Blog - Tobacco Reporter

EU to Decide on Swedish Match Deal by Oct. 11

European Antitrust regulators will review Philip Morris International’s $16 million bid for Swedish Match by Oct. 11, reports Reuters, citing a Sept. 6 European Commission filing.

At the end of its scrutiny, the EU competition enforcer can clear the deal with or without remedies or it can open a four-month-long investigation if it has serious concerns.

In August, PMI extended the acceptance period for its offer from Sept. 10 to Oct. 21 following indications that the European regulators needed more time to review the proposed takeover.

The multinational says it has already obtained approvals from other prominent regulators, including those in the United States and Brazil.

September 8, 2022

Paper Calls for More Balanced Vaping Rules

Four tobacco control specialists have called for a more balanced approach toward vaping regulation.

In a paper titled “A Proposed Policy Agenda for Electronic Cigarettes in the U.S.: Product, Price, Place and Promotion,” the authors observe that many Americans are confused about the relative harms of nicotine use and that public messaging around the substance tends to be more focused on stopping youth use than educating adults, according to Filter.

“Policy regarding e-cigarettes in the U.S. has focused on measures intended to reduce youth vaping, including imposing taxes on e-cigarettes and restricting flavors,” said Kenneth Warner, who wrote the paper with his University of Michigan colleagues Cliff Douglas and Karalyn Kiessling, along with Alex Liber of Georgetown University.

“Unfortunately, some of the measures may be backfiring. For example, if not matched by at least comparable increases in cigarette taxes, e-cigarette taxes that reduce youth vaping may also increase kids’ smoking. As well, some of these youth-oriented taxes appear to be reducing adult smokers’ use of e-cigarettes, increasing their smoking and reducing smoking cessation. We need to find policies that simultaneously address the widely shared dual goals of preventing youth vaping and increasing adult smoking cessation.”

The authors advocate for the U.S. Food and Drug Administration to reduce nicotine levels in combustibles, adding that it would have the best outcome if “accompanied by regulations ensuring the availability of alternative products, such as e-cigarettes.”

They also advocate for “states and the federal government [levying] large excise taxes on cigarettes and other combustible tobacco products and a more modest excise tax on e-cigarettes.”

The authors insist that only vape and tobacco shops should be allowed to sell nicotine products, that flavors should be banned in combustible tobacco products and that “all e-cigarette flavors other than tobacco and menthol and possibly a relatively small selection of other flavors with clearly adult-oriented marketing” should be banned.

September 8, 2022

Reynolds Hit with $95 Million Verdict in Vapor Patent Dispute

A jury in the U.S. District Court for the Middle District of North Carolina awarded Altria Client Services more than $95 million after finding that Reynolds Vapor Co.’s Vuse Alto e-vapor product infringed three Altria patents.

The jury awarded $95.23 million in past damages through June 30, 2022. Post-trial proceedings will address ongoing damages through the expiration of Altria’s patents in 2035. At trial, Altria urged the jury to find a royalty rate of 5.25 percent, which the jury accepted in returning its award of past damages.

“Patents are at the core of innovation, and we take very seriously protecting our intellectual property,” said Murray Garnick, executive vice president and general counsel of Altria, in a statement. “We are pleased that the jury recognized the importance of Altria’s innovation and the value of its patent rights.”

At issue in this case were three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings dating back to April 2015. The jury found that Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.

The case is Altria Client Services vs. Reynolds Vapor Company et al.

September 7, 2022

Management Changes at 22nd Century

22nd Century Group is changing its management team as the company accelerates growth in its reduced nicotine content tobacco business. President and Chief Operating Officer Michael Zercher will depart the company effective Sept. 30, 2022. John Miller, who leads 22nd Century’s tobacco business team, will assume the tobacco-related duties of the chief operating officer’s role while CEO James A. Mish will assume the title of corporate president.

“With exceptionally successful VLN pilot results in hand, 22nd Century is expanding sales and planning rollouts in strategic regions across the United States,” said Mish in a statement. “In order to coordinate all of the critical elements of this expansion plus additional planned market launches, John Miller, who already leads our tobacco product, marketing and partnership efforts, will assume full operational responsibility for the tobacco product lines, bringing to bear his more than 30 years of industry experience to direct a fully integrated national VLN sales strategy.

“On behalf of the board of directors and the entire company, I thank Mike for his work at 22nd Century Group, including his important role in helping bring VLN through the regulatory process to secure the first and only FDA modified-risk tobacco product marketing order ever granted to a combustible cigarette.

“Mike has also been instrumental in developing our initial VLN industry partnerships and successful Chicagoland pilot program,” said Mish. “As a result, 22nd Century represents a completely new type of tobacco business focused on disrupting the industry and, most importantly, helping adult smokers to smoke less. We thank Mike for the incredible success he has helped the company achieve and wish him well in his future endeavors.”

