Author: Taco Tuinstra

  • PMI: Strong Quarter Despite Uncertainty

    PMI: Strong Quarter Despite Uncertainty

    Photo: Vitezslav Vylicil

    Philip Morris International reported net revenues of $7.75 billion for the first quarter of 2022, up 2.1 percent over that reported for the 2021 first quarter. Its operating income was $3.3 billion, compared with $3.44 billion in the previous year’s quarter. PMI reported adjusted operating income of $3.34 billion, down 4.4 percent from the comparable 2021 period.

    The company’s operations during the quarter were heavily impacted by the war between Russia and Ukraine, two important markets for PMI.

    On Feb. 25, PMI announced the temporary suspension of its operations in Ukraine, including at its Kharkiv factory. While activities in the east of Ukraine remain the most heavily impacted, the company said it has seen some resumption of retail activities where safety allows.

    In 2021, Ukraine accounted for around 2 percent of PMI’s total cigarette and heated tobacco unit shipment volume and under 2 percent of PMI’s total net revenues. As of March 31, 2022, PMI’s Ukrainian operations have approximately $400 million in total assets.

    In March, PMI  announced it would significantly scale down its operations in Russia, discontinuing a number of cigarette products, including Marlboro and Parliament, and reducing its manufacturing activities accordingly. According to PMI, the discontinued products represent approximately one-quarter of the company’s domestic cigarette SKUs.

    PMI also canceled all product launches planned for 2022 in Russia, including the launch of its flagship heated tobacco product IQOS Iluma, which was originally planned to take place in March 2022. In addition, PMI canceled plans to manufacture its Terea heated tobacco units for IQOS Iluma in Russia  and the related ongoing investment of $150 million.

    PMI is currently working on a plan to exit Russia in an orderly manner. In 2021, Russia made up almost 10 percent of total shipment volumes and around 6 percent of PMI net revenues. As of March 31, 2022, PMI’s Russian operations have approximately $1.4 billion in total assets.

    “The recent months have been an extremely challenging time for many in the PMI family given the war in Ukraine,” said PMI CEO Jacek Olczak in a statement. “Our primary concern is for our people and their families, and we are doing everything in our power to help them.”

    “Despite this tragic situation, we were able to deliver a very strong performance in the first quarter—reflecting the hard work and dedication of our employees globally—with organic net revenue and currency-neutral adjusted diluted EPS growth coming ahead of our expectations.

    “The re-acceleration of our IQOS business continued in the quarter, highlighted by a sequential increase of over 1 million total IQOS users, excluding Russia and Ukraine, and the superb performance of Iluma in initial launch markets. This was complemented by the robust performance of our combustible business, which exceeded our objective of stable category share in the quarter and delivered positive shipment volume and organic net revenue growth.

    “We expect to deliver robust top- and bottom-line growth this year on a pro forma adjusted basis, including full-year adjusted diluted EPS growth of 9 percent to 11 percent, excluding currency. This gives us confidence in achieving our 2021 to 2023 compound annual growth targets, on a pro forma basis, and our ambition to become a majority smoke-free company by 2025.”

  • Zeller: CTP Tenure ‘Incredibly Rewarding’

    Zeller: CTP Tenure ‘Incredibly Rewarding’

    Photo: Tobaccco Reporter archive

    Mitch Zeller, the outgoing director of the U.S. Food and Drug Administration Center for Tobacco Products (CTP), described his tenure at the center as “incredible rewarding.” “I’ve had the opportunity to work with the best, hardest working people in the world and we’ve gotten a lot done, so my time here has been a joy,” he said in an interview published on the FDA website ahead of his retirement from public service in April.

    Zeller joined the CTP as director in March 2013. During his tenure, the center grew from 426 people to more than 1,110. The CTP, said Zeller, also published multiple foundational rules and took action on just over 99 percent of marketing applications for 6.7 million products.

    Asked about the remaining challenges for the CTP, Zeller cited the importance of taking action on the remaining marketing applications, but noted that the center and the agency are “more than up to the task.” He also stressed the importance of evidence-based policies.

    “We must be faithful to our responsibility that whatever decision we make on any of them is firmly grounded in the science, whether we’re issuing a marketing authorization or a marketing denial order,” said Zeller.

    Asked what advice he would give to the next CTP director, Zeller said he would encourage him or her to ask questions. “You’ll be working with extraordinarily talented people in the Commissioner’s Office and throughout the agency as well as the Department of Health and Human Services,” he said. “A lot of new insights and good thinking can come from people hearing a question that hadn’t occurred to them. 

