Author: Taco Tuinstra

  • Regulator Proposes Retail Licensing

    Regulator Proposes Retail Licensing

    Photo: Tabakprom

    Russia’s alcohol and tobacco regulator wants to extend the country’s tobacco licensing requirements to retailers, reports Interfax.

    Doing so would improve regulatory oversight, boost budget revenues and reduce the share of illegal tobacco on the market, according to Rosalkogoltabakkontrol head Igor Aleshin.

    Manufacturers of tobacco products have been subject to licensing since March 1. Among other things, they are required to register their machinery. Unused equipment must be mothballed under the regulations.

    According to Aleshin, 225 tobacco market participants have received licenses so far, of which 190 are producers and the rest are importers.

    The current law does not call for the licensing of retail sales, but it does prohibit retail sales of tobacco-containing and nicotine-containing products that are not in consumer packaging.

    On Sept. 1, 2023, lawmakers expanded the role of the former Federal Alcohol Market Regulation Service, giving it the right to regulate tobacco and nicotine-containing products and renaming it Rosalkogoltabakkontrol.

  • KT&G Volunteers Help With Harvest

    KT&G Volunteers Help With Harvest

    Photo: KT&G

    KT&G volunteers assisted Boeun County tobacco farmers with their tobacco harvest on July 19.

    Farmers in South Korea have been facing labor shortages due to the ongoing decline in rural populations and aging demographics. The situation is particularly critical during the tobacco harvest season in July and August, which is labor intensive and largely unmechanized.

    To alleviate the burden, KT&G volunteers have been visiting tobacco farms annually since 2007. After assisting with transplanting tobacco seedlings in the spring, the employees also contribute to the tobacco leaf harvest.

    Additionally, KT&G has been carrying out welfare improvement projects for tobacco farmers. In June, the company provided KRW420 million ($303,829.67) to support tobacco farmers with health checkup costs, children’s education fees and fuel-saving curing devices. Since 2013, the company has provided KRW4.27 billion, benefiting 15,212 farmers.

    “The company annually conducts employee volunteer activities to support stable farming operations for tobacco farmers facing labor shortages,” said Jung-Ho Kim, head of KT&G’s SCM division, in a statement. “We will continue our support for mutual prosperity with farmers.”

  • IQOS’ U.S. Launch Postponed

    IQOS’ U.S. Launch Postponed

    Photo: A Stockphoto

    Philip Morris International has postponed the test launch of its IQOS heated-tobacco device in the U.S. to the fourth quarter, reports Reuters. The company declined to say why.

    The pilot was earlier scheduled to run in Austin, Texas, in the second quarter, for which the company reported results on the day.

    Anti-tobacco activists have been seeking to derail the U.S. introduction of IQOS, arguing among other things that PMI exaggerates the number of people who have quit smoking regular cigarettes using IQOS.

    In a joint letter to the U.S. Food and Drug Administration dated June 27, six health groups cited yet-to-be published independent studies contradicting PMI’s findings about how many IQOS users completely switch to the device from cigarettes.

    Meanwhile, PMI said the impact of the EU ban on flavored heated tobacco in the European Union has had a “slightly greater” impact on IQOS sales than previously assumed.

    This led the company to temper its expectations for volume growth in the heated-tobacco category to around 13 percent for the full year, down from between 14 percent and 16 percent expected earlier.

  • Zimbabwean Cigarette Exports up by Half

    Zimbabwean Cigarette Exports up by Half

    Photo: Taco Tuinstra

    Zimbabwean cigarette exports rose from $71 million in 2022 to $106 million in 2023, reports The Herald

    A leading exporter of leaf tobacco, Zimbabwe has been keen to move up the value chain by producing products beyond raw tobacco.

    Zimbabwe is currently Africa’s sixth-largest tobacco exporter, behind countries such as Kenya, Nigeria, South Africa, Morocco and Tunisia, according to Trade Statistics for International Business Development. Worldwide, it ranks 42nd among cigarette exporting nations.

    No African country was on the world’s list of 30 top cigarette exporters in 2023.

  • Smoke-free Product Sales Boost PMI Income

    Smoke-free Product Sales Boost PMI Income

    Photo: PMI

    Philip Morris International’s operating income jumped 34.2 percent to $3.44 billion for the quarter that ended June 30. On an adjusted basis, operating income rose 3.5 percent to $3.66 billion. Net revenues were $9.47 billion, compared with $8.97 billion in the comparable 2023 quarter.

