Author: Taco Tuinstra

Bentley: Banning Menthol is a High-Risk Strategy
Guy Bentley
The U.S. Food and Drug Administration’s plan to ban menthol cigarettes may have unintended consequences, such as increased black market sales and more incarceration, while doing little to advance public health, according to Guy Bentley, director of consumer freedom at the Reason Foundation.
Writing on the organization’s website, Bentley says the desired public health gains could also be achieved by applying the harm reduction model to tobacco policy.
In his article, Bentley examines the experiences of Canada, the European Union and Massachusetts, which have already banned menthol cigarettes, and finds the results to be underwhelming.
“In the aggregate, the experience of menthol bans in the real world, as opposed to forecasts about them, is that the bans have minimal effects on tobacco consumption but do engender unintended consequences, even in markets where menthol is relatively unpopular,” he writes.
According to Bentley, banning menthol cigarettes is a radical policy with significant implications for the criminal justice system and personal autonomy. “Rather than resorting to the failed policies of the past, the FDA and the Biden administration should apply the harm reduction model to tobacco policy,” he writes.
“Educating the public and taking a harm reduction approach has been successful in the fields of sexual health and drug addiction, and it would be far more effective in reducing smoking than banning menthols.”
April 18, 2022
1Account to Accelerate Online Age Verification

Photo: Song_about_summer
1account, providers of age verification solutions for the vaping sector, has launched 1click sign-up for consumers buying vape products online, to enable faster transaction times and higher customer conversions than ever experienced before, according to a company press release.
With 1click sign-up, any consumer previously verified on a website where 1account’s tech is present, can click a button and have their data attributes pulled into a vape retailer’s website registration form. Because their details are pre-validated – and there is no need for interaction from the consumer – there is zero user input error.
Research by the Baymard Institute estimates that sales conversions can increase by more than 35 percent if a vendor is implementing the right checkout optimization strategies. Its research also shows that average cart abandonment is just under 70 percent, with more than a third (34 percent) abandoning a transaction due to having to register an account online.
1account currently provides age verification services to 40 percent of the top vape retailers in the UK, including  E-Cigarette Direct, Royal Flush Vape, Vapourcore, Vape Superstore, VPZ, E–Liquids UK, Not Blowing Smoke, Vape UK and E-liquids.com, according to the release.
“People have always had a level of expectation when it comes to customer service,” Ben Keirle, 1account’s CEO, said. “Traditionally, in physical real-world settings, the benchmark has been factors such as pricing, quality and how they are treated by the vendor.
“Today’s customers, however, demand much more from their online experiences and won’t think twice about ending an interaction mid-transaction if it’s not to their liking.”
There are around three million vapers in the UK, 60 percent of whom are buying their products online. Hyperfast age and identity verification is not only crucial to the industry’s reputation as being a responsible one, but to the online customer experience and the bottom line, according to the release.
When consumers are first verified by 1account they have to provide their name, date of birth, email and phone number which are then checked against an extensive range of national data sources. These consumers, when subsequently registering on vape retailer sites with 1account’s technology, then simply need to use the 1click sign-up function to pull in all their previously verified details.
Consumers using 1account’s digital ID app, which verifies their identity by checking typical identity documents, can also take advantage of 1click sign-up. As with those who have been age verified previously by 1account, the company’s system will simply call up their data which was used as part of creating a digital ID.
1account aims to have an estimated 3 million verified consumers on its system by the end of 2022.
April 18, 2022
FDA to Provide PMTA Updates Every Three Months

