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  • Elliot Raises Stake in Swedish Match Again

    Elliot Raises Stake in Swedish Match Again

    Photo: Swedish Match

    Elliott Management Corp. raised its stake in Swedish Match to over 10 percent on Oct. 28. The move came one week before the Nov. 4 deadline when shareholders must decide whether to accept Philip Morris International’s takeover bid for the Swedish company.

    In May, PMI bid about $16 billion for Swedish Match. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp., objected, saying the bid undervalues their firm.

    Earlier this month, PMI increased the price of its bid to SEK116 ($10.34) per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.

    Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.

    By increasing its stake to 10.5 percent from 7.25 percent previously, Elliott could scupper the deal if it rejects the offer. When it announced its sweetened bid, PMI indicated it would not further increase the price of its revised offer.

    PMI also has the option to reduce the acceptance threshold and take a majority stake in order to prevent the bid from failing.

    Speaking to Reuters before Elliott disclosed the higher stake, Swedish Match CEO Lars Dahlgren said that he believed the company could thrive by itself or together with Philip Morris.

    “I believe we have exciting prospects as a standalone company, but I see exciting opportunities with a potential combination,” he said.

  • Zimbabwe: Tobacco Sales Hit $650 Million

    Zimbabwe: Tobacco Sales Hit $650 Million

    Photo: Taco Tuinstra

    Zimbabwe earned $650 million during the 2022 tobacco marketing season, which closed Oct. 21, reports All Africa. The figure was up from $589 million last year.

    In a statement announcing the end of the 2022 tobacco marketing season, the Tobacco Industry Marketing Board (TIMB) expressed delight with improved sales volumes and deliveries to auction floors.

    The value of sales was up 10.3 percent over last year while volume increased 0.75 percent, according to the regulatory body.

    As of Oct. 21, 2022, a total of 212,711,370 kg of tobacco had been sold compared with 211,100,219 kg sold during the same period in 2021.

    “The increase in tobacco sold as well as the value is evidence of our efforts as an industry to establish a $5 billion industry by 2025,” said the TIMB.

  • Imperial Launches Blu 2.0 in U.K.

    Imperial Launches Blu 2.0 in U.K.

    Photo: Imperial Brands

    Imperial Brands has launched Blu 2.0, a new vaping device that replaces its existing Myblu system, in the U.K., reports The Grocer.

    According to Imperial Brands, the new product offers a smoother and richer vaping experience due to its ceramic heating pod technology, which replaces the previously used cotton wick option. It also features a longer-lasting battery and bigger 1.9 mL volume liquid pods.

    The new device also comes with a magnetic lock feature and “power tap,” which enables users to easily check the battery level.

    Imperial has also launched a new range of six flavored liquids for use with the system: Golden Tobacco, Polar Menthol, Fresh Mint, Berry Mix, Blueberry Ice and Fresh Mango. All come in 9 mg and 18 mg nicotine strength variants.

    “Through the launch of Blu 2.0, we’ve developed a product that looks better, tastes better and lasts longer than before to provide consumers with the next-generation vape product they’re looking for,” said Tom Gully, Imperial Tobacco’s head of consumer marketing for the U.K. and Ireland.

  • New Leaders at ITGA

    New Leaders at ITGA

    Photo: jirsak

    The International Tobacco Growers’ Association (ITGA) has named José Javier Aranda as its new president and Adam Gordon Strong as its new vice president, the organization announced in a press note.

    The appointments came during the group’s annual general meeting Oct. 26–29 in Castelo Blanco, Portugal.

    The gathering was the first in-person annual meeting in two years. The previous two events were held online due to the Covid-19 pandemic.

    During the meeting, growers called for greater inclusion in consultations shaping the future of the sector, such as those conducted by the Framework Convention on Tobacco Control.

    While tobacco prices have generally been up due to crop shortages in key markets, growers around the world have had to contend with skyrocketing inflation and rapidly rising costs of production.

  • U.K. Urged to Ban Pouch Sales to Minors

    U.K. Urged to Ban Pouch Sales to Minors

    Photo: Andrii

    U.K. health campaigners are calling for the closure of a loophole that allows nicotine pouches to be sold to under-18s, reports the BBC.

