Blog - Tobacco Reporter

Court Dismisses Suit to Outlaw Tobacco

A Kenyan court dismissed a petition by Ibrahim Mahmoud challenging the legality of the production, manufacturing and use of tobacco products, reports Business Daily.

The suit requested that the government ban the production, supply, management, dissemination, consumption and use of tobacco products and cigarettes as well as requesting that cancer be declared a tobacco-related ailment and a national disaster requiring special administrative action.

The suit was dismissed by Justice Hedwig Ong’udi on grounds that the petitioner did not prove that the Tobacco Control Act and the Tobacco Control Regulations 2014 are contrary to the constitutional provisions that were allegedly violated.

“It is not, therefore, enough for the petitioner to solely rely on his dissatisfaction in the use and legalization of tobacco products in Kenya. He should avail [sic] evidence to show how the statute and regulations are contrary to the provisions of the constitution complained of,” Ong’udi said.

November 29, 2022

Vape Sector Boosts U.K. Economy: Report

The vape industry has had a considerable positive impact on the U.K. economy, according to a new report compiled by the Centre for Economics and Business Research (CEBR) on behalf of the U.K. Vaping Industry Association (UKVIA).

Valued at £2.8 billion ($3.36 billion) in 2021, the U.K. vape sector supports almost 18,000 full-time-equivalent jobs in retail, manufacturing and supply chain. What’s more, smokers abandoning cigarettes in favor of less harmful e-cigarettes have saved the National Health Service (NHS) more than £300 million in 2019 alone, according to the report.

Even as many businesses suffered in recent years, vape retail stores have bucked the trend and represent one of the biggest growing sectors since the first decade of the 21st century when they started to appear for the first time.

From 2017 to 2021, the U.K. vape sector’s turnover grew by 23.4 percent to £1.33 billion last year alone. When indirect economic benefits such as supply chain support and the spending power of vape sector workers is factored in, the economic impact more than doubles.

In 2021, the vaping industry paid £310 million in taxes to the British exchequer.

CEBR estimates that the vaping sector saved the U.K. £322 million in smoking-related healthcare costs in 2019. The research organization reckons that if 50 percent of smokers switched to vaping, the potential healthcare savings would have been £698 million in 2020.

Meanwhile, the gain in economic productivity associated with smokers switching to using vaping products was estimated to be £1.3 billion in 2019. If 50 percent of remaining U.K. smokers switched to vaping, this would increase to £3.33 billion, according to the study.

“In little over a decade, vaping in the U.K. has grown from very much a ‘cottage industry’ to one of the fastest growing sectors in not just retail but the whole economy.”

John Dunne, director general, UKVIA

“The findings of the vaping industry’s first ever economic impact report demonstrates its significant success as a fast-growing disruptive sector,” says Owen Good, head of economic advisory at CEBR.

“Whilst many high street retailers have suffered in recent years, the vaping sector has bucked the trend, with significant growth both in-store and online. Even the effects of the pandemic have not significantly hampered the sector’s growth.

“The sector’s growth has been hugely beneficial to the U.K. economy; businesses and their employees directly involved in the industry and those running operations across the wider supply chain; and the NHS, which has seen a massive cost saving with increasing numbers of smokers switching to vaping in order to quit their habits.”

“In little over a decade, vaping in the U.K. has grown from very much a ‘cottage industry’ to one of the fastest growing sectors in not just retail but the whole economy,” said UKVIA Director General John Dunne in a statement.

“More people than ever are vaping, and by all measures, this is a true British success story, creating employment and wealth, generating precious revenue for the government through taxation while at the same time saving the NHS more than £300 million a year through people switching from smoking to vaping.”

November 29, 2022

Elfbar Warns of Fake Vapes

Potentially dangerous counterfeit disposable vaping products are flooding into the U.K. market, according to an investigation by Elfbar, a Chinese manufacturer. The company warns retailers and consumers that the illegal products are produced in “squalid Chinese factories with no license for manufacturing and regard for product safety.”

Since June 2021, Elfbar has cracked down on more than 120 counterfeit production and sales targets, including factories, warehouses, logistics and foreign trade companies. Its actions have resulted in the seizure of more than 2 million finished counterfeit Elfbar products, millions of packaging boxes, anti-counterfeit codes, semi-finished vaping pipes and other accessories, according to the company.

Elfbar CEO Victor Xiao said consumers would be horrified if they saw the conditions in which these products are made. “The criminals behind these counterfeit products care nothing about product safety or the health of consumers, and they cut every corner possible to maximize their profits,” he said in a statement. “Quite frankly, the conditions in these factories are absolutely squalid, where workers man production lines in filthy conditions with no regard to hygiene at all.”

Elfbar said that manufacturers and retailers have an important role in protecting consumers.

“While it can be hard to tell a fake product from the real thing just by looking at it, there is no excuse for any retailer to sell a counterfeit Elfbar product. Retailers can scan a code on the packaging to check the authenticity of the product, and we urge them to do this for every product they sell,” Xiao said.

John Dunne, director general of the U.K. Vaping Industry Association, applauded Elfbar for standing up against the counterfeiters.

