Author: Taco Tuinstra

Habanos Reports Record Turnover

Photo: Habanos
Habanos reported a turnover of $568 million in 2021, up 15 percent growth over the previous year.
“The 2021 results confirm the solid path we are on, despite the crisis caused by Covid-19. Last year we surpassed the $500 million mark for premium cigar sales worldwide, an all-time record for the category and a testament to the enormous potential of our business,” Habanos wrote in a statement attributed to its co-presidents, Inocente Núñez Blanco and Luis Sánchez-Harguindey Pardo de Vera.
“We are very proud to lead the premium cigar category and to continue to grow despite the situations experienced over the past two years,”
In terms of volume, Habanos, top markets were Spain, China, Germany, France and Switzerland. Europe remains Habanos’ main regional market, with 59 percent of global sales volume, followed by Asia Pacific (16 percent), America (14 percent) and Africa and the Middle East (11 percent).
“At Habanos, we maintain our commitment to offer the best experience to our aficionados, exclusive products and novelties, all in keeping with the quality, tradition and unique origin that make our Habanos a luxury product appreciated all over the world,” Commercial Vice President Leopoldo Cintra González and Vice-President of Development José María López Inchaurbe wrote in a press note.
“Our aficionados have remained loyal to Habanos and their tastes and, in many cases over the past year, they have incorporated into their domestic consumption vitolas and brands that used to be part of a more social consumption.”
According to Habanos, the Covid-19 pandemic has changed consumer habits. However, working with its distributors, the company said it was able to keep alive smokers’ passion for Habanos with a combination of product launches, virtual events and—when possible—face-to-face events.
While strong demand, in combination with the pandemic, has delayed the supply of some of Habanos’ bestselling vitolas, the company managed to export 38 new products in 2021. Habanos says it the supply situation has gradually improved after the first quarter of 2022.
Following the pandemic-related cancelation of the Habanos Festival in 2021 and 2022, the company presented several new products, including : Cohiba Ambar Cohiba Ideales and Cohiba Edición Limitada 2021, at is virtual Habanos World Days.
Habanos will commemorate the 55th anniversary of its prestigious Cohiba brand on Sept. 9 in Havana.
May 10, 2022
PMI Mulls Offer for Swedish Match

Photo: SecondSide
Philip Morris International and Swedish Match confirmed that they are talking about a possible offer by PMI for Swedish Match.
“The discussions are in progress, and it is uncertain whether an offer will be made,” PMI wrote in a statement. “PMI intends to make no further comment regarding the discussions unless and until it is appropriate to do so.”
“There can be no certainty that an offer will be made,” Swedish Match wrote in a press note.
The statements were made in response to market speculation, first reported in The Wall Street Journal, about a possible deal.
Swedish Match has a market capitalization of SKR120.92 billion ($11.99 billion), and Philip Morris is valued at about $154 billion.
Financial analysts said a deal has strategic merit for PMI given the attractive U.S. market. The U.S. is the world’s most lucrative nicotine market, with strong and highly predictable cash flows.
Morgan Stanley said that purchasing Swedish Match could accelerate PMI’s smoke-free transition. “Swedish Match is one of the few larger scale tobacco assets with a meaningful smoke-free business and attractive growth profile,” the investment bank wrote in a note to investors. Morgan Stanley believes Swedish Match could increase PMI’s smoke-free revenue from 29 percent in 2021 to 44 percent by 2025.
PMI aims to generate about 50 percent of its revenue from smoke-free product by 2025.

Purchasing Swedish Match could accelerate PMI’s smoke-free transition. (Photo: Swedish Match)
Goldman Sachs, too, was enthusiastic about the opportunities presented by a possible tie-up. A deal would provide PMI access to the fast-growing and high-margin U.S. oral nicotine pouch category, in which Swedish Match’s Zyn is the market leader, with a volume share of 64 percent in fiscal 2021. Goldman Sachs expects the U.S. nicotine pouch category to reach $4 billion retail sales value by 2025.
What’s more, buying Swedish Match would provide PMI with a platform to bring its Veev vapor product to the U.S. once approved by the Food and Drug Administration. This would be beneficial because PMI’s current partner, Altria Group, is unable to distribute Veev in the U.S. due to its stake in Juul Labs.
Purchasing Swedish Match would also provide PMI with potential distribution for IQOS in the U.S. and allow it to capture the product’s full revenue and margins in the event that Altria loses the right to distribute IQOS, according to Goldman Sachs. Altria’s IQOS distribution deal expires in April 2024, but PMI and Altria currently disagree about whether Altria has thus far met the milestones to earn the renewal option for an additional five-year deal.
The U.S. currently bans IQOS imports following an intellectual property dispute with BAT.
Acquiring Swedish Match would also provide PMI with a move diversified geographic exposure, reducing the impact of swings in currency exchange rates.
While considering a potential deal positive for PMI, Goldman Sachs says it could be potentially negative for Altria as PMI could evolve from a partner to a formidable competitor on Altria’s home turf. Morgan Stanley said it would also make the long-mulled recombination of PMI and Altria less likely.
May 10, 2022
Vector Announces First-Quarter Results

