opportunity for professionals to see the next generation of innovative products, ingredients, materials and insight for the tobacco industry all in one place.

    Registration for the event is free for all industry-related personnel and includes the following:

    • Exclusive show-only offers and deals from 60+ leading suppliers, including Evergrowing, Mcairlaids, Prestige Leaf, Indesso, Aiger, Truewell Filter, Focke & Co, Voedsel, BMJ, Miquel Y Costas and Aroma King.
    • Access to a large and growing market at one of the most prestigious events for the industry
    • The chance to improve and gain new industry insights by getting hands on with machinery and equipment that is designed for the next generation of smokers
    • Face-to-face networking with influential business leaders and senior decision makers within the tobacco industry, as well as friends – old and new
    • Better your understanding of available alternative tobacco and nicotine products. As this sector of the industry continues to grow, learn what sourcing and procurement options are available to help you create and build your own range of products
    • Insight into what the future holds for leaf tobacco-associated businesses: machinery, services, communities, and more
    • Access to the co-located World Vape Show, which provides free insight to exhibitors and the vaping industry

    Trusted by the industry’s biggest brands and manufacturers, Quartz Business Media now delivers the world’s largest network of smoking-related B2B events in the world. In the last 12 months alone, World Tobacco, World Vape Show and World Shisha events have gathered more than 17,000 professionals in Dubai, London, Sofia and now Surabaya.

    WT Asia will take place on the Ground Floor of the Grand City Convex Convention Hall in Surabaya. For more information and free registration, visit http://www.wtprocessandmachinery.com/asia.

  • Avanti Cigar Moves to the Dominican Republic

    Avanti Cigar Moves to the Dominican Republic

    Photo: sezerozger

    The Avanti Cigar Co. is moving its production from the United States to the Dominican Republic, citing high labor cost and difficulty in finding employees as reasons for the decision, according to a report in the Standard-Speaker.

    After manufacturing premium cigars for more than 90 years in Dunmore, Pennsylvania, Avanti will shut down its U.S. factory on Aug. 31.

    “The last two years have been difficult due to the Covid-19 pandemic; it is getting harder and harder to hire skilled people, able to learn and manage production activities and to guarantee business sustainability in the medium [term] and long term,” the company wrote in a statement.

    Founded in 1912 in New York City as Suraci Brothers, the company moved to Scranton, Pennsylvania, around 1930, then to Dunmore in 2013.

    David Ozgo, president of the Cigar Association of America, said Avanti’s move overseas fits a trend.

    “This is a trend that’s been going on for decades,” Ozgo said. “In the U.S., we make a lot of premium tobacco. There is a real issue in hiring employees that probably makes it more attractive for them to move to the Dominican Republic.”

  • 22nd Century Reports Second-Quarter Results

    22nd Century Reports Second-Quarter Results

    Photo: 22nd Century Group

    22nd Century Group reported net revenue of $14.48 million for the three months ended June 30, 2022, up 73 percent over the comparable 2021 quarter. Gross profit was $892,000 for the quarter compared with $449,000 for the second quarter of 2021.

    The increase in net revenue was due to increased contract manufacturing volumes as well as the addition of GVB Biopharma revenue for approximately half of the second quarter. 22nd Century Group acquired GVB Biopharma on May 13.

    Revenue from tobacco-related products was $10 million, an increase of 19 percent from 2021. Revenue from hemp/cannabis-related products was $4.5 million compared to zero in the prior year, reflecting a partial quarter of GVB revenues.

    22nd Century Group said it will step up the rollout of its VLN King and VLN Menthol King reduced-nicotine content cigarettes. After receiving permission from the Food and Drug Administration in December to market its VLN brands as modified-risk tobacco products (MRTPs), 22nd Century started a pilot program to sell the product at select Chicagoland Circle K stores.

    “Our VLN pilot in Chicago is exceeding expectations, driving us to accelerate and expand our launch plans,” said 22nd Century Group CEO James A. Mish in a statement. “The pilot and consumer studies have made clear that our approach focusing on awareness, education and trial is working with adult smokers. We are now testing specific offers designed to increase trial and repeat purchase among existing smokers looking to smoke less/reduce their nicotine consumption while also expanding our presence in Chicago and the state of Illinois.

    “We are also expanding our VLN launch to the state of Colorado ahead of plan. Colorado offers a reduced taxation rate for MRTP-authorized products, providing a favorable cost structure for our VLN products in that state as compared to traditional premium cigarettes.