“They pose a significant risk to the harm reduction reputation of the global vaping industry,” he said. “It’s why we have called for a retail licensing scheme here in the U.K. to prevent the sale of illicit products and much higher penalties of at least £10,000 [$12,058] per instance for retailers who break the law in this way,” he said. “Similarly, the counterfeiters and those who trade fake vapes along the supply chain need dealing with in a way by the relevant authorities that put them off from doing it ever again.”

November 29, 2022

Appointments at Japan Tobacco

Kei Nakano, currently the senior vice president, will take on the role of executive vice president and representative director, effective Jan. 1, 2023, and March 24, 2023, respectively. Nakano will succeed Naohiro Minami, who will assume a new position as member of the board without the right to represent the company as of Jan. 1, 2023, and will resign as member of the board upon the ratification at the 38th annual general meeting of shareholders, scheduled for March 24, 2023.

Suguru Fujiwara will assume the role of senior vice president of corporate affairs and communications for the tobacco business in Japan. Hisashi Shimobayashi will assume the role of senior vice president of information technology. Yuki Otaki will assume the role of senior vice president of D-LAB. These newly appointed officers’ positions are effective Jan. 1, 2023.

A full list of resigning board members and changes in responsibility can be found on JT’s website.

November 29, 2022

EU: Sweden Retains Right to Set Snus Tax

The EU Commission’s spokesperson for tax matters, Daniel Ferrie, said at a press conference on Nov. 28 in Brussels that Sweden has the right to set the tax level on snus.

His comments, reported by Aftonbladet, follow an uproar among Swedish snus lovers after the publication of a leaked document suggesting the EU wants to force Sweden to raise the tax on snus by 200 percent.

The document, which was seen by Aftonbladet, contains proposals for a new excise tax on tobacco.

If applied to Sweden, the price of a can of portioned snus would have increased by approximately SEK34 ($3.26). The price of a can of loose snus would have increased by approximately SEK62 compared to today. A can of General loose snus would cost over SEK120 under the proposal.

Reminding his audience that Sweden is exempted from the EU snus ban, Ferrie said the bill under discussion would not change Sweden’s status. “Sweden will retain its full freedom to set tax regimes and excise taxes for snus,” he said.

November 28, 2022

Stabilization Settlement Funds Available

Current and former tobacco growers who wish to claim funds from the U.S. Tobacco Stabilization lawsuit settlement should complete a proof of claim form by Dec. 12, 2022.

The settlement stems from a lawsuit against the Flue-Cured Tobacco Cooperative over withheld funds, which are now being returned to qualifying grower members.

Tobacco growers who were a member of the cooperative at some point between 1946 and 2004 are eligible for payment considerations.

Growers claiming funds must supply their FC Number. Alternatively, they must provide sufficient identifying information, including all names and addresses used during the period that they marketed flue-cured tobacco.

A copy of the qualified settlement fund procedures, the proof of claim form and additional relevant information is available at https://omniagentsolutions.com/lewissettlementclasstrust.

November 28, 2022

Philip Morris International to Delist Swedish Match

Philip Morris International plans to take Swedish Match off of the stock market now that it owns a large enough share of the company to initiate a compulsory redemption of remaining shares, according to Reuters.

“We are delighted to have obtained over 90 percent ownership of Swedish Match, allowing us to initiate a minority redemption process to acquire the remaining shares outstanding and request the delisting of the company from the stock market,” said PMI CEO Jacek Olczak in a statement.

“This transaction marks a major milestone in accelerating our shared objective of a smoke-free future. We look forward to welcoming Swedish Match’s employees and leading oral nicotine portfolio into the PMI family to create a global smoke-free champion, notably bringing IQOS and Zyn together in both the U.S. and international markets.

“We are very excited about the growth, value creation and progress in tobacco harm reduction that we believe can be achieved together over the coming years. Despite the increased cost of financing over recent months, we expect the combination to be low single-digit accretive to PMI’s adjusted diluted EPS in 2023, before potential revenue synergies and excluding transaction-related and one-off costs and the amortization of acquired intangibles.”

In May, PMI submitted a $16 billion takeover bid for Swedish Match. The bid initially received pushback from Elliott Management, Framtiden and other stakeholders as they felt that it undervalued the company. PMI later raised its bid from SKK106 ($10.21) per share to SKK116 per share. Elliott Management, Framtiden and the other shareholders agreed to tender their shares after the bid was raised, and PMI secured over 83 percent approval by the end of the initial offer period.

November 28, 2022

Ireland Approves E-Cigarette Rules

Ireland Minister for Health Stephen Donnelly and Minister for Public Health Frank Feighan received government approval to introduce additional restrictions on the sale and advertising of nicotine inhaling products such as e-cigarettes, according to Gov.ie.

Under the new proposals, the sale of e-cigarettes and related vaping products will be prohibited from self-service vending machines, from temporary or mobile premises and at places or events for children. In addition, advertisements for e-cigarettes will be prohibited on public transport, in cinemas and near schools.

“These measures are designed to protect our children and young people from starting to vape,” said Donnelly. “We recognize that nicotine is a highly addictive drug, and we are acting today to make these products less accessible to our young people and to remove the advertising for these products from our children’s everyday lives.”

