Blog - Tobacco Reporter

CME to Invest in Packaging Automation

CME Automation Systems, a specialist in automated packing line solutions, has announced ambitious growth plans following significant backing from private equity. The investment enables CME to strengthen its offering to customers internationally in the pharmaceuticals, fast-moving consumer goods, cannabis and tobacco sectors.

For 40 years, the CME brand has helped companies to improve efficiency and throughput through the use of automation in product handling for primary and secondary packaging systems. The new investor has identified the potential to build on CME’s expertise and reputation for innovation, especially given the company’s recent success in developing new solutions for growth markets such as cannabis and clinical trials.

The investment comes from a specialist fund for small-sized and medium-sized U.K. enterprises and will be invested in a combination of resources, infrastructure, new product development and channels to market.

In today’s hyper-competitive markets, the use of automation can deliver the competitive edge to balance productivity, profit and growth.

Paul Knight, CEO, CME Automation Systems

“Automation is critical for manufacturers who need to pack products at speed and at scale. In today’s hyper-competitive markets, the use of automation can deliver the competitive edge to balance productivity, profit and growth,” said CME Automation Systems CEO Paul Knight.

“At CME, we provide the tools to help them achieve value through automation. As well as our core markets, we’re seeing significant interest from some of the world’s most rapidly growing sectors. So this investment is well timed to help us realize our business’s potential—and to help even more customers to meet their automation challenges.”

The CME range offers standard and turnkey line solutions to support a variety of packing functions, including tax stamping, wrapping, collating, cartoning, filling and product handling. This is complemented by in-house capability for certain bespoke machinery design and build to help customers with specialist requirements.

“CME has a proven track record but also huge future potential,” said CME Financial Director Scott Cullen. “We’re delighted to have a new investor for this ambitious growth plan, which will help to strengthen the CME brand internationally and grow sales in pharmaceuticals, FMCG, cannabis and tobacco.”

August 22, 2023

Zimbabwe Leaf Sales Touch $900 Million

Zimbabwe has earned nearly $900 million from tobacco sales this season, reports New Zimbabwe, citing a government statement dated Aug. 21.

“Cabinet is pleased to advise that the total tobacco production now stands at a phenomenal 295,499,782 kg, valued at $895,114,791,” said Lands and Agriculture Minister Anxious Masuka.

“Of special note is the fact that 52 percent of the total production came from A1 and A2 farmers, confirming that the land reform program has been a success,” he said.

In the early 2000s, Zimbabwe confiscated large-scale and mostly white-owned tobacco farms and redistributed them among landless peasants.

The tobacco crop grew despite increased fertilizer prices caused by the war in Ukraine.

Tobacco in Zimbabwe has been on a rebound after production plummeted from a high of about 240 million kg in 1998 to less than 50 million kg a decade later.

Through the Tobacco Value Chain Transformation Plan, the southern African country has been working to make its tobacco industry more lucrative by manufacturing more cigarettes at home and limiting foreign funding of farmers.

August 22, 2023

New Zealand Sets Youth Vaping Regulations

New Zealand has set new regulations to limit youth vaping, effective Sept. 21, reports the Xinhua News Agency.

New specialist vape shops will be banned in locations within 300 meters of schools and Maori meeting places, according to Health Minister Ayesha Verrall.

“Vapes will need child safety mechanisms, and names like ‘cotton candy’ and ‘strawberry jelly donut’ will be prohibited,” Verrall said. Only generic names like “orange” or “berry” that accurately describe the flavors will be allowed.

The new regulations also set the maximum allowed nicotine level and require that all vaping devices have removable batteries.

“We’re creating a future where tobacco products are no longer addictive, appealing or as readily available, and the same needs to apply to vaping,” Verrall said.

August 22, 2023

Industry Group Lobbies Against Flavor Ban

The Russian Union of Nicotine Industry Enterprises (Spini) has called on the government to exclude food flavorings and nicotine salts from the list of active ingredients and additives that are expected to be banned by the Ministry of Health for issues of nicotine dependence, reports ECigIntelligence.

Representatives of Spini, which has more than 50 members, have sent a corresponding letter to the minister of finance asking for the exception to the ban.

August 22, 2023

NATO Appoints New Executive Director

The U.S. National Association of Tobacco Outlets (NATO) has named David Spross as the next executive director.

With over 23 years working in the tobacco industry, most recently as the senior vice president of government relations and strategic engagement for Reynolds American, Spross brings a wealth of knowledge and experience to the executive director role.

“NATO is the leading voice for retailers of tobacco and nicotine products, and I am thrilled with the opportunity to lead this organization into the next generation of education, engagement and advocacy. As our industry continues to evolve, I look forward to keeping retailers front and center on these important developments,” said Spross.

“We are excited for this next chapter at NATO under David’s leadership, and we remain incredibly grateful to Tom Briant for founding NATO 23 years ago and for his leadership growing the association to be the premier advocacy organization for tobacco retailers,” notes NATO board President Chris Beaulier.

NATO’s mission is to enhance the business interests of retailers that sell tobacco and nicotine products, support the legislative and regulatory interest of its members and encourage the expansion of the retail tobacco and nicotine market in a responsible manner. NATO currently has 66,000 members.

Spross will officially begin as executive director on Sept. 1, 2023.

August 22, 2023

Israel Updates Plan to Tackle Smoking

Israel’s health ministry has issued a request for public comments on an “action plan for all tobacco and smoking products,” reports The Jerusalem Post. The plan includes eventually raising the legal smoking age to 21 from 18.

“The phenomenon of smoking is very worrying, and under my leadership, we are determined to promote measures to reduce it and increase awareness of the harm smoking causes,” said Health Minister Moshe Arbel. “This demands a complex and joint effort, and we are committed to implementing the policy in a variety of areas of prevention and encouraging quitting to promote public health and protect youngsters and adults alike from this serious damage to health.”

