Author: Taco Tuinstra

  • Smoore Launches TPD Compliance Lab

    Smoore Launches TPD Compliance Lab

    Photo: Smoore

    Smoore has established a vaping products risk assessment laboratory for European Union Tobacco Products Directive (TPD) compliance. The lab is part of the Smoore fundamental research center.

    Operational since the first half of 2021, the laboratory has already completed 52 product tests for leading vape brands. As China’s first corporate TPD-compliant risk assessment laboratory, it can generate test reports within five working days. Its laboratory equipment is benchmarked against those in world-class analytical testing laboratories, such as Labstat and Enthalpy, according to Smoore.

    As the industry’s harm reduction and quality benchmark, the company complies with its in-house Smoore 3.0 safety standards. Based on the risk assessment guidance of the U.S. Environmental Protection Agency and Food and Drug Administration, Smoore 3.0 covers all of the premarket tobacco product application (PMTA) vapor safety tests and FDA-listed harmful and potentially harmful constituents. In addition to vapor safety, Smoore 3.0 also involves extractable and leachable substances of medical-grade atomization materials.

    Smoore’s fundamental research center has developed a comprehensive analytical testing and risk assessment system, covering PMTA nonclinical testing and health risk assessment. Accredited by the China National Accreditation Service for Conformity Assessment (CNAS) in 2019, the system is now capable of up to 149 CNAS tests involving the chemical analysis of e-liquids and aerosols, electrical safety, material safety and battery safety.

    Smoore entered the EU market in 2018 with its FEELM atomization brand.

  • U.S. Youth Smoking at Historical Low

    U.S. Youth Smoking at Historical Low

    Youth cigarette smoking rates in the United States are at historically low levels with just 1.9 percent of high school students reporting current use of cigarettes, according to the National Youth Tobacco Survey 2021.

    In 2021, an estimated 34 percent of high school students (5.22 million) and 11.3 percent of middle school students (1.34 million) reported ever using a tobacco product, a definition that includes e-cigarettes, cigarettes, cigars, smokeless tobacco, hookahs, pipe tobacco, heated-tobacco products, nicotine pouches and bidis.

    Current (past 30-day) use of a tobacco product was 13.4 percent for high school students (2.06 million) and 4 percent for middle school students (470,000). E-cigarettes were the most commonly currently used tobacco product cited by 11.3 percent of high school students (1.72 million) and 2.8 percent of middle school students (320,000) followed by cigarettes, cigars, smokeless tobacco, hookahs, nicotine pouches, heated-tobacco products (HTPs) and pipe tobacco.

    The report also shows that 170,000 middle school students and high school students used HTPs in 2021, which appears odd given that the only HTP sold in the United States last year—Philip Morris International’s IQOS—was available only in a handful of test markets. Jim McDonald of Vaping360 suspects that this group of survey participants confused HTPs with another product, possibly cannabis vaporizers.

    Interestingly, while 85 percent of youth vapers reported using flavored products, the availability of flavors was not listed as a top consideration by survey participants. When asked about their reasons for using e-cigarettes, they ranked friends and family, curiosity, anxiety and “I can use them to do tricks” as more important factors in their decisions.

    Administered from January to May 2021, this NYTS was the first to be fully conducted amid the Covid-19 pandemic, with about half the students completing the online survey in schools and half completing it at home or at other locations. The Centers for Disease Control and Prevention and the Food and Drug Administration cautioned that the 2021 results cannot be compared to previous years because of pandemic-related changes in methodology.

  • Synthetic Nicotine Rule Clears Senate

    Synthetic Nicotine Rule Clears Senate

    Photo: lazyllama

    Synthetic nicotine products will soon require U.S. Food and Drug Administration marketing approval. The U.S. Senate approved a $1.5 trillion spending bill that includes language that changes the definition of a tobacco product to include synthetic nicotine. The legislation now heads to President Joe Biden, who looks forward to signing it into law, according to White House spokesperson Jen Psaki.

    Synthetic nicotine—nicotine that is made in a lab rather than derived from tobacco—has long existed in a legal gray area, and many companies started using it after their natural nicotine products were denied market access by the FDA. Public health groups have been warning that synthetic nicotine e-cigarettes, such as Puff Bar, have grown in popularity among teens while skirting FDA oversight.

    The Food, Drug and Cosmetic Act, which includes the 2009 Tobacco Control Act, defines a tobacco product as “any product made or derived from tobacco that is intended for human consumption, including any component, part or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part or accessory of a tobacco product).”

    At a time when FDA is under scrutiny from multiple federal courts for unlawful regulatory overreach on nicotine, handing the agency even more powers to prevent Americans from switching to vaping is like handing car keys and a bottle opener to your drunk uncle.