The proposals will be incorporated into the Public Health (Tobacco and Nicotine Inhaling Products) Bill, which is currently being drafted. The bill is expected to be finalized and published by year end. The legislation will be designed to regulate any product that can be used for the consumption of nicotine-containing vapor or any component of that product.

The bill already contains measures to ban the sale of nicotine inhaling products to those under the age of 18 and to introduce a licensing system for the retail sale of tobacco products and nicotine inhaling products. Other measures contained in the bill include:

prohibiting the sale of tobacco products and nicotine inhaling products by persons under 18 years of age;
prohibiting the sale of tobacco products from self-service vending machines, from temporary or mobile units and at events or locations for children;
introducing minimum suspension periods for retailers convicted of offenses; and
introducing fixed penalty notices for offenses.

Feighan welcomed the government’s approval of the measures.

“Tobacco smoking continues to kill approximately 4,500 people in our country each year,” he said. “We recognize that nicotine inhaling products are used by some adult smokers to assist them to quit tobacco smoking. However, we are clear that these products are of no benefit to our children and young people or to nonsmokers, and that is why we are taking this action today.”

November 28, 2022

Commission to Propose EU-Wide Vaping Levy

The European Commission (EC) wants to increase the minimum excise duty on cigarettes to €3.60 ($3.77) from €1.80 per pack of 20 and introduce a bloc-wide vaping levy, reports the Financial Times, citing a draft EC document.

If enacted, the legislation would double cigarette excise duties in EU member states with low cigarette taxes. In some eastern European nations, cigarette packs currently sell for under €3. Excise duties on cigarettes would also increase considerably in countries such as Austria and Luxembourg where prices are low relative to income. The tax rise on cigarettes is expected to generate an extra €9.3 billion for EU member states.

The update to the 2011 EU tobacco taxation directive will also bring the taxation of electronic nicotine-delivery systems into line with cigarettes. Stronger vaping products would have an excise duty of at least 40 percent applied to them while lower strength vapes will face a 20 percent duty. Heated-tobacco products will also be hit by 55 percent duty, or a tax rate of €91 per 1,000 items sold.

Rob Branston, senior lecturer in business economics and a member of the University of Bath’s Tobacco Control Research Group, told the Financial Times that the tax regime update was “long overdue” to increase prices in countries where cigarettes were “too cheap” and to catch up with inflation.

But Peter van der Mark, secretary-general of the European Smoking Tobacco Association, warned that a sudden steep increase in tax rates would likely boost illicit tobacco sales.

Dustin Dahlmann, president of the Independent European Vape Alliance, said that imposing taxes on novel tobacco products could lead to “the much less harmful alternatives” to smoking being “taxed far too heavily in many countries.”

The proposal will have to be agreed on by all EU member states before it is enshrined in law. BAT stressed that the EC draft proposal was “the beginning of a long legislative process.”

November 28, 2022

Snus Lovers up in Arms After EU Tax Proposal

Swedish snus lovers are up in arms after the publication of a leaked document suggesting the EU wants to force Sweden to raise the tax on snus by 200 percent.

The document, which was seen by the Swedish daily Aftonbladet, contains proposals for a new excise tax on tobacco.

If the plan becomes reality, the price of a can of portioned snus could increase by approximately SEK34 ($3.26). The price of a can of loose snus would increase by approximately SEK62 compared to today. A can of General loose snus would cost over SEK120 under the proposal.

Patrik Hildingsson, head of communications at Swedish Match, said that while Swedes are accustomed to high tax rates, the leaked EU proposal goes too far. He urged the Swedish government to make it clear to Brussels that Sweden alone regulates snus.

“Imagine if the EU decided to raise the tax on Italian Parma ham or German beer. This is basically the same thing,” Hildingsson was quoted as saying by Aftonbladet. “In the snus issue, the EU has chosen to disregard the principle of member state self-determination.”

“To dramatically increase the tax on snus will be a deadly blow to tobacco harm reduction and can make users go back to smoking.”

Bengt Wiberg, founder, EUforsnus

Meanwhile, snus advocates pointed to the health impact of snus, which is considerably less risky than other tobacco products.

“The Swedish Experience of snus has made Sweden almost smoke-free,” said Bengt Wiberg, founder of the EUforsnus international consumer group. “Daily smoking is now only 5 percent in Sweden as per the EU’s own Eurobarometer and thus Sweden has the lowest rate of all tobacco-caused cancers in Europe.

“To dramatically increase the tax on snus will be a deadly blow to tobacco harm reduction and can make users go back to smoking. I am sure the Swedish liberal/conservative government will even consider using its veto right within EU to stop this proposal.”

Finance Minister Elisabeth Svantesson indicated she would oppose the proposed tax hikes.

While snus is banned in the EU, Sweden obtained an exemption on cultural grounds when it joined the union in 1995. In the following years, however, the EU has made several attempts to restrict snus sales in Sweden, according to Aftonbladet.

The recent leaked proposal is scheduled to be published in early December. It must then be discussed and decided by the EU member states.

November 27, 2022