Author: Taco Tuinstra

  • Short Brazilian Crop Selling Rapidly

    Short Brazilian Crop Selling Rapidly

    More than half of the tobacco produced in southern Brazil had been sold by the middle of March, reports Kohltrade, citing figures released by the growers’ organization Afubra. Driven by a short crop, the average per-kilo price was up nearly 20 percent over that paid during 2022-2024 marketing season.

    According to the Ministry of Development, Industry and Commerce, Brazil shipped 512 million kg of tobacco in 2023, generating $2.73 billion in earnings. In the first two months of 2023, the country exported 75.3 million kg valued at $492.7 million.

    According to information from Emater-RS, tobacco prices reached values above BRL20 ($4.02) per kilo for dry leaf, reaching up to BRL390 per arroba [11.34 kg]  for tobacco classified as BO1 in some regions. However, producers expressed concern about the weight of the leaves, which has been lower than anticipated due to heavy rains during the growing season.

    Reduced volumes and high prices are also accelerating leaf sales. Industry representatives expect sales, which normally extend to the end of June, to end in late April this season.

    Brazil’s tobacco crop has been heavily impacted by the El Nino weather phenomenon this year. When production started in May 2023, the industry expected to harvest 10 percent more  leaf than in the 2022-2023 growing season based on the area planted.

    While the climate conditions initially supported the expectations for a larger crop, heavy rains from mid-July to the end of November forced the industry to adjust its figures downward. Instead of a 10 percent increase, market watchers are now predicting 20 percent drop in volume compared with 2023.

    Rainy growing seasons tend to result in lower nicotine levels. Because this season’s heavy downpours followed three years of drought, which resulted in record high nicotine levels for Brazilian tobacco, there is now an unprecedented gap in the nicotine levels of the 2023 and 2024 harvests, averaging 0.35 percent to 0.5 percent for grades XC to BM, and up to 0.8 percent for grades B and BT.    

    But while nicotine levels have declined, the quality of Brazil’s tobacco is up significantly, with great maturity and a very good aroma. According to Kohltrade, Brazil’s tobacco this year has a very good and intense “flavor,” including in XC grade. Leaf position is showing good quality, and what in previous years was predominantly “LO” to “OF” light orange to orange, this year is “O” orange to “F” full orange or deep orange.

    Overall, the industry expects a small drop in sugar levels.

    With the reduction in volumes, competition has been fierce for Brazil’s 2024 crop. All companies are rushing to buy their volumes and serve their customers, greatly inflating the market and accelerating the process of purchasing tobacco.

  • Zim Growers Worried About Price Fixing

    Zim Growers Worried About Price Fixing

    Photo: Taco Tuinstra

    Tobacco growers in Zimbabwe have voiced concern over tobacco leaf prices at the auction floors, which have capped out at $4.99 per kilogram compared to around $6 per kilogram on the contract floors, reports NewsDay. Growers are worried about buyer collusion.

    “The season is progressing reasonably well, even though we have raised concern about the $4.99 cap, which is on the auction system, and for us, it’s a kind of a sign of collusion, which is worrisome,” Zimbabwe Tobacco Growers Association President George Seremwe said. “We cannot have the auction system offering lower prices than the contract.”

    “The contract has gone up to $6.90, and for us, there is a discord,” Seremwe said. “The same buyers who are buying at the auction are the same buyers who are also buying at the contract.

    “So that’s why we suspect there’s collusion. We would want the prices to go up because if you look at the production cost, it was quite high.”

    Tobacco growing will not be sustainable for the farmers due to poor auction floor prices, according to Seremwe. “So, the growth of tobacco has to be attractive by the prices. We know the price world over has gone up, so we also expect the prices to go up than what is currently prevailing on the market,” he said.

    “We talk of sustainability of the farmer. As farmers, we think it is not sustainable at the moment.”

    Farmers expected the prices to be better compared to last year, said Shadreck Makombe, president of the Zimbabwe Commercial Farmers’ Union. “The prices are not yet at what we would have expected,” Makombe said. “We would have expected a few coins up.”

    “Again, it’s the only start of the marketing season, [and] most of the tobacco being sold there is primary leaf tobacco, not quite what we want,” he said. “We expect the prices to firm up or to increase for the farmers to get anything meaningful from their crop.”

  • Belgium to Ban Sale of Disposables

    Belgium to Ban Sale of Disposables

    Photo: Bennphoto

    Belgium will ban the sale of disposable e-cigarettes effective Jan. 1, 2025, making it the first EU country to do so, reports The Brussels Times, citing Federal Health Minister Frank Vandenbroucke. The country has received approval from the European Commission for the ban.

    “The disposable e-cigarette causes a lot of damage to society and the environment,” said Vandenbroucke. “This harmful product mainly targets our young people. I am therefore pleased that we can remove this from the market.”

    Vandenbroucke said that marketing for vapes is “very savvy” and “youth-oriented” despite sales of vapes to minors being banned in Belgium. Youth use is widespread, and in 2023, about three in four points of sale sold disposables to minors, according to an inspection.

    “Belgium is playing a pioneering role in Europe to break the power of the tobacco lobby,” Vandenbroucke said upon receiving approval for the ban from the European Commission. “This is another milestone in our fight against tobacco.”

    “We strive for a smoke-free generation and want people, especially young people, to be better protected and to come into less contact with tobacco or alternative smoking methods,” Vandenbroucke said. “With this measure, we ensure that we remove an extremely harmful product from the market, which is also cheap and therefore attractive to young people.”

    Nondisposable e-cigarettes will still be allowed as many use them to quit smoking combustible cigarettes. “Still, we have been able to agree that they can no longer be offered with lights and other things to make them attractive,” Vandenbroucke said. “It should not be a product to start smoking but to stop smoking.”

  • Top Court Asked to Review Anti-FDA Ruling

    Top Court Asked to Review Anti-FDA Ruling

    Photo: tinnaporn

    The U.S. Department of Justice has asked the Supreme Court to review a lower court’s ruling rejecting the Food and Drug Administration’s reasoning in denying premarket tobacco product applications submitted by Wages and White Lion Investments.

    According to the solicitor general, the 5th Circuit Court of Appeals relied upon “legal theories that have been rejected by other courts of appeals that have reviewed materially similar FDA denial orders.”

    The federal government’s decision to seek Supreme Court review is unsurprising, according to Reason. However, the libertarian publication also notes that there is a circuit split on whether the FDA acted in an arbitrary and capricious fashion when it refused to consider certain materials submitted with PMTAs and departed from previous guidance it had given the industry. Most circuits to hear such claims turned them away, according to Reason.

    The 5th Circuit (along with the 11th Circuit) did not. A Supreme Court review could help resolve the circuit split and remove any cloud over the FDA’s continuing ability to review (and deny) PMTAs for vaping products. Without Supreme Court review, vaping product manufacturers would be incentivized to seek review of any PMTA denials in the 5th and 11th Circuits, which could undermine the FDA’s regulatory authority.

     

  • Rachael Trimpert Schmidt Joins Chemular

    Rachael Trimpert Schmidt Joins Chemular

    Rachael Trimpert Schmidt (Photo: Chemular)

    Chemular has appointed Rachael Trimpert Schmidt as a senior consultant.

    Schmidt joins Chemular from her recent position with the U.S. Food and Drug Administration as assistant director of laboratory compliance and coordination of the Center for Tobacco Products (CTP) where she was responsible for establishing and coordinating all FDA tobacco regulatory laboratories in support of the Family Smoking Prevention and Tobacco Control Act.

    At the CTP, Smith was responsible for developing and executing all tobacco product testing programs, including premarket application review, postmarket compliance and adverse events. In her more than 12 years at the agency, Schmidt engaged with both national and international partners to harmonize tobacco enforcement.

    Most recently, Schmidt has worked extensively as the lead regulatory science expert for the development of tobacco product standards.

    “Schmidt brings a wealth of knowledge to our team,” says Jason Carignan, chief commercial officer of Chemular, in a statement. “She’s been deeply involved with developing and implementing regulations within the tobacco industry for many years and has a sharpened ability to identify and address emerging issues. This firsthand experience will ensure that Chemular stays at the forefront of compliance initiatives and that our customers can launch and keep their products on the market. She is going to be a valuable asset to Chemular and supporting our customers through her insights and action.”

    “I am excited to join the Chemular team,” says Schmidt. “I’ve spent a large part of my career immersed in the tobacco industry, identifying issues and opportunities while shaping its policies through my work with the FDA and the Center for Tobacco Products. I look forward to taking an active role with Chemular and helping its customers pave a smooth path to compliance.”

  • Former STMA Chief Pleads Guilty to Bribery

    Former STMA Chief Pleads Guilty to Bribery

    Photo: alswart

    The former deputy chief of China’s State Tobacco Monopoly Administration, He Zehua, pled guilty to accepting bribes worth over CNY943 million ($130 million) during a trial in Liaoning province, reports China Daily. The case was publicly heard by the Dalian Intermediate People’s Court. 

    Prosecutors alleged that from 1998 to 2023, He used his various work posts in the country’s tobacco system to seek benefits for relevant people and departments in business operations, business contracting, job promotion and employment in return for monetary bribes. After leaving his work posts, prosecutors alleged, he sought profits for individuals and organizations in tobacco-related business contracting and bank solicitation for monetary bribes as well.

  • Pension Fund Supports KT&G CEO Nominee

    Pension Fund Supports KT&G CEO Nominee

    South Korea’s National Pension Fund (NPF) will vote in favor of KT&G’s CEO nominee Bang Kyung-man at the cigarette manufacturer’s upcoming shareholder meeting, reports the Yonhap News Agency.

    The NPF will also vote for former Judge Sohn Dong-hwan as a new KT&G board member.

    The NPF holds a 6.2 percent stake in KT&G. 

    The Industrial Bank of Korea, which is state-run and holds an 8 percent stake in KT&G, has opposed Bang’s nomination, citing falling profitability and dubious business practices during his board tenure. Sohn is a director candidate proposed by the Industrial Bank of Korea.

  • Netherlands Probes Tobacconist Support

    Netherlands Probes Tobacconist Support

    Photo: jordi2r

    The Netherlands’ food and consumer product safety organization, NVWA, will investigate cigarette manufacturers’ support of tobacconists, which critics insist amounts to illegal advertising, reports Dutch News.

    Dutch law prohibits the advertising, promotion, sponsoring and marketing of tobacco products.

    The investigation was prompted by a news report that said Philip Morris International is giving money to people who are opening new tobacco shops ahead of a ban on the sale of cigarettes in supermarkets scheduled to take effect in July.

    In the runup to the ban, the number of specialist cigarette shops, often in the direct vicinity of supermarkets, has risen for the first time in more than 10 years.

    “A lot of adult smokers will be looking for new outlets,” a PMI spokesperson told Distrifood. “We are very willing to work with those entrepreneurs who share our vision of the future,” he said.

    Almost a quarter of the Dutch population smokes.

  • Finland Aims for Pouch Regulation Like Tobacco

    Finland Aims for Pouch Regulation Like Tobacco

    Photo: ir1ska

    The government of Finland wants to bring nicotine pouches under tobacco laws so that it can more effectively discourage consumption, reports YLE.

    Among other measures, it wants to curb pouch nicotine levels to 20 milligrams per gram of product. In addition, the government wants to prohibit the online sales of nicotine pouches and limit the range of flavors, in an effort to reduce the products’ appeal to young people.

    Under the proposals, retailers selling pouches would need to obtain a license, while importers would face restrictions.

    The stated aim of the proposed legal reform is to prevent health risks and the use of oral nicotine among young people.

    The widespread availability of strong nicotine pouches in Finland has reportedly reduced the smuggling of oral tobacco products from neighboring Sweden.

  • Altria to Sell Part of its Anheuser-Busch Stake

    Altria to Sell Part of its Anheuser-Busch Stake

    Photo: Rafael Henrique

    Altria Group plans to sell a portion of its investment in Anheuser-Busch InBev (ABI) through a global secondary offering. In addition, ABI has agreed to repurchase $200 million of ordinary shares directly from Altria, concurrently with, and conditional on, completion of the offering.

    Altria currently holds approximately 197 million shares of ABI, representing approximately 10 percent ownership. Altria, as the selling shareholder, is offering 35 million of ABI’s ordinary shares. In connection with the offering, Altria expects to grant the underwriters an option to purchase up to 5.25 million additional ABI shares owned by Altria, exercisable within 30 days following the pricing of the offering. In addition, Altria has agreed to a 180-day lockup with the lead underwriter for our remaining ABI shares.

    “As good stewards of shareholder capital, we consistently review options to unlock the value of our ABI investment, and we believe this is an opportunistic transaction that realizes a portion of the substantial return on our long-term investment,” said Altria CEO Billy Gifford in a statement.

    “Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet. Our continued investment reflects ongoing confidence in ABI’s long-term strategies, premium global brands and experienced management team.”

    Following its investment sale notice, Altria announced a $2.4 billion increase to its existing $1 billion share repurchase program. The expanded program is expected to be completed by Dec. 31, 2024.

    Altria expects cash savings from the elimination of future dividend payments on the repurchased shares.

    “These opportunistic capital allocation decisions reflect our ongoing confidence in Altria’s future and the significant value offered in our shares today,” said Gifford. “We have a longstanding history of returning cash to our shareholders, and today’s announcement reflects our continued desire to create long-term shareholder value.”