    Nicotine pouches, which are made without tobacco, are not regulated by rules that cover tobacco products, vaping products or medical products in the U.K. As a result, there are no age restrictions on sales.

    Action on Smoking and Health (ASH) says the lack of rules is a “Wild West.”

    Leading manufacturers, however, have introduced their own restrictions on age of sale and warnings on packaging.

    In a recent ASH survey of 13,000 people, about one in 25 said they had tried nicotine pouches, and awareness was highest among 18-year-olds to 24-year-olds, with 45 percent having heard of them.

    Leonie Brose, reader in nicotine research at King’s College London, agreed the current regulation should be reviewed.

    “If you are a smoker, then moving to something else is a good idea, but if you’ve never smoked, it’s not a good idea to take up nicotine because it is addictive and may produce a dependence,” she said.

    Japan Tobacco International, which sells Nordic Spirit nicotine pouches, welcomed the call for more regulation.

    Spokeswoman Nicky Small told the BBC that the company has spearheaded a self-regulation framework that governs the marketing of the product and limits access to over-18s.

  • BAT to Close Boncourt Factory

    BAT to Close Boncourt Factory

    Photo: BAT

    BAT will close its Boncourt cigarette factory in Switzerland and move production elsewhere in Europe, reports SWI.

    The factory employs more than 200 people, around half of them cross-border workers from France.

    The closure will not affect BAT’s Lausanne office, which employs more than 100 other staff.

    Boncourt mayor Lionel Maître described the decision as “a shock, a disappointment, a feeling of desperation and a mess.”

    The Boncourt factory was founded by the Burrus family in 1814 and was taken over by Rothmans International in 1996 before merging with BAT three years later. In 1887, the site started producing Parisienne, which is the second best-selling cigarette brand in Switzerland.

    In 2014, BAT closed a research and development facility in Boncourt with the loss of around 15 jobs.

  • Robust Pricing Boosts JT Results

    Robust Pricing Boosts JT Results

    Masamichi Terabatake (Photo: JT Group)

    The JT Group reported revenue of ¥2 trillion ($13.5 billion) for the first nine months of 2022, up 13.7 percent over the comparable 2021 period.

    Core revenue at constant currency exchange rates increased by 4.1 percent to ¥1.77 trillion. Adjusted operating profit at constant currency increased by 6.5 percent to ¥78.4 billion. On a reported basis, adjusted operating profit increased by 17.5 percent to ¥637.8 billion. Operating profit increased by 20.5 percent to ¥579.3 billion while profit increased by 19.2 percent to ¥403.8 billion.

    “In the nine-month results, the JT Group delivered a strong performance, mainly driven by robust pricing in the tobacco business,” said JT Group President and CEO Masamichi Terabatake in a statement. “We are also encouraged by the Ploom X volume and share performance in Japan. We have launched Ploom X in the U.K. starting in London. We will accelerate Ploom X launches internationally from 2023.”

    Terabatake said he had high expectations of the recently announced joint venture with Altria Group to market and commercialize heated-tobacco sticks products in the U.S. “I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for JT and Altria,” he said.

    “We have revised our 2022 full-year guidance upward, driven by business momentum as well as favorable currency movements against the Japanese yen,” said Terabatake. “Following the upward revisions of our guidance, we are pleased to share our plan to increase our annual dividend guidance by ¥38 to ¥188.”

  • Altria Reports Quarterly Results

    Altria Reports Quarterly Results

    Photo: Casimiro

    Altria Group reported its 2022 third-quarter and nine-months business results and narrowed its guidance for 2022 full-year adjusted diluted earnings per share (EPS).

    “This is an exciting moment on our journey toward ‘Moving Beyond Smoking,’” said Billy Gifford, Altria’s CEO, in a statement. “Our tobacco businesses remained resilient during the first nine months of the year, and we continued to reward shareholders while making investments in pursuit of our vision.

    “We are optimistic that the actions we have taken to date have strengthened our portfolio in the three major smoke-free categories. We have built a compelling portfolio in heated-tobacco, enhanced our ability to compete in e-vapor and continued to strengthen On!’s position in the oral tobacco category.

