Author: Taco Tuinstra

Analyst: Nicotine Rule Could Take a Decade

Photo: Leo Lintang
It could take up to a decade to resolve whether the Food and Drug Administration could require traditional cigarettes to contain minimal nicotine levels, reports The Winston-Salem Journal, citing Barclays analyst Jain Gaurav.
On June 21, the FDA formally announced its proposal to reduce nicotine content in traditional cigarettes to minimal and potentially non-addictive levels.
The FDA proposal is expected to draw legal challenges from tobacco manufacturers that could take several years to address.
“We think it will take a decade or longer for the FDA to introduce nicotine caps due to the long nine-step process at the FDA, the inevitable litigation, and then the one-year time given to retailers to get rid of excess inventory,” Barclays analyst Jain Gaurav said in an investor note.
“The FDA will need to take into consideration inputs from scientific, legal, law enforcement, public health, industry and budgetary stakeholders, and respond to all the comments in an iterative process before it can publish a final rule.”
Some analysts also question whether the FDA has the authority to purposefully decrease demand for a legal product, in this instance by reducing nicotine levels to 5 percent of what most popular traditional cigarettes contain.
In June 2019, Morgan Stanley analysts issued an “industry risk navigator” report that predicted a significant decline in revenue—up to 50 percent by 2034—for tobacco companies if the FDA succeeds in establishing significantly lower nicotine levels.
With the lower nicotine levels, the tobacco industry could lose up to $165 billion in combined profits over the next 15 years even if manufacturers gain revenue from innovation nicotine products, such as electronic cigarettes, heat-not-burn traditional cigarettes and oral nicotine products.
The analysts project BAT taking up to a 13 percent decline to its $88 billion market capitalization, partially limited because just 40 percent of BAT’s profits come from the U.S. Altria could experience up to a 20 percent decline of its $92 billion market capitalization.
The only apparent manufacturing benefactor of the FDA proposal is 22nd Century Group, which specialized in nicotine-reduction and has said it is ready to license its technology to others.
Those are the only combustible cigarettes that the FDA had authorized in the modified-risk tobacco product process. In December 2021, the FDA authorized 22nd Century to market its low-nicotine VLN King and VLN Menthol King cigarettes as modified risk tobacco products. They are currently the only cigarettes with such an authorization on the U.S. market.
June 27, 2022
Motley Fool: Juul Exit Would Crown BAT King

Photo: BAT
The removal of Juul products would hand the U.S. market to British American Tobacco, according to Motley Fool.
Juul, which is partly owned by Altria Group, had been the undisputed e-cigarette leader, with a near-80 percent share of the market at the height of its success. The latest Nielsen data puts Vuse’s share at 35.1 percent compared to 33.1 percent for Juul. Third-place NJOY has a 3.1 percent share.
Last year, the U.S. International Trade Commission ruled that Philip Morris International’s IQOS heated tobacco device infringed on BAT’s patents, and that device was prohibited from being imported and sold in the U.S. Altria had partnered with PMI to market and distribute IQOS in the U.S., but the ITC ruling disrupted those plans.
Because Altria shelved its MarkTen e-cigarette brand in favor of partnering with PMI, the ITC ruling leaves it without a vapor product. The FDA has all but wiped out the rest of its investment in Juul. In 2018, Altria paid $12.8 billion for a 35 percent in the vapor company. As of the end of the first quarter of 2022, Altria had reduced the fair value of its Juul position to just $1.6 billion.
If the FDA is successful in eliminating Juul, BAT will essentially have no roadblocks in its way to market dominance.
Vuse turned profitable in the U.S. for BAT in the second half of last year, and it’s been able to grow its share because it discounted the device and the consumables to attract users. Earlier this month, BAT said it was now ready to raise prices on both. With a major competitor removed from the market, this should provide the company with a big boost in profits.
BAT’s vapor revenue grew 59 percent last year to £927 million ($1.14 billion), while its own heated tobacco products, marketed under the Glo brand, saw a 46 percent rise in sales to £853 million.
June 27, 2022
Leadership Changes at Kaival

Photo: Nirajkumar Patel
(Photo: Kaival Brands Innovations Group)
Kaival Brands Innovations Group Founder and CEO Nirajkumar Patel will transition to chief science and regulatory officer. Eric Mosser, the company’s current chief operating officer, will become president and remain COO. Mosser will serve as the company’s principal executive officer for purposes of its filings with the Securities and Exchange Commission. Patel will remain on the board of directors for Kaival Brands.
The management changes follow the company’s recently announced international licensing agreement with Philip Morris Products (PMP) on June 13, 2022.
The agreement grants to PMP a license of certain intellectual property rights relating to Bidi Vapor’s premium electronic nicotine delivery system (END”) device, the Bidi Stick, in the U.S., as well as potentially newly developed devices, to permit PMP to manufacture, promote, sell and distribute such ENDS device and newly developed devices, in markets outside of the U.S.
Eric Mosser
“What Mr. Patel has accomplished, from initial concept to an international distribution agreement with Philip Morris is extraordinary,” said Mosser in a statement. “With unwavering belief and integrity, he established himself as a true visionary within the vaping category.
Mr. Patel has been both inventor and salesman, developing a product and everything that goes around it to make it successful. We have grown from a no-name brand to the No. 1-selling self-contained disposable ENDS device in the U.S based on the Nielsen retail sales data for the 52-week period ending June 4, 2022, according to a recent Goldman Sachs’ Equity Research Report.”
The transition will allow Patel to focus on developing new products and expanding the Bidi Vapor product portfolio, which is directly related to the new agreement with PMP, and allow Mosser to focus on expanding sales distribution channels and increasing the revenues and profits of Kaival Brand.
“My passion for the business is in creating, designing and delivering new products for adult tobacco users to the market,” said Patel. “Mr. Mosser understands the core values, mission and goals of the Company, and I am confident he will take Kaival Brands to new levels.”
The management changes are effective immediately, with roles and responsibilities to transfer over the coming weeks.
June 27, 2022
Juul Granted Emergency Stay of FDA Order

Photo: steheap
Court Grants Juul Emergency Stay of FDA Order
Juul Labs received an emergency stay of the Food and Drug Administration’s order for the vaping company to pull its e-cigarettes off the U.S. market.
The U.S. Court of Appeals for the D.C. Circuit on June 24 granted Juul’s request to delay the FDA’s ban. The temporary stay gives the court time to hear arguments and wasn’t a ruling on the merits of the case, the judges wrote.
In its court filing, Juul argued that the FDA’s order was extraordinary and unlawful and it would suffer significant irreparable harm without a stay, according to The Wall Street Journal.
Juul said that the requirement to immediately remove all Juul products from U.S. stores was a departure from the agency’s practices, which typically have a transitional period.
The e-cigarette maker also questioned the agency’s handling of the announcement, noting The Wall Street Journal reported on the ban a day before it was announced.
“Regulation through leaks and press releases is no way to handle agency action, much less to order a company to cease essentially all business operations,” Juul said in the court filing.
Former FDA Center for Products Director Mitch Zeller said that Juul’s e-cigarettes were judged solely on the strength of the company’s application. Political pressure to ban Juul didn’t influence the ruling, nor did Juul’s past actions, he said. “This was a scientific review conducted by subject-matter experts,” he said. “That’s the way the system is supposed to work.”
In a statement, Juul Labs it was exploring all its options under the FDA’s regulations and the law.
“We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency,” said Juul Labs Chief Regulatory Officer Joe Murillo.
“In our applications, which we submitted over two years ago, we believe that we appropriately characterized the toxicological profile of Juul products, including comparisons to combustible cigarettes and other vapor products, and believe this data, along with the totality of the evidence, meets the statutory standard of being “appropriate for the protection of the public health.”
“We remain committed to doing all in our power to continue serving the millions of American adult smokers who have successfully used our products to transition away from combustible cigarettes, which remain available on market shelves nationwide.”
Among other options, Juul is reportedly exploring a bankruptcy filing if the company is unable to get relief from the government’s ban, reports The Wall Street Journal, citing people familiar with the matter.
June 24, 2022
Swedish Billionaire Invests in Sting Free
Erik Selin (Photo courtesy of Sting Free)
Swedish billionaire Erik Selin has invested SEK4.4 million ($434,247) in the Swedish nicotine pouch innovation company Sting Free. He has thus become the second largest shareholder in the company, which is now valued at just under SEK31 million. Sting Free’s other shareholders include Curt Enzell, inventor of the original snus pouch and Meg Tivéus, a former board member of Swedish Match.
Sting Free has developed and patented a pouch for modern oral nicotine products and snus, where one side has an integrated protective shield for the gums ((also see “Patching the Pouch,” Tobacco Reporter, July 2017). The shield effectively reduces the burning sensation and gum irritation that is normally caused by these products.
This is the third time Selin has invested in companies in the snus industry. He is already the largest Swedish shareholder in the snus giant Swedish Match and is also a major shareholder in Haypp Group, which is the largest e-trader of snus and modern oral nicotine pouches in Europe.
“We welcome Erik with open arms and could not have found a better partner,” said Sting Free founder and Chairman Bengt Wiberg.
“We are a tobacco harm reduction company whose technology has already received much media attention and an international award for removing the stinging sensation. The stinging sensation is often considered as being a deterrent for smokers and other nicotine users who have never tried smokefree oral nicotine products,” said Wiberg.
Sting Free AB recently conducted a survey with more than 1,000 snus and nicotine pouch using men and women in Sweden. The results show that the patented technology is in demand, especially among women and those who have, or are concerned about, oral health problems linked to their use of these types of products. The survey results shows that 59 percent of users dislike the familiar burning sensation and 56 percent have worried about their oral health in connection with their use of the products presently on the market.
The market for snus and tobacco-free nicotine pouches is presently worth approximately SEK9 billion per year in Scandinavia alone.
Before the end of 2022, Sting Free AB will launch its first tobacco-free nicotine pouch with the unique integrated Stingfree shield. “In the future our goal is to license the technology and thereby create a new standard in the industry that is as familiar to consumers as light products are for soft drinks or Gore-Tex is for clothes and shoes,” says Sting Free CEO Daniel Wiberg.
June 24, 2022
Spain Asked to Rethink Vape Shop Ban

Photo: Nito
The Independent European Vaping Association (IEVA) has called on the Spanish government to reconsider a proposal to ban vape shops. According to the IEVA, the legislation under consideration would hand the entire electronic cigarette business to big tobacco companies.
“Against all principles of EU law (proportionality, good regulation, good administration, fair competition and harmonization), the Spanish government has proposed to ban and close all vape shops across Spain (transferring the sale of electronic cigarettes and e-liquids to the state monopoly of tobacco shops and to prohibit all online sales,” the IEVA wrote on its website.
According to the IEVA, these measures not only contravene EU rules on free competition and free movement of goods, but will also generate unemployment at a time or economic crisis. What’s more, the proposal will deprive vaper from personalized access to vaping products, forcing them to buy them at tobacco shops, which could temp them back to more risky combustible products, the group said.
As part of the legislative process, Spain submitted a so-called TRIS notification to the European Commission on June 21 The IEVA shared its views on the proposal and the full submission is available here.
June 24, 2022
Juul Requests Stay of FDA Order

Photo: steheap
Juul Labs today asked a federal appeals court to temporarily block the U.S. Food and Drug Administration’s marketing denial order until it can petition the court for an emergency review.
In its filing, Juul said the FDA’s order was extraordinary and unlawful and it would suffer significant irreparable harm without a stay.
On June 23, the regulatory agency ordered Juul Labs to remove its products from the market, saying the e-cigarette company had provided insufficient evidence in its premarket tobacco product application to demonstrate that its products are “appropriate for the protection of public health.”
In particular, the FDA noted that its concerns about genotoxicity and potentially harmful chemicals leaching from the Juul Labs’ proprietary e-liquid pods had not been adequately addressed.
“We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency,” said Joe Murillo, chief regulatory officer at Juul Labs, in a statement.

We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency.
Joe Murillo, chief regulatory officer, Juul Labs
“In our applications, which we submitted over two years ago, we believe that we appropriately characterized the toxicological profile of Juul products, including comparisons to combustible cigarettes and other vapor products, and believe this data, along with the totality of the evidence, meets the statutory standard of being “appropriate for the protection of the public health.”
In its court filing, Juul said the FDA’s decision followed “immense political pressure from Congress once it became politically convenient to blame [Juul] for youth vaping, even though several of its competitors now have a larger market share and much higher underage-use rates,” according to The Wall Street Journal.
Juul said that the FDA’s order to immediately remove all Juul products from U.S. stores was a departure from the agency’s practices, which typically have a transitional period. The e-cigarette maker also questioned the agency’s handling of the announcement, pointing to the fact that the order had reported in the press before it was officially announced.
“Regulation through leaks and press releases is no way to handle agency action, much less to order a company to cease essentially all business operations,” Juul said in the court filing.
In a press note, Juul Labs said it is exploring all of its options under the FDA’s regulations and the law. “We remain committed to doing all in our power to continue serving the millions of American adult smokers who have successfully used our products to transition away from combustible cigarettes, which remain available on market shelves nationwide,” the company wrote.

