Blog - Tobacco Reporter

Habanos Announces Habano Festival Dates

The dates for the XXIV Edition of the Habano Festival, have been announced. The exclusive cigar event is to be held in Havana from Feb. 26 – to March 1, 2024.

Habanos, S.A., the state-run distributor of global Cuban cigars, said in a release that its annual event is “in an international and exclusive atmosphere,” and it will include a wide-ranging program of activities combining the knowledge of the Habano and the exciting culture, including the ending final evening gala dinner and famed humidor auction.

“In this XXIV Edition, the best specialists, distributors and aficionados will enjoy all the activities that along with the best gastronomy and music have made this famous event: visits to renowned Habanos factories, plantations, seminars with interesting lectures, exclusives pairings, contests and three very special nights where they will get a sneak preview of the latest Habanos, S.A. novelties,” the release states.

Habanos, S.A. is already “working to make this event memorable for the expectations of aficionados with the passion and magic that they have come to expect from each new edition.”

More details on the Habano Festival will be announced soon and registration will be open to the public.

November 6, 2023

Meeting Fails to Ease Growers’ COP Fears

Tobacco growers representatives are unlikely to be admitted to the November meeting of the Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC) in Panama, according to Vera Luiza da Costa e Silva, who leads Brazil’s National Commission on the Implementation of the FCTC.

Speaking during a round table in Brasília promoted by the House of Representatives. Costa e Silva said the COP has a strict policy of denying access to those who have a conflict of interest. “The secretariat, based at the WHO headquarters, has the credentials to deny participation if some kind of relationship with the industry is at stake,” she explained.

Costa e Silva also insisted that the FCTC does not mention actions that will directly impact the supply chain, but industry representatives participating in the Brasilia meeting weren’t buying it. “Today were told […] that there has never been any attempt to endanger the production of tobacco, but we know that this is not true,” said Iro Schunke, president of the Interstate Tobacco Industry Union, in a statement.

He pointed to actions in what he described as a methodical battle against the production of tobacco in Brazil. “They accuse the sector of deforestation, but it is the segment that has the biggest forest areas,” said Schunke. He also countered allegations of tobacco farmer vulnerability, pointing to recent research suggesting that tobacco farmers earn up to twice the national average income.

Despite concerns about global demand, Brazilian tobacco production and exports have been stable, Schunke noted. Farmers in southern Brazil have planted enough tobacco to harvest 604.73 million kg in 2023—7.95 percent more than in 2022, according to the country’s tobacco growers’ association, Afubra.

November 3, 2023

Study Confirms Minimal Carcinogenic Effects

The aerosol from e-cigarettes induced slight to no cytotoxic, mutagenic and genotoxic effects during tests conducted by the Replica research team of the Center of Excellence for the acceleration of Harm Reduction (CoEHAR) that compared these effects to those induced by cigarette smoke.

According to CoEHAR, science has been suffering from a “replicability crisis” in recent years. The use of different research methodologies usually leads to different data, resulting in flawed results that misinform policies and impact on health and social care practices, as well as smokers who are seeking a complete cessation.

Replica researchers aim to fill this methodological gap by replicating international in vitro studies on the toxicity of cigarette smoke and e-cigarette aerosol by an independent and multicentric approach, adding experiments or conditions where necessary, in order to verify the robustness and replicability of the data and results.

The most recent study replicated by the team was published by Rudd and colleagues in 2020. The study aimed to establish the cytotoxicity, mutagenesis and genotoxicity of cigarette smoke or e-cigarette aerosol on cells .

Replica researchers performed a standard toxicology battery of three assays used for product assessment and regulatory applications. Their results, published by Springer Nature’s Scientific Reports, indicated that e-cigarette aerosol was low cytotoxic and it did not show any mutagenic or genotoxic activity unlike the cigarette smoke, which showed high cytotoxic, mutagenic and genotoxic activity. Moreover, the Replica study covered some methodological gaps and limitations in the original work, by adding some conditions with the aim of covering all the possible ways of inducing genotoxicity and mutagenesis on cells.

Our findings not only confirmed the results obtained by our colleagues but also addressed some methodological gaps and limitations in the original work.

First author Rosalia Emma

“Our findings not only confirmed the results obtained by our colleagues but also addressed some methodological gaps and limitations in the original work,” said Rosalia Emma, first author of the Replica study, in a statement. “However, it’s important to highlight that, despite using different machinery and the variations in the exposure methodology, in the case of cytotoxicity (NRU assay), the toxicity of the e-cigarette is significantly lower than that of traditional cigarettes”.