    “We are narrowing our full-year 2022 guidance and now expect to deliver adjusted diluted EPS in a range of $4.81 to $4.89, representing a growth rate of 4.5 percent to 6 percent from a base of $4.61 in 2021. We believe this range allows us the flexibility to react to marketplace conditions.”

    Net revenues for the third quarter decreased 3.5 percent to $6.6 billion, primarily driven by the sale of the company’s former Ste. Michelle wine business in October 2021 and lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment. Revenues net of excise taxes decreased 2.2 percent to $5.4 billion.

    Reported diluted EPS increased 100 percent-plus to $0.12, primarily driven by lower reported losses from investment in ABI (due primarily to a lower impairment of the company’s investment in ABI), favorable Cronos-related special items, higher reported operating companies income (OCI) and fewer shares outstanding, partially offset by unfavorable changes in the estimated fair value of the company’s investment in Juul (including the corresponding adjustment for a tax valuation allowance).

    Adjusted diluted EPS increased 4.9 percent to $1.28, primarily driven by higher adjusted OCI and fewer shares outstanding.

    Net revenues for the first nine months decreased 3.9 percent to $19 billion, primarily driven by the sale of the company’s former Ste. Michelle wine business in October 2021 and lower net revenues in the smokeable products segment. Revenues net of excise taxes decreased 2.6 percent to $15.6 billion.

  • Logic Rejection Based on Fuzzy Math

    Logic Rejection Based on Fuzzy Math

    Photo: vchalup

    The FDA’s recent rejection of Logic products is based on questionable statistics, says the director of the Center for Substance Use Research.

    By Neil McKeganey

    Last week in Washington, D.C., at the FDLI Tobacco Conference, Brian King, director of U.S. Food and Drug Administration’s Center for Tobacco Products, explained that FDA would be using the recently released 2022 National Youth Tobacco Survey (NYTS) results to inform its judgment as to whether electronic nicotine-delivery system (ENDS) products being assessed under the premarket tobacco product application (PMTA) process would be deemed “appropriate for the protection of the public health.” For those unfamiliar with the National Youth Tobacco Survey, the just-published survey data showed that 9.4 percent of youth in the U.S. had used an e-cigarette in the last 30 days, that 84.9 percent of flavored e-cigarette-using youth had used a nontobacco flavor and that 26.6 percent of those had used menthol-flavored e-liquids.

    If anyone in the audience thought that there might be a disconnect between King’s words and FDA actions, they were proved wrong barely a week later when marketing denial orders (MDO) arrived at the doorstep of Logic Technology Development for its Logic Power Menthol E-Liquid Package and its Logic Pro Menthol E-Liquid Package, with the FDA press release accompanying those denial orders expressly referring to the NYTS findings. In the light of King’s warning, you might think that the company receiving those denial orders could hardly have expected anything else. On the face of it, the NYTS figures are very scary, seemingly justifying immediate action on the part of the FDA. But as with all percentages, you have to look a little closer at what is actually being reported before you push the red button of alarm.

    Within the CDC Mortality and Morbidity Weekly Report setting out the NYTS results, the prevalence of youth use of Logic products is shown to be 4.3 percent. However, that is not 4.3 percent of all U.S. youth but 4.3 percent of the 9.4 percent of youth who were currently vaping within the U.S. With that clarification, the numbers here begin to look very different to the headline announcements. Instead of alarming levels of Logic use among U.S. youth, the extent of that use reported by the CDC researchers is 4.3 percent of 9.4 percent, i.e., 0.4 percent. By their own calculations, the CDC authors estimate this to be 100,000 of all U.S. youth—hardly an epidemic of Logic use.

    But it gets worse than this because the 0.4 percent figure of youth Logic use actually refers to the Logic brand not the two denied products. Unfortunately, the NYTS does not collect information on the specific Logic devices that youth in the U.S. are using. However, research currently underway by the Centre for Substance Use Research in Scotland does have these data. The Scottish researchers have been studying ENDS use among representative samples of U.S. youth and adults in 2021 and 2022, collecting data on over 20 leading ENDS brands and over 200 specific ENDS devices.