Photo: Niroworld
The U.S. Food and Drug Administration will be required to give premarket tobacco product application (PMTA) status reports every 90 days. The first reports are due on April 29, according to a revised order from District Judge Paul Grimm for the United States District Court for the District of Maryland.
The revised order, signed on April 15, granted a motion filed by American Academy of Pediatrics (AAP) and other plaintiffs that requires the FDA to “forecast the percentages of such products for which it expects to have taken ‘action’ by June 2022 and quarterly thereafter.” Subsequent reports will also be required to state any revisions to prior estimates.
The order states that “covered applications” means all applications for newly deemed tobacco products “sold under the brand names Juul, Vuse, NJoy, Logic, Blu, Smok, Suorin or Puff Bar.” Additionally, any product with a reach of 2 percent of more (vaping product brands deemed to have the greatest public health impact) in “Retail & Sales” in Nielsen’s “Total E-cig Market & Players” or “Disposable E-Cig Market & Players.”
The FDA has approved some products from Vuse and Logic, while denying applications for Blu’s Myblu products.
The decision was expected by the vaping industry. Speaking during Keller and Heckman (K&H) annual E-Vapor and Tobacco Law Symposium Feb. 2–3, K&H Partner Azim Chowdhury said the FDA had appeared to concede to the requested requirement to submit status reports on many of the remaining submissions under review, adding that the updated requirements requested by the anti-vaping groups appeared to be even broader than the original.
It’s been more than eight months since the 12-month continued compliance policy for products subject to timely submitted PMTAs ended, but the agency is still sitting on some 88,000 reviews, including some of the vaping products with the highest market shares as measured by Nielsen.
Requiring the FDA to provide the status reports comes with some controversy. Chowdhury says that it wouldn’t be appropriate for the protection of public health (APPH) or positive for the vaping industry if a requirement for status updates forced the regulatory agency to make PMTA decisions only to appease the anti-vaping groups or politicians.
“These status reports could be used as a tool to pressure FDA to act—i.e., deny— applications quickly,” Chowdhury told Tobacco Reporter’s sister publication Vapor Voice. “Rather, we want FDA to review the science carefully and take the time it needs to determine whether a particular product is APPH.”
In November 2021, the anti-vaping organizations whose lawsuit brought forward the deadline for filing PMTAs asked U.S. District Judge Paul Grimm to reopen the case. The plaintiffs asked him to require the U.S. Food and Drug Administration to regularly report on the status of the applications for the 10 bestselling vapor brands according to Nielsen rankings.
April 17, 2022
Juul to Pay Washington State $22.5 Million for Youth Vaping

Photo: steheap
Juul Labs has agreed to pay Washington State $22.5 million to settle claims that it unlawfully targeted underage consumers with deceptive advertisements.
“Juul put profits before people,” Washington Attorney General Bob Ferguson said on April 13 in a statement. “The company fueled a staggering rise in vaping among teens.”
Among other complaints, Washington State argued that Juul failed to disclose clearly that its products contain nicotine. For more than 20 months, from August 2016 until April 2018, it “unlawfully sold hundreds of thousands of vaping products to Washington consumers,” the state’s attorneys wrote in their complaint.
As part of the settlement, Juul committed to reforms, including stopping all advertising that appeal to youth and ending most social media promotion in the settlement, according to Bloomberg.
“This settlement is another step in our ongoing effort to reset our company and resolve issues from the past,” the company said in a statement. “We support the Washington state attorney general’s plan to deploy resources to address underage use, such as future monitoring and enforcement.”
The deal is the latest in a series of settlements of youth vaping-related court cases brought by U.S. states.
In November 2021, Juul agreed to pay $14.5 million and change its business practices as part of an agreement with Arizona. In June 2021, it settled a similar case brought by North Carolina for $40 million.
Juul Labs continues to face similar suits from several states, including New York and California.
April 17, 2022
Synthetic Nicotine Applications Due Soon

Photo: Brian Jackson
Premarket tobacco product applications (PMTAs) for nontobacco nicotine products are due May 14, the U.S. Food and Drug Administration announced on its website.
Legislation enacted on March 15 empowers the FDA to regulate tobacco products containing nicotine from any source.
Effective April 14, not new nontobacco nicotine products may enter the market, as portions of the new law take effect.
The May 14 deadline applies to applicants using the FDA’s electronic submission process. Hardcopy applications must be received by FDA no later than 4 p.m. EDT on May 13.
April 17, 2022
Vietnam Sets Import Quotas for Cambodian Tobacco