    “Additionally, and more importantly, we are working closely with a major consumer packaged goods distributor and a longstanding specialty distributor covering convenience, grocery and drug stores across the state, giving us full access to a broad range of more than 3,000 targeted statewide potential points of sale.”

  • PMI Extends Period for Swedish Match Offer

    PMI Extends Period for Swedish Match Offer

    Photo: SergeVo

    Philip Morris Holland Holdings has extended the acceptance period for its offer to Swedish Match shareholders until Oct. 21, 2022, as the bid awaits approval in Europe.

    On May 11, Philip Morris International, through its Dutch subsidiary, offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer commenced on June 29, 2022, and was initially set to expire on Sept. 30, 2022.

    In a statement, PMI said it has obtained all international approvals required for the transaction other than merger control approval from the European Commission, which is still pending.

    Based on customary pre-notification discussions with the European Commission, the company believes the European Commission will not complete its review of the transaction before the Sept. 30 expiry date of the initial acceptance period.

    Other than the extension of the acceptance period, the terms and conditions of the offer remain unchanged.

    The Swedish Match board of directors has recommended shareholders accept PMI’s offer, but some shareholders have raised objections.

    Earlier this year, Swedish Match shareholder Bronte Capital opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.

    Another shareholder has also said it was not clear whether the long-term value of Swedish Match was reflected in PMI’s offer price.

    Meanwhile, Elliot Investment Management has reportedly been building a stake in Swedish Match and plans to oppose the pending takeover of the Scandinavian tobacco company by PMI under its current terms.

    However, according to Danske Bank analyst Mads Rosendal, it is unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own

                                   

  • Delnevo to Chair TPSAC

    Delnevo to Chair TPSAC

    Photo: Rutgers

    Cristine Delnevo has been appointed chairperson of U.S. Food and Drug Administration’s Tobacco Products Scientific Advisory Committee (TPSAC).

    Delnevo is the director of the Rutgers Center for Tobacco Studies and a professor of health behavior, society and policy at the Rutgers School of Public Health. She was appointed to serve on the TPSAC in March 2021. Her appointment as chair will run through Jan. 31, 2025.

    Established in 2009, TPSAC reviews and evaluates safety, dependence and health issues related to tobacco products and provides advice, information and recommendations to the FDA’s commissioner. The FDA commissioner selects the committee members from among people with expertise in medicine, medical ethics, science or technology involving the manufacture, evaluation or use of tobacco products.

    “I have valued the importance of this FDA advisory committee since the signing of the Family Smoking Prevention and Tobacco Control Act in 2009,” said Delnevo in a press note published by Rutgers. “This advisory committee plays an important role in several ways, perhaps most notably on the review of modified risk tobacco product applications, as required under the Tobacco Control Act.

    “I value the service of Dr. Jonathan Samet and Dr. Robin Mermelstein who served admirably before me as chair, and I look forward to working with an esteemed group of colleagues to help the FDA make regulatory decisions to protect public health and reduce tobacco-related morbidity and mortality.”

    Delnevo’s expertise spans population-level tobacco behavior trends—particularly non-cigarette tobacco products like cigars and e-cigarettes—tobacco control policy and regulation, and survey methods research.

    In 2022, she received the John Slade Award from the international Society for Research on Nicotine and Tobacco for outstanding contributions to public health and tobacco control through science-based public policy and public advocacy. Her work has been extensively cited in two FDA proposed rules that would ban menthol in cigarettes and characterizing flavors in cigars and she recently served as an external peer reviewer on the FDA’s Scientific Assessment of Impact of Menthol in Cigarettes.

    In addition, she served as a committee member on the National Academies of Sciences, Engineering and Medicine report on the Health Effects and Patterns of Use of Premium Cigars.

    Delnevo co-leads one of nine Tobacco Centers of Regulatory Science and has published extensively on tobacco-use behavior patterns. She has authored more than 250 scientific articles, reports and book chapters and serves on the Editorial Advisory Board for the journal Tobacco Control.

    “We are excited that an RBHS faculty member was selected to be a member, and indeed the leader, of an important committee like TPSAC,” said Brian Strom, chancellor of Rutgers Biomedical and Health Sciences. “I am confident that Dr. Delnevo will bring to this role her passion, commitment, and leadership skills, which she has already exhibited at the Rutgers Center for Tobacco Studies, and will help FDA make decisions for the country that will help save lives.”