September 7, 2022

Cuba Marks Cohiba Anniversary

Although a year late, Habanos is celebrating its most iconic brand’s 55th birthday.

By Timothy S. Donahue

Cuba is trying to get back to a sense of normalcy. Covid served a crushing blow to the reclusive island’s tourism industry. It also caused chaos in its cigar production chain from the farms to the factory floor. However, after a year’s delay, Habanos, the government-owned distributor of Cuban cigars, is welcoming cigar connoisseurs to celebrate the 55th anniversary of its most iconic brand, Cohiba.

While officially the event began on Wednesday with a cocktail reception at the El Laguito event center nearby where Cohibas are produced, media were given an opportunity Tuesday to mingle with representatives of Habanos. During the media event, Leopoldo Cintra Gonzalez, commercial vice president for Habanos, told Tobacco Reporter that the Cohiba brand has shown strength throughout its history and remains one of the most exclusive cigars on the global market.

He mentioned Cuba’s “always present” former leader Fidel Castro who first launched the Cohiba brand in 1966 and passed away in 2016. “It has not been an easy 55 years. We have had to be very innovative, which is normal for Habanos,” Cintra Gonzalez said through a translator. “But for this [exquisite] brand, because of the love everyone puts into the brand … especially the hands of the torcedors in El Laguito who put in so much effort … remains a favorite of consumers around the world.”

Typically, brand anniversaries for Habanos happen during the company’s annual cigar festival held in February. However, that event has been cancelled the past two years due to the Covid-19 pandemic. Next year, the festival will return, and the 2023 Festival del Habano XXIII will take place from Feb. 27 to March 3.

Thursday, attendees will attend a tour of the El Laguito factory during operating hours and have an opportunity to see how the Cohiba cigars are produced followed by a gala dinner Friday evening that will include an auction of two exclusive humidors, the proceeds from which will help support the Cuban healthcare system.

The Cohiba 55 Aniversario, which measures 5 9/10 inches (150 mm) long with a 57 ring gauge, is a new vitola called Victoria. The cigar also wears a foot band, the first time an Edicion Limitada release from Habanos has done so. All of the tobacco blend comes from the Pinar del Rio province of Cuba and includes seco and ligero filler leaves, undergoing an additional fermentation in barrels to give the brand a distinctive aroma and flavor.

According to media reports, Phoenicia Trading Co. stated in May that the retail price of the Cohiba 55 Aniversario at its duty-free location in the Beirut airport would be $300 per cigar.

Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

September 7, 2022

22nd Century Launches VLN in Colorado

Encouraged by the strong results of its pilot program in Chicago, 22nd Century Group will launch its VLN low-nicotine cigarette in Colorado and expand sales of the brand in Illinois.

In addition to its existing partnerships with cigarette retailers Circle K and Smoker Friendly, 22nd Century will announce two distribution partners as part of its launch in Colorado.

To date, the company has already completed state attorney general registrations for VLN in 44 U.S. states and the District of Columbia.

“We are excited to expand our VLN launch to Colorado with both current and new partners. The overwhelmingly positive feedback from consumers during our Chicago pilot has demonstrated impressive demand and rapid market entry for VLN as the first and only tobacco cigarette that actually helps adult smokers smoke less,” said John J. Miller, president of 22nd Century’s tobacco business, in a statement

“Extrapolating our strong pilot market results to a national scale with additional points of sale and geographic coverage gives us confidence we can disrupt and rapidly take significant share in the more than $80 billion U.S. market and $800 billion global tobacco market to create substantial value for our stakeholders.”

In December 2021, the U.S. Food and Drug Administration authorized 22nd Century to market its VLN King and VLN Menthol King cigarettes as modified-risk tobacco products, making them the first combustible products to receive such a designation.

September 7, 2022

Zimbabwe: Record Tobacco Area Expected

Industry representatives expect Zimbabwe’s tobacco farmers to plant a record hectarage of leaf this season as sales of seed soar, reports The Herald.

As of Sept. 2, 2022, at least 925 kg of tobacco seed with the capacity to cover 184,999 ha was sold, according to the Tobacco Research Board. This would be the largest hectarage ever planted if all the seed sold is sown.

Planting of irrigated tobacco began on Sept. 1, 2022, according to the Tobacco Industry and Marketing Board (TIMB). The TIMB stated that it has designed a monitoring system for contractors’ compliance to help relieve farmers’ anxiety over contract farming agreements.

“As the 2022/2023 season commences, TIMB is working toward standardizing the inputs package offered by contractors to growers,” said Chelesani Moyo, TIMB public relations officer.

