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  • King’s Speech: Activists Decry Generational Ban

    King’s Speech: Activists Decry Generational Ban

    Image: Michael

    Smokers’ rights group Forest condemned the U.K. government’s official announcement of legislation that will deny future generations of adults the right to purchase tobacco.

    During the opening of the new session of Britain’s parliament today, King Charles presented the government’s plans for new legislation, which includes a generational tobacco bill, as reported by the BBC and other news outlets.

    The proposed legislation would make it illegal for anyone born on or after Jan. 1, 2009, to ever legally buy cigarettes, effectively raising the legal age of purchase by one year, every year.

    The government is also looking to bring in rules regulating the flavors and descriptions of vapes that critics say are targeted at children.

    “This is the worst form of nanny state regulation because it treats consenting adults like children,” said Forest Director Simon Clark.

    “If you’re old enough to vote, drive a car, join the army, and purchase alcohol, you’re old enough to buy cigarettes and other tobacco products.

    Clark warned that the legislation would boost the black market.

    “The biggest benefactor from prohibition won’t be public health but criminal gangs and other illicit traders,” he said.

    “Given everything else that is going on in the world, at home and abroad, it’s staggering that a Conservative government would waste valuable parliamentary time banning the sale of tobacco to adults who are perfectly capable of making informed decisions for themselves.”

  • 22nd Century Expands Nicotine-Reduction IP

    22nd Century Expands Nicotine-Reduction IP

    Photo: Tobacco Reporter archive

    22nd Century Group has signed a reduced nicotine content technology license with North Carolina State University. The latest license provides additional modes of efficiently producing reduced nicotine content tobacco plants, extending 22nd Century’s IP portfolio. The license will provide 22nd Century Group exclusive rights to the technology until 2042.

    “Our reduced nicotine content technologies support the first and only FDA MRTP [modified-risk tobacco product] authorized combustible smoking harm reduction products that meet adult smokers where they are today, providing a new solution to help them smoke less and achieve their health goals,” said 22nd Century Group interim CEO John Miller in a statement.

    “This latest license further enhances and expands on our capabilities to produce reduced nicotine content tobacco plants as we work to bring these innovative products to market for the betterment of public health, including by enhancing our capability to produce reduced nicotine content tobacco plants suitable for international markets that are opposed to genetically modified plants.”

    This latest license further enhances and expands on our capabilities to produce reduced nicotine content tobacco plants.

    John Miller, interim CEO, 22nd Century Group

    Under terms of the exclusive license, 22nd Century will have full use of the patent rights and plant materials to develop and commercialize reduced nicotine content tobacco using this latest non-GMO technology, which further enables worldwide marketability of the company’s VLN reduced nicotine content products.

    “22nd Century is pioneering a new pathway in the global fight to end the health and economic harms of smoking, offering both GMO and non-GMO solutions suitable worldwide,” said Miller. “Extensive clinical research, much of it funded by national government health agencies, has consistently documented the benefit of reduced nicotine content tobacco products in helping adult smokers to break the bonds of nicotine addiction and smoke less over time. Reduced nicotine content solutions, such as our VLN products, provide a new solution to adult smokers who want to quit, but have not found success with traditional cessation products.”

  • WSJ: Tobacco Firms Losing Pricing Power

    WSJ: Tobacco Firms Losing Pricing Power

    Photo: darren415

    A combination of inflation and shifting smoking habits is making it more difficult for tobacco companies to offset declining cigarette volumes with higher prices, according to an article in The Wall Street Journal.

    According to the paper, one of the attractions of investing in tobacco stocks has been cigarette manufacturers seemingly unlimited ability continuously grow their profits through price hikes even as overall cigarette sales are in long-term decline.

    The recent higher-than-expected U.S. volume declines are increasingly testing that strategy, however. Over the three months through September, U.S. cigarette sales fell 8 percent year-on—almost double the long-term average.

    Altria Group suspects many smokers have been migrating to illegal disposable vapes, the market for which has grown by one fifth recently. In October, the cigarette manufacturer announced “sweeping litigation” against 34 manufacturers, distributors and online retailers of illicit disposable e-vapor products that are unlawfully marketed and sold in California and other U.S. states.

    Stronger against illicit vapes by the Food and Drug Administration could potentially stabilize cigarette volumes.

    In addition to competition from illicit vapes, premium brands such as Marlboro face additional pressures as inflation makes consumers more price sensitive. Smaller brands offering discounts have been gaining market share, with a 15 percent increase in sales of the cheapest cigarettes over the past year.

    At a national average of $8.77-a-pack including taxes, Marlboro is now 43 percent more expensive than cheaper rivals, according to Altria data, compared with 31 percent five years ago. 

    One of the beneficiaries of downtrading has been Vector group, whose Montego brand is now the biggest discount cigarette in America.

    Despite the pressures, The Wall Street Journal believes it is unlikely that Altria will take dramatic actions. Thirty years ago, the company cut the cost of Marlboros by 20 percent to close a gap that had opened between it and cheaper brands.

    Traumatized investors sold their shares in the company en masse in an event that became known as “Marlboro Friday.”

  • BAT Designer Urges Responsible Creations

    BAT Designer Urges Responsible Creations

    Photo: KFF

    Product designs should not center only on providing attractive appearance but also encompass meaning, value and responsibility, according to Ken Kim, head of design at the BAT Group.

    “The role of designers is changing, from simply designing products to assuming social and environmental responsibilities,” Kim said at the Design Korea conference, which took place Nov. 1-5, 2023, in Seoul. “This [new role] is not a choice for individual designers to make, but a common goal the industry and society must undertake together in order to move forward.”

    Kim is the first Korean to head BAT’s product design division. His portfolio includes tobacco heating products such as Vuse Epod 2, Glo Pro Slim and Glo Hyper X2. 

    During the conference, which was reported in The Korea Herald, Kim reviewed measures on how designs could address social issues such as carbon neutrality amid heightened regulations, emphasizing that designs could function as an important key to the tobacco industry’s sustainable future.

    He stressed the importance of designing products in ways that do not appeal to underage consumers. “We need a balanced design strategy that does not stimulate the curiosity of minors, through conducting analysis of design preferences by age groups,” he was quoted as saying. 

  • Documentary Celebrates ‘Swedish Miracle’

    Documentary Celebrates ‘Swedish Miracle’

    We Are Innovation (WAI), an activist group, will pre-screen the documentary How Sweden Quit Smoking to a select audience on Nov. 15, 2023, at RSA House in London.

    Directed by award-winning Polish filmmaker Tomasz Agencki, the documentary explores how Sweden managed to reduce smoking to levels unrivaled in the European Union and elsewhere.

    According to its makers, How Sweden Quit Smoking highlights the determination, innovation and creativity that drove the Swedes toward a milestone unparalleled in contemporary times. The documentary features the perspectives of scholars, doctors, innovators and activists while demonstrating the interplay of science, politics, history and personal responsibility at the center of this journey.

    “We are incredibly thrilled to bring this important documentary to the broad audience,” said WAI CEO Federico Fernandez in a statement. “How Sweden Quit Smoking will inspire stakeholders, decision-makers, activists and the general public to pursue innovation and creativity toward a better future for all. This event is a must-attend for anyone looking to stay ahead of the curve in leveraging effective innovation methodologies to help transform the world’s most pressing problems.”

    “The goal of this documentary is to generate a positive impact on society,” said Agencki. “Through the journey of Sweden toward becoming a smoke-free nation, I hope to inspire people worldwide to embrace innovation, personal responsibility and to work toward a better society.”

    Registration is available through Eventbrite.

  • Imperial’s Performance ‘in Line With Guidance’

    Imperial’s Performance ‘in Line With Guidance’

    Photo: Igor Golovnyev

    Imperial Brands is on track to deliver in line with its previous full-year guidance, the company announced in a trading update. On a constant currency basis and including Russia in the comparable prior-year period, the company expects tobacco and NGP net revenue growth in the low single digits and group adjusted operating profit growth to accelerate to the lower end of its mid-single-digit range. (Imperial Brands transferred its Russian business to local investors in April 2022.)

