Blog - Tobacco Reporter

CRP to Build $80 million Plant in Harare

Cut Rag Processors plans to build an $80 million cigarette factory in Harare, Zimbabwe, reports The Sunday Mail, citing sources familiar with the project.

The company, which is one of the country’s largest exporters of cut rag and manufactures the Remington Gold cigarette brand, has already started clearing 60,000 square meters of land in the Lochinvar industrial area.

The factory will have both a primary department for the production of cut rag and a secondary department for the manufacture of cigarettes, an unnamed source told The Sunday Mail.

While confirming the construction of the new facility, Cut Rag Processors Managing Director Nyasha Chinhara declined to provide details, citing “finalization of confidential internal processes.”

The project fits with Zimbabwe’s Tobacco Value Chain Transformation Plan, which aims to extract more value from the tobacco business.

The world’s sixth largest producer of leaf tobacco, Zimbabwe currently captures only a fraction of the trade’s value. The government aims to unlock $5 billion in export revenue by 2025.

Net foreign currency inflows from tobacco stood at $45.7 million in 2020. About 98 percent of tobacco produced in Zimbabwe is exported in green (semi-processed) form by big tobacco merchants.

Zimbabwe has three processing facilities owned by Zimbabwe Leaf Tobacco, Tobacco Processors Zimbabwe and Mashonaland Tobacco Co.

Cut Rag Processors was formed in February 2000 as the first independent cut rag production facility in Zimbabwe servicing both the domestic and export markets.

The establishment of the company paved the way for the merger of BAT and Rothmans in 2000. Previously, the Competition and Tariff Commission had rejected the merger out of concern that the merged entity would create a monopoly.

Between 2012 and 2014, Cut Rag Processors closed its cigarette line. A year later, the company decided to exit the entire tobacco business. It returned to production after its owner, Gold Leaf, sold the business to new shareholders in 2019.

Encouraged by the government’s plan to boost Zimbabwe’s tobacco earnings, the new investor injected capital into the manufacturing business.

October 9, 2022

Cuba Plots Tobacco Course Post-Hurricane

Tabacuba Business Group of Cuba is drawing up new strategies for tobacco output in the 2022–2023 harvest following the destruction of Hurricane Ian, reports Prensa Latina.

Marino Murillo, president of Tabacuba, considered the Pinar del Rio province as decisive in the effort.

All tobacco that was protected in natural curing houses and warehouses will be collected; 33,000 tons of the existing 41,000 tons are in this province, which reported 80 percent infrastructure destruction.

Anywhere from 15,000 tons to 17,000 tons of tobacco will be taken to other provinces, and seedbed irrigation will be immediately resumed.

Warehouses and natural curing houses that are in good condition will be stripped of available materials because the country is deficient in wood, according to Murillo.

Tobacco growers in Pinar del Rio kept 650 tons of covered tobacco from being damaged with their early actions before the hurricane.

According to Murillo, Cuba is still planning on planting tobacco, which covers 15,000 ha nationwide, but the area to be used in Pinar del Rio has not yet been defined and will depend on possible curing houses that can be rebuilt.

October 8, 2022

Campaign for Harm Reduction in Strasbourg

As a kickoff for the #BackVapingBeatSmoking campaign, representatives of the World Vapers Alliance (WVA) presented Members of the European Parliament in Strasbourg with a “Vaping Products Directive” to show how e-cigarettes need to be treated to fulfill their potential as tobacco harm reduction tools.

The campaign launches as European legislators review the Tobacco Products Directive. Responding to the EU Commission’s public call for evidence, the WVA has spoken out against flavor bans and excessive regulation.

“By backing vaping, we can beat smoking and save 19 million lives with sensible regulation,” said Michael Landl, director of the WVA. “The EU call for evidence has seen a record number of 24,000 responses, showing that consumers want to embrace tobacco harm reduction, and it happens that vaping has been proven one of the most successful so far.

“The EU needs to put an end to current discussions about flavor bans, and vaping must be kept affordable and accessible. It is time for the EU to fully endorse tobacco harm reduction and to make vaping a centerpiece of it.”