Photo: MIND AND I
Vector Group released its first-quarter 2022 results for the quarter ended March 31, 2022.
Consolidated revenues were $312 million, an increase of 15.1 percent compared to the prior year period. Tobacco Segment revenues were $309 million, an increase of 15.1 percent compared to the prior year period.
Reported net income attributed to Vector Group was $32.5 million compared to $32 million in the previous year. Adjusted net income from continuing operations was $26.6 million compared to $34.9 million in the prior year period. Reported operating income was $75.1 million, a decline of $0.8 million compared to the prior year.
Tobacco segment operating income was $77.6 million, a decline of 4.9 percent compared to the prior year, attributable to the investment in Montego’s significant volume and market share growth.
“Vector Group delivered strong tobacco business revenue performance in the first 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 timely investments in expanding our price-fighting Montego brand further demonstrate our proven long-term strategy of optimizing long-term profit through the effective management of volume, pricing and market share growth.”
May 10, 2022
Aspire Withdraws NYSE Listing Application

Photo: kmiragaya
Shenzhen-based Aspire Global has asked U.S. regulators to withdraw its New York Stock Exchange (NYSE) listing application. The move comes as Beijing clamps down on the growth of vaping companies, mandating pre-approval for initial public offerings and restricting foreign investment.
Aspire filed a withdrawal request to the Securities and Exchange Commission on May 9, without providing a reason for the decision in its filing, according to the South China Morning Post. It had originally planned to sell 15 million shares at $7 to $9 each, and had applied to trade on the Nasdaq exchange under the ticker “ASPG.”
Aspire applied for a Nasdaq listing last June, and updated its draft prospectus in January this year. The company was expected to raise $135 million. Its withdrawal comes as recent rules introduced in China make expansion and distribution more challenging for e-cigarette manufacturers.
Other rules introduced last month include a ban on foreign investors in a sector that once attracted venture capital giants such as Sequoia Capital and IDG. Manufacturers and retailers must also get a license before they can produce and market their products. The government banned online advertising in late 2019, and sales in shops are restricted.
More than half of Aspire Global’s sales in 2021 were generated from Europe, with China and the U.S. accounting for 18.5 percent and 10 percent respectively, according to the company’s draft prospectus. In the U.S., Aspire has been marketing its cannabis vaping product, Ispire, since late 2020. “Our strategy is … directed at increasing our e-cigarette vaporizer technology products and developing our cannabis vaporizer technology products,” the company stated in its draft prospectus.
May 10, 2022
Taat Preparing to Launch in Switzerland
Taat Global Alternatives is preparing to introduce its tobacco-free cigarettes in Switzerland
In a press note, the company announced that it is working with a tobacco distributor with a presence in Zurich and Zug to coordinate a near-term launch of Taat Original, Smooth and Menthol in Switzerland with a primary objective of capitalizing on recent changes to Switzerland’s market landscape causing tobacco brands to be prohibited from advertising in public places.
Although tobacco advertising has long been banned in most Western markets, Switzerland was among the last to allow tobacco product advertisements in public spaces (e.g., on billboards, in movie theaters and at events such as music festivals). On Feb. 13, 2022, voters in Switzerland overwhelmingly approved legislation forbidding tobacco companies from advertising in public spaces.
Taat Global Alternatives has been exploring several launch opportunities throughout Europe, particularly after finalizing the advanced formulation of its Beyond Tobacco product using reconstituted material.
Taat says its advanced Beyond Tobacco formulation yielded excellent feedback from tobacco wholesalers in markets to include Germany, Poland, France and Switzerland. Pending final regulatory approval of the Taat product by Swiss authorities, the company expects Switzerland to be the first new international market to be added for Taat in 2022 following the pending finalization of a distribution agreement and initial purchase order. Switzerland currently has a higher adult smoking rate than the European average at 27 percent, more than double the national rate of 12.5 percent in the United States.
Because Taat’s offerings contains no tobacco, the company expects to enjoy a comparatively high degree of freedom to market the products in Switzerland.
In the United States, Taat has advertised its brand as a better alternative to tobacco cigarettes through methods such as in-store displays at the point of sale as well as sports sponsorships (e.g., a stock car racing team, the entourage of world champion boxer Floyd Mayweather). The company intends to strategically place German-language advertisements as part of its launch plan in Switzerland, with French-language variations for markets in western Switzerland such as Geneva, the country’s second-ranking city by population.
“As the tobacco industry continues to evolve, it is a major part of our playbook to jump on opportunities to do things that tobacco companies cannot do as a way for Taat to gain a competitive advantage. Switzerland was already a target market for a future Taat launch due to its relatively high adult smoking rate of 27 percent and its optimal location in the center of Europe, sharing a border with five other nations.
“However, with Switzerland set to put an end to tobacco advertising based on a vote for new legislation last quarter, we recognized this impending change for the timely opportunity that I believe it to be. We are working closely with a Swiss tobacco distributor who is now in the final stages of obtaining government approval for Taat to be sold in Switzerland, and I am excited for the next steps as we continue to build out our tobacco industry footprint.”
May 9, 2022
Litigants Agree on Corrective Statements