Photo: Taco Tuinstra
Cambodia may export up to 3,000 tons of leaf tobacco to Vietnam under preferential import tax rates this year, reports The Khmer Times, citing Vietnam’s Ministry of Industry and Trade (MoiT).
In order to enjoy the preferential import tax rate, the products must be accompanied by a Certificate of Origin issued by the Cambodian Ministry of Trade or another authorized agency, and their customs clearance procedures must be conducted at designated border crossings.
For dried tobacco leaves, importers must show a license to import raw tobacco under tariff quotas issued by the MoIT.
In September last year, Vietnam announced that it would impose a zero percent tax rate on 31 commodities imported from Cambodia such as live poultry, poultry meat and by-products, lemons and rice.
The list also includes finished pork products and unprocessed tobacco leaves.
April 17, 2022
Russia Sanctions Target Tobacco Tycoon

Photo: Zerophoto
Tobacco tycoon Igor Kesaev is among the targets of the latest tranche of EU and U.K. sanctions against individuals believed to be supporting the Russian-backed breakaway regions of Luhansk and Donetsk in Ukraine, according to The Herald of Scotland.
Kesaev reportedly controls 70 percent of the Russian cigarette market and is Russia’s 35th richest person.
Other individuals on the sanctions list include the wife of Russian foreign minister Sergei Lavrov, Maria Lavrova; Alexander Ananchenko and Sergey Kozlov, self-styled Prime Minister and Chair of Government of the so-called Donetsk and Luhansk People’s Republics.
Relatives of Russian oligarchs have been targeted as well, including Pavel Ezubov, cousin of Oleg Deripaska, and Nigina Zairova, Executive Assistant to Mikhail Fridman.
April 17, 2022
Blinc Secures Patent for Branding Technology

Photo: The Blinc Group
The Blinc Group has secured a patent for its RingSystem hardware branding and labeling technology.
“Cannabis businesses have been struggling to maintain the proper amount of inventory in the vape space while also keeping their customers informed of what’s in their product,” said Sasha Aksenov, co-founder and chief innovation officer of The Blinc Group, in a statement.
“Companies shell out thousands of dollars for packaging and fill their cartridges with a specific cultivar to shortly find out that it’s not selling as expected. They are left with huge losses in branded hardware, but our Ring System allows the brands and licensed producers to label their products on demand during production, and, if they have to—pivot and relabel for pennies, not dollars.”
The Ring System consists of two bands one at the base of the mouthpiece or “top” and the other at the base of the cartridge—Top Ring and Base Ring. Before capping a compatible cartridge or disposable, operators can snap the Top Ring onto the mouthpiece of the cartridge with the strain name. The ring is also easily removed if the strain is not being sold or brands decide to pivot on the formulation or experience.
“At the Blinc Group we strive every day to promote innovation, quality, safety, and integrity in every one of our products, the Ring System is no different. It is imperative that the entire industry take those goals to heart,” said Arnaud Dumas de Rauly, co-founder & CEO of The Blinc Group. “Consumers need to know what’s in their cartridges at all times and for this industry to thrive companies need to be able to increase their productivity and flexibility, without spending huge amounts of working capital on an unsold inventory. There are enough hurdles in the cannabis space, what’s in your vape cartridge shouldn’t be one of them.”
April 17, 2022
Heading for the Exit