    On the future of tobacco regulation, the outgoing CTP director said the opportunity over the next three to five years is for the center to continue the process of building the institution. “CTP remains the “baby” center in terms of how long it’s been around compared to the other FDA centers,” he said.

    “In light of that, one of the things that I think I can safely predict is that more and more of those critically important foundational regulations will be proposed and finalized. With each one that comes, CTP will become that much more mature and stood up as a center like its sister centers that have been around for many, many decades.”

  • Derek Yach on TR’s Special Innovation Issue

    Derek Yach on TR’s Special Innovation Issue

    The renowned global health expert explains how innovation represents the single biggest opportunity to lower the health toll of tobacco use.

    By Taco Tuinstra

    Until recently, few people would have mentioned the words “tobacco” and “innovation” in the same sentence. Even as other legacy industries started disrupting their respective operations, the tobacco industry remained content to milk its tried-and-tested business model and count on the habit-forming properties of nicotine to sustain its business.

    That has changed dramatically over the past 15 years. Advances in technology, together with shifting attitudes, have turned the once-staid nicotine business into a cutting-edge innovator. The modern e-cigarette was not invented by the tobacco industry, but when it started making inroads around 2008, the industry recognized its potential and devoted considerable resources to its perfection. The ensuing disruption to the nicotine business prompted one major financial institution to rank the impact of e-cigarettes in the same league as that of 3D printing.

    And it didn’t stop there. Tobacco companies went on to develop a host of additional reduced-risk technologies, such as tobacco-heating devices. Some even began applying their expertise in agronomy, product development and substance delivery to create nonrecreational products, such as vaccines, pharmaceuticals and therapeutic devices.

    The topic of innovation has always been dear to Tobacco Reporter’s heart. Not only have we covered it frequently in our columns; we have also created a competition dedicated to industry innovation—the Golden Leaf Awards.

    Astonished by the radical transition taking place in the industry, and excited about what it promises for the future, Tobacco Reporter decided to devote an entire issue to the topic of innovation.

    To ensure the topic would be treated with the breadth and depth it deserves, we partnered with one of the world’s most prominent advocates for public health progress through innovation: Derek Yach. Formerly with the World Health Organization and the Foundation for a Smoke-Free World, Derek was deeply involved in the creation of the Framework Convention for Tobacco Control—a document that was prepared when King Combustible still ruled supreme.

    Since leaving the WHO, Derek has spent much of his time encouraging health authorities to recognize the unique public health opportunity presented by innovation, urging them to accommodate, rather than frustrate, new technologies.

    Tobacco Reporter spoke with Derek about Tobacco Reporter’s special issue and the importance of innovation.

    Taco Tuinstra is Tobacco Reporter’s editorial director.Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.On his watch, Tobacco Reporter has won several awards for editorial excellence.Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.
  • Streamline Launches ‘Fruit-Forward’ Pouches

    Streamline Launches ‘Fruit-Forward’ Pouches

    Photo: The Streamline Group

    The Streamline Group has launched Juice Head pouches, the latest addition to its line of premium, fruit-flavored nicotine products.

    Featured in 6 mg and 12 mg tobacco-free nicotine strengths, Juice Head pouches are available in five premium, fruit first, mint second flavors: blueberry lemon mint, watermelon strawberry mint, mango strawberry mint, peach pineapple mint and raspberry lemonade mint.

    Juice Head pouches are thin, white pouches that are made with Zero Tobacco Nicotine—a trademarked synthetic nicotine brand—and are available in 20-pouch cans and 5-can sleeves.

    Compared to other nicotine pouches currently on the market, which are mainly offered in a variety of mint or mint with light fruit flavors, Juice Head pouches offer adult users a unique “fruit first, mint second,” rich flavor experience that’s on par with the brand’s world-renowned e-liquid flavors, according to the company.

    “As the needs of our customers continue to evolve, we are proud to introduce a new product that’s unlike any other currently on the market and offers discreet, convenient, smoke-free, and tobacco-free nicotine satisfaction for adults around the world,” said Patrick Mulcahy, CEO and co-founder of the Streamline Group, in a statement.

    “With the launch of Juice Head pouches, we plan to not only expand our product offering for our existing global customer base but to also introduce the Juice Head brand to an entirely new demographic of consumers, retailers and distributors that we had previously been unable to reach.

    Juice Head is manufactured and distributed by Streamline Group, which is based out of Huntington Beach, California, USA.

  • Kaival Expands Distribution for Bidi Vapor

    Kaival Expands Distribution for Bidi Vapor

    Photo: Kaival Brands Innovations Group

    “We are encouraged by growing sales volumes in our second fiscal quarter generated by both established wholesalers and retailers selling the Bidi Stick in new stores, as well as new wholesale and retail accounts being added to our distribution network,” said Kaival Brands CEO Niraj Patel in a statement. “We anticipate the activation of approximately 3,900 new store locations over the next 45 days, including one new major retailer having already placed orders totaling more than $1.1 million.”

