Author: Taco Tuinstra

  • Kinsman Named CFO at 22nd Century

    Kinsman Named CFO at 22nd Century

    Photo: akub Jirsák | Dreamstime.com

    22nd Century Group has appointed R. Hugh Kinsman as chief financial officer. Kinsman is currently CFO of GVB Biopharma, which 22nd Century acquired in May.

    “The integration of GVB Biopharma is proceeding very well, and we are excited to build on Hugh’s success at GVB by elevating his financial leadership role to 22nd Century as a whole,” said James A. Mish, chief executive officer of 22nd Century Group, in a statement.

    Kinsman has extensive experience as a senior executive in roles ranging from acting CFO of a publicly traded battery manufacturer with operations in the U.S., Switzerland and Italy, to the CFO of West World Media, a private data aggregation company that was acquired for $60 million.

    He also worked at GE Capital where he oversaw over a billion dollars in infrastructure, energy, and communications investments. He began his career at Asher & Company, CPAs (now BDO) and has held a certified public accountant designation.

    He earned his Bachelor of Science degree in finance from Penn State University and an MBA from Cornell University.

  • China E-Cigarette Exports to Exceed $27 Billion

    China E-Cigarette Exports to Exceed $27 Billion

    Photo: Taco Tuinstra

    The value of China’s electronic cigarette exports will reach CNY186.7 billion ($27.82 billion) this year, reports Pandaily, citing the Blue Book of Electronic Cigarette Exports, which was released by the China Electronics Chamber of Commerce  on June 14.

    According to the Blue Book, China exported e-cigarettes with a value of CNY138.3 billion in 2021, 180 percent more than in the previous year.

    In the first quarter of 2022, the value of Chinese e-cigarette exports stood at CNY45.3 billion. Most of those exports (58 percent) went to the United States, followed by the European Union and Britain (24 percent) and Russia (8 percent). Southeast Asia and the Middle East accounted for 5 percent and 4 percent of Chinese e-cigarette exports, respectively.

    In 2021, there were more than 1,500 domestic e-cigarette manufacturing and brand enterprises, more than 190,000 e-cigarette retail outlets and nearly 100,000 e-cigarette supply chains and merchandise service enterprises. The domestic e-cigarette industry directly employs about 1.5 million people and indirectly employs 4 million people, totaling about 5.5 million people.

    After allowing the vapor product sector to operate in a legal gray zone for years, the Chinese government has started crafting a regulatory framework, placing e-cigarettes under the jurisdiction of the State Tobacco Monopoly Administration.

    It has been issuing standards and requirements for production, wholesale and retail, as well as the protection of minors.

  • Pyxus Reports Progress in Fiscal 2022

    Pyxus Reports Progress in Fiscal 2022

    Photo: Alliance One International

    Pyxus International reported sales and other operating revenues of $1.64 billion, up 23.1 percent from the prior fiscal year. Gross profit as a percent of sales was 13.8 percent, compared with 12.1 percent in 2021. The net loss attributable to Pyxus International was $82.1 million, which improved 30.2 percent from the prior fiscal year despite $32.2 million of goodwill impairment in fiscal 2022.

    The results presented for the prior fiscal year period reflect the periods prior to and subsequent to the company’s emergence from Chapter 11 proceedings.

    Pyxus International attributed the increase in sales and other revenues to a 16.8 percent increase in kilo volume and a 7.5 percent increase in average price per kilo. The 16.8 percent increase in kilo volume was driven by larger crop sizes in Africa and increased market share in Africa, Asia and South America partially due to customers reversing their vertical integration in certain markets.

    In addition, 21.1 million kilos or $178.3 million of shipments were delayed by the Covid-19 pandemic and customer shipping instructions from the prior year into the current year and was offset by similar volume of shipments expected in the current that has been delayed into next year in Africa, North America and South America.

    The 7.5 percent increase in average price per kilo was primarily due to product mix having a higher concentration of lamina in Asia, Africa, and Europe, as well as customer and grade mix in Africa and North America.

    Our employees worked diligently to successfully increase volumes and revenue compared to the prior year while continuing to navigate global challenges.

    Pieter Sikkel, president and CEO, Pyxus International

    “We are proud of the progress made by the business during fiscal year 2022,” said Pyxus’ President and CEO Pieter Sikkel,  in a statement. “Our employees worked diligently to successfully increase volumes and revenue compared to the prior year while continuing to navigate global challenges, which largely stem from the ongoing impacts of Covid-19 and the unfortunate events in Ukraine.

