Author: Taco Tuinstra

  • Vector Reports Strong Tobacco Revenue

    Vector Reports Strong Tobacco Revenue

    Photo: tadamichi

    Vector Group reported revenues of $387.2 million for the second quarter of 2022, up 14.7 percent over that for the comparable 2021 quarter. Operating income was $90.71 million and net income was $39.15 million compared with operating income of $93.89 million and net income of $93.3 million in the second quarter of 2021. Tobacco contributed $374.31 million of the 2022 second-quarter revenues, with the balance coming from Vector Group’s real estate business.

    “Vector Group delivered strong tobacco revenue performance in the second quarter as we capitalized on favorable market opportunities to substantially increase value and market share,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “Our price-fighting Montego brand is now our largest brand and the third-largest discount brand in the United States. This strong performance demonstrates our commitment to optimizing long-term profit through the effective management of volume, pricing and market share growth.”

    According to data from Management Science Associates, the retail market share of Vector Group’s Liggett Group subsidiary increased to 5.5 percent for the second quarter of 2022 from 4.1 percent for the second quarter of 2021. For the six months ended June 30, 2022, Liggett’s retail market share increased to 5.3 percent compared to 4.1 percent for the six months ended June 30, 2021.

  • Ukraine Redefines ‘Tobacco Product’

    Ukraine Redefines ‘Tobacco Product’

    Photo: Dmytro

    The government of Ukraine has changed the definition of “tobacco product” to include heated-tobacco products (HTPs), making HTPs subject to the same restrictions as combustible cigarettes, according to the Framework Convention on Tobacco Control.

    As a result, it is now illegal to smoke HTPs in public places. Moreover, the new rules prohibit smoking rooms on company premises and empower local authorities to establish additional smoke-free places.

    Smoking of tobacco products, hookahs and e-cigarettes has been prohibited in Ukrainian workplaces since 2012, but until recently, smoking areas were still permitted.

    The new law holds both smokers and businesses responsible for compliance.

    Earlier this year, Ukraine started requiring manufacturers of e-cigarettes and e-liquids to print health warnings covering 30 percent of the packaging.

    Starting on July 11, 2023, it will also become illegal to promote e-cigarettes, e-liquids and HTPs or to sell such products with flavors.

    From Jan. 11, 2024, traditional, combustible cigarettes will be required to carry pictorial health warnings covering 65 percent of both sides of their packaging.

    According to the World Health Organization, up to 85,000 Ukrainians die from smoking-related diseases each year. Experts estimate smoking to result in annual economic losses equivalent to 3.2 percent of Ukraine’s GDP, in part due to the cost of treating smoking-related illnesses.

  • Florida: Drop in Smoking Hits MSA Revenues

    Florida: Drop in Smoking Hits MSA Revenues

    Photo: JF19

    Florida will likely collect lower-than-expected revenues from a landmark settlement with the tobacco industry because fewer people are smoking, and the remaining smokers are smoking less, reports The Free Press.

    In 1998, America’s largest tobacco companies settled litigation brought by state attorneys general over the cost of treating sick smokers. The tobacco industry agreed to pay billions of dollars over more than two decades, with the level of payments depending on the number of cigarettes sold.

    In a report released on Aug. 5, economists anticipated Florida to receive $412.1 million in settlement payments by the end of year, down from the earlier anticipated $413.8 million.

    The report pointed to a forecast last month that cigarette sales would decline by 2.5 percent annually over the next decade.

    The decline had earlier been projected between 1.44 percent and 1.75 percent. The report also said that tobacco manufacturer payments were $1.7 million less than anticipated for the recently completed 2021–2022 fiscal year.

    Meeting at the state Revenue Estimating Conference, the economists also revised anticipated payments for the coming years.

    After earlier projecting $442.5 million in revenue for the 2023–2024 fiscal year, the state is now forecast to receive $417.9 million through the settlement during that period.

  • KT&G Profit up Slightly

    KT&G Profit up Slightly

    Photo: KT&G

    KT&G reported a consolidated operating profit of KRW327.6 billion ($249.7 million) for the second quarter of 2022, up by 1 percent from a year earlier, the company said in an earnings release.

    Revenue for the April-June period amounted to KRW1.42 trillion, up 10.9 percent from a year ago, with net profit gaining 34 percent to KRW330.1 billion.

    Sales increased thanks to brisk overseas sales and real estate margins, the company said.

    International sales from the company’s traditional cigarette business surged 47.1 percent, driven by the growth of Latin America and other emerging markets and improved sales in Indonesia.

    KT&G’s share of the domestic market for heat-not-burn (HnB) products increased to 47 percent in 2022, up from 40.4 percent in 2021. HnB products now account for 16.7 percent of all tobacco sales in South Korea, according to KT&G.