    In this Scottish research, out of the 1,215 youth aged 13 to 17 surveyed in 2022, 0.2  percent had ever used a Logic Power and 0.5 percent had ever used a Logic Pro. When the Scottish researchers looked at youth e-cigarette use over the last 30 days, the levels of Logic use shrank even further with 0.1 percent of youth reporting having used the Logic Power in the last 30 days and the level of Logic Pro use so low that it was not even recorded.

    In dispatching the MDOs for these two products, the FDA seems to have set aside a commitment to review the data around individual devices and liquids and to formulate a response in terms of the brand of products being used and justify the denial orders issued by reference to the NYTS data.

    However, there is something even more troubling in the MDOs that have been dispatched this week. If the CDC researchers estimates of only 0.4 percent of U.S. youth having used a specific branded ENDS product is sufficient for the FDA to issue an MDO, one has to wonder at the relative value that is being placed here on the goal of helping adult smokers to quit and the goal of preventing youth vaping. 

    The good news in the NYTS research is that overall levels of e-cigarette use by youth in the U.S. is declining. The bad news is that it would appear from the Logic experience that for as long as the NYTS data reveal any level of youth ENDS use, no matter how small, the FDA may still regard that as sufficient to issue an MDO. The implicit suggestion here then is that the FDA are operating a zero-tolerance approach to youth ENDS use and are prepared to sacrifice the potential benefit of ENDS products for adult smokers on the altar of youth ENDS prevention. 

  • Altria and JT to Sell Heated Products in U.S.

    Altria and JT to Sell Heated Products in U.S.

    Photo: ASDF

    The JT Group and Altria Group, through their Japan Tobacco International and Philip Morris USA subsidiaries, have established a joint venture to market and commercialize heated-tobacco sticks (HTS) products in the U.S. with Ploom-branded devices and Marlboro-branded consumables.

    The two groups also signed a long-term, nonbinding global memorandum of understanding (MOU) to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).

    “As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the U.S., the world’s largest RRP market in value, through our partnership with the market leader, Altria,” said  Masamichi Terabatake, president and CEO of the JT Group’s tobacco business, in a statement.  

    “We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    “We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Altria CEO Billy Gifford in a statement. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”

    “We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated-tobacco products position us well to increase adoption of smoke-free products.”

    The joint venture establishes a new company, Horizon Innovations, for the U.S. commercialization of current and future HTS products owned and developed by either party. Horizon will commercialize HTS products in the U.S. under the Ploom and Marlboro trademarks.

    JTI will have a 25 percent economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75 percent economic interest, reflecting the company’s strong distribution network and infrastructure, as well as its initial capital contribution of $150 million to Horizon.

    Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interest. JTI and PM USA will both maintain independent ownership of their respective intellectual properties, including any IP acquired after the formation of the joint venture that supports the development of future HTS products.

    “I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    As part of the joint venture, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare U.S. Food and Drug Administration filings, including a premarket tobacco product application (PMTA) for the latest version of Ploom HTS products. The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorization, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialization milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.

    “By forming this JV [joint venture], we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years with Altria’s science, U.S. regulatory experience and vast infrastructure to create a very strong proposition for the U.S. adult smoker,” said JTI CEO Eddy Pirard.

    Separate to the JV, the JT Group and Altria also announced the mutual signing of a nonbinding MOU. Under this MOU, the parties aim to structure a strategic partnership over time to market and commercialize a wide range of potentially reduced-risk products and strengthen their shared development capabilities and geographic reach. The companies believe this collaboration will accelerate global tobacco harm reduction solutions and bring significant value to their respective businesses.

    Altria’s pipeline of heated-tobacco products includes tobacco-heating product formats and new-to-market technologies. “We believe HTC products can appeal to U.S. adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes,” the company wrote. “This audience includes the millions of U.S. adult smokers who tried, but ultimately rejected, e-vapor products.”

    Altria expects to finalize the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission by the end of 2024.

    The company also expects to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.

    Prior to the recent agreement with the JT Group, Altria terminated its noncompete agreement with Juul Labs and sold its exclusive U.S. commercialization rights for the IQOS tobacco-heating system to Philip Morris International for about $2.9 billion.