    “We continued to expand our customer relationships as customers sought solutions to reduce supply chain complexities and improve operational efficiencies. Expansion of these relationships, partially attributable to our environmental, social, and governance framework that we publicly announced in December 2021, increased our market share in Africa, Asia, and South America and contributed to a 16.8 percent increase in kilo volume compared to last year.

    “Our efforts in fiscal 2022 to execute on our strategy to increase financing sources and working capital lines around the globe resulted in a new asset-based lending credit facility with PNC Bank in February 2022, which provides the company with an extended maturity date, reduced costs and increased potential borrowing availability. In addition, in June 2022, we entered into an agreement to amend our delayed draw term loan facility, which provides the company with an extended maturity date, reduced costs, and increased financial flexibility.

    “In January 2022, we completed the exit of our cash-flow-negative cannabinoid operations. Our restructuring activities generated savings in SG&A, which contributed to a $55.9 million decrease in expense compared to last year. As a result, our SG&A expense has normalized and is consistent with levels prior to our investments to develop those businesses.

    “For the full year, we 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 as we anticipate increased demand for our leaf products, the continuation of Covid-related logistical challenges, and cost and price increases due to inflation.

    “Maintaining farmer livelihood and a supply chain of responsibly sourced, sustainable, and traceable products remains a top priority as we engage with customers about the impact of inflation on the cost and price of tobacco going forward. Additionally, we have taken proactive measures to secure inputs for the next year, such as fertilizer and fuel, allowing us to remain focused on delivering stakeholder value as we work to grow a better world.”

  • New Leadership at Covectra

    New Leadership at Covectra

    Covectra, a track-and-trace company, has named Gary Miloscia as president and CEO. Steve Wood, co-founder and CEO since Covectra’s inception in 2008, will transition to serving on the board of directors and as a senior advisor to the management team.

    “As a leading provider of serialization, track-and-trace and authentication technologies, Covectra is poised to leverage its technology and strategic position to enhance value for its customers,” said Wood in a statement. “I have served over 14 years as CEO and have been proud and fortunate to work with an outstanding and dedicated group of employees. I am deeply grateful for their hard work and commitment and am confident Gary Miloscia will be an excellent leader for Covectra.”

    Since 2015, Miloscia has served as Covectra’s chief financial officer and chief marketing officer, responsible for its strategic business, financial planning, marketing and product development initiatives. Prior to Covectra, Miloscia held senior finance roles at Fidelity Investments, Health Dialog and American Express. Miloscia received a Bachelor of Science degree in finance from Rutgers University and a Master of Business Administration degree from Indiana University’s Kelley School of Business.

    “I am very excited for the opportunity to assume my new role at Covectra,” said Miloscia. “We have a strong business model and very talented management team that uniquely positions us in providing exceptional serialization and innovative brand protection solutions to our customers. I look forward to leading the company through its next chapter as we move forward to fully commercialize our new StellaGuard security label.”

  • Kaival and PMI Sign Distribution Agreement

    Kaival and PMI Sign Distribution Agreement

    Photo: khwanchai

    Kaival Brands Innovations Group, the U.S. distributor of all products manufactured by Bidi Vapor, has reached an agreement with Philip Morris Products (PMP), a wholly owned affiliate of Philip Morris International, for the development and distribution of electronic nicotine-delivery system (ENDS) products in markets outside of the U.S., subject to market (or regulatory) assessment.

    The company’s recently formed wholly owned subsidiary, Kaival Brands International (KBI), entered into a licensing agreement with (PMP) on June 13, 2022. The agreement grants to PMP a license of certain intellectual property rights relating to Bidi Vapor’s premium ENDS device, known as 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 international markets outside of the U.S.

    The parties believe this agreement promotes their joint vision of a smoke-free future.

    “We believe that in addition to the Bidi Stick having wide acceptance among legal-age nicotine users in the United States, Bidi Vapor’s numerous decisions around design; responsible adult-oriented marketing and stringent youth-access prevention measures; and sustainability bolstered its appeal to PMI,” said Niraj Patel, CEO of Kaival Brands, in a statement.