    During the quarter, PMI shipped 157.6 billion cigarettes, 35.5 billion heated tobacco units and 4.2 billion oral smoke-free products, a category that excludes snuff, snuff leaf and U.S. chewing tobacco.

    The smoke-free business accounted for 38.1 percent of PMI’s total quarterly revenues, up 2.7 percentage points from the comparable 2023 period. Oral smoke free products experienced the largest volume gains, growing by 20 percent from second quarter last year.

    This growth was driven by primarily the popularity of Zyn nicotine pouches in the U.S., where shipments reached 135.1 million cans, representing growth of 50.3 percent versus the prior-year quarter. The company expect Zyn sales to reach 580 million cans in 2024.

    Scrambling to fulfill ferocious U.S. demand for Zyn, PMI recently announced a $600 million investment in a new nicotine pouch factory in Aurora, Colorado.

    Quarterly heated tobacco product sales were strong in Japan, following an expansion of the IQOS product range, as well as Greece, Hungary and Spain. In Japan, Philip Morris grew its market share for heated tobacco by more than 3 percentage points to more than 29  percent.

    The company will begin a trial of IQOS in Austin, Texas, USA, in the fourth quarter of this year, according to Chief Financial Officer Emmanuel Babeau.

    “The excellent momentum of our smoke-free business continued with an outstanding second-quarter and first-half performance,” said PMI CEO Jacek Olczak in a statement.

    “The powerful combination of excellent underlying performance and proactive measures across all categories enabled our business to outperform once again, and we are on track for a strong 2024. As a result, we are raising our full-year guidance, despite currency headwinds.”

  • Air Global Launches R&D Facility in Dubai

    Air Global Launches R&D Facility in Dubai

    Photos: Air Global

    Advanced Inhalation Rituals (AIR Global) has launched a new research, design and development (RDD) lab in Dubai.

    Backed by an AED100 million ($27.23 million) investment, the facility will be used to develop and hire tech talent, drive innovation in the shisha industry and speed up the development of new products.

    The global hub will develop new inhalation products that build on the success of OOKA, a charcoal-free, pod-based shisha device, which, according to AIR Global, provides a cleaner alternative.

    OOKA currently delivers approximately 30 percent of AIR Global’s revenue in the United Arab Emirates region.

    The lab will boast newly designed laboratories and deliver purpose-built workshops; new products are in early phases of testing and intended for launch in 2025.

    “I have always drawn personal inspiration in my career from the power of technology—to create entirely new industries, disrupt existing sectors and develop products that no one else has thought of,” said AIR Global Chief Product Officer Paul Dawson.

    “And it’s this exact mindset and ethos that we will achieve through the RDD Lab. With an aspirational team from around the world and cutting-edge technology at our fingertips, we’ll be creating new prototypes and combining them with our existing range of products to fundamentally change how people experience shisha. It’s an exciting time to be part of such a talented team that will drive forward innovation.”

    The RDD Lab will employ 26 people and 19 different nationalities, with equal numbers of men and women in its workforce.

    “The business is embarking on the next phase in its growth journey at an incredibly exciting time, where consumers are showing appetite for more eco-conscious, reduced-risk shisha experiences. The RDD lab will not only create new products that put sustainability, science and technology at the forefront but enable us to break ground into new global regions,” said Chief Legal and Corporate Officer Ronan Barry.

    “The recent launch of OOKA in Germany, a significant shisha market, was a milestone moment for us as we aspire to bring new inhalation experiences to a European market. The launch of this lab gives us even more momentum to build on as we expand our product range and presence globally.”

  • Synthetic Coolants Under Scrutiny

    Synthetic Coolants Under Scrutiny

    Image: yusufadi

    U.S. tobacco companies have been using a synthetic coolant originally developed for shaving products to replace menthol cigarettes, according to an article in Chemical & Engineering News.

    California and Massachusetts ban menthol cigarettes, and the U.S. Food and Drug Administration would like to prohibit them at the federal level, arguing that menthol makes it easier to start smoking and harder to quit.

    In the 1970s, the British shaving product company Wilkinson Sword began altering menthol in search of analogs for its shaving products. It sought molecules that would provide the same cooling effect but without the skin and eye irritation sometimes associated with menthol.

    Cigarette companies took note and created products using similar molecules to mimic the cooling sensation provided by menthol.

    In 2020, the FDA determined that cigarettes with nonmenthol cooling agents, developed by R.J. Reynolds Tobacco Co., are substantially equivalent to menthol cigarettes, basically permitting the marketing of them.

    Critics contend that the vague legal definition of flavors has allowed tobacco companies to develop and market substitute menthol products.