    Amanda Wheeler, president of the American Vapor Manufacturers Association

    Proponents of the policy change refer to it as closing a loophole. “By using synthetic nicotine, e-cig companies are avoiding public health protections for flavored tobacco products and still hooking teens,” tweeted billionaire philanthropist Michael Bloomberg. “With millions of kids still using e-cigs, we must get synthetic nicotine products off the market.”

    Critics contend that, given the flaws and deficiencies in the FDA approval process, the new rules will likely result in the prohibition of products that smokers have been using to quit cigarettes.

    Amanda Wheeler, president of the American Vapor Manufacturers Association, said banning synthetic products will drive millions back to combustible cigarettes.

    “At a time when FDA is under scrutiny from multiple federal courts for unlawful regulatory overreach on nicotine, handing the agency even more powers to prevent Americans from switching to vaping is like handing car keys and a bottle opener to your drunk uncle,” she said.

  • RLX Net Revenue Jumps in 2021

    RLX Net Revenue Jumps in 2021

    Net revenues of RLX Technology increased by 123.1 percent to RMB8.52 billion ($1.34 billion) in fiscal year 2021. The increase was primarily due to an increase in net revenues from sales to offline distributors, which was mainly attributable to the expansion of the company’s distribution and retail network (China banned internet sales of vapor products in October 2019).

    Gross profit increased by 140.4 percent to RMB3.67 billion while gross margin increased to 43.1 percent from 40 percent in the prior year.

    For the fourth quarter of 2021, RLX Technology reported net revenues of RMB1.9 billion, up 17.7 percent from the comparable 2020 quarter. Gross margin was 40.2 percent compared with 42.9 percent in the same period of 2020.

    “We are pleased with our operational and financial performance in the fourth quarter, ending 2021 on a strong note. Despite the evolving industry regulatory framework and challenging backdrop of recurrent Covid-19 outbreaks, we remained focused throughout the year on optimizing our distribution and retail channels, investing in scientific research, new product development and digitalization upgrades,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.

    “The 2021 fiscal year was defined by year-over-year revenue growth of 123.1 percent, further cementing our leadership as a trusted e-vapor brand for adult smokers. Looking ahead, we are confident that the company is well positioned to further explore the enormous potential of this vast yet growing industry and achieve future growth in 2022 and beyond.”

  • French Experts Call for Tobacco Policy Rethink

    French Experts Call for Tobacco Policy Rethink

    Photo: OceanProd

    Sixteen French doctors, researchers and medical professors have called for government support of vaping in response to a publication by the French High Council for Public Health last year, which was critical of the sector, according to the Independent European Vape Alliance.

    The article, by addiction researcher Benjamin Rolland and pulmonologist Sebastien Couraud published in Le Monde newspaper, equates the High Council’s anti-vape position with unscientific anti-vaccination arguments.

    The article evaluates public health policy developments to combat the Covid-19 pandemic and compares them with government measures to contain the tobacco “epidemic.” Vaccines have been available for more than a year to help reduce the number of infections and severe health damage. 

    Anti-vaxxers rejected these vaccines because there was the absence of information about the long-term effects despite the well-known significant risks of contracting Covid-19. Vaccines helped millions of people and saved a great many lives, but they could have saved many more had opposition to them not been as fierce, according to the article.

    The authors see a parallel to this development in the tobacco epidemic:

    “For many decades now, another pandemic has been raging—that of tobacco addiction. It is responsible for more than 8 million deaths per year (including 75,000 in France),” they write.

    Citing information from the international scientific consortium Cochrane, Rolland and Couraud suggest that e-cigarettes are among the most effective tools to wean smokers off cigarettes.

    However, opponents of vaping often deny the public health potential of reduced-risk alternatives. And their reasoning is reminiscent of the arguments of anti-vaxxers, according to the authors. “Some scientists, however, refuse to promote the vape because of the lack of perspective on the prolonged consequences of this new device in the name of the same precautionary principle as that mentioned above,” they write.

    Pointing to the high relapse rates among smokers seeking to quit with medical cessation devices—an estimated 70 percent to 80 percent of users return to smoking—the authors call on healthcare professionals to recommend e-cigarettes to smoking patients as a significantly less harmful alternative.

  • J.P. Morgan: War Could Thwart PMI’s Smoke-Free Ambitions

    J.P. Morgan: War Could Thwart PMI’s Smoke-Free Ambitions

    Photo: Sergey

    The war in Ukraine could seriously impact sales of Philip Morris International, reports MarketWatch. Earlier this week, J.P. Morgan downgraded the multinational’s shares to “neutral” from “overweight,” citing the company’s exposure to Russia and Ukraine.

    PMI derives about 8 percent of group sales from Russia and Ukraine combined, according to the investment bank. The two countries account for about 23 percent of PMI’s heated-tobacco unit (HTU) volume. Heated-tobacco products are key to PMI’s next-generation growth strategy as they are reportedly less harmful than cigarettes.