The #BackVapingBeatSmoking campaign launched in Strasbourg, France, with a “Don’t Let 19 Million Lives Fall” protest art installation and will spread to 10 cities in six countries during October 2022 through November 2022.

“We will host community events and protests in France, Poland, Czech Republic, Italy, Portugal and Belgium to draw attention to one of the most crucial pieces of legislation for the future of vaping. It is time for politicians to listen to consumers and science,” said Landl in a statement.

The WVA has also launched a petition against harmful vaping regulation, such as flavor bans or high taxation on vaping products. The signatures will be delivered to Members of the European Parliament at the end of the tour in November.

October 8, 2022

Shopkeepers up in Arms Over Tobacco Bill

Bangladesh’s proposal to require all tobacco businesses to obtain licenses will adversely impact the livelihoods of small traders and hurt government revenue, according to critics.

Lawmakers are currently reviewing a draft law that would ban tobacco sales from makeshift shops, outlaw product displays and prohibit the sale of single cigarettes, a common practice in many low-income countries.

Muhammad Helal Uddin, president of the Bangladesh Shop Owners Association, insisted licenses should be required only for manufacturers and warned that shopkeepers would take to the streets if the bill became law.

Meanwhile, economists predicted that the proposal would deprive the government of significant tax earnings at a time of economic hardship.

“The tobacco sector is the largest contributor to VAT income. Any abrupt decision without the consultation of the revenue board would surely backfire and nosedive revenue income,” an unnamed National Board of Revenue official was quoted as saying by the Dhaka Tribune.

The National Board of Revenue earned nearly BDT300 billion ($2.91 billion) from cigarette taxes in fiscal 2021–2022—equivalent to approximately 10 percent of Bangladesh’s total revenue income.

Ahsan H. Mansur, executive director of the Policy Research Institute, cautioned that the draft law would boost the illegal trade in tobacco products and drive up sales of low-cost brands at the expense of higher priced varieties.

“Since these vendors will not get the supply of top brands produced by the multinational tobacco companies, they will sell low-quality brands of the local companies that are least interested in complying with rules and regulations,” said Mansur.

Mansur advised government to instead focus on raising awareness of the health risks of tobacco consumption.

According to Global Adult Tobacco Survey, 44 percent of Bangladeshis used tobacco in 2009. Through a range of anti-tobacco measures, the government brought down this number to 34 percent in 2017. If the trend continues, the smoking rate could dip below 5 percent over the next 15 years to 20 years, according to Mansur.

October 7, 2022

Snowplus Expands in the Philippines

Snowplus of China is expanding its vaping business in the Philippines, reports The Philippine Star.

Co-founder and head of overseas markets Derek Li is confident the company can build a good distribution network in the country.

Snowplus has invested $2 million in quality and safety research since 2019 and has received over $150 million in financing, which is among the largest funding for any startup in the e-cigarette industry.

Snowplus has also committed to raising industry quality and standards to deliver safe and reliable e-cigarettes to consumers in the Philippines.

In line with new vapor industry regulations in China, Snowplus recently obtained permission to operate from the State Tobacco Monopoly Administration. The license authorizes the company to produce 80 million pods per year.

The company established three advanced scientific laboratories with equipment to test its products’ power supply and durability, among other characteristics.

“Consumers can trust Snowplus. We work only with the most reputable partners and deliver products of the highest quality that are 100 percent safe,” Li said.

October 7, 2022

Magellan Denies Receiving MDO

Magellan Technology insists it did not receive a marketing denial order (MDO) for its Hyde Brand, despite a U.S. Food and Drug Administration announcement to the contrary.

In an email to Tobacco Reporter’s sister publication, Vapor Voice, Magellan CEO Jon Glauser said his company had received a “refuse to accept” (RTA) letter. An RTA is not a judgment on the product’s appropriateness for the protection of public health. It is merely a determination that the premarket tobacco product application doesn’t conform to the FDA’s standards, and it leaves the applicant the option to refile.

“A refuse to accept letter is a refusal based on nothing more than a technical review of the applications’ contents, which, in this case, was a missing document, i.e., a sworn certification related to the translation of certain components of the application,” wrote Gauser. “In other words, the refusal to accept was based on bureaucratic technicalities.”

