Blog - Tobacco Reporter

Zambia Expects $92 Million From Tobacco

Zambia expects to increase its tobacco harvest by a quarter and generate $92 million from leaf sales at the close of the marketing season in September, reports Farmers Review Africa.

By Aug. 12, the country’s tobacco growers had sold 35 million kg of leaf through the approval sales floors against projected sales of 33 million kg. Flue-cured Virginia accounted for 27 million kg and burley represented 6 million kg of the leaf sales.

Agriculture Minister Reuben Mtolo told the International Tobacco Growers Association’s Africa Congress in Lusaka on Aug. 24 that the sector had performed well during the season despite various headwinds coupled with low investment.

He said the government is committed to creating an investment-friendly environment.

“The government is now in the process of enacting a new legal framework for the industry that will bring about effective regulation and foresee improved private stakeholder participation across the tobacco value chain,” said Mtolo.

Zambia’s eighth national development plan emphasizes crop diversification and increasing profitability among all actors within the value chain.

August 25, 2022

STG’s Quarterly Sales Down in ‘Difficult’ Year

Scandinavian Tobacco Group’s (STG) net sales and EBITDA declined 2 percent and 15 percent, respectively, for the second quarter of 2022 against a strong second quarter last year. The company cited lower-than-expected productivity in its supply chain, resulting in lower production volumes and higher costs. While anticipating improvements in the second half of the year, STG expects the delay to impact its full-year net sales and costs negatively.

According to STG, the level of the production backlog was almost DKK150 million ($20.12 million) by the end of July. “However, as the improvements kick in combined with pricing initiatives across the product categories and easier year-on-year comparisons, we expect to return to EBITDA growth in the second half of the year,” the company wrote in a statