Blog - Tobacco Reporter

Altria Ends ‘Non-Compete’ With Juul

Altria Group has decided to compete with Juul Labs, as the e-cigarette maker faces a potential ban of its products in the United States, reports The Wall Street Journal.

According to a filing with the Securities and Exchange Commission, Altria has exercised its option to permanently terminate its non-competition obligations to Juul Labs, losing the right to the board designation and significantly reducing its voting power.

“We believe the decision to terminate our noncompete maximizes our flexibility to compete in the e-vapor space while maintaining our economic interest in Juul,” an Altria spokesman told The Wall Street Journal.

The move comes almost four years after the tobacco giant paid nearly $13 billion for a 35 percent stake in the e-cigarette manufacturer that at the time was dominating the market.

Juul’s value has declined considerably since then, as the company faced scrutiny and litigation over its marketing practices. In early September, Juul Labs agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products, which critics have blamed for sparking a surge in underage vaping.

On June 23, the U.S. Food and Drug Administration ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.” A federal appeals court then granted Juul Labs an emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal.

In July, Altria valued its Juul stake at $450 million—below a threshold that allowed Altria to exit a noncompete agreement and bring to market its own e-cigarettes. Altria Chief Executive Billy Gifford noted at the time that the tobacco giant now had the freedom to explore acquisitions of other e-cigarette brands.

Ending its noncompete obligations to Juul Labs allows Altria to go it alone or pursue other vapor companies, such as Njoy, which has received FDA marketing authorization for several of its products. In July, The Wall Street Journal reported that Njoy had hired bankers for a possible sale of the company.

October 1, 2022

PMI to Make Heatsticks in the Philippines

Philip Morris International plans to invest an additional $150 million in its Philippine affiliate Philip Morris Fortune Tobacco Corp. (PMFTC) to add manufacturing lines that will produce specially designed heated-tobacco sticks for its smoke-free products, reports The Manila Times.

PMFTC’s cigarette manufacturing facility in Tanauan City, Batangas, will be expanded, with production beginning in the fourth quarter of 2023. The expansion is expected to generate 220 specialized jobs. PMFTC will use locally grown tobacco.

“We can say that we are proud to invest in the country’s journey to finally rid society of cigarettes by providing better alternatives to those who would otherwise continue to smoke while helping generate revenues for the government and livelihood opportunities for the people,” PMFTC President Denis Gorkun said.

In 2020, PMFTC launched PMI’s IQOS tobacco heating system in the Philippines. The company controls more than 90 percent of the local tobacco market.

September 30, 2022

BAT Urges Collaboration on Harm Reduction

BAT’s chief growth officer, Kingsley Wheaton, called for greater collaboration between the industry, governments and intergovernmental organizations to accelerate tobacco harm reduction becoming the tobacco control policy of choice during the recent Global Tobacco & Nicotine Forum in Washington D.C.

While BAT is determined to reduce the health impact of its business, Wheaton stressed that to bring about change, a “whole-of-society” approach is needed.

“We must provide adult consumers with a portfolio of products that are a better choice than cigarettes. And so that consumers are able to make informed decisions about those choices, public health needs to accurately communicate risk, while the industry should be able to responsibly communicate the benefits of switching via appropriate marketing freedoms,” Wheaton said.

BAT says its business is on track to achieve its ambition of having 50 million adult consumers of non-combustible products by 2030. The company is also investing heavily in research and development. In September 2021, for example, BAT announced it was constructing a state-of-the-art innovation hub in Trieste, Italy. The company is also conducting industry-leading science, with one recent study showing smokers who switched exclusively to BAT’s Glo product saw significant and sustained improvements in several indicators of potential harm

According to Wheaton, transforming the industry and positively impacting public health requires the continued production of robust and accessible science, the freedom to responsibly inform adult smokers about the potential benefits of reduced-risk products and a transition from the old tobacco control approach of “quit or die” to sustainable change, along with engagement between governments, intergovernmental bodies and industry figures, among other things.

September 30, 2022

FITA Wants More Engagement

The Fair-Trade Independent Tobacco Association (FITA) chairperson, Sinenhlanhla Mnguni, has expressed that the organization would like to see more government engagement with manufacturers before policy amendments are made. This follows news of the Control of Tobacco Products and Electronic Delivery Systems Bill of 2018 being submitted to Parliament by the Cabinet, according to The South African.

The bill proposes 100 percent smoke-free indoor areas and designated outdoor smoking areas as well as cigarette packaging changes. The FITA represents 80 percent of cigarette manufacturers in South Africa, and Mnguni stated that the proposed changes will lead to fiscal challenges for FITA members and the whole of the tobacco industry.

“FITA and its members hope and trust that these measures will be introduced after full consultation with all the role players in the industry and not just those big companies that seem to hold much sway over certain government officials,” said Mnguni.

“We are of the opinion that communication between our industry and government and its institutions continues to be monopolized, dominated and controlled by multinational cigarette manufacturers,” Mnguni said.

“There is still a lot of noncompliance in the tobacco industry along the value chain, particularly following the five-month-long tobacco ban, and we hope that government will employ greater resources in future to protect the legitimate industry and to ensure that issues such as the rampant smuggling of cigarettes, which robs our fiscus of billions, are eradicated.”

September 30, 2022

UPM Raflatac and Logopak Collaborate

The label manufacturer UPM Raflatac and the industrial labeling and identification solutions provider Logopak have agreed on a collaboration, which provides the first robust linerless solution in print and apply labeling.

With linerless labeling, omitting the label liner significantly increases the running length and capacity of the label rolls, saves costs and benefits the environment by reducing the carbon dioxide footprint in production and logistics, according to a joint press release. As a first step, the collaboration will improve the automatic labeling of secondary packaging.

The benefits of the collaboration for customers are realized through the compatibility between Logopak’s linerless labeling technology and UPM Raflatac’s Linerless Opticut label material.

“We have been determined to develop linerless labeling to new heights to drive both sustainability and efficiency. By joining the forces with Logopak, we can accelerate these advancements and offer first-class solutions also in the field of automated labeling,” said Ville Pollari, business segment director of paper laminates EMEIA for UPM Raflatac.

“Our vision is to make industrial labeling consistently sustainable in order to improve the eco-balance in an efficient way. By close cooperation with UPM Raflatac, we achieve a perfect interaction in the field of linerless labeling technology, which enables us to offer complete solutions for our customers, from machinery and software until consumables. This underlines our mission to make business ‘Faster. Safer. Greener,’” says Patrick Petersen-Lund, product manager for Logopak.

September 28, 2022

Cuba: Tobacco Fields Destroyed in Hurricane

Cuba faced power outages across the entire island as well as the destruction of some of the country’s most important tobacco farms when Hurricane Ian hit the island’s western tip on Tuesday, reports AP.

Energy has been restored to three regions, and the Energy and Mines Ministry is working to get others back online. As of Wednesday morning, Havana, the country’s capital, was still without power.

Hurricane Ian made landfall in Cuba as a Category 3 hurricane, devastating Pinar del Rio province, where much of the tobacco used for Cuban cigars is grown.

Tens of thousands of people were evacuated, and others fled the area ahead of the arrival of Ian. So far, no fatalities have been reported.

Ian’s winds damaged one of Cuba’s most prestigious tobacco farms, Finca Robaina. “It was apocalyptic, a real disaster,” said Hirochi Robaina, owner of the farm.

Cuban President Miguel Diaz-Canel visited the affected region, telling the population, “Although the first impact is very painful, there’s nothing to do but overcome the adversity.”

September 28, 2022

China: Flavored Vape Ban Takes Effect

China’s ban on flavored vapor products takes effect on Oct. 1 along with other new vaping product standards that were decided on earlier this year, reports Vaping360.

In November 2021, Chinese law was amended to bring the vapor industry under control of the State Tobacco Monopoly Administration (STMA), which regulates China’s tobacco products.

Vapers are rushing to buy and hoard flavored vapor products before the ban takes effect on Saturday, according to Vaping360. It is not clear yet if the ban will create a large black market in the country; China is known to punish illicit sellers harshly.

Products meant for export will not have to meet Chinese standards unless the destination country does not have its own specific standards.

China’s new rules also require domestic e-cigarette manufacturers and traders to obtain a license before operating their business, according to The Global Times.

E-cigarettes cannot be sold to customers under 18, and the sale points cannot be near schools or kindergartens. Warning signs must also be placed at the e-cigarette sale points, and self-service sales are banned.

Manufacturers, wholesalers and retailers of e-cigarettes, vaporizers and e-liquid are required to conduct their business on specific platforms that are subject to STMA supervision.

The rules also forbid the advertising of e-cigarettes in the mass media or in public places.

The iiMedia Research Institute expects China’s e-cigarette market to be worth RMB25.52 billion ($3.57 billion) by the end of 2022 and RMB45.43 billion by the end of 2023.

September 28, 2022

Fire Destroys Dominican Cigar Factories

A large fire broke out on Sept. 26 in Tamboril, Dominican Republic, destroying the Tabacalera William Ventura and Intercigar factories, reports Halfwheel.

Tabacalera William Ventura produces its own line of cigars under the ADV and McKay and ADVentura names as well as producing cigars for Caldwell Cigar Co., Bellatto Premium Cigars, Freud Cigar Co., Room101, J. London Cigars and others. Intercigar produces the Vallejuelo line as well as other brands and has also produced cigars for RBGN Rauchvergnugen.

The two companies shared the same factory building. The cause has not been identified yet, but there were no reported injuries.

Tabacalera William Ventura will move its production to a smaller factory, El Maestro, while the main facility is unavailable.

The Zona Franca La Palma complex is home to several cigar factories.

September 27, 2022

Malaysia Lawmakers Studying Kiwi Policies

Malaysia has sent a parliamentary delegation to New Zealand to see what policies are required to achieve its smoke-free ambitions. According to Nancy Loucas, co-founder of the Aotearoa Vapers Community Advocacy, the visit reflects that Kiwis are getting the mix right when it comes to tobacco control, legalizing and regulating vaping.

As part of their visit, members of a special Malaysian health, science and innovation select committee intend to meet with New Zealand’s Minister of Health as well as tobacco harm reduction experts to learn exactly what New Zealand is doing to achieve its national ambition of Smoke-Free 2025.

“The visiting Malaysian delegation is a timely reminder to New Zealand MPs [Members of Parliament] to keep focused on the prize—that is, crushing combustible tobacco and not try[ing] to relitigate the 2020 vaping legislation, which is still bedding in and is the envy of plenty,” says Loucas.

Now before Parliament’s health select committee, New Zealand’s Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill limits the number of retailers able to sell smoked tobacco products, aims to make tobacco products less appealing and addictive and prohibits the sale of tobacco products to anyone born in 2009 or after.

Similarly, Malaysia’s “generational endgame” bill proposes to ban the sale of cigarettes and tobacco products to anyone born during and after 2007. However, Malaysia’s health minister has proposed adding vaping products to the generational ban—a move that has been criticized by advocacy group MOVE (Malaysian Organization of Vape Entities).

“As a percentage, Malaysia has more than twice as many smokers than New Zealand. Hopefully, the visiting delegation will take a clear message back to Malaysia that you can’t achieve smoke-free without providing a safer, viable alternative,” says Loucas.

September 27, 2022

United Tobacco Starts Manufacturing in Egypt

The United Tobacco Co. (UTC) has started manufacturing cigarettes in the Egyptian market, ending the decades-old monopoly by the state-owned Eastern Co., reports Ahram Online.

UTC secured a government license to establish a cigarette factory in 2022. The company is jointly owned by PMI and Eastern Co., which acquired a 24 percent stake in the firm.

Eastern Co. Managing Director Hany Aman stressed his company had not been negatively affected by UTC’s presence.

“Our acquisition transaction in the UTC compensates for the absence of PMI proper in the Egyptian market. PMI products are available in the local market under the label ‘Made by UTC,’” he stressed.

Under the deal, UTC is obliged to lease the building and the current production lines previously allotted to the manufacturing of PMI products from Eastern Co. for a period of three years. Meanwhile, Eastern Co. is obliged to manufacture PMI products on the same production lines until June 2022.

PMI affirmed its full commitment to all existing contractual relationships with traders and suppliers in order to ensure the availability of its products in Egypt. The company added that it will continue to provide all of its products at the same prices with no changes to packaging.

Eastern Co.’s revenues grew by 6 percent to EGP67.9 billion in fiscal year 2021–2022. Eastern Co. and PMI have each raised their cigarette prices twice so far in 2022 due to increased production costs and the depreciation of the Egyptian pound against the U.S. dollar.

“Eastern Co. is trying to absorb the rise in production costs that were caused by recent increases in raw materials costs and also disruptions in supply chains amid the ongoing conflict in Europe,” Aman explained to Ahram Online.

In the first half of 2022, PMI shipped 9.9 billion cigarettes and 0.3 billion heated-tobacco units in Egypt, claiming 22.5 percent share of the local market.

Eastern Co. has license-manufactured PMI’s bestselling Marlboro brand in Egypt since the 1980s.

September 27, 2022