In its letter to Magellan, the FDA wrote that the absence of the forms prevented the agency from accepting and processing the applications. “In other words, FDA could not have conducted any scientific review because it refused to accept the application,” wrote Glauser. “Our counsel has demanded that FDA not only retract the press statement it made but also issue a corrective statement making clear that FDA did not issue an MDO to Magellan and that it has not yet conducted a scientific review of Magellan’s products.”

Magellan is not the first company to take issue with the FDA’s handling of the PMTA process. The agency is currently facing more than 20 lawsuits and has had to backtrack on MDOs issued to companies such as Juul Labs, Turning Point Brands and Kavial Brands.

October 7, 2022

Campaigners Welcome Delay Tobacco Bill

Legalizing vape sales in Malaysia remains on the table despite the heath minister postponing the “generational endgame” anti-smoking bill after considerable public and political pressure, according to the Malaysian Organization of Vape Entities (MOVE).

Malaysia’s Minister of Health, Khairy Jamaluddin, made the decision not to table the bill despite the bipartisan special parliamentary select committee making amendments and reaching consensus.

“This delay now gives MPs time to get the country’s tobacco control strategy right. We strongly believe that vaping should be not part of the generational endgame bill. It would only criminalize vape consumers and retailers,” said MOVE President Samsul Arrifin.

MOVE would like vaping and noncombustible products out of the legislation and for the government to treat them as harm reduction tools.

Tobacco harm reduction (THR) advocates were heartened in April when the regulation of vaping devices was announced to take effect in August. It was assumed the move would precede the legalization of vape sales in Malaysia.

They also took heart from a visit last month to New Zealand by a Malaysian parliamentary delegation to understand what policies are required to achieve smoke-free. New Zealand has legalized and regulated vape sales and is now on track to achieve its national ambition of Smoke-free 2025—where 5 percent or less of the population smoke regularly.

New Zealand is also looking to implement a similar generational smoking ban, which would see the prohibition of tobacco product sales to anyone born in 2009 or after. However, Malaysia’s proposal for those born in 2007 or after would also ban vaping product sales.

“New Zealand’s smoking rate is less than half of ours because they’ve regulated adult-only retail access to vaping products. New Zealand actively steers smokers toward safer nicotine products, with vaping an incredibly effective off-ramp to smoking. If Malaysia is to reduce smoking to below 5 percent by 2040, then we need to regulate, not ban, vaping products,” said Arrifin.

The Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA) says about 70 countries have already proven that a THR approach works. In contrast, Australia is showing just how badly vaping bans fail.

“As well as giving the 21 percent of Malaysians who smoke a less harmful alternative, regulating vaping will ensure Malaysia has product safety standards, not to mention extra tax revenue. We are pleased the government is taking its time on this one. An evidence-based approach will serve them well,” said Nancy Loucas, executive coordinator of CAPHRA.

October 7, 2022

Malaysia Removes NRT from Poisons List

Malaysia’s Health Ministry has categorized nicotine-replacement products as nonpoisons to make them more accessible to consumers, reports The New Straits Times.

Minister Khairy Jamaluddin said the move was done by granting an exemption to nicotine under the Poisons Act 1952 for products in the form of patches or gum registered under the Control of Drugs and Cosmetics Regulations 1984.

“This exception is expected to help smokers, who are motivated to quit smoking, in dealing with the withdrawal symptoms,” said Khairy.

At present, smokers who want to quit smoking have limited access to nicotine-replacement products as they are regulated under the Poisons Act 1952.

Under the law, nicotine is classified as a “Group C poison” and can be dispensed only by licensed pharmacists or registered medical practitioners.

The New Straits Times article made no mention of nicotine vapor products, which tobacco harm reduction advocates consider to be the most effect nicotine-replacement products on the market.

Malaysian lawmakers are currently considering the Control of Tobacco Product and Smoking Bill 2022, which, among other measures, would ban the sale of tobacco products, including e-cigarettes, to anyone born after 2007.