“We have come up with a compliance administration framework that every registered contractor should meet. This stipulates the minimum inputs package for both small[-scale] and large-scale growers. The conditions also include the last date for inputs distribution for those who are contracted.”

“The pricing of tobacco being determined at the auction floors through a transparent system is justified as the grower is protected from any unfair pricing by the contractor who stands guided by the previous day grade price matrix obtained from the auction floors,” Moyo added.

September 7, 2022

Btomorrow Invests in Kanvas

BAT’s corporate venturing unit, Btomorrow Ventures (BTV), has invested an undisclosed amount in the Kanvas Co., a developer of patented electronic vaporizer technology solutions.

The investment will fuel the research, development and growth necessary to commercialize Kanvas’ proprietary Vapetelligence technology platform and further enable scalability of its products, which are designed to promote device safety in electronic vaporizers and regulated marketplaces globally.

“Kanvas is excited to work with BTV as a strategic investor to advance the commercialization of our unique IP portfolio and technology platform, focusing on our patented and temperature-controlled dosing technology and hardware that provides a secure and controlled delivery system for brands,” said Andy Fathollahi, CEO of Kanvas, in a statement.

“Kanvas’ pioneering innovations will be a catalyst for brands to support better, safer consumer experiences through integrating higher quality software and smart-chip technology.”

“BTV is thrilled to support Kanvas. With its innovative product proposition, strong management team and now strategic partnership with BAT, we believe the company is poised for success, and we welcome it to BTV’s portfolio,” said Lukasz Garbowski, BTV investment director.

Kanvas has a diverse portfolio of patents in technology, software and hardware products to offer brands a comprehensive suite of premium solutions for electronic CBD, cannabis and nicotine-delivery systems.

September 7, 2022

Juul Settles Teen Vaping Investigation

Juul Labs will 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, reports AP.

The probe found that Juul marketed its e-cigarettes to underage teens with launch parties, product giveaways and ads and social media posts using youthful models.

“Through this settlement, we have secured hundreds of millions of dollars to help reduce nicotine use and forced Juul to accept a series of strict injunctive terms to end youth marketing and crack down on underage sales,” Connecticut Attorney General William Tong said on Sept. 6 in a statement.

In reality, most of the limits imposed by the settlement won’t affect Juul’s practices, which halted use of parties, giveaways and other promotions after coming under scrutiny several years ago.

While Juul’s early marketing focused on young, urban consumers, the company has since shifted to pitching its product as an alternative nicotine source for older smokers.

“We remain focused on our future as we fulfill our mission to transition adult smokers away from cigarettes—the number one cause of preventable death—while combating underage use,” the company said in a statement.

While resolving one of the biggest legal threats, Juul Labs still faces nine separate lawsuits from other states. Additionally, Juul faces hundreds of personal suits brought on behalf of teenagers and others who say they became addicted to the company’s vaping products.

The company is also in the process of appealing a marketing denial order (MDO) by the U.S. Food and Drug Administration, which, if upheld, would force its products off the market.

In June, the FDA rejected Juul Labs’ premarket tobacco product applications, saying that the company has submitted insufficient evidence that its products were appropriate for the protection of public health.

While the agency subsequently suspended its MDO, citing scientific issues in the application that warrant additional review, the agency stressed that the stay does not rescind the order.

September 6, 2022

Bangladesh Urged to Keep Vapes Legal

Bangladesh must keep e-cigarettes legal if it wants to achieve its goal of becoming a tobacco-free country by 2040, according to tobacco harm reduction activists.

Speaking during a webinar organized by the Bangladesh-based Voices of Vapers and reported by The Daily Star, several experts addressed the government’s recent proposal to ban vapor products, heat-not-burn devices and other cigarette alternatives in a new amendment to the country’s tobacco control legislation.

Delon Human, president of Health Diplomats, said there is no evidence for the National Tobacco Control Cell’s statement that nicotine in vapes is more harmful than cigarettes.

“There needs to be a credible harm reduction strategy as practiced by many developed countries,” he added. “The authorities must consider regulating a safer alternative, such as vape, and make it accessible to smokers wanting to quit.”

Schumann Zaman, president of the Bangladesh Electronic Nicotine Delivery System Traders Association, said not recognizing vape traders and vape users as stakeholders will have major consequences as many of these vapers are using e-cigarettes as a smoking cessation tool.

John Dunne, director general of the U.K. Vaping Industry Association, said vapes should be regulated separately because vapes and cigarettes are different products.

“Vapes are far safer and a proven method of nicotine-replacement therapy [NRT]. Regulating vapes will help smokers who are trying to quit have access to vapes,” he added.

“Countries such as the U.K., France, New Zealand and Canada have successfully lowered smoking rates by using vaping as NRT. Banning vapes will lower the number of smokers trying to quit.”

September 6, 2022