    Despite rising interest rates and soaring commodity prices, KT&G’s traditional and HnB business will continue strong growth in the months ahead, a company official said.

  • Universal Reports First-Quarter Results

    Universal Reports First-Quarter Results

    Photo: Taco Tuinstra

    Universal Corp. reported sales and other operating revenue of $429.8 million for the three months ended June 30, up 23 percent over the comparable 2021 quarter. Tobacco operations sales and other operating revenues increased 18 percent to $348.1 million, but tobacco operations income declined 9 percent to $8.1 million.

    George C. Freeman, III, chairman, president and CEO of Universal Corp. expressed satisfaction with the start of the company’s 2023 fiscal year.

    “In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco and shipping constraints,” Freeman said in a statement. “We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.

    “Results for our Tobacco Operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar.

    “Demand for leaf tobacco remains strong, and flue-cured, burley, oriental and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there.

    “While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets.”

  • Industry Group Opposes Flavored Cigar Ban

    Industry Group Opposes Flavored Cigar Ban

    Photo: Andrii

    The Cigar Association of America (CAA) has filed comments opposing the Food and Drug Administration’s (FDA) proposed flavored cigar ban, saying FDA’s own data show that underage usage of flavored cigars—the main rationale for the proposal—is at historic lows, after years of continued decline.

    “This clearly shows that FDA is proposing a solution in search of a problem. The underage usage of flavored cigars is minuscule,” said CAA President David M. Ozgo in a statement. “It is a blatant example of targeting an industry that is clearly marketing its products to legal age adults.”

    The comments note that one of the key purposes of the Tobacco Control Act—the law giving FDA authority to regulate tobacco—is to continue to permit the sale of tobacco products to adults, in conjunction with measures to ensure tobacco products are not sold or accessible to underage purchasers. The current historically low youth usage rates show the success of existing measures.

    According to the CAA, government evidence shows that youth usage of cigars is so low as to be almost immeasurable. When the FDA first sought to exercise regulatory authority over certain tobacco products in 1996, the only survey that tracked youth usage of cigars in 1997, the National Survey on Drug Use and Health (NSDUH), showed last 30-day youth usage at 5 percent in 1997. In 2020 NSDUH tracked last 30-day youth usage of cigars at 0.8 percent.

    The CAA comments highlight the most recent data from the government’s Population Assessment of Tobacco and Health Survey (PATH) showing that youth last 30-day usage of cigars overall was down to 0.75 percent and that youth usage of flavored cigars is around just 0.29 percent.

    “In short, youth usage of flavored cigars continues to decline to almost unmeasurable levels,” Ozgo stated in the filed comment. “FDA asserts that flavored cigars attract youth. If that were true, we would expect flavored cigars to account for a majority of youth cigar use,” the comment added.

    “But the government data clearly show that youth usage of flavored cigars is tiny and declining further,” Ozgo noted.

    The comments also state there is no scientific basis for the proposed ban, but there would be devastating economic consequences. Many small businesses, often minority owned, would be negatively impacted as well as an assortment of cigar manufacturers, suppliers and producing countries such as the Dominican Republic and Honduras.

    Additionally, the CAA comments go on to demonstrate how the FDA does not show any differentiated health effects posed by flavored cigars and that banning flavored cigars would only lead to the development of an unregulated illegal market for flavored cigars. Illegally produced and sold product can often have dangerous additives.

  • PMI Halts Cash-for-Vapes Program

    PMI Halts Cash-for-Vapes Program

    Photo: PMI

    Philip Morris International has paused a program that would have paid Australian pharmacists AUD275 ($190.24) when ordering Veev vapes, according to The Guardian.

    The scheme, first reported by News Corp., would have seen pharmacists receive AUD5 every time they dispense a new VEEV script, AUD10 for educating a new patient about the device, and AUD5 for referring patients to a doctor to obtain a prescription. Pharmacists would also receive a AUD275 payment for placing an initial stock order.

    Nicotine-containing vapor products are available only with a doctor’s prescription in Australia.

    The cash-for-vapes program caused an uproar among public health advocates.

    Emily Banks, a professor at Australian National University National Centre for Epidemiology and Population Health, said the tobacco industry wanted to piggyback off the trust Australians place in the healthcare system.

    “Big tobacco wants a piece of that—they want some of the trust to rub off. It’s beyond appalling.”

    “Big tobacco’s attempt at financial kickbacks shows absolute contempt for pharmacists,” said a spokesman for the Pharmaceutical Society of Australia. “Multinational tobacco companies have no place in health care.”

    In a statement, PMI defended the program, saying since 2021 nicotine vaping products had been available in Australian pharmacies as a prescription-only medicine for smoking cessation.