    At current rates, the company anticipates foreign exchange rates to provide a boost of approximately 2 percent to its full-year net revenue and adjusted operating profit.

    “Focused investment in our priority combustible markets is expected to deliver a further modest gain in the aggregate share for our top 5 markets at the full year,” the company wrote in its update. “This will complete three consecutive years of improved market share performance following several years of decline.

    Imperial expects market share growth in the U.S., Spain and Australia to offset declines in Germany and the U.K. “This positive aggregate share performance has been achieved while delivering strong pricing across all five markets and reflects the strengthened equity of our brands and our improved resilience as a result of our recent targeted investments,” Imperial wrote.

    “As anticipated, at constant currency, our tobacco net revenue growth improved in the second half of the year as continued strong pricing helped to offset the relatively higher volume declines against historic averages.

    “Tobacco net revenue growth has remained strong in Europe and the AAACE region, more than offsetting declines in the U.S. Our U.S. cigarette business has outperformed with continued growth in cigarette net revenue, although, as expected, this has been more than offset by a decline in mass market cigar net revenue against a strong comparator period.”

    Imperial Brands’ full-year NGP revenue growth accelerated in the second half of the year, driven by strong growth in Europe.

    In its trading update, Imperial also announced a further £1.1 billion ($1.36 billion) share buyback for fiscal 2024, a 10 percent increase on the £1.0 billion buyback in fiscal year 2023.

    Imperial will announce its full-year results on Nov. 14.

  • BAT Strengthens Organigram Partnership

    BAT Strengthens Organigram Partnership

    Image: weerapat1003

    BAT is investing some £74 million ($91.68 million) in its partnership with Organigram and increasing its equity position from 19 percent to 45 percent.

    This investment is intended to deepen the strategic relationship between Organigram Holdings and BAT, which has strengthened since BAT’s initial investment and the establishment of the Product Development Collaboration (PDC) in March 2021. The PDC was set up to leverage the expertise of both companies in order to develop the next generation of noncombustible cannabis products.

    In a statement, BAT said it has been pleased with Organigram’s performance and continues to be impressed by the careful financial governance of the company. “BAT also remains supportive of the category stewardship displayed by Organigram’s management team, particularly in response to tough market conditions,” BAT wrote. “These factors give BAT confidence that the new investment can position Organigram to capitalize on market opportunities and deliver incremental value for both companies.”

    The majority of the investment will be allocated for Organigram to establish a strategic investment pool, intended to be applied for emerging opportunities within the cannabis space to accelerate Organigram’s growth and to support geographic, technological and product expansion. According to BAT, the investment remains subject to customary conditions, including necessary approvals by the shareholders of Organigram.

    “This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company. In addition, this deepens the strategic partnership between Organigram and BAT, and we look forward to continuing to leverage BAT’s global capabilities and scientific expertise,” said Organigram CEO Beena Goldenberg in a statement.

  • Campaign Launched Against Menthol Ban

    Campaign Launched Against Menthol Ban

    Photo: Karen Roach

    A conservative advocacy group has launched a campaign opposing a proposed ban on menthol cigarettes in the United States, reports Fox News.

    In its campaign, Building America’s Future contends that restricting menthol cigarette sales would jeopardize hundreds of millions of dollars in state revenue nationwide. According to a Tax Foundation analysis conducted in 2022, the measure would cost the federal government $1.9 billion and state governments a total of $4.7 billion in lost tax revenues.

    The average pack of cigarettes in the U.S. attracts $1.91 in state taxes and $1.01 in federal taxes. Additionally, every state continues to receive funds from the 1998 Master Settlement Agreement, which, translates to about $0.75 per pack in 2022, according to the Tax Foundation.