In the Replica study, the team performed the NRU assay to assess cytotoxicity, the bacterial reverse mutation (Ames) assay to evaluate mutagenicity and the in vitro micronucleus assay to measure genotoxicity. Despite some different methodologic aspects, the researchers obtained results similar to those obtained by Rudd and colleagues.

“Although we have added experimental conditions neglected by the authors of the first paper, the results obtained previously are confirmed and even strengthened, confirming the electronic cigarette as a useful tool for reducing smoking damage in healthy smoking subjects” said Massimo Caruso, co-project leader of the Replica project and corresponding author.

November 3, 2023

Azerbaijan Prepares Exports for Italy

Azerbaijan tobacco processing factory “Azertertun” has begun production of cured tobacco with principal products for export to Italy, according to 2Firsts.

The factory reportedly uses advanced production equipment from the United States, Italy and Germany. This year, 620.1 hectares of tobacco were cultivated in Balakan, Zagatala, Gakh, Sheki, Oguz and other areas, according to the factory’s general manager.

An estimated 470 tons of processed fine-cut tobacco will come from the cultivated leaf.

November 3, 2023

Universal’s Income Jumps 30 Percent

Universal reported sales and other operating revenue of $1.16 billion for the six months that ended Sept. 30, up 7 percent over that posted for the comparable 2022 period. Operating income jumped 30 percent to $66.3 million.

Universal Chairman, President and CEO George C. Freeman III expressed satisfaction with the results. “Our Tobacco Operations segment delivered strong performance in the first half of fiscal year 2024,” he said in a statement.

According to Freeman, Universal benefited from robust demand for leaf tobacco and a favorable tobacco product mix. Leaf tobacco margins improved in the first half of fiscal year 2024, despite lower leaf tobacco sales volumes, as the company had fewer shipments of lower margin tobacco compared to the first half of fiscal year 2023.

Segment operating income for Universal’s tobacco operations segment was up 46 percent compared with the previous year’s six-month period. Uncommitted tobacco inventory levels of 12 percent at Sept. 30, 2023, remained low, and global leaf tobacco supply continues to be tight for all types of tobacco, according to Freeman.

“Looking ahead, we continue to expect that, similar to fiscal year 2023, our tobacco shipments will be strongly weighted to the second half of the fiscal year 2024,” he said. “We also believe our uncommitted tobacco inventory levels will remain low for the rest of fiscal year 2024.”

November 3, 2023

BAT Appoints CFO

Soraya Benchikh has been appointed to the role of chief financial officer and executive director at BAT. She will join the boards from May 1, 2024, succeeding Javed Iqbal, who will continue to serve as interim finance director until April 30, 2024.

Benchikh has been president of Europe at Diageo since January 2023, having joined Diageo in July 2020 as managing director for Northern Europe. Benchikh previously spent 20 years at BAT, where she served as president of BAT France, area director for East and Southern Africa and regional finance director for Europe. Earlier in her career, Benchikh worked in finance roles at General Electric and Gillette.

“I am pleased to welcome Soraya as chief financial officer and to the board,” said BAT chair Luc Jobin in a statement. “She brings a wealth of leadership experience and commercial acumen from across both finance and commercial roles. Soraya’s excellent track record in different geographies and in-depth understanding of the sector make her ideally suited for the role.”

“I am delighted to welcome Soraya to the management board as our new chief financial officer,” said BAT CEO Tadeu Marroco. “Her extensive senior leadership and financial experience from a range of international fast-moving consumer goods companies represents a great addition to our leadership team. I am grateful to Javed for his continued contribution as interim finance director in addition to his ongoing role as director, digital and information.

“Following the recent appointment of Dr. Cora Koppe-Stahrenberg as chief people officer, Soraya’s appointment is also a further important step toward building a modern organization. I very much look forward to working with Soraya as we continue our transformation.”

“I am excited to rejoin the leadership of BAT as chief financial officer and executive director and share their passion for the transformation strategy,” said Benchikh. “I am looking forward to working with my new colleagues, the leadership team, Tadeu and the board and leverage my recent experience within broader FMCG to provide an external lens and support their efforts to accelerate BAT’s strategy to build ‘A Better Tomorrow.’”

November 2, 2023

Vaping Down Among U.S. Youth

One in 10 U.S. middle and high school students reported using of any type of tobacco, according to data from the 2023 National Youth Tobacco Survey (NYST) that were collected between March and June 2023 and released today.