    “We, along with PMI and Bidi Vapor, share the vision of a smoke-free future. The Bidi Stick offers legal-age nicotine users a high-quality alternative to cigarettes that satisfies their taste preferences. Further, we, along with Bidi Vapor, are committed to prioritizing the appropriate regulation and responsible commercialization, inclusive of taking the necessary measures to make sure these products do not appeal to unintended audiences, including youth. By example, Bidi Vapor does not engage in direct online sales to consumers and requires age verification contracts with our distributors and retailers.

    “While Bidi Vapor continues to pursue the U.S. Food and Drug Administration premarket tobacco product authorization, cooperation with a major multinational company like PMI, a leader in scientifically substantiated smoke-free products, opens doors on a global scale. Kaival Brands looks forward to a long, productive relationship with PMI to accelerate the end of smoking.”

    “We have previously mentioned our intention to broaden our current smoke-free product portfolio for adults who would otherwise continue to smoke cigarettes or use other nicotine products. This agreement supports that vision and is another step toward accelerating the delivery of a smoke-free future. We are excited to start our agreement with Kaival Brands—led by CEO Niraj Patel—who shares the same vision as we do, to accelerate the end of combustible cigarette smoking,” says PMI President of E-Vapor Ashok Rammohan.

  • Flow Stops Sales of Flavored Vapes in China

    Flow Stops Sales of Flavored Vapes in China

    Photo: Max

    E-cigarette manufacturer Flow will stop producing non-tobacco flavored e-liquid cartridges for the Chinese market to comply with new regulations, reports Pandaily.

    In November 2021, the Chinese government granted the State Tobacco Monopoly Administration jurisdiction over the vapor business. Since then, authorities have published a series of new rules. Among other things, e-cigarette manufacturers must sell their products through authorized channels. Retailers, meanwhile, are required to buy all vapor products through a “unified platform” and restrict the liquids sold on the Chinese market to tobacco flavors.

    According to the Blue Book of the E-Cigarette Industry, there were nearly 190,000 e-cigarette retail stores in China in 2021, including 138,000 authorized stores, 47,000 specialty stores, and 5,000-7,000 “collection” stores.

    Currently, fruit-flavored e-cigarettes account for more than 70 percent of sales in many retail outlets.

  • Canada Wants Warnings on Individual Sticks

    Canada Wants Warnings on Individual Sticks

    Photo: vchalup

    The Canadian government wants to require cigarette manufacturers to print written health warnings on individual cigarettes, reports Reuters, citing Mental Health and Addictions Minister Carolyn Bennett.

    If the plan moves forward, Canada would be the first country to implement such a rule. In 2001, Canada pioneered graphic health warnings on cigarette packs, an example that has since been followed by many other nations.

    Carolyn Bennett said the measure had become stale for the 13 percent of Canadians who smoke regularly.

    “Adding health warnings on individual tobacco products will help ensure that these essential messages reach people, including the youth, who often access cigarettes one at a time in social situations sidestepping the information printed on a package,” she was quoted as saying.

    A 75-day public consultation period will start on June 11, and this will inform the development of the proposed new regulations.

    Rothmans Benson & Hedges, the Canadian unit of Philip Morris International, said the proposals would not help cut the number of smokers.

    “We believe that better choices start with better information, and the millions of current adult smokers should be given access to the appropriate information about alternatives,” a spokesperson told Reuters.

    Action on Smoking & Health (ASH) welcomed the plan.

    “We are delighted to see proposed new graphic health warnings on all tobacco products, including smokeless tobacco” said Les Hagen, executive director of ASH Canada in a statement. “A picture is worth a thousand words and these pictures and messages will protect thousands of Canadians from tobacco dependence and disease. The new and improved warnings will replace the stale messages that have appeared on tobacco packages for over 10 years. The messages on cigarette sticks are a global precedent and will warn smokers about the grave risks of smoking with every puff. The visibility and intensity of these warnings will better reflect the enormous risks of smoking.”

    Tobacco use kills over 50,000 Canadians each year—more than all other drugs combined, according to ASH.

  • Pakistan: Illicit Cigarette Market Up Significantly

    Pakistan: Illicit Cigarette Market Up Significantly

    Photo: Taco Tuinstra

    Pakistan’s revenue losses from the illicit cigarette trade increased by 53 percent in two years, reports The Nation, citing a report by Oxford Economics. In fiscal year 2020-2021, the state missed PKR77.8 billion ($380.7 million) in tax collections due to illicit cigarette sales, compared with PKR50.9 billion in 2018-2019.