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Meanwhile, the announcement that Juul products must come off the market triggered a run on stores, according to various news outlets, including Bloomberg. “Gonna clear the shelves and hoard ’em like our incandescent bulbs!” one user wrote on Twitter following the news.
June 24, 2022
It’s Official: FDA Denies Juul Market Access

Photo: steheap
Today, the U.S. Food and Drug Administration confirmed what many had already been anticipating: Juul Labs must remove all currently marketed Juul products from the U.S. market.
“Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic nicotine delivery system products currently being marketed to consumers meet our public health standards,” said FDA Commissioner Robert M. Califf. “The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize these make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”
These marketing denial orders (MDO) pertain only to the commercial distribution, importation and retail sales of these products, and do not restrict individual consumer possession or use—the FDA cannot and will not enforce against individual consumer possession or use of Juul products or any other tobacco products.
After reviewing the company’s premarket tobacco product applications, the FDA determined that the applications lacked sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health. In particular, some of the company’s study findings raised concerns due to insufficient and conflicting data—including regarding genotoxicity and potentially harmful chemicals leaching from the company’s proprietary e-liquid pods—that have not been adequately addressed and precluded the FDA from completing a full toxicological risk assessment of the products named in the company’s applications.
The FDA says that, to date, it has not received clinical information to suggest an immediate hazard associated with the use of the Juul device or Juul pods. However, the MDOs issued today reflect FDA’s determination that there is insufficient evidence to assess the potential toxicological risks of using the Juul products.
“There is also no way to know the potential harms from using other authorized or unauthorized third-party e-liquid pods with the Juul device or using Juul pods with a non-Juul device,” the agency wrote in a statement.
“The FDA is tasked with ensuring that tobacco products sold in this country meet the standard set by the law, but the responsibility to demonstrate that a product meets those standards ultimately falls on the shoulders of the company,” said Michele Mital, acting director of the FDA’s Center for Tobacco Products. “As with all manufacturers, Juul had the opportunity to provide evidence demonstrating that the marketing of their products meets these standards. However, the company did not provide that evidence and instead left us with significant questions. Without the data needed to determine relevant health risks, the FDA is issuing these marketing denial orders.”
June 23, 2022
KPMG: Illicit Trade up in Europe

Photo: Europol
Illicit cigarette consumption increased by an estimated 3.9 percent, or 1.3 billion cigarettes, in 2021, reaching 35.5 billion cigarettes consumed across the European Union, according to a KPMG study commissioned by Philip Morris International. Meanwhile, the study estimates that total EU cigarette consumption declined over the same period.
The increase of illicit consumption was largely driven by an estimated 33 percent increase in counterfeit consumption in France, where it grew to 8 billion cigarettes last year. Overall, France remains the largest market for illicit cigarettes in the EU, with a total of 15.1 billion illicit cigarettes consumed in 2021, comprising 29 percent of total cigarette consumption in the country, which represents a significant growth from 13 percent in 2017.
“The findings of the KPMG Report should be a real wake-up call. It’s alarming that in countries that maintain high excise taxes on cigarettes, such as France, instead of driving a decrease in smoking prevalence, we see a rise in counterfeit cigarette consumption. In fact, in France in the past five years, while the average price of a pack of legitimate cigarettes has increased by more than half, the number of adult smokers has only marginally decreased,” said Gregoire Verdeaux, senior vice president, external affairs, PMI, In a statement.
“But there is also hope. Other EU countries have adopted differentiated policies on alternatives to cigarettes that support the continued decline of cigarette consumption while reducing illicit trade, and they are already yielding encouraging results. The European Commission in Brussels should make this the foundation for the future.”
The annual KPMG report focuses on the consumption and flows of illicit cigarettes in 30 European countries—the 27 EU member states, as well as the United Kingdom, Norway, and Switzerland—and indicates that had these cigarettes been legally purchased, an additional €10.4 billion ($10.93 billion) in taxes would have been collected by governments in the EU.
Tax revenue losses will limit governments’ ability to invest in areas such as public safety, public services, or infrastructure, at a time when people across Europe are also facing higher prices of many basic goods. The risk that more adult smokers—especially those among the lower-income population—turn to illicit trade is now significant. This creates an even more urgent need to ensure that smoke-free alternatives are available and affordable for all, to enable them to make a better choice instead of buying from the black market,” said Verdeaux.

Consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives.
Gregoire Verdeaux, senior vice president, external affairs, PMI
The KPMG report also shows that roughly half—16 out of 27—of the member states experienced declining or stable consumption of illicit cigarettes in 2021. Among these countries, Poland saw one of the largest declines in illicit volumes, showing a 3.7 percentage point decrease in its share of illicit cigarette consumption.
“The decreasing consumption of illicit cigarettes in countries like Poland is remarkable and reassuring. It showcases the impact of effective law enforcement against criminals profiting from illicit trade in a market where better alternatives to smoking are available and more affordable to adult smokers. These are outcomes other countries should aspire to emulate,” said Alvise Giustiniani, vice president, illicit trade prevention. “It has never been more important to provide in particular the most vulnerable in society with access to information, as well as to develop and implement innovative policies that truly include everyone and facilitate access to better alternatives.”
Counterfeit consumption was the main driver of illicit trade in the EU; consumption of fake cigarettes reached an estimated total of 12.3 billion—accounting for 34.6 percent of total illicit consumption. The study indicates that due to continued travel and border restrictions related to the Covid-19 pandemic, organized criminal groups shifted their focus toward manufacturing counterfeit cigarettes directly within EU borders. Interviews conducted by KPMG with seven different law enforcement agencies found that illegal manufacturing sites are increasingly moving west in Europe to get closer to higher-priced end markets, such as France and the U.K.
The continued growth of a black market where fake and unregulated cigarettes are easily available seriously undercuts legitimate efforts to reduce and eventually eliminate cigarette smoking.
“We are convinced that consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives, such as scientifically substantiated smoke-free products,” said Verdeaux. “Making them accessible as a better option for millions of adult smokers in Europe who don’t quit should be our common top priority.”
June 23, 2022
AOI-Bayer Partnership Boosts Maize Yields

Photo: AOI
Alliance One International announced the Phase Two results of the partnership of its Brazilian subsidiary with Bayer Crop Science, which was formed with the goal of providing quality maize seeds and agronomic support to smallholder tobacco farmers in Brazil. Following the completion of the 2021 growing season, participating farmers reported a 15 percent average increase in maize yield compared to the 2020 growing season.
“Due to strong farmer interest, we expanded the opportunity to participate in phase two of the program to 100 percent of our Brazilian grower base,” said Helio Moura global agronomy director for AOI, in a statement. “we distributed 5,700 bags of Bayer maize seed to our contracted farmers as well as provided fertilizer and additional agronomic guidance related to maize production. As a result, farmers reported that they experienced improved crop quality and yield, in turn, increasing the farmers’ bottom lines.”
Through the partnership, Alliance One Brazil’s goal is to help its contracted farmers diversify their income by strengthening the quality and yield of a crop that is complementary to tobacco. Farmers that participated in phase two of the program earned an average of $270 more per hectare of maize when compared to the prior crop.

We are very excited about the future of this program and its potential to improve farmer livelihoods not only in Brazil but [also] around the globe.
Alex Strohschoen, president, AOI
“Alliance One Brazil’s contracted farmers produced an additional 5.150 metric tons of maize this past crop year, which is primarily sold for use in animal feed,” said Moura. “Given the threat of a global food crisis, it is increasingly important to help our farmers scale production in order to help offset shortages and high costs.”
In response to the positive results of the program’s second phase, Alliance One Brazil is evaluating the inclusion of additional crops as part of the program and AOI is assessing the potential to expand the program to other countries within its footprint.
“We are very excited about the future of this program and its potential to improve farmer livelihoods not only in Brazil but around the globe,” said Alex Strohschoen, president of AOI. “As we enter the 2022 growing season, we plan to introduce the program to our contracted farmers in Argentina, where a significant portion of our grower base could benefit from improving the quality and yield of their maize crops.”
The improvement of farmer livelihoods is a key priority for AOI. It is committed to maximizing all farmers’ income potential by 2030 through appropriate training in good agricultural practices and the opportunity for crop diversification.
Tobacco Reporter profiled the AOI-Bayer partnership in its June edition (See, “Fruitful Cooperation.”)
June 23, 2022