    PMI entered the Ukrainian market in 1994. In 2021, Ukraine accounted for around 2 percent of PMI’s total cigarette and HTU shipment volume and under 2 percent of PMI’s total net revenues. The company has one factory and approximately 1,300 employees in the country.

    Russia accounted for almost 10 percent of PMI’s total cigarette and HTU shipment volume and around 6 percent of PMI’s total net revenues in 2021. PMI opened its first representative office in Russia in 1992 and has more than 3,200 employees in the country.

    PMI’s cigarette shipments to Russia in 2021 fell to 52.5 billion units from 55.6 billion units in 2021, and the percentage of total cigarette shipments fell to 8.4 percent from 8.8 percent, according to a company filing with the U.S. Securities and Exchange Commission.

    For HTUs, Russian shipments rose to 16.3 billion units from 13.6 billion units while the percentage of total HTU shipments slipped to 17.2 percent from 17.9 percent.

    Meanwhile, PMI’s HTU market share in Russia improved to 7.4 percent from 6.3 percent while the company’s overall HTU market share increased to 3.5 percent from 3 percent.

    On March 9, PMI announced the suspension of its planned investments in Russia, including all new product launches and commercial, innovation and manufacturing investments. PMI has also activated plans to scale down its manufacturing operations in Russia amid ongoing supply chain disruptions and the evolving regulatory environment.

  • New Report on Cigar Health Effects

    New Report on Cigar Health Effects

    Photo: Marco Mayer

    The National Academies of Sciences, Engineering and Medicine (NASEM) has published an independent report on the health effects of premium cigars. Commissioned by the Food and Drug Administration and the National Institutes of Health, the report provides a comprehensive review of the scientific literature on these products.

    For example, the report includes information on short-term and long-term health effects, patterns of use, marketing and perceptions, and product characteristics of premium cigars.

    The early to mid-1990s saw a large surge in U.S. cigar consumption, including premium cigars. Based on recent import data, premium cigar use may be increasing, though premium cigars currently make up a small percent of the total U.S. cigar market.

    Premium cigars have also been the subject of legal and regulatory efforts for the past decade. In 1998, the National Cancer Institute undertook a comprehensive review of available knowledge about cigars—the only one to date. The resulting research recommendations have largely not been addressed, and many of the identified information gaps persist. Furthermore, there is no single, consistent definition of premium cigars, making research challenging.

    In response, the FDA and the National Institutes of Health commissioned the NASEM to convene a committee of experts to address this issue. The resulting report, Premium Cigars: Patterns of Use, Marketing and Health Effects, includes 13 findings, 24 conclusions and nine priority research recommendations and assesses the state of evidence on premium cigar characteristics, current patterns of use, marketing and perceptions of the product, and short-term and long-term health effects.

  • Firms Scale Back in Russia and Ukraine

    Firms Scale Back in Russia and Ukraine

    Photo: BAT

    The leading tobacco companies are adjusting their strategies in Russia and Ukraine following the war between those countries.

    Philip Morris International announced the suspension of its planned investments in the Russian Federation, including all new product launches and commercial, innovation and manufacturing investment. PMI has also activated plans to scale down its manufacturing operations amid ongoing supply chain disruptions and the evolving regulatory environment.

    “We have watched with shock the war in Ukraine and condemn the violence in the strongest possible terms. We stand in solidarity with the innocent men, women and children who are suffering,” said PMI CEO Jacek Olczak in a statement. “We join the many voices calling for an immediate end to the war and the restoration of peace.”

    Olczak said PMI had helped evacuate more than 800 people from the most impacted areas; provided critical aid to employees who remain in Ukraine; and provided those who have left the country with logistical, medical, financial and other practical support in neighboring countries. PMI is continuing to pay salaries to all its Ukrainian employees during this period, the company said.

    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 in 2021. The company has one factory and approximately 1,300 employees in the country.

    In 2021, Russia accounted for almost 10 percent of PMI’s total cigarette and heated-tobacco unit shipment volume and around 6 percent of PMI’s total net revenues. The company employs more than 3,200 people in the country.

    BAT, which employs more than 1,000 people in Ukraine and around 2,500 people in Russia, said it had suspended all business and manufacturing operations in Ukraine and suspended all planned capital investment into Russia.

    “In Ukraine, we have suspended all business and manufacturing operations and are providing all the support and assistance we can to our colleagues, including relocation and temporary accommodation. Our businesses bordering Ukraine are providing assistance to the humanitarian relief effort,” the company wrote on its website.

    “In Russia, we have a full establishment of our people right across the country, including substantial local manufacturing. Our business in Russia continues to operate. As a key principle, we have a duty of care to all our employees at this extremely complicated and uncertain time for them and their families.”

