Blog - Tobacco Reporter

Elf Bar Exceeds Legal U.K. E-Liquid Volumes

Elf Bar 600 products have been pulled from shelves in multiple U.K. stores after it was discovered that the products contained e-liquid volumes at levels at least 50 percent higher than what is legal, reports The Daily Mail (the article states the liquids were over nicotine limits, but there is no evidence of that. The UK limits nicotine strength to no more than 20mg/ml).

The company stated that it “inadvertently” broke the law and “wholeheartedly apologized.”

Experts described the situation as “deeply disturbing” and warned of risk to youth, among which the products are very popular.

Elf Bar, which launched in 2021, sells 2.5 million Elf Bar 600s in the U.K. every week, accounting for two in three of all disposable vapes sold.

The legal limit on e-liquid in vapes is 2 mL, but tests commissioned by the Mail on three flavors of Elf Bar 600s found volume levels between 3 mL and 3.2 mL.

Mark Oates, director of consumer advocacy group We Vape, said, “The Mail’s findings on Elf Bars are deeply worrying, and it is clear there have been failings on multiple levels.

“Not only are the levels of e-liquid too high, but checks to make sure these guidelines are adhered to either haven’t occurred or are insufficient. Anyone supplying vapes in the U.K. market should be following the legislation.

“It is incredibly frustrating when major players in this sector appear to behave in a way that damages the reputation of something as beneficial as vaping, and we expect the matter to be fully investigated by the Medicines and Healthcare products Regulatory Agency (MHRA).”

February 6, 2023

Over Half of Americans Support Tobacco Ban

A new paper showed that over half of Americans would support a ban on the sale of all tobacco products, reports Vaping360.

The paper was published in the U.S. Centers for Disease Control and Prevention (CDC) journal Preventing Chronic Disease.

According to the results of a survey, detailed in the paper, 57.3 percent of respondents strongly or somewhat supported prohibiting the sale of all tobacco products while 62.3 percent of respondents supported a menthol cigarette ban.

The survey did not provide a definition of “tobacco products,” so it is unclear how many respondents believed e-cigarettes and nicotine pouches were included in the category.

Survey data was compiled from a spring 2021 web panel of 6,455 people ages 18 and older, weighted to match Census Bureau proportions for demographic variables like sex, age, income, race, education and region. Four scientists from the CDC Office on Smoking and Health and one scientist from the Oak Ridge Institute for Science and Education compiled and analyzed the data.

February 6, 2023

ITC Quarterly Profit Up

ITC reported a profit of INR50.31 billion ($614.52 billion) in the October–December quarter, up from INR40.56 billion in the comparable 2021 period, reports Reuters. The company attributed the increase to strong cigarette sales and steady demand for its packaged foods.

ITC’s overall revenue from operations rose about 3 percent to 172.65 billion rupees, of which more than 40 percent came from its cigarette business.

Revenue in that business, which includes the Classic and Gold Flake brands, jumped nearly 17 percent to 72.88 billion rupees.

ITC said its cigarette business “continues to reinforce market standing by fortifying the portfolio through innovation, democratizing premiumization across segments and enhancing product availability backed by superior on-ground execution.”

It also praised the government’s actions against illegal cigarettes sales. “Stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, continues to enable volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector,” the company wrote in a statement.

“The company continues to engage with policymakers for a framework of equitable, nondiscriminatory, pragmatic, evidence-based regulations and taxation policies that disincentivize illicit trade in cigarettes, balance the economic imperatives of the country and tobacco control objectives while cognizing for the unique tobacco consumption pattern in India.”

This week, the government raised the National Calamity Contingent Duty on cigarettes by 16 percent, which some analysts said could mean a “modest” 1.5 percent increase in tax. Others expect ITC to counter with price hikes.

February 6, 2023

Kaival’s Fiscal 2022 Hit by Marketing Denial

Kaival Brands Innovations Group reported revenues of $3 million for the fourth quarter that ended Oct. 31, 2022, compared with revenues of $100,000 million for the prior fourth fiscal quarter. Revenues for the full fiscal year were approximately $12.8 million, down from $58.8 million for fiscal year 2021.

Kaival attributed the full-year decrease to the U.S. Food and Drug Administration’s marketing denial orders (later overturned), which temporarily prevented the company from selling its products, and to increased competition in general, which Kaival suspects resulted from lax enforcement by federal and state authorities against subpar and low-priced vaping products that continued to enter the market illegally without FDA authorization.

“Fiscal 2022 was an exceptionally challenging year for us, primarily due to regulatory action by the FDA that was ultimately overturned in August,” said Kaival Brands President and Chief Operating Officer Eric Mosser in a statement.