“Given the dimensions of the spread of smoking, we have examined all possible measures and continue to act in many ways in order to raise awareness of the dangers of using these products,” said Moshe Bar Siman Tov, health ministry director-general. “We recommend adopting a strict policy and dramatic measures required by the necessity of reality, but it’s clear to all of us that the best way to stop smoking is not to start smoking.”

The action plan includes decisions on the prohibition of flavors, giving the ministry powers to enforce the nicotine concentration limit, limiting the volume of the filling liquid allowed for import, marketing and sale, requiring graphic warnings on all tobacco and smoking products and visual uniformity to the smoking and vaping products, a ban on the sale of disposable electronic cigarettes, selling tobacco and smoking products in designated stores only and reducing the number of points of sale, raising the selling age to 21, giving authority to the ministry to enforce a ban on advertising on the internet, equalizing taxation on e-cigarettes and other tobacco products, and applying taxation to nicotine intended for nonmedical use.

The ministry’s statement said that “e-cigs are the gateway to smoking for young people who start experimenting with them at a young age; there is not strong evidence that e-cig use helps smokers kick the habit compared to the proven safety of other means of withdrawal, such as smoking cessation workshops, nicotine gums and patches and medical treatment. The scientific evidence on the health damage of e-cigs in the short[-term] and medium-term is known and described in the literature as affecting the respiratory system, cardiovascular system, trauma and burns, the developing brain in children and the creation of addiction.”

August 21, 2023

Illicit Cigarettes Set to Dominate Pakistan

Illicit cigarettes may exceed legitimate tobacco sales in Pakistan within the next quarter, warn some industry insiders, according to Profit. The illicit products have already secured more than 40 percent of the market.

The tobacco industry has criticized the Federal Board of Revenue and the Ministry of Health for their perceived failure to curb the illicit market.

Sami Zaman, head of external affairs at Pakistan Tobacco Co., warned that if left unchecked, illicit cigarette sales could secure more than 50 percent of the market share in months.

Illicit cigarettes offer lower price points and many flavor options but lack proper taxation and legally mandated graphic health warnings.

The industry is having a hard time fighting this due to a supply shortage of legal products; 75 million kg of raw tobacco was secured for the entire cigarette manufacturing industry despite promises of 85 million kg, causing cigarette prices to increase dramatically.

The licit cigarette industry saw a 44 percent decrease in cigarette manufacturing during June 2023 followed by a 28.4 percent decrease from July 2022 to July 2023.

August 21, 2023

Call for Stronger Anti-Smuggling Rules

Law enforcement and health authorities have called for stronger rules against the illicit cigarette trade in Vietnam, according to VN Express.

Most e-cigarettes that are sold in Vietnam are smuggled, according to a leader of the Vietnam Federation of Commerce and Industry. He added that there is not strict legal framework to control e-cigarette products.

“There should be a legal framework to control this product and reduce smuggling,” said Nguyen Hai Cong, head of the Department of Tuberculosis and Lung Diseases at Military Hospital 175. He noted that e-cigarettes are gaining popularity with young people and students, who seem to believe there is no risk to the products.

Many e-cigarette smugglers have been caught recently, according to Kieu Duong, head of policy and legal at Vietnam Directorate of Market Surveillance; 81 smugglers were caught in Hanoi in the first six months of the year with about 20,000 items confiscated. Recently, Hai Phong police confiscated 54,000 illicit products.

According to Duong, the highest penalty for smuggling these products is VND50 million ($2,100), which is not enough to dissuade criminals.

August 21, 2023

Official Accused of Promoting Tobacco

Moses Kuria, Kenya’s trade cabinet secretary, has been accused by tobacco control lobby groups of promoting tobacco use, according to 2Firsts.

Kuria met with BAT representatives regarding the company opening a manufacturing facility in Kenya for tobacco-free oral nicotine pouches.

Lobbyists led by the Kenya Tobacco Control Alliance (KETCA) criticized Kuria for the meeting, accusing him of undermining efforts to control tobacco use. They alleged that the meeting violated regulations regarding interactions between public officers and the tobacco industry. The activists are concerned that Kuria’s support may diminish efforts to curb tobacco use and move farmers away from tobacco growing.

Following the meeting, Kuria expressed support for the tobacco industry on Twitter.

The tobacco industry contributes about 1 percent to Kenya’s GDP.

August 21, 2023

Kaival Amends Philip Morris Deal

Kaival Brands International (KBI) has amended its agreement with Philip Morris Products, a wholly owned affiliate of Philip Morris International, for the development and distribution of electronic nicotine-delivery system products in markets outside of the U.S.

Eric Mosser, CEO of Kaival Brands, the exclusive distributor of all products manufactured by Bidi Vapor, said in a press note that with more than a year of operational history for KBI and given the recent changes to regulations in international markets, it became clear that there were a number of opportunities to improve the terms of the original licensing agreement with PMI and reduce the burden of administering it.

“We are extremely pleased to reach an agreement that shall enable us to achieve our objectives. The revised licensing agreement simplifies the payment structure resulting in cost savings of approximately $2.7 million for the company over the lifetime of the license agreement,” said Mosser. “It also enables better predictability and forecasting for KBI and streamlines data reporting. Finally, we anticipate that the acceleration of royalty payments will be a net positive to our financial performance over the duration of the agreement.”

Under the terms of the amended agreement, the parties agreed to revise certain terms, which provide for, among other things, a fixed pricing structure with volume-driven increases and a recapture of nonrecurring engineering costs by KBI.

Accordingly, Kaival Brands expects a reconciliation payment of approximately $135,000. It projects approximately $300,000 in additional royalties to be earned through the end of 2023.

August 21, 2023