    Japan Tobacco International, which has four factories and nearly 4,000 employees in Russia, announced the suspension of all new investments and marketing activities as well as the planned launch of its Ploom X heated-tobacco product in Russia, citing the unprecedented challenges of operating in Russia at this time. “Unless the operating environment and geopolitical situation improve significantly, JTI cannot exclude the possibility of a suspension of its manufacturing operations in the country,” the company wrote in a press statement.

    Imperial Brands also suspended all operations in Russia, halting production at its factory in Volgograd and ceasing all sales and marketing activity.

    “We have already suspended our operations in Ukraine in order to prioritize the safety and well-being of our 600 employees in that country,” the company wrote in a statement.

    Russia and Ukraine are relatively small markets for Imperial Brands, representing around 2 percent of net revenues and 0.5 percent of adjusted operating profit in 2021.

  • Synthetic Nicotine Regulation Clears House

    Synthetic Nicotine Regulation Clears House

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    The House of Representatives approved a $1.5 trillion spending package that would give the U.S. Food and Drug Administration authority to regulate synthetic nicotine. The bill now goes to the Senate.

    Synthetic nicotine—nicotine that is made in a lab rather than derived from tobacco—has long existed in a legal gray area, and many companies started using it after their natural nicotine products were denied market access by the FDA. Public health groups have been warning that synthetic nicotine e-cigarettes, such as Puff Bar, have grown in popularity among teens while skirting FDA oversight.

    The Food, Drug and Cosmetic Act, which includes the 2009 Tobacco Control Act, defines a tobacco product as “any product made or derived from tobacco that is intended for human consumption, including any component, part or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part or accessory of a tobacco product).”

    If the spending bill currently under consideration passes, the language of the Tobacco Control Act would change to define a tobacco product as “any product made or derived from tobacco, or containing nicotine from any source, that is intended for human consumption.”

    The synthetic nicotine provisions are set to take effect 30 days after the bill’s passage. Synthetic nicotine producers then have 60 days from its enactment—or 30 days after it becomes effective—to file premarket tobacco product applications with the FDA to legally stay on the market. Ninety days after the effective date, or 120 days after the bill’s passing, these manufacturers will have to stop selling their products if the FDA has not authorized them. At that point, the FDA can exercise its enforcement discretion.

    Anti-smoking activists welcomed the legislation. “By using synthetic nicotine, e-cig companies are avoiding public health protections for flavored tobacco products and still hooking teens,” tweeted billionaire philanthropist Michael Bloomberg. “With millions of kids still using e-cigs, we must get synthetic nicotine products off the market.”

    Consumer advocates, by contrast, warned the move would deny adult smokers access to lower risk alternatives. “Only the largest and most powerful vaping and tobacco companies can afford the lawyers and the time necessary to complete the paperwork necessary to pass the FDA’s process, meaning thousands of hard-working American business owners will now be forced to close, depriving millions of adult consumers of harm reducing options,” said Yael Ossowski, deputy director of the Consumer Choice Center.

    The FDA appears keen to crack down on synthetic nicotine. During his Senate confirmation hearing, FDA Commissioner Robert Califf vowed to close what he described as the synthetic nicotine “loophole.”

    Earlier, FDA Center for Tobacco Products Director Mitch Zeller indicated that the synthetic nicotine could be considered a component of e-cigarettes, which would have allowed the agency to assert authority over the substance under existing legislation.

  • Strong Cigar Sales Boost STG’s Results

    Strong Cigar Sales Boost STG’s Results

    Photo: STG

    Scandinavian Tobacco Group (STG) reported net sales of DKK8.23 billion ($1.21 billion) in 2021, up 4.5 percent organically from the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) before special items grew by 18.4 percent organically to DKK2.23 billion, with free cash flow before acquisitions stable at DKK1.39 billion.

    Net sales for the fourth quarter were DKK2.01 billion, reflecting 1.8 percent organic growth over the comparable quarter in 2020. EBITDA before special items was DKK474 million, up from DKK397 million in the previous year’s quarter.

    The fourth-quarter results were driven by continued strong demand for handmade cigars in the U.S., price increases across most product categories and continued cost efficiencies. The integration of Agio Cigars approaches completion, according to STG.

    “We deliver particularly strong financial results for 2021 based on a strong demand for handmade cigars in the U.S., Agio synergies and a favorable market mix,” said STG CEO Niels Frederiksen in a statement. “During the year, we showed good progress on our strategy ‘Rolling Toward 2025’ across the business and edged closer to our vision of becoming the undisputed global leader in cigars.”

    STG expects organic EBITDA growth in 2022 to be in the range of 0 percent to 6 percent.

    At the annual general meeting on March 31, 2022, the board of directors will propose an increase in the ordinary dividend of 15 percent to DKK7.50 per share. The board has also approved a new share buyback program with a value of up to DKK700 million to adjust the capital structure and meet obligations relating to the group’s share-based incentive program.