“For a portion of fiscal 2022, we were prohibited from selling our flavored Bidi Sticks, and our 2022 revenues reflect the significant extended impact of this. The good news is that this impediment is behind us. Moreover, despite the challenges, we accomplished several important milestones during the year, which we believe has laid the foundation for renewed growth and progress in 2023, including expanding existing sales channel relationships and initiating significant new ones. We expect and hope that the FDA will continue to pull bad actors from the marketplace, paving the way for companies like ours to provide our products to adult smokers deserving of premium e-cigarette product and experience.”

February 6, 2023

Gudang Garam Owner Accused of Fraud

The Indonesian affiliate of Oversea-Chinese Banking Corp. has accused a billionaire owner of Gudang Garam of fraud, according to Bloomberg.

PT Bank OCBC NISP reportedly filed a police report against Susilo Wonowidjojo, an owner and president director of Gudang Garam, concerning some INR232 billion ($15.5 million) in troubled loans.

The bank disbursed the loan in 2016 to a wig-making company owned by Wonowidjojo’s family, according to the lender’s lawyer. The case involves a total of INR1 trillion of funds when including loans from other lenders, he said.

Gudang Garam shares fell 5.7 percent Jan. 3 in their biggest drop since Jan. 5.

February 6, 2023

Bloomberg Commits Millions to Tobacco Control

Bloomberg Philanthropies has committed another $420 million over four years to the Bloomberg Initiative to Reduce Tobacco Use. This fourth investment brings Bloomberg’s total commitment to tobacco control to more than $1.58 billion since 2005.

The Bloomberg Initiative to Reduce Tobacco Use is helping cities and countries implement measures such as smoke-free public places, banning tobacco advertising, increasing tax on tobacco products, requiring graphic warnings on cigarette packaging and mass-media public awareness campaigns.

Currently, the initiative spans more than 110 low- and middle-income countries (LMICs)—including China and India, which together account for nearly 40 percent of the world’s smokers.

From the new $420 million in funding, $280 million will be aimed at reducing tobacco use in LMICs and $140 million will target reducing e-cigarette use among teenagers in the United States.

“Over the past two decades, we’ve made major progress in reducing tobacco use and the death and disease connected to it, but it continues to take a devastating toll, and it remains the leading cause of preventable death,” said Michael R. Bloomberg, founder of Bloomberg Philanthropies and WHO Global Ambassador for Noncommunicable Diseases and Injuries, in a statement.

“This latest investment will help to spread strategies that have proven so effective at saving lives — including smoke-free laws and advertising restrictions—to more nations and communities around the world.”

February 3, 2023

Iranian Tobacco Co. to Build in Zimbabwe

The Iranian Tobacco Co. (ITC) will build a cigarette factory in Zimbabwe, reports Press TV.

According to local media reports, ITC CEO Mohammad Sheikhan and Zimbabwe’s agriculture minister, Anxious Jongwe Masuka, signed an agreement in Harare on Jan. 26.

The facility will manufacture ITC’s Bahman brand using Zimbabwean leaf tobacco. As part of the agreement, Zimbabwe will also supply tobacco for cigarette manufacturing in Iran or for re-exports to Central Asia.

Other Iranian-made cigarette brands will be exported to Zimbabwe under the deal.

Iran’s tobacco sector has grown in recent years amid lower imports of international brands and increasing demand for local products.

The boom has enabled the ITC to revive idle plants and to start exporting to several countries in West and Central Asia.

The company’s planned cigarette factory dovetails with Zimbabwe’s ambition to move up the tobacco value chain. While the country exports hundreds of millions of kg of leaf each year, most of the value is captured by the buyers who process the tobacco into consumer products.

The country aims to generate US$5 billion from tobacco by 2025, up from US$1 billion today.

February 3, 2023

Arthur J. Schick Jr. Joins Universal Board

Arthur J. Schick Jr. will join Universal Corp.’s board of directors on April 1, 2023, at which time the board will expand to nine directors, eight of whom are independent, according to the company.

“We are thrilled to welcome Art Schick to our board of directors,” said George C. Freeman III, chairman, president and CEO of Universal Corp. “Art is an experienced, well-respected global consumer products executive with in-depth knowledge of the food and beverage industry, and he has deep-rooted expertise and knowledge of the ingredients industry from the top down. He brings tremendous value to Universal, with over four decades of experience in ingredients, strategic supplier development, procurement, operations, international supply chain management and product research and development.”

Schick is a 35-year veteran of PepsiCo, where he served his last 17 years as the vice president of proprietary flavors within the beverage concentrate division. In that role, Schick led PepsiCo’s organization that manufactured all proprietary flavors for the company’s global beverage brands and led the global sourcing strategies and supply chain management for the organization. Schick also spent over a decade as a contributing board member for the Flavor Extract Manufacturers Association (FEMA), the premier national association of the U.S. flavor industry, serving as FEMA’s president in 2013. Schick currently serves as president of Alpha Sierra Global, a company providing strategic and operational consulting to companies focused on consumer products, flavor compounding and ingredients.