    In challenging fines received in Massachusetts for selling their menthol replacement products, R.J. Reynolds testified that these cigarettes scientifically cannot be a flavored product because they do not activate the taste or olfactory receptors, but only thermoreceptors.

    Reynolds also has a lawsuit pending against the attorney general of California based on similar arguments regarding what constitutes characterizing flavor.

    Public health advocates have argued for legislation that considers a molecule’s chemical structure and function.

    They point to Germany, which bans multiple cooling agent in cigarettes. Belgium and the Netherlands consider molecules’ function in their bans. Canada has a list of approved additives that doesn’t include menthol or any other coolant.

    Michael Chaiton, director of research at the Ontario Tobacco Research Unit, which studies the province’s tobacco strategy, told Chemical & Engineering News that problems arise when lawmakers attempt to regulate things they don’t understand. A better appreciation for how tobacco additives interact with the body would help mitigate their harmful consequences without reliance on semantic arguments about flavor, aroma, and taste, he says.

  • Vietnam Wants to Raise Tobacco Taxes

    Vietnam Wants to Raise Tobacco Taxes

    Photo: Tobacco Reporter archive

    Vietnam’s finance ministry want to raise the excise duty on cigarettes and add an absolute rate per pack, reports Tuoi Tre News.

    The current excise duty on tobacco in Vietnam is 75 percent of the factory price but only 38.8 percent of the retail price, according to the World Health Organization.

    This share is much lower than in Singapore, where tax accounts for 69 percent of the cigarette retail prices, or Thailand, where it is 70 percent.

    To protect public health, the ministry has proposed two solutions. The first involves keeping the 75 percent excise tax unchanged in 2026 but adding an additional tax of VND2,000 ($0.07) per pack.

    From 2027 to 2030, the tax would then be revised up by VND2,000 per pack each year under this proposal until the absolute rate reaches VND10,000 per pack in 2030.

    As an alternative, the ministry has proposed keeping the 75 percent tax unchanged in 2026 but subjecting cigarettes to an absolute rate of VND5,000 per pack.

    This tax will then increase by VND1,000 per pack each year until it reaches VND10,000 per pack in 2030.

    More than 42 percent of adults smoke in Vietnam, which is among the top 15 countries with the highest smoking prevalence.

  • Russia Sues Dutch Owner of Megapolis

    Russia Sues Dutch Owner of Megapolis

    Image: somemeans

    The Russia government is seeking to suspend the corporate rights of Megapolis Distribution, the Dutch owner of Russian tobacco distributor Megapolis Group, reports Interfax.

    On July 18, Russia’s Industry and Trade Ministry filed a lawsuit against Megapolis Distribution in the Arbitration Court of the Moscow Region, according to records.

    The Russian company was earlier included in Russia’s list of economically significant organizations.

    The court has agreed to hear the lawsuit, and the first hearing is scheduled for August 8.

    Shortly after Russia’s invasion of Ukraine in February 2022 and just before the EU imposed sanctions on him, Russian billionaire Igor Kasaev, who owns 40 percent of Megapolis, funneled €8 million ($8.71 million) through the Netherlands, according to the NL Times.

    Kasaev is known to have ties to the Kremlin and the Russian arms industry. He keeps his shares in Megapolis, the largest distributor of cigarettes in Russia, in the letterbox company registered in The Hague. The sanctions froze Kesaev’s assets in his Hague company, “trapping” some €650 million in assets in the Netherlands.

  • Zimbabwe Pioneers Centralized Curing

    Zimbabwe Pioneers Centralized Curing

    Photo: Taco Tuinstra

    Zimbabwe’s Tobacco Industry and Marketing Board and Boost Africa have jointly introduced a centralized curing business system for smallholder tobacco farmers, reports News Day.

    According to Boost Africa representative Henry Dike, the system will not only reduce production cost and efficiency but also boost sustainability.

    Smallholders in Zimbabwe have traditionally cured their tobacco individually. Most use wood as a fuel source, which has led to concerns about deforestation.

    “By providing them with the necessary resources and training, we are not just improving their yield but also elevating their entire farming operation to a commercial level,” said Dike.

    “It’s not just about financial gains; it’s about creating a sustainable, scalable farming practice that can be replicated across the country,” he added.

    Tafadzwa Mukarakate, agronomist and head of the Zimbabwe Farmers’ Union, said the project was critical in ensuring that farmers have the means to reinvest in their operations.

    “The success of this project is a clear indication that with the right support, smallholder farmers can achieve commercial success,” he said.