    According to Kaival Brands, the expansion represents a positive development for the company since the U.S. Food and Drug Administration (FDA) issued its marketing denial order (MDO) to Bidi Vapor this past September, as it did for about 96 percent of all manufacturers of flavored electronic nicotine delivery systems.

     In February 2022, the U.S. Court of Appeals for the Eleventh Circuit granted Bidi Vapor a judicial stay of the MDO, pending the resolution of Bidi Vapor’s ongoing merits-based litigation. In effect, the judicial stay means that the MDO, which covered the non-tobacco flavored Bidi Sticks, is not legally in force.

    Accordingly, Kaival Brands anticipates marketing and selling all 11 flavored Bidi Sticks, subject to the FDA’s enforcement discretion, while Bidi Vapor continues with its merits case challenging the legality of the MDO.

    The FDA has indicated that it is prioritizing enforcement against companies that have either not submitted premarket tobacco product applications (PMTAs), or whose PMTAs have been refused acceptance or filing by FDA, or whose PMTAs remain subject to MDOs.

    Patel says he sees signs of growing confidence in the vaping industry as the MDOs for Bidi Sticks and products of several other companies have been placed on hold.

    “This was a significant event not only for Kaival Brands and Bidi Vapor, but the entire industry,” said Patel of the court decision. “The judicial stay granted in February allowed us to resume sale of all 11 flavored products in the Bidi Stick lineup. We are eager to return our flavored products to the shelves of retailers that comply with the Prevent All Cigarette Trafficking Act so adult consumers can enjoy their preferred flavors once again. As a result of the judicial stay, we expect revenues to resume an upward trajectory as renewed distribution ramps up and sales of flavored Bidi Sticks increase.

    “Additionally, we believe that the FDA’s new authority over products using synthetic nicotine will only bolster Kaival Brands’ market position, as more retailers understand the nearly insurmountable compliance hurdles facing those manufacturers of non-compliant, synthetic products. “

    “Products in the vaping industry should be developed and placed in the market under a high degree of supervision, such as the FDA’s PMTA process or the FDA’s drug-approval process,” continued Patel. “We anticipate that as the FDA begins enforcement against illegally marketed and synthetic-nicotine vaping products, there may be an increased demand for compliant and legal vaping products, such as the Bidi Stick.”

  • Most Doctors Confused About Risk Continuum

    Most Doctors Confused About Risk Continuum

    Photo: pathdoc

    More than 60 percent of all U.S. doctors incorrectly believe all tobacco products are equally harmful, making them less likely to recommend e-cigarettes for people trying to quit smoking, according to a study led by Rutgers University and published in JAMA Network Open.

    Researchers asked more than 2,000 doctors in the U.S. in 2018 and 2019 about how they would advise patients on using e-cigarettes as a method of combustible smoking cessation. One in four physicians discouraged all use of e-cigarettes and were also more likely to advise against them if the hypothetical smoker they were counseling were a younger, light smoker compared to an older, heavy smoker.

    “These findings show it is critical to address physicians’ misperceptions and educate them on e-cigarettes’ efficacy, particularly correcting their misperceptions that all tobacco products are equally harmful as opposed to the fact that combusted tobacco is by far the most dangerous,” said lead author Cristine Delnevo, the director of the Rutgers Center for Tobacco Studies.

    The belief that all tobacco products are equally harmful was associated with lower rates of recommending e-cigarettes, the study found, demonstrating the need for physician education.

    “As the evidence base grows for e-cigarette efficacy for smoking cessation, physicians’ understanding of e-cigarettes in the context of harm reduction must keep pace with the emerging scientific evidence through effective educational opportunities,” the study’s authors wrote. “Such opportunities should address e-cigarette safety and efficacy and correct misperceptions that all tobacco products are equally harmful.”

     

  • Groh to Lead U.S. Tobacconist Association

    Groh to Lead U.S. Tobacconist Association

    Photo: jirsak

    Jennifer Groh is the new president of the Tobacconists’ Association of America (TAA), according to Halfwheel. Groh is associated with Metro Cigars in Germantown, Wisconsin, USA. Her tenure began at the end of March when she took over for Joe Arundel of Rain City Cigars in Seattle, Washington, USA.

    The TAA consists of some of the top tobacconists in the U.S., including about 80 retailers and 40 manufacturers. The board of directors is largely made up of retail store owners who are members of TAA.

    The TAA convenes annually to discuss issues facing the industry and retailers and to have its annual trade show. 