“When presented with the opportunity to serve on Universal’s board of directors, I was impressed with the company’s long and successful history in international tobacco operations, and I was excited about the tremendous upside potential for the company as it expands its plant-based ingredients platform,” said Schick. “Universal already has a strong foundation and sustainable strategy to position itself as a leader in the ingredients space. I look forward to working with my fellow directors and the company’s management team as Universal charts its course for a bright future.”

February 2, 2023

Essentra Filters Rebrands as Filtrona

Following the announcement about a change of ownership, the former filters and tapes businesses of Essentra will now begin the process of rebranding as Filtrona.

“This is an exciting time for our business, marking a new chapter in our journey to build a global market-leading company that supports our partners to transform and grow,” said Filtrona CEO Robert Pye in a statement.

“Many of our customers and suppliers will know that Filtrona was the company name prior to rebranding to Essentra plc. Having talked to them about our plans, it was clear that the Filtrona name represented a rich history of innovation and partnership. It was only right that we adopted the brand again, which had such a strong foundation, and gave it a fresh contemporary design to take us forward.”

With its rebrand well underway, the business enters 2023 with exciting plans for the future.

“Both the tobacco and packaging industries are focused on driving innovation in response to ever-changing consumer preferences,” says Pye. “Our customers therefore need global partners that are investing in the future of their business.

“At Filtrona, we now have a truly global presence with facilities in all major markets worldwide supported by a 2,000-strong team of talented employees working across our 11 manufacturing locations, 3 innovation centers, an accredited laboratory and a center of excellence focused on sustainability. Our mission is to be a responsible, customer-focused innovation leader creating excellence in sustainable solutions for today and tomorrow. We look forward to delivering on this commitment.”

“We are delighted to welcome Filtrona into our diverse portfolio,” said a representative of the new shareholder. “The business has a rich heritage in providing innovative solutions to a well-established customer base with a global footprint, high quality people and exciting prospects. We continue to support our partners through the next phase of growth relying on our combined expertise in identifying and unlocking value creation opportunities.”

February 2, 2023

An Essential Component

Manufacturers of tipping papers adapt to a changing cigarette market.

TR Staff Report

Valued at $1.6 billion in 2021, the global cigarette paper market is projected to reach $2.2 billion by 2031, according to Allied Market Research. Tipping base paper represents only a small part of this market but is an essential component in cigarette construction, where it has to meet many requirements.

“As tipping base paper is a printing paper, the printability is most important,” says Nina Ritter-Reischl, CEO of German cigarette paper manufacturer Glatz Feinpapiere. “Printability is mainly depending on sheet formation and smoothness as well as the sizing. The latter is important to prevent color bleeding in the printing process. Our papers show a very good printability due to their formation and constant quality parameters, especially in sizing. Our know-how in tipping base paper goes back for decades and is one of our main assets.”

Other considerations are water absorption, which determines ink absorption; smoothness, which plays a role in printability; and a “dynamic contact angle” for the gluing process; along with flammability, according to Liem Khe Fung, Innovation Center director at Indonesian cigarette paper manufacturer BMJ.

“The print quality of BMJ’s tipping base paper is excellent,” says Liem. It allows for 12-color print and the inclusion of tactile and embossed features along with security features. Flavored and sweetened papers are also possible, according to Liem. The company started to significantly supply the market only a few years ago, so the potential growth for BMJ in this field is still high, according to Liem.

Ritter-Reischl views her company as a specialist for tipping base paper within the cigarette industry. “Therefore, we started focusing even more on our tipping base paper customers and were able to raise our sales within this market segment,” she says. “Tipping base paper customers are demanding and have high quality standards; they expect close customer relationships and interlinks in addition to excellent services. Those are challenges we can meet and are specialized in. As an example, we even deliver our tipping base paper with our own transportation company to one of our most valued customers, door to door every day.”

The tipping base paper market has become highly competitive. Liem, whose company mainly caters to the Asian market, says that price competition is the main challenge, followed by small order quantity per stock-keeping unit.

Julius Glatz is strong in Europe. “However, we also deliver to Asia and Latin America as there are printers too,” says Ritter-Reischl.

As tipping base paper is an essential part of the cigarette, the tipping base paper market is facing the same challenges as the cigarette market in general. “Rising inflation and therefore declining purchasing power of consumers, political instability, rising costs and stumbling logistics worldwide are afflicting the market,” says Ritter-Reischl.

Following a modest uptick during the Covid-19 pandemic, when many people where stuck at home, global cigarette consumption has resumed its long-term decline. In 2024, Statista projects volumes to shrink by 0.4 percent. That still leaves a market of around 5 trillion cigarettes, however—and the vast majority of them will require a tipping paper.

February 2, 2023