Author: Taco Tuinstra

  • Hong Kong Mulls New Anti-Smoking Measures

    Hong Kong Mulls New Anti-Smoking Measures

    Photo: ChenPG

    Hong Kong announced several new anti-tobacco policies on June 6, reports The Standard.

    Among other measures, the city plans to introduce a new duty-paid labeling system, ban “smoke-and-queue” behavior in public, and prohibit all flavored cigarettes and alternative products including vapes and heated cigarettes.

    The rules are meant to help the government lower smoking prevalence to 7.8 percent by 2025 and ultimately achieve a “Tobacco-free Hong Kong” after the completion of a public consultation exercise launched last year.

    Other measures include raising the maximum penalty for evading tobacco duty to a HKD2 million ($256,082) fine and seven years’ imprisonment; a ban on providing cigarettes to underage teens and children; and continuous reviews on the adjustment of tobacco duty.

    The government will also maximize the area reserved for health warnings on cigarette packaging to 100 percent; expand non-smoking areas and increase fines for violations.

    Secretary for Health Lo Chung-mau said the government strives to table the new policies to the Legislative Council before the end of this year and expects they will be passed within this legislative year.

    More than 90 percent of respondents to the public consultation agreed with further lowering the smoking prevalence.

    There are more than 570,000 daily smokers in Hong Kong and the latest prevalence stands at 9.1 percent, according to Director of Health Ronald Lam Man-kin.

  • Pyxus Completes Strong Fiscal 2024

    Pyxus Completes Strong Fiscal 2024

    Photo: Pyxus International

    Pyxus International reported sales and other revenue of $2 billion in fiscal year 2024, up 6.1 percent over its 2023 results. The company attributed this growth to “consistent execution” and an increase in average pricing of 10.5 percent, partially offset by slightly lower volume of 4.4 percent compared to fiscal 2023. Operating income increased 46.3 percent to $137.2 million, reflecting a more favorable business mix as well as improved operating efficiencies.

    “We achieved strong fiscal year 2024 results through our continued identification and capture of opportunities for growth, acceleration of our operating cycle times, improved working capital efficiency and increased availability of our total liquidity,” said Pyxus’ President and CEO Pieter Sikkel in a statement.

    “Our discipline is enabling a significant reduction of long-term debt that strengthens our capital structure and demonstrates our ability to achieve near-term operating and financial objectives while ensuring that the business remains positioned for long-term success.”

    For fiscal 2025, Pyxus anticipates sales to range between $2.1 billion and $2.3 billion and adjusted EBITDA to range between $165 million and $185 million. The company believes it is well positioned to successfully navigate an industry operating environment for fiscal 2025 that, due to the El Niño weather phenomenon, is generally expected to have a short-term negative impact on margins. 

  • Shareholders Approve Hotels Demerger

    Shareholders Approve Hotels Demerger

    Timon Schneider/Wirestock

    Shareholders on May 6 approved ITC’s plan to demerge its hotels business, reports Reuters.

    The company, which has a substantial cigarette business, announced the demerger plan in July last year and later said that the new entity would be tentatively listed.

    In May, proxy advisory firms Stakeholders Empowerment Services and InGovern Research Services asked shareholders to support the proposal, while Institutional Investor Advisory Services opposed the move.

    The hotels business contributed 4 percent to ITC’s fiscal year 2024 revenue, while its mainstay consumer staples business made up 71 percent of the topline.

  • Leaf Sales Down

    Leaf Sales Down

    Photo: Taco Tuinstra

    Contracted and self-financing growers had earned more than US$600 million by Day 56 of Zimbabwe’s 2024 tobacco selling season, down from $722 million earned by the same day last year, reports The Herald.

    The most recent season was impacted by an El Nino-induced drought, which caused the season to start late and end early.

    Tobacco Industry and Marketing Board statistics revealed that farmers had cumulatively sold 173.76 million kilograms of tobacco worth $607.08 million by Day 56 under both the auction and contract systems. This represents a 16 percent decline in earnings from the comparable 2023 period.

     In volume terms, the leaf sold was 27 percent below the 239.56 million kg sold last season. The average auction price was $0.12 higher than that at the contract floors.