Photo: fotofabrika
The parties to the U.S. government’s long-running racketeering lawsuit against the major tobacco companies have reached an agreement in principle that will require the companies to place “corrective statements” about the health risks of smoking and secondhand smoke in retail outlets that sell cigarettes, according to the Campaign for Tobacco-Free Kids.
Once this agreement is finalized and approved by the court, it will require the tobacco companies to display court-ordered statements detailing the adverse health impacts of smoking near cigarette displays in hundreds of thousands of retail outlets across the country.
On May 4, the parties to the case—the U.S. Department of Justice, the tobacco companies and our six public health groups—filed a joint motion with the U.S. District Court for the District of Columbia that briefly describes the terms of the agreement, which will soon be put in final form and submitted to the court for review and approval.
This agreement will resolve the biggest remaining legal issue in the longstanding tobacco racketeering lawsuit and fully implement the corrective statements U.S. District Judge Gladys Kessler ordered in 2006 when she issued her landmark judgment against the major tobacco companies.
Judge Kessler found that the tobacco companies had violated civil racketeering laws (RICO) and engaged in a decades-long conspiracy to deceive the American public about the health effects of smoking and their marketing to children. To prevent and restrain future RICO violations, Judge Kessler ordered the tobacco companies to publish corrective statements that tell the American public the truth about the adverse health effects of smoking and secondhand smoke.
The corrective statements have previously been published through newspaper and television advertisements and cigarette pack inserts, and they continue to appear on tobacco company websites. However, the tobacco companies and various trade associations representing cigarette retailers have challenged Judge Kessler’s requirement that the corrective statements also be displayed at retail points-of-sale, such as convenience stores and tobacco outlets. The proposed agreement would resolve that issue.
Public health groups welcomed the agreement. “We are pleased to see this important next step taken to ensure that the tobacco industry carries out the court’s order to issue corrective statements after being found guilty of deceiving the American people more than two decades ago,” said Karen E. Knudsen, CEO of the American Cancer Society and the American Cancer Society Cancer Action Network, in a statement.
May 6, 2022
Australia Mulls Higher Minimum Tobacco Age

Photo: Taco Tuinstra
Australia may raise the minimum age for cigarette purchases, if recommendations from the draft 2022-2030 national tobacco strategy are accepted, reports the Daily Mail.
The current minimum age to buy tobacco products is 18.
The new policy proposal comes as a national survey, conducted by the Cancer Council, revealed that most Australians would support a policy that stops retailers from selling cigarettes completely.
In a recent survey conducted by Cancer Council Victoria, 50.8 percent of participants supported a phase-out, and an overwhelming majority of 61.8 percent said it should happen within the next decade.
Australia is already home to the most expensive cigarettes in the world, with a typical 20-stick pack costing $40. The Australian government rakes in about AUD17 billion ($12.06 billion) in tobacco tax each year. The high prices are believed to have contributed to a significant illicit market for tobacco products. The illegal tobacco trade is worth about $600 million annually, according to Border Force.
In December, New Zealand banned young people from ever being allowed to buy cigarettes in a rolling scheme that aims to make the entire nation smoke-free. People aged 14 and under in 2027 will never be allowed to buy cigarettes in their lifetime under the new law.
May 6, 2022
PMI Holds 2022 Annual Meeting