Among U.S. high school students, current overall tobacco product use declined during 2022-2023 from 16.5 percent to 12.6 percent, a development attributed primarily to reduced e-cigarette use, which dropped from 14.1 percent to 10 percent. Among high school students, declines in current use were also observed during 2022-2023 for cigars and overall combustible tobacco smoking, representing all-time lows.

“It’s encouraging to see this substantial decline in e-cigarette use among high schoolers within the past year, which is a win for public health,” said Brian King, director of the U.S. Food and Drug Administration’s Center for Tobacco Products, in a statement. “But we can’t rest on our laurels. There’s more work to be done to build on this progress.”

Among middle school students there was an increase in current overall tobacco product use (4.5 percent to 6.6 percent) and multiple tobacco product use (1.5 percent to 2.5 percent). However, among middle school students overall, no significant change was observed during 2022-2023 for current use of any individual tobacco product type, including e-cigarettes.

It’s encouraging to see this substantial decline in e-cigarette use among high schoolers within the past year, which is a win for public health. But we can’t rest on our laurels.

Brian King, Director, CTP

E-cigarettes remained the most commonly used tobacco product among both high school and middle school students for the 10th year in a row. Among youth who reported current e-cigarette use, approximately one-quarter reported using e-cigarettes every day. Disposable e-cigarette products were the most common product type used by youth who reported e-cigarette use. However, the most popular brands included both disposable and cartridge-based products. Among current youth e-cigarette users, the most commonly reported brands were Elf Bar (56.7 percent), Esco Bars (21.6 percent), Vuse (20.7 percent), Juul (16.5 percent) and Mr. Fog (13.6 percent).

Among youth who reported current e-cigarette use, nearly all used flavored products (89.4 percent), with fruit, candy, mint and menthol being the most commonly used flavors. For the first time in NYTS, the 2023 questionnaire asked about use of flavors that included the word “ice” or “iced” in their name, along with other concept flavor names—that is, names that imply flavor but do not explicitly indicate any particular flavor, such as “island bash.”

R.J. Reynolds Tobacco Co. said it welcomed the decline in overall youth tobacco use. “This is good news, and we agree with Dr. King that more needs to be done,” the company wrote in an e-mailed statement. “Future progress requires regulators—especially FDA—to seriously address the influx of irresponsibly marketed, illegal flavored disposable vapor products.”

In October, Reynolds filed a complaint with the International Trade Commission charging multiple manufacturers, distributors and retailers of disposable vaping devices with unfair importation.

November 2, 2023

Tobacco Income Up at Vector

Vector Group announced financial results for the three months and nine months ended Sept. 30, 2023.

Consolidated revenues for the third quarter were $364.1 million, down 3.7 percent, or $13.9 million, compared to the prior year period.

The tobacco segment wholesale market share declined to 5.3 percent from 5.7 percent in the prior year period, and retail market share increased to 5.9 percent from 5.7 percent in the prior year period.

Montego wholesale market share increased to 3.5 percent from 2.8 percent in the prior year period, and retail market share increased to 3.8 percent from 2.8 percent in the prior year period.

Operating income was $90.5 million, up 7.9 percent, or $6.6 million, compared to the prior year period.

Tobacco segment operating income was $94.8 million, up 7.6 percent, or $6.7 million, compared to the prior year period.

Adjusted EBITDA was $94.9 million, up 8.8 percent, or $7.7 million, compared to the prior year period. Tobacco Adjusted EBITDA was $96.3 million, up 7.4 percent, or $6.7 million, compared to the prior year period.

Year-to-date consolidated revenues were $1.06 billion, down 1.2 percent, or $13.3 million, compared to the prior year period. Tobacco segment revenues were $1.06 billion, up 0.2 percent, or $2.6 million, compared to the prior year period. Tobacco segment wholesale and retail market share increased to 5.5 percent and 5.8 percent from 5.4 percent and 5.4 percent, respectively, in the prior year period.

Year-to-date Montego wholesale market share increased to 3.4 percent from 2.4 percent in the prior year period, and retail market share increased to 3.6 percent from 2.4 percent in the prior year period. Operating income was $236.4 million, down 5.3 percent, or $13.3 million, compared to the prior year period. Tobacco segment operating income was $248.5 million, down 2.2 percent, or $5.5 million, compared to the prior year period. Adjusted EBITDA was $267.1 million, up 2.9 percent, or $7.6 million, compared to the prior year period. Tobacco adjusted EBITDA was $271.0 million, up 5.6 percent, or $14.4 million, compared to the prior year period.

Tobacco segment wholesale and retail market share increased to 5.5 percent and 5.8 percent from 5.1 percent and 5.2 percent, respectively, in the last 12 months ended Sept. 30, 2022.

