Blog - Tobacco Reporter

Finland and Estonia Investigate Smuggling

Finland and Estonia are investigating a criminal case involving the illegal import of millions of cigarettes into Finland from Estonia and Latvia, reports The Baltic Times.

By failing to declare imports and pay taxes, Finland missed out on approximately €2 million ($2.18 million) in revenue, according to fiscal authorities.

Finnish and Estonian law enforcement officers recently seized two freight consignments containing a total of almost half a million cigarettes. The seizures are part of a criminal case estimated to involve the illegal import of about 6 million cigarettes spread over more than 20 different occasions between March and December 2022.

Some of the cigarettes were found to be counterfeit products.

During the criminal investigation, five persons have been apprehended in Finland and Estonia.

Sanctions on Russia and the sharp fall in traffic across Finland’s eastern border have shifted many illegal imports to postal and express freight transport, the Finnish customs authority reports.

May 12, 2023

Portugal to Further Restrict Public Smoking

The government of Portugal plans to ban smoking near schools and hospitals, as well as in covered outdoor seating areas, reports Channels TV. The law would also prohibit smoking in all indoor spaces, including areas currently set aside for smokers in cafes. In addition, venues would not be allowed to sell tobacco products in the covered locations.

The European Commission intends to decrease tobacco use in the 27-country bloc, which includes Portugal, to less than 5 percent of the population by 2040.

“With this law, we hope that young people can live in an environment without tobacco, reduce the incentive to smoke and allow smokers to overcome their addiction,” Health Minister Manuel Pizarro was quoted as saying on May 11.

“Our objective is to have a generation living without tobacco by 2040… this law is in line with the EU’s anti-tobacco stance, but we wish to go further,” he added.

In addition to the recently announced measures, the government wants to require manufacturers to print health warnings on new nicotine products, such as e-cigarettes.

In 2019, 13,500 Portuguese dies from tobacco-related diseases, according to Lisbon.

May 12, 2023

PM to Pay $36 Million in Massachusetts Suit

A Massachusetts unanimous state Supreme Judicial Court ruling awarded $37 million to a plaintiff in a lawsuit against Philip Morris USA.

Issued Tuesday, the justices’ opinion found enough evidence to support a prior jury verdict and lower court judge’s rulings against the company in a case that claimed that the company’s cigarettes — and the company’s claims about them — resulted in the plaintiff’s cancer, reports WBUR.

In the high court opinion, written by Justice Scott Kafker, the justices found the company failed to disclose its own research to customers, which showed that filtered cigarettes were even more damaging to human DNA than regular cigarettes.

The opinion noted Philip Morris did not dispute that cigarettes are harmful to health. Instead, the company claimed there was no evidence linking its advertisements to Greene’s personal decision to take up Marlboro Lights as a safer alternative.

May 11, 2023

Tobacco Industry Gathers in Bologna

The TABEXPO trade exhibition opened May 10 in Bologna, welcoming representatives of tobacco companies and their suppliers from around the world.

According to Tony Crinion, managing director of Quartz Business Media, the first day of the show exceeded expectations in terms of both visitors numbers and visitor quality.

Interest in the event, he said, was driven by the industry’s relentless focus on innovation, which has resulted in a compelling portfolio of products and services. Crinion also credited Bologna as a location for the event. The region is home to many tobacco-related businesses and continues to attract new tobacco investments, such as Philip Morris International’s state-of-the-art heated-tobacco factory and BAT’s innovation hub.

Quarts Business Media’s global portfolio of industry events, including its shisha and vape exhibitions, have all been performing equally well, according to Crinion, who again credited the industry’s innovation for the widespread interest.

In addition providing to a platform to showcase new products and services, TabExpo 2023 also featured a thought-provoking Congress during which experts shared their insights into the latest industry trends and developments.

May 11, 2023

Altria Settles Multiple Juul Cases

Altria Group has reached agreement on terms to resolve at least 6,000 Juul-related state and federal cases for $235 million.

“While we continue to believe the claims against us are meritless, we believe this settlement avoids the uncertainty and expense of a protracted legal process and is in the best interest of our shareholders,” said Murray Garnick, Altria’s executive vice president and general counsel, in a statement. “This settlement brings to a close the vast majority of our pending Juul-related litigation.”