    “Several manufacturers, including PMI, have been providing nicotine vaping products to Australian pharmacies via the stringent regulatory regime. Industry data indicates that across multiple manufacturers products are now available in over 2,000 pharmacies nationwide,” the statement said.

  • VTA: Give Menthol Smokers Alternatives

    VTA: Give Menthol Smokers Alternatives

    Photo: Andrey Popov

    The U.S. Food and Drug Administration’s proposal to a menthol flavored cigarettes will improve public health only if there are viable menthol and flavored vapor products on the market, according to the Vapor Technology Association (VTA).

    In April, the FDA announced a plan to ban the sale mentholated cigarettes, which account for about one-third of the U.S. market. The public was invited to share its thoughts on the measures and the official comment period ended Aug. 2.

    In its official comment submission to the agency’s proposed product standards, the VTA urges the FDA to continue to build an “offramp” to menthol and flavored vaping products for smokers to access effective smoking alternatives.  

    “The menthol cigarette rule “has the potential to dramatically reducing cigarette smoking—the leading cause of death and disease of Americans—but only if the agency heeds the warning of scientists that menthol smokers must have access to less harmful vaping and other alternative nicotine products,” the VTA wrote in a statement.

    “These limitations threaten to take what should be a public health victory and turn it into a half measure that, in the absence of other decisive action from the FDA, will fall far short of the benefits the agency claims.”

    “FDA’s own proffered scientific experts acknowledge that at least 50 percent, and in some cases a larger percentage, of smokers will continue to smoke cigarettes or other combustible products after the menthol cigarette rule is put into effect unless provided access to effective alternatives.

    “To fulfill its own harm reduction mission, the agency must use its PMTA process to ensure a rational, regulated legal marketplace with suitable less harmful non-combustible alternatives,” the VTA wrote.

  • Cigarette Business Boosts ITC’s Quarter

    Cigarette Business Boosts ITC’s Quarter

    Photo: Wirestock

    ITC’s cigarette business delivered strong results in the second quarter of fiscal year 2022, with segment revenue and segment results up 29 percent and 30.1 percent year-on-year respectively

    In a media statement, the company said it continues to counter illicit trade and reinforce market standing by fortifying its product portfolio through innovation, premiumization across segments and enhancing product availability backed by superior on-ground execution.

    The business also continues to launch several differentiated variants to further strengthen and future-proof its product portfolio. Recent launches include Classic Connect, Gold Flake Indie Mint and Gold Flake Neo SMART Filter.

    The company said it was encouraged by the stable tobacco tax environment and actions by India’s law enforcement agencies to stamp out illicit trade.

    “As seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables green shoots of volume recovery for the legal cigarette industry from illicit trade, thereby engendering domestic demand for Indian tobaccos, while also mitigating loss of tax revenue to the exchequer,” ITC wrote in a statement.

    The company said it continues to engage with policymakers for a framework of equitable, non-discriminatory, pragmatic, evidence-based regulations and taxation policies that balance the economic imperatives and tobacco-control objectives, while taking account of the unique tobacco consumption pattern in India, where factory-made cigarettes account for only a fraction of combustible tobacco volumes.

  • Philip Morris To Produce at Imperial’s Kyiv Plant

    Philip Morris To Produce at Imperial’s Kyiv Plant

    Photo: Tobacco Reporter archive

    Philip Morris Ukraine will start producing some of its cigarettes at Imperial Tobacco’s factory in Kyiv this month, following a deal between the two companies, reports Interfax Ukraine.

    The arrangement allows Philip Morris to continue supplying customers even as production at its Kharkiv factory remains suspended in the wake of Russia’s military invasion. It also enables Imperial Tobacco to better utilize its production capacity, some of which has been idle due to the difficulty of exporting cigarettes.

    “Since the beginning of the war, we have been looking for alternative ways to ensure the supply of products,” said Philip Morris Ukraine Managing Director Maksym Barabash. “We are very pleased that we have found a mutually beneficial solution with Imperial Tobacco, which will produce products in accordance with PMI’s high-quality standards. For Philip Morris, this is a temporary measure. We hope that we will be able to resume production at our Kharkiv factory as soon as it becomes safe for workers.”

    “The Imperial Tobacco factory in Kyiv has a significant production potential and a strong professional team to ensure the production of additional volumes of products with high quality and in the right time,” said Halyna Vorobyova, head of Imperial Tobacco’s board in Ukraine. “Since the beginning of the war, our company cannot carry out export deliveries; therefore, the agreement with Philip Morris will allow us to load our capacity.”

    Philip Morris employed about 1,300 people prior to the war. Its Kharkiv factory exported cigarettes to more than 20 countries, including major markets such as Japan and Egypt.