    Some stakeholders remained positive about the remainder of the season. “On the back of an El Niño-ravaged season, we need to celebrate the 174 million kilograms achieved to date,” said Paul Zakariya, secretary general of the Zimbabwe Farmers Union. “The marketing season is still underway and we expect more tobacco to come through. We may not necessarily reach the desired target, but we will not totally be out of range .”

    Others were less optimistic. Tobacco Farmers Union Trust Vice President Edward Dune said it was highly unlikely that the 240 million kilogram target would be reached in the wake of the drought.

    “Deliveries should definitely be declining now that the marketing season is almost coming to an end. Firewood cutting and nursery preparations are the major farmer activities currently taking place on farms,” he said.

  • Tax Hike Diverted Cigarette Sales: LUMS

    Tax Hike Diverted Cigarette Sales: LUMS

    Image: alexlmx

    Pakistan’s 2023 federal excise duty (FED) hike on tobacco products has diverted rather than reduced cigarette consumption, reports The News International, citing recent research.

    In 2023, the government announced a significant cigarette tax hike, prompting tobacco companies to more than double their cigarette prices.

    The fiscal measure aimed to boost revenue and discourage smoking. However, a recent study conducted by the Lahore University of Management Sciences (LUMS), suggests it has achieved neither objective.

    Instead of lowering smoking rates, the increased prices have prompted consumers to source their cigarettes from informal sources, a development that will likely cause the government to miss PKR300 billion ($1.08 billion) in tax earnings this year, according to LUMS.

    The LUMS study found that the share of duty-paid cigarettes shrank to 42 percent over the past two years.

    “Government has implemented various initiatives to address the extent of illicit sector to bring more companies and illicit sector under tax net,” said LUMS Associate Professor of Economics Kashif Zaheer Malik. “These, however, have not been successful in reducing illicit trade in Pakistan.”

    In light of Pakistani smokers’ profound price sensitivity, the LUMS report urged the government to reconsider its excise tiers. It also said the success of Pakistan’s track-and-trace system would depend on an all-encompassing rollout and consistent enforcement.

    Only a handful of Pakistan’s cigarette manufacturers have implemented the new system.

    In related news, the government of Pakistan’s Khyber Pakhtunkhwa (KP) province announced a 400 percent tobacco tax increase.

    Civil society groups welcomed the measure. “This substantial increase is projected to generate over PKR2 billion annually, which will be dedicated to enhancing health facilities across KP,” Blue Veins and the Provincial Alliance for Sustainable Tobacco Control wrote in joint statement.

    Tobacco growers warned the tax hike would destroy the sector. “The farmers can’t afford this and will stop growing tobacco,” Pakistan Tobacco Board member Rustam Khan was quoted as saying by The News International.

    “Tobacco crop is the only cash crop of the province. And around 1.2 million people in the province depended on it,” said Khan, adding that more than 75,000 farmers were involved in tobacco cultivation.

    Tobacco taxation has been a contentious topic in Pakistan recently. In May, market leader Pakistan Tobacco Co. threatened to cease operations in the country if the government further increases cigarette taxes.

  • Vietnam Trade Ministry Supports Vapes Ban

    Vietnam Trade Ministry Supports Vapes Ban

    Photo: Holger

    Vietnam’s Ministry of Industry and Trade supports a ban on e-cigarettes, reports The VN Express

    The ministry has requested the government to halt the review of its proposed bill on regulating e-cigarettes after the health ministry officially published a report highlighting their negative effects.

    “The Ministry of Industry and Trade supports making changes in the law to ban e-cigarettes as the Ministry of Health has affirmed that they are harmful,” Trader Minister Nguyen Hong Dien told lawmakers on June 5.

    No business have been licensed to trade e-cigarettes in Vietnam.

    The share of Vietnamese aged 13-15 using e-cigarettes has increased from 3.5 percent in 2022 to 8 percent in 2023, official data shows.

  • BAT Expects Lower First-Half Profit

    BAT Expects Lower First-Half Profit

    Photo: BAT

    Declining sales of cigarettes and growing competition from illegal vapes in the U.S. will likely dent British American Tobacco’s 2024 earnings, the tobacco manufacturer said in a pre-close trading update on June 4.

    Analysts estimate BAT will make £27.60 billion ($35.35 billion) in total organic revenue and adjusted operating profit of £12.48 billion for the year, according to The Wall Street Journal.