In October 2019, the U.S. Judicial Panel on Multidistrict Litigation ordered the coordination or consolidation of federal individual and class action lawsuits related to Juul in the U.S. District Court for the Northern District of California for pretrial purposes. These cases include approximately 50 economic class actions, approximately 4,500 personal injury actions and approximately 1,500 government entity actions, including approximately 1,400 school district cases. These cases are covered by the agreement as well as cases in a related state court consolidated proceeding involving 750 cases.

This settlement does not apply to three cases brought by attorneys general, 35 cases brought by Native American tribes, 17 antitrust cases or three Canadian cases.

The settlement remains subject to the parties entering into one or more final settlement agreements approved by the relevant courts.

Altria expects to record a pre-tax charge of $235 million in the second quarter of 2023 and intend to treat such amount as a special item and exclude it from our adjusted diluted earnings per share.

May 10, 2023

Logic Challenges Marketing Denial Of Its Menthol Product

E-cigarette maker Logic filed papers in court on May 9 that challenge the U.S. Food and Drug Administration’s marketing denial orders (MDO) that it issued against two brands: Logic Pro Menthol E-Liquid Package and Logic Power Menthol E-Liquid Package, reports Bloomberg Law.

Logic called the FDA’s MDOs “arbitrary and capricious.”

The 3rd Circuit Court entered a stay on the FDA’s MDOs in December 2022. The MDOs were the FDA’s first-ever MDOs directed at menthol e-cigarette products.

May 10, 2023

Net Revenue Up 143 percent at 22nd Century

22nd Century Group posted net revenues of $22 million in the first quarter of 2023, up 143 percent from the comparable 2022 quarter.

“22nd Century is executing an aggressive commercial rollout of our FDA [U.S. Food and Drug Administration]-authorized VLN reduced-nicotine content cigarettes and a revolutionary new CDMO plus distribution business model for our hemp/cannabis business unit, the combination of which will accelerate revenue, increase gross margin and drive 22nd Century to cash profitable operating results for both business units in 2024,” said CEO James A. Mish in a statement.

“Having clearly confirmed the incredible consumer demand for VLN and rapidly expanding pipeline of retail stores wanting to carry the brand, we are now fully focused on commercialization. We are working steadily toward commercial sales covering thousands of stores in California, Texas and Florida with a top retail chain as well as booking launch windows and orders with both existing and new chains seeking to sell VLN products across an expanding geography.

“To support these launches and accelerate the rollout of hundreds or even thousands of new stores across multiple states within a very narrow time frame, we have now secured agreements with the No. 1 and No. 2 national-scale c-store distribution providers, which are already taking warehouse stocking quantities of VLN for customer distribution. These actions provide a clear pathway for a rapid acceleration in VLN sales activity and our goal of entering up to 18 states by year-end 2023, which we believe will make VLN available in almost 60 percent of the $80 billion U.S. tobacco market.

“We believe 22nd Century is poised for phenomenal growth this year in both our tobacco and hemp/cannabis businesses. As such, we are introducing our first revenue guidance, calling for full-year 2023 revenue of $105 million to $110 million, representing a 69 percent to 77 percent increase from $62.1 million in 2022. Our growth will be driven by the rapid stocking and ramp up of new VLN customers, new Pinnacle CMO sales, continued record cannabinoid ingredient volumes, startup of our CDMO+D hemp/cannabis agreements and a full year of GVB sales.”

May 10, 2023

Mativ Results Impacted by ‘Tough’ Quarter

Mativ Holdings reported sales of $679 million in the quarter of 2023, up 66.9 percent from the comparable 2022 period. The company attributed the increase to the benefits from the July 2022 merger between Schweitzer-Mauduit International and Neenah, which created the holding. In a press note, it stressed that financial results for periods prior to the merger reflect only the legacy SWM results.

GAAP loss was $7.7 million and GAAP operating profit was $9.3 million, which all included merger integration and purchase accounting expenses. Adjusted Income was $13.7 million. For the engineered papers business, adjusted EBITDA decreased approximately $15 million, accounting for roughly two-thirds of total year-over-year EBITDA decline, mainly due to labor strikes in France and manufacturing inefficiencies.