Photo: PMI
Philip Morris International held its 2022 annual meeting of shareholders on May 4. André Calantzopoulos, executive chairman of the board, addressed shareholders and answered questions. CEO Jacek Olczak gave the business presentation, which included an overview of PMI’s financial performance and its efforts to support employees impacted by the war in Ukraine, along with an update on the company’s progress in its smoke-free transition and investments in the wellness and healthcare categories.
“The recent months have been an extremely challenging time for many in the PMI family given the war in Ukraine. Our primary concern is for our people and their families, and we are doing everything in our power to help them,” said Olczak in a statement.
“Despite this tragic situation, and the related impacts on our operations in the region and more broadly, the outlook for our business excluding Russia and Ukraine remains strong and our smoke-free ambition remains intact. We are off to a strong start to the year, following an excellent performance in 2021, with robust underlying momentum and a reacceleration in IQOS user growth.
“We continue to prioritize returns to shareholders and have increased the dividend for 14 consecutive years since the 2008 spin. In 2021, we raised the dividend by 4.2% to an annualized rate of $5.00 per common share. In addition, since July 2021, we have repurchased approximately $1 billion in shares as part of our current three-year program.”
Approximately 81 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 14 nominees for director; approved, on an advisory basis, the compensation of named executive officers; approved the 2022 performance incentive plan; ratified the selection of PricewaterhouseCoopers as independent auditors; and voted against a shareholder proposal. Final voting results will be included in a Form 8-K that PMI will file with the SEC in the coming days.
An archived copy of the webcast of the meeting will be available for approximately one year from the date of the meeting at http://www.virtualshareholdermeeting.com/PMI2022.
May 5, 2022
ALD Group to Launch Biodegradable Vape Next Year

Photo: Timothy Donahue
ALD Group Limited (ALD) is set to launch the first biodegradable vaping product worldwide in mid-2023, the company announced at today’s In Focus event. The product will also be 90 percent recyclable (including the packaging, plastic shell, PCBA, mouthpiece and battery).
Currently named the Eco-friendly, Biodegradable Vape Solution (EBVS), the new device will take as little as three months to biodegrade, and was created in response to consumer and market demand.
Founded in 2009 and headquartered in Shenzhen, China, ALD is a high-tech enterprise specializing in electronic atomization technology research and applications. ALD′s business covers electronic nicotine delivery systems, inhaled medical vaporizer and heated tobacco products.
The plastic components in ALD’s eco-friendly vape solutions use innovative biodegradable raw materials like PBS, and the shell and structural parts do not come into contact with e-liquid; addressing the challenge of vaping producers whose single-use plastic pod products cannot be recycled due to the residues left over from e-liquids.
“The innovative factor is that our extensive research showed that in the e-cigarette sector there was currently no ready-made solution for the application of biodegradable materials,” said Eric Ding, founder and president of ALD Group.
“During development, we screened dozens of materials, repeatedly verified product performance and, finally, determined the seven best mixes of materials. Our processes included the verification of material strength, chemical resistance, extractability and degradability.”
The engineering validation and testing evaluation of its new device was completed in mid-2021, and the shelf life and biodegradability testing are expected to be completed in mid-2022.
Tobacco Reporter profiled ALD’s environmental efforts in its May 2022 print edition (see “Combating Waste).
May 5, 2022
22nd Century Reports Quarterly Results

Photo: 22nd Century Group
22^nd Century Group reported net sales of $9 million for the first quarter of 2022, up 33 percent from the comparable 2021 quarter. The increase was due to increased contract manufacturing volumes in both filtered cigars and cigarettes, including products for export markets and pricing adjustments.
Gross profit for the first quarter was $500,000, compared to $600,000 million in the prior year first quarter. Gross margin in the first quarter was reduced by lower research cigarette sales volume compared with the prior year, and a Master Settlement Agreement adjustment of $200,000 recorded in the quarter.
Operating loss for the first quarter 2022 was $8.1 million, compared to an operating loss of $5.2 million in the prior year period. Net loss was $8.9 million.
“We are off to an exciting start with our VLN reduced nicotine content cigarette pilot launch at more than 150 Chicagoland Circle K stores,” said James A. Mish, chief executive officer of 22nd Century Group, in a statement.
“The recently proposed menthol cigarette ban by the FDA could leave our VLN Menthol King reduced nicotine cigarettes as the only menthol cigarette on the market, helping adult menthol smokers find an off-ramp from nicotine addiction. Early sales in our Chicago pilot affirm the importance of this approach, with sales of VLN Menthol King already selling ahead of non-menthol in pilot stores. We fully anticipate an even more favorable regulatory environment as the FDA continues to advance the agency’s comprehensive plan, which includes requiring all cigarettes to be ‘minimally or non-addictive,’ a standard our VLN King and VLN® Menthol King cigarettes already meet.”
May 5, 2022