October 7, 2022

FDA Issues Warning to Puff Bar, MDOs to Hyde

New data from the 2022 National Youth Tobacco Survey (NYTS) shows that 2.5 million U.S. youth use e-cigarettes, according to the published findings in the Morbidity & Mortality Weekly Report released by the U.S. Food and Drug Administration in conjunction with the Centers for Disease Control and Prevention.

“The FDA remains deeply concerned about e-cigarette use among our nation’s youth. It’s clear that we still have a serious public health problem that threatens the years of progress we have made combatting youth tobacco product use,” said FDA Commissioner Robert M. Califf. “We cannot and will not let our guard down on this issue. The FDA remains steadfast in its commitment to using the full range of our authorities to address youth e-cigarette use head-on.”

The study shows that about one in 10 middle school (3.3 percent) and high school (14.1 percent) students reported current e-cigarette use; current use is defined as use within the past 30 days. About 85 percent of surveyed students reported using flavored e-cigarettes while 27.6 percent reported daily use. Respondents most commonly used disposables, with Puff Bar being most common (14.5 percent) followed by Vuse (12.5 percent) and Hyde (5.5 percent). Puff Bar and Vuse were pre-specified options on the survey, but Hyde was written in by students as their preferred brand.

Since methodology changes occurred, including in survey administration and data collection procedures due to the Covid-19 pandemic, comparisons between the 2022 NYTS and previous years is limited.

Following the release of this data, the FDA has issued a warning letter to Puff Bar for receiving and delivering e-cigarettes in the U.S. without a marketing authorization order. The FDA has requested a response within 15 working days of receiving the letter, detailing how the company intends to address the FDA’s concerns, including the dates on which they discontinued the sale and/or distribution of these tobacco products and plans for maintaining compliance with the Federal Food, Drug and Cosmetic Act. Failure to address the violations puts the manufacturer at risk of regulatory action, such as a civil money penalty, product seizure and/or injunction.

The Puff products subject to this warning letter are nontobacco nicotine products.

After reviewing premarket tobacco product applications for 32 Hyde e-cigarettes, the FDA issued marketing denial orders (MDOs) for these applications submitted by Magellan Technology Inc. In conducting its scientific review, the FDA determined that the applications lacked sufficient evidence demonstrating that the products would provide a benefit to adult users that would be adequate to outweigh the risks to youth. No Hyde products have received marketing authorization orders from the FDA.

“Congress gave the FDA authority to hold manufacturers and retailers who violate the law accountable,” said Brian King, director of the FDA’s Center for Tobacco Products. “FDA is actively working to identify violations and to swiftly seek corrective actions, particularly for products popular among youth. We will use all compliance and enforcement tools available to us, as appropriate, to protect our nation’s youth.”

October 6, 2022

JTI Investing in Philippines

Japan Tobacco International is expanding its operations in the Philippines, hiring additional workers for its global business service center (GBSC).

The GBSC was established in 2020, at the height of the Covid-19 pandemic, to service JTI’s affiliates in Asia-Pacific and the Americas. In an interview with the Manila Bulletin Business, JTI Philippines General Manager John Freda said the company would be hiring an additional 150 people, bringing the center’s overall manpower to 600.

Although there are no immediate plans, Freda did not discount the possibility of JTI producing its Ploom heated-tobacco sticks in the Philippines, which serves as the company’s manufacturing hub for the Asia-Pacific region. Ploom is currently produced in Japan and in the EU.

JTI’s cigarette factory in Malvar, Batangas, exports more than 50 percent of its production mainly to 16 countries in the Asia-Pacific region. The factory employs 800 people with marketing team support of over 4,000 personnel across the country.

In the interview, Freda also expressed his concern about the growing illicit cigarette trade in the Philippines, which is estimated to account for 16 percent to 18 percent of the market. In some areas in Mindanao, the share of smuggled cigarettes could reach 60 percent of the market.

Citing the experience of Malaysia as a cautionary example, Freda urged the Philippines to step up enforcement and adopt reasonable rates of taxation.

“We are paying PHP55 [$0.94] per pack in taxes, and clearly the illicit operator is not paying like that, and as prices increase due to taxation, it becomes even more profitable for smugglers and therefore need[s] strong enforcement measures,” he said.

October 6, 2022