Montego wholesale and retail market share increased to 3.3 percent and 3.5 percent from 2 percent and 2 percent, respectively, in the last 12 months ended Sept. 30, 2022.

“We are proud that Montego grew to be the largest discount brand in the United States in the third quarter of 2023, demonstrating the strength of our strategy and the skillful execution by Liggett to offer the best value proposition in the U.S. cigarette industry,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “As Liggett continues to outperform the market, we remain focused on optimizing long-term profit and driving value for stockholders by effectively managing its volume, pricing and market share.”

November 2, 2023

Nicotine a Top ‘Intangible’ Sector

The tobacco and vaping business is the world’s most “intangible” sector in relative terms, according to the brand valuation consultancy Brand Finance.

Intangible assets are identifiable, non-monetary assets without physical substance. They can be grouped into three broad categories—rights (including leases, agreements, contracts), relationships (including a trained workforce) and intellectual property (including brands, patents and copyrights).

According to Brand Finance, intangible assets account for 91 percent of the tobacco and vaping sector’s total enterprise value—a condition that the consultancy attributes to tobacco and e-cigarette companies’ heavy investments in proprietary vaping-related technology and patented intellectual property. The China National Tobacco Corp., BAT and Philip Morris, for example, have each accumulated significant disclosed intangibles and goodwill due to large acquisitions.

“While tobacco products are increasingly regulated in developed markets, e-cigarettes are at nascent stage and currently proving to generate high intangible value thanks in part due to lack of regulation of marketing these products in some jurisdictions,” Brand Finance writes in its report.

Remarkably, the tobacco and vaping business was the second-largest contributor (after semiconductors) to the performance in the rankings of Japan, which saw the value of its intangible assets jump by $587 billion this year.

“Our research aims to demonstrate the continued growing importance of intangible assets like strong brands and innovative technology in driving productivity and growth potential,” said Annie Brown, general manager at Brand Finance UK, in a statement. “Companies that strategically deploy their intangible assets have the ability to significantly outperform their competitors.”

November 2, 2023

Growers Demand Voice

Stakeholders in the nicotine business gathered in Dar es Salaam from Oct. 29 to Nov. 1 for the annual meeting of the International Tobacco Growers’ Association (ITGA).

Hosted by the Tanzanian Minister of Agriculture Hussein Bashe, the conference focused on environmental social governance (ESG) practices and the socioeconomic impact of tobacco, among other topics.

ITGA’s President José Javier Aranda urged governments to consider tobacco growers as partners, given the contribution of tobacco as an income generator and employer. He cited the example of Tanzania, where tobacco provides livelihoods to more than 2.5 million people and generates around $180 million annually in export revenue.

The ITGA president also highlighted the lack of alternatives to tobacco production: “Tobacco is still among the main cash crops in most of the countries where it is grown,” he said. “There is no room for crop substitution at this moment and only complementary crops can be considered as a way of transitioning away from tobacco in the long term.”

Participants in the conference also debated the increasing regulatory pressure on the tobacco industry. For example, the EU Supply Chain Due Diligence Directive, which is expected to enter into force in 2024, will require total transparency in the social and environmental sourcing of products imported into the EU. The ITGA delegates agreed that compliance is key, as compliant markets will have better opportunities to position their products and remain stable in the long term.

Speakers encouraged growers to actively pursue ESG initiatives in their communities. Such efforts, they said, will contribute to the long-term viability of the sector.

The forum also reflected on the Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), which is scheduled to take place Nov. 20-25 in Panama. As the only global tobacco growers association, the ITGA is looking forward to seeing the evolution of FCTC Article 17 (economically viable alternatives to tobacco growing) because the group has yet to see any evidence of viable alternatives to tobacco growing, ITGA CEO Mercedes Vazquez noted.

Vazquez also insisted on the inclusion in the discussions of farmers, who have been denied a voice in the FCTC debates for nearly two decades. She said the COP has yet to respond to ITGA’s request for observer status at the conference.

The Dar es Salaam meeting also took stock of the latest consumption trends. Modest growth in Asia Pacific and Latin America was offset by significant declines in developed markets, leaving total global cigarette volumes largely unchanged. Among emerging products, heated tobacco products continue to make inroads while e-cigarettes face regulatory headwinds, and nicotine pouches struggle to expand beyond their core markets.

In the leaf market, China, Brazil, Zimbabwe, Malawi and India significantly expanded production in 2023, while volumes in Europe and the United States continued to decline, according to ITGA experts.

November 2, 2023