    In April 2022, the FDA issued product standards to prohibit menthol as a characterizing flavor in cigarettes and prohibit all characterizing flavors other than tobacco in cigars.

    Last month, the FDA sent the proposed regulations to the White House Office of Management and Budget for review, a final step in finalizing and eventually implementing the menthol cigarette ban.

    In related news, the convenience and fuel retailing group NACS has been urging its members to urge the White House to stop the menthol ban from moving forward, using the organization’s grassroots portal. Rather than reducing smoking, the group believes that a menthol ban would fuel illicit cigarette sales.

    For convenience stores, menthol cigarettes account for 34 percent of cigarette sales and flavored cigars account for 51 percent of cigar sales. Removing them from shelves means that current users who cannot quit or switch to other tobacco products will search for the products from illegal sources, according to the organization.

  • Revenues Down, Loss Up for 22nd Century

    Revenues Down, Loss Up for 22nd Century

    Image: Tobacco Reporter archive

    22nd Century Group reported net revenues of $17.81 million in the three months that ended Sept. 30, 2023, down from $19.38 million in the comparable 2022 quarter. Net loss was $72.72 million against a net loss of $13.1 million in the third quarter of 2022.

    “In the third quarter, our VLN footprint expanded from approximately 1,100 stores in 14 states as of June 30, 2023, to over 4,550 stores spanning 19 states. This includes the recent expansion of more than 400 stores in Florida with a leading national convenience store chain that has prior experience in VLN sales across other states,” said 22nd Century Group CEO John Miller in a statement.

    “We also initiated sales in our first nationwide drug store chain, thereby conducting sales trials in five states and diversifying the range of channels through which our products are accessible. However, our dynamic store count growth did not translate into immediate revenue. Sales of VLN were modest in the quarter as the brand is still largely unknown to our target market, and our marketing capabilities are limited given our current financial condition.”

    On Sept. 5, 2023, the company announced its intent to explore strategic alternatives in an effort to maximize shareholder value. While the initial focus was primarily on 22nd Century’s tobacco portfolio, the company subsequently received indications of interest regarding its other assets in addition to tobacco.

    In October, the company reduced the outstanding principal of its senior secured credit facility from approximately $22.1 million to approximately $14 million.

  • KT&G Boosts NGP Capacity

    KT&G Boosts NGP Capacity

    Photo: KT&G

    KT&G has expanded its Sin Tanjin next-generation product (NGP) factory.

    During a ceremony attended by CEO Baek Bok-in and over 40 employees, the company pledged to grow its NGP segment into a leading business.

    KT&G has installed three additional electronic cigarette stick production lines this year, bringing the total number to eight. It also established an automated warehouse capable of storing up to 360,000 boxes.

    KT&G plans to further expand its production innovation hubs, focusing on domestic manufacturing facilities such as Sin Tanjin and Gwangju, to ensure a smooth response to the rapidly growing demand for its NGP products.

    The expansion of the Sin Tanjin NGP factory is part of KT&G’s investment plan, which was presented during the company’s “Future Vision Proclamation” event in January.

    During that event, KT&G announced its strategy would focus on e-cigarettes, heated tobacco and the international expansion of its combustible cigarette business. The company intends to increase the revenue share of its noncombustible products to more than 60 percent by 2027 through investments and innovation.

    The Sin Tanjin NGP factory will play a role as a growth engine that enhances the essential competitiveness of the NGP business, which is strengthening its market leadership.

    Baek Bok-in , CEO, KT&G

    In September, KT&G announced the construction of a new factory in Indonesia, which will be manufacturing for exports. In October, it broke ground for a new factory in Kazakhstan, establishing a foothold in Eurasia.

    “The Sin Tanjin NGP factory will play a role as a growth engine that enhances the essential competitiveness of the NGP business, which is strengthening its market leadership,” said Baek in a statement.

    “In the future, we will lead the growth of the NGP business based on innovative technology and advanced global partnerships and will leap to the ‘global top-tier’ through domestic innovative growth investments, including expanding production infrastructure.”