Price increases more than offset the impacts of higher input costs, according to the company; however, lower volumes primarily from customer de-stocking and manufacturing challenges drove margin pressure

Mativ Holdings expects $25 million incremental synergy realization in 2023, with procurement and supply chain activities building upon 2022 operating expenses actions, The company also anticipated easing input costs to support sequential margin improvements

“The first quarter of 2023 was impacted by a combination of customer de-stocking across the business, operational inefficiencies in our French facilities, where we experienced a number of strikes in response to governmental actions related to social benefits, and inefficiencies in several U.S. sites,” said Mativ CEO Julie Schertell.

“We believe the key issues affecting first quarter margin performance will prove temporary, as customer indications suggest we are currently moving past the peak de-stocking impacts, and that more normalized volume activity should resume in the second half of the year.

“Further, we are starting to see improved manufacturing performance across the business, which we expect will translate into better margins as the year progresses. Despite a tough first quarter and some continued headwinds expected in the second quarter, we expect to exit 2023 on a strong trajectory toward $100 million EBITDA quarters.”

May 10, 2023

Revenues Up 143 Percent at 22nd Century

22nd Century Group reported net revenues of $22 million for the first quarter of 2023, up 143 percent from the comparable 2022 quarter.

“22nd Century is executing an aggressive commercial rollout of our FDA authorized VLN reduced nicotine content cigarettes and a revolutionary new CDMO plus distribution business model for our hemp/cannabis business unit, the combination of which will accelerate revenue, increase gross margin and drive 22nd Century to cash profitable operating results for both business units in 2024,” said CEO James A. Mish in a statement.

“Having clearly confirmed the incredible consumer demand for VLN and rapidly expanding pipeline of retail stores wanting to carry the brand, we are now fully focused on commercialization. We are working steadily toward commercial sales covering thousands of stores in California, Texas and Florida with a top retail chain, as well as booking launch windows and orders with both existing and new chains seeking to sell VLN products across an expanding geography.”

“We believe 22nd Century is poised for phenomenal growth this year in both our tobacco and hemp/cannabis businesses. As such, we are introducing our first revenue guidance, calling for full-year 2023 revenue of $105 million to $110 million, representing a 69 percent to 77 percent increase from $62.1 million in 2022.

“Our growth will be driven by the rapid stocking and ramp up of new VLN customers, new Pinnacle CMO sales, continued record cannabinoid ingredient volumes, start-up of our CDMO+D hemp/cannabis agreements and a full year of GVB sales.”

May 10, 2023

“Compliant” Cigarettes Violate Flavor Ban, Says California AG

California Attorney General Rob Bonta has warned R.J. Reynolds Tobacco Co. and ITG Brands that their menthol-like flavored cigarettes violate the state’s new law prohibiting sales of flavored tobacco products, including menthol cigarettes.

“The Tobacco Unit of the California Department of Justice has reviewed referred packaging and promotional materials for several of your company’s products—Camel Crush Oasis Silver, Camel Crush Oasis Blue, and Camel Crush Oasis Green and determined that each of these reviewed products is presumptively flavored under the California flavor ban law,” Bonta wrote in letters to Reynolds.

Following the enactment of California’s flavor ban, Reynolds and ITG Brands introduced cigarettes with a cooling flavor similar to that provided by menthol cigarettes. The products have been marketed with slogans such as “tropical oasis,” “new fresh taste” and “a taste that satisfies the senses.”

According to RJR, its new products don’t violate California law because they don’t have a distinguishable taste or aroma other than tobacco. California law defines a flavored tobacco product as any product that has a “distinguishable taste or aroma, or both, other than the taste or aroma of tobacco, imparted by a tobacco product or any byproduct produced by the tobacco product.”

The Campaign for Tobacco-Free Kids applauded Bonta’s actions. “Policymakers at every level must stand up to the tobacco industry by adopting and fully enforcing measures to end the sale of all flavored tobacco products, including menthol cigarettes,” wrote CTFK President Matthew L. Myers in a statement.

State legislators approved California’s law prohibiting flavored tobacco sales in 2020 and the ban was upheld by 63 percent of the state’s voters in 2022.

May 9, 2023