    Oxford Economics said that illegal cigarettes account for 38 percent of total consumption in Pakistan, compared with 32 percent in 2018-2019. The vast majority of illegal cigarettes (90 percent) are locally produced.

    The value of tax evaded by illegal cigarettes in Pakistan in 2021 amounts to 58 percent of the total tax revenues collected from legitimate sales in the previous financial year. To place this in context, it is equivalent to more than double the government’s education expenditure in 2020-21.

    According to Oxford Economics, the rise in the illicit cigarette market share in recent years coincided with a sharp rise in the excise rates. Excise rates on most legal cigarettes nearly doubled following the September 2018 supplementary budget and the June 2019 Federal Budget. Tier 2 excise rates—which represent 92 percent of the total industry volume—rose from PKR854 per 1,000 pieces to PKR1,650 per 1,000 pieces.

    Due to the instability of revenues and growing illicit share, Pakistan kept cigarette excise taxes unchanged in 2020-2021.

  • Call for Crackdown on Synthetic Nicotine

    Call for Crackdown on Synthetic Nicotine

    Photo: jozsitoeroe

    A coalition of more than 30 U.S. attorneys general have called on the U.S. Food and Drug Administration to reject marketing authorization for all nontobacco nicotine products, which they say are currently being sold without regulation of their contents, manufacturing, health effects, required warning labels or marketing claims.

    In a letter directed to FDA Commissioner Robert Califf, the coalition argues that these products currently don’t meet the FDA’s public health standard, and that the health of residents—especially young people—should not be gambled on the unknown effects of these products.

    The letter specifically calls for the FDA to reject a request by product manufacturers to grant marketing authorization for nontobacco nicotine products. The letter also insists that if the agency does grant marketing authorizations for these products, it imposes the same restrictions required of tobacco-derived nicotine products including a ban on all products with a flavor other than tobacco and strict regulatory requirements regarding their contents, manufacturing, and effect on users’ health.

    Products should carry warnings concerning their addictiveness, and manufacturers should be required to validate health claims made about their products, including claims that a product is safer than tobacco, according to the attorneys general.

    “The lack of regulation on non-tobacco nicotine products has created an unlevel playing field, as manufacturers of one category of nicotine products have evaded regulatory burdens and restrictions, while manufacturers of tobacco-derived nicotine products must undertake the expense and effort required to conform to FDA requirements,” wrote Massachusetts Attorney General Maura Healey in a statement.

  • Industry Braces for Reduced Nicotine Policy

    Industry Braces for Reduced Nicotine Policy

    Photo: chones

    The Biden administration intends to pursue a policy requiring tobacco companies to reduce the nicotine in all cigarettes sold in the U.S. to minimally or nonaddictive levels, reports The Wall Street Journal, citing people familiar with the matter. The policy could be announced as early as this week.

    Health advocates have long pushed for lower nicotine levels, arguing that it would prevent future generations from becoming addicted to cigarettes, and prompt current smokers to quit. In 2009, the Family Smoking Prevention and Tobacco Control Act authorized the Food and Drug Administration to mandate such a change—with the stipulation that the policy be based on scientific evidence.

    Research funded by the FDA and National Institutes of Health has shown that when nicotine was nearly eliminated in cigarettes, smokers were more likely to quit or seek their nicotine fix from less harmful alternatives such as e-cigarettes or gum compared with smokers who continued using cigarettes with normal nicotine levels.

    According to estimates published in the New England Journal of Medicine, mandating a reduction of nicotine levels in cigarettes to very low levels would prompt an additional 5 million adult smokers to quit within a year of implementation.

    The tobacco industry has cautioned that a reduced-nicotine mandate will lead people to smoke more, rather than less, because smokers would need a larger number of cigarettes to satisfy their nicotine cravings. This, in turn, would cause them to inhale more of the cancer-causing substances generated by combustion. Critics have also warned that requiring low-nicotine cigarettes would boost the illicit tobacco market.

    If the low-nicotine policy is indeed announced this week, it will still take several years to come into force. The FDA first must publish a proposed rule, then invite public comments before publishing a final rule. Tobacco companies could then challenge the rule in court, which could further delay the policy’s implementation.