Photo: Matvey Salivanchuk
Following Russia’s invasion of Ukraine, tobacco companies to retreat from one of the world’s top cigarette markets.
By Stefanie Rossel
Amid growing pressure, the four leading international tobacco manufacturers have joined the exodus of U.S. and European companies that has followed Russia’s invasion of Ukraine. In early March, after the United States, the European Union and Great Britain imposed economic sanctions, all major cigarette makers announced that they would suspend operations or pull out of Russia altogether—although some did so less enthusiastically than others.
After initially announcing it would merely suspend its planned capital investments in Russia, BAT quickly made a U-turn, signaling a far greater retreat. On March 11, the company announced that its ownership of the business in Russia was no longer sustainable in the current environment, which it described as “highly complex, exceptionally fast-moving and volatile.” BAT is in advanced talks to transfer its Russian business to the SNS group of companies, its distributor in the country since 1993. According to SNS, the level of production and the supply and distribution chain would be maintained with a transfer. As a result of the withdrawal, BAT reduced its annual revenue growth outlook to between 2 percent and 4 percent from the 3 percent to 5 percent announced in February.
BAT’s move came a day after a Russian government commission approved the first step toward nationalizing the assets of departing foreign companies. On March 10, Russia’s economic development ministry published a draft bill that would give state-owned Vnesheconombank and the state export guarantee agency the right to seize the property of foreign firms that left Russian markets of their own accord. The proposed law would treat a corporate decision to exit the business as a criminal bankruptcy and empower authorities to initiate criminal justice proceedings against local management, BAT Chief Marketing Officer Kingsley Wheaton told Reuters in an interview.
After announcing plans to scale down its operations in Russia on March 9, Philip Morris International in late March specified the concrete steps it would take, saying it was working on options to exit the Russian market “in an orderly manner.” The company stated that it had discontinued some of its cigarette brands offered in the market and suspended its marketing activities. Furthermore, it had canceled all product launches planned for this year in Russia, including the introduction of its new tobacco-heating product (THP), IQOS Iluma, and its plans to manufacture more than 20 billion Terea sticks, the consumables for IQOS Iluma. Production of the latter would have involved an ongoing investment of $150 million, which the company also canceled.
JTI, meanwhile, limited its withdrawal from Russia to a suspension of all new investments and marketing activities along with the launch of its most recent THP, Ploom X.
Imperial Brands, which has a relatively small footprint in Russia, announced on March 15 that it had started negotiations with a local third party about a transfer of its Russian assets of operations. “We believe that, in the current circumstances, an orderly transfer of our business as a going concern would be in the best interests of our Russian colleagues,” Imperial Brands wrote in a statement.
In addition to their actions in Russia, all four cigarette manufacturers temporarily closed their production sites in Ukraine to protect their workforce and have pledged to continue paying the salaries of employees in the affected countries.

The decision to leave Russia not only has financial consequences, but it also presents practical challenges. (Photo: Tobacco Reporter archive)
Between a Rock and a Hard Place
In deciding their course of action, cigarette manufacturers faced a dilemma of choosing either to leave and protect their reputations or to stay and continue to benefit from the world’s fourth-largest tobacco market.
The decision to leave not only has financial consequences, but it also presents practical challenges, according to Jon Fell, partner at Ash Park Capital. “It’s one thing to say, ‘we’re no longer going to send our luxury handbags or fashionable training shoes to Russia,’ but if, in addition to factories or distribution centers, you have hundreds or thousands of employees in the country—who up until now have been seen as an integral part of your international company—then you have to take difficult and complex decisions, and there’s no obvious easy, right answer,” he says.
“Sorting the mess out takes time, and you can’t just abandon employees,” adds Fell. “I don’t think the approach of the tobacco industry overall is very different to that of other consumer packaged goods companies, quite a few of whom are continuing to operate in Russia right now—and drawing criticism because of that.”
Russian cigarette makers sold 206 billion cigarettes with an estimated value of $717 billion in 2020, according to Euromonitor International. The market has been declining at a 6 percent compound annual rate over the past 10 years and almost 7 percent over the past five years.
At the same time, the country has developed into a promising market for THPs, which, according to Moningstar, accounted for 11 percent of the total tobacco market in 2021, making the country one of the largest markets for these products outside of Asia.
With a volume share of 38 percent in 2021, JTI has the greatest exposure to Russia of the tobacco multinationals, according to Euromonitor. The company, which in 2018 acquired Donskoy Tabak, has four factories and 4,000 employees in the country. It has invested over $4.6 billion in the past 20 years. In 2020, its tax payments accounted for 1.4 percent of Russia’s state budget. Russia represented almost 16 percent of group volume in 2021, according to Morningstar.