    BAT noted that while the U.S. was showing some early signs of recovery, traditional cigarette volumes were down around 9 percent so far this year across the industry.

    Chris Beckett, head of equity research at Quilter Cheviot, told Reuters BAT’s anticipated decline in first-half revenue and profit was “more pronounced” than expected.

    The company expects half-year revenue and adjusted profit from operations to fall by low single digits, but says it is on track to deliver its guidance for the full year.

    “We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our U.S. commercial actions, as well as the phasing of new launches,” said BAT CEO Tadeu Marroco.

    “Our guidance also reflects ongoing macro-economic pressures, particularly in the U.S. market and continued lack of effective enforcement against the growing illicit vapor segment. As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.”

  • Cote D’Ivoire to Require Plain Packaging

    Cote D’Ivoire to Require Plain Packaging

    Photo: alexlmx

    Cote D’Ivoire will start requiring cigarette manufacturers to sell their products in plain packaging in November.

    According to the Campaign for Tobacco-Free Kids (CTFK), Cote D’Ivoire is the second nation in Africa to introduce following Mauritius.

    “The Campaign for Tobacco-Free Kids applauds Cote D’Ivoire for joining Mauritius in bringing plain packaging to Africa,” said CTFK President and CEO Yolanda Richardson. “These new measures should serve as a reminder that countries around the world can and must take swift action to curb tobacco use, protect public health and stop Big Tobacco companies from targeting youth.”

  • Investor Plans Nicotine Extraction in Zimbabwe

    Investor Plans Nicotine Extraction in Zimbabwe

    Photo: Tobacco Reporter archive

    A Chinese investor plans to build a multi-billion dollar nicotine-extraction factory in Zimbabwe, reports The Herald. The plans are at an advanced stage, according to the country’s former ambassador to China, Christopher Mutsvangwa.

    The facility will extract nicotine from tobacco stalks, leaves and flowers for the cigarette alternatives, such as e-cigarettes. Once established the factory is expected to also process tobacco from neighboring countries including Malawi, Mozambique and Zambia.

    “There is going to be a very big industry to extract nicotine from the by-products after selecting the premium tobacco leaves,” Mutsvangwa told participants in meeting of the ruling  Zanu PF’s party’s Mashonaland West provincial coordinating committee in Chinhoyi.

    “The Chinese firms have an interest in setting up the factories here in Zimbabwe because of our production levels,” he said.

    The investor’s board of directors reportedly met on May 31, 2024, to finalize the modalities of setting up the factory, which will likely be built in Karoi, in one of Zimbabwe’s largest tobacco producing districts.

    Zimbabwe is also expected to be a major producer of cannabis seeds following plans to establish a US$400 million factory. “We now have capacity to produce cannabis seed in the country. After an initial investment of $30 million, the company now wants to set up a seed production factory,” said Mutsvangwa.

    The investments in nicotine extraction and cannabis production will boost Zimbabwe’s attempts to extract more value from its tobacco industry, as detailed in the government’s Tobacco Value Chain Transformation Plan.  

  • FDA Updates Vaping Products ‘Red List’

    FDA Updates Vaping Products ‘Red List’

    Photo: xy

    The U.S. Food and Drug Administration has updated its import alert, which includes a “red list” of vapor products that may be detained “without physical examination,” the agency announced.

    The alert authorizes U.S. Customs and Border Protection to detain new tobacco products that do not have the required marketing authorization under the Federal Food, Drug and Cosmetic Act, which gives the FDA the authority to regulate all tobacco products.

    The list of products now includes Chinese manufacturers and distributors as well as U.S. importers and distributors.

    The FDA announced last week that it is taking stronger enforcement actions against unauthorized e-cigarettes. The agency is seeking civil money penalties (CMP) against nine brick-and-mortar retailers and one online retailer for selling unauthorized Elf Bar brand vaping products. The FDA is seeking a penalty of more than $20,000 from each retailer.

    “In order to remove a firm’s product from the red list, information should be provided to the agency to adequately demonstrate that the firm has resolved the conditions that gave rise to the appearance of the violation,” the FDA wrote. “The purpose of this is so that the agency will have confidence that future shipments/entries will be in compliance with the Federal Food, Drug and Cosmetic Act.”