  • Aquios Labs Presents Water-Based Vaping

    Aquios Labs Presents Water-Based Vaping

    Photo: luchschenF

    Aquios Labs plans to introduce water-based vaping technology this month, according to a press release published by Vaping360.

    Most traditional vaping devices and e-liquids contain no water, and in those that do, the water content is 3 percent or less. Until now, the low viscosity of water made it unsuitable for use in vaping devices at any meaningful level.

    Dubbed AQ30, the first generation of Aquios Labs’ technology can support up to 30 percent water content using a combination of specially formulated e-liquid and hardware design. Aquios says it is already developing the capability to support even higher levels of water content.

    According to Aquios Labs, water reduces dehydration and irritation, helps to deliver nicotine more efficiently and produces a more natural flavor. In addition, the operating temperature of water-based vaping is much lower than traditional vaping, which enhances the chemical stability of the vaping process.

    “We founded Aquios Labs because there’s still a long way to go in terms of improving the vaping experience,” said Aquios Labs founder Jack Sanders. “We believe that water-based vaping is the new frontier of nicotine delivery, and AQ30 is already demonstrating this by drastically reducing the dehydrating effects of vapor while delivering clean flavors. We welcome new and existing vape brands to consider how this technology can be adopted as part of a growing product offering.”

    Innokin, a leading vape brand and manufacturer, plans to integrate Aquios Labs technology into a wide range of its entry-level devices. Consumers can expect to see Innokin devices with AQ30 technology debut in the second quarter of 2022.

    “Innokin has always believed that new technology has the power to eliminate the need for combustible tobacco,” said Innokin co-founder George Xia. “When we were introduced to Aquios, our product development team was immediately sold on the unique advantages of water-based vaping. We look forward to hearing feedback about our range of water-based devices when they launch this April.”

  • Juul Labs Settles Louisiana Vape Suit

    Juul Labs Settles Louisiana Vape Suit

    Photo: steheap

    Juul Labs has agreed to pay $10 million to settle a lawsuit filed by the Louisiana Attorney General’s Office over the e-cigarette manufacturer’s marketing practices. Juul has settled similar cases in Washington state, Arizona and North Carolina.

    “This settlement is another step in our ongoing effort to reset our company, and we applaud the Attorney General’s plan to deploy resources to combat underage use,” reads a statement from Juul Labs. “We will continue working with federal and state stakeholders to secure a fully regulated, science-based marketplace for vapor products.”

    In the Louisiana case, Attorney General Jeff Landry had accused Juul Labs of marketing its e-cigarettes to youth, according to a news report.

    In a 76-page filing in November, Attorney General Jeff Landry claimed Juul used marketing tactics that included designing sleek, concealable devices that featured “fun flavors like mango and cool mint” and edgy ad campaigns directed toward youth.

    Landry also accused Juul of “deceptive marketing practices” regarding the device’s concentrations of nicotine. Landry’s office had sought to prevent Juul from selling the product to minors and wanted to limit available flavors to tobacco and menthol. Prosecutors also sought financial penalties from Juul.

  • 22nd Pilots its Low-Nicotine Brand in Illinois

    22nd Pilots its Low-Nicotine Brand in Illinois

    Photo: 22nd Century Group

    22nd Century Group’s VLN cigarettes are now available through a national pilot in select Chicagoland Circle K stores, the company announced in a press release.

    Containing 95 percent less nicotine than conventional cigarettes, VLN cigarettes in December 2021 became the first combustible cigarettes to receive authorization from the U.S. Food and Drug Administration to be marketed as modified-risk tobacco products.

    When choosing Chicagoland for the pilot, 22nd Century noted smokers are found within every segment of the population, many of whom are looking for alternatives. The Centers for Disease Control estimates 15.5 percent of Illinois adults aged 18 years or older smoke cigarettes, higher than the national average of 12.5 percent, according to 2018 state and 2020 national statistics.

    A pack of VLN cigarettes will be similarly priced to full nicotine premium brands, approximately between $9 and $12, depending on tax. Illinois is the second most expensive cigarette retail market in the United States.

    The three- to six-month pilot will be the first U.S. sales of VLN King and VLN Menthol King cigarettes. 22nd Century is also launching VLN cigarettes in South Korea, its first international market. Following the pilot, 22nd Century and Circle K intend to expand sales nationwide to more than 7,000 stores in 48 states.

    On April 4, 2022, the Illinois Attorney General’s Tobacco Enforcement Bureau added 22nd Century Group’s VLN cigarettes to the Illinois Directory of Participating Manufacturers listing. The registration was the final step before 22nd Century could begin distribution.

    .