It’s one thing to say, ‘we’re no longer going to send our luxury handbags or fashionable training shoes to Russia,’ but if, in addition to factories or distribution centers, you have hundreds or thousands of employees in the country, then there’s no obvious easy, right answer.
Jon Fell, partner at Ash Park Capital
Costly Exits
For PMI, Russia accounted for almost 10 percent of cigarette and THP unit shipment volume and around 6 percent of its total net revenues in 2021. With a market share of 26 percent, the company has three factories, more than 100 sales outlets and approximately 4,100 employees in the country. Ukraine, where PMI runs a factory in Kharkiv with around 1,300 employees, represents about 13 percent of PMI’s regional volume and contributed almost 2 percent to PMI’s total net revenues in 2021.
Morningstar expects PMI’s tobacco volume from Eastern Europe to decline by 45 percent in 2022 with a slow recovery thereafter as the collapse of the ruble is likely to create translational foreign exchange pressure.
Both Russia and Ukraine are important markets for IQOS, accounting for about 23 percent of PMI’s THP sales. PMI’s shipments of THP consumables in Russia increased from 13.6 billion units to 16.3 billion sticks in 2021 while shipments of cigarettes continued to fall. Considering Russia’s worsening economic outlook in the wake of international sanctions, however, a J.P. Morgan analyst doubted that PMI would still be able to achieve its next-generation product growth targets. Morningstar assumes that PMI’s write-down in case of a market exit could be approximately $7 billion, corresponding to 5 percent of the company’s market capitalization.
Ukraine and Russia combined accounted for 3 percent of BAT’s group revenue in 2021 and a slightly lower proportion of adjusted profit, the company said on its website. Morningstar estimates that the bulk of net revenue from these two countries, 2.5 percent, was generated by Russia, where BAT, according to Euromonitor, held 25 percent of the market in 2021. Employing some 2,500 people in Russia, BAT has a factory in St. Petersburg and 75 regional offices. Since the company entered the market in 1991, it has invested more than $1 billion in Russia. Morningstar reckons that the value of BAT’s operations will depreciate by around $2.2 billion, or about 2.4 percent of its market capitalization, as a result of its withdrawal from Russia.
Among the four players, Imperial Brands is a distant fourth, holding 8 percent of the Russian cigarette market. It operates a production site in Volgograd and has a workforce of 1,000. In 2021, the company said, Ukraine and Russia represented in total around 2 percent of net revenues and 0.5 percent of adjusted profits. Due to the limited profit contribution of the two markets, Imperial Brands explained it expected “a relatively small impact” on its constant currency adjusted profit.

Seeking a Backdoor
How the multinationals’ retreat will impact Russia’s illicit cigarette market is anyone’s guess. “It’s very hard to know how demand and supply of tobacco products will evolve in Russia given all that’s going on with sanctions, ownership of the industry and, presumably, local purchasing power,” says Fell. “I would certainly think that an increase in the size of the illicit market is a risk, and that’s also going to depend on how long this situation lasts.” Illegal cigarette sales represented 10.7 percent of the total Russian tobacco market in 2021, up from 4.6 percent in 2017, according to Statista.
Much will depend on how long the conflict continues. Considering the large amounts invested in Russia over the past 20 years, it’s safe to assume that cigarette manufacturers will do their best to minimize their losses. The companies have built strong positions in the Russian market, and there is demand for their products.
“I’d be surprised if any of the companies—not just the tobacco manufacturers—now exiting Russia are doing so in a way that would prevent their going back in the future, assuming that the war stops at some point, relations are normalized and reentry becomes conceivable,” says Fell. “But arranging that in a way which allows you to say you have exited the country for the time being is no doubt very tricky and is likely to be contributing to decisions taking some time to reach and to be implemented.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

April 13, 2022
Brazil Starts Consultation on E-Cigarettes

Photo: Brenda Blossom
Brazil’s national drug agency, Anvisa, has opened a consultation on e-cigarettes, reports Portal Rondonia. The agency is seeking technical and scientific information to help it craft regulations for the product category.
The import, sale and advertising of e-cigarettes is banned in Brazil, but the products are said to be widely available anyway.
Brazil’s Pulmonology Society has already expressed its opposition to e-cigarettes, claiming they are a threat to public health.
Pulmonologist Paulo Corrêa, coordinator of the institution’s smoking commission, explained there is a false belief among users that the smoke is not harmful, as it is only water vapor. He also warned that electronic cigarettes have a great appeal among young people, raising the number of new smokers in Brazil.
On April 11, Brazil’s research foundation Fiocruz, which runs a center for studies on tobacco and health, launched a campaign on the risks of the use and release of electronic smoking devices in Brazil. Besides informative material on social media, the campaign includes an online petition encouraging people to oppose the legalization of e-cigarettes in Brazil.
Stakeholders can submit information to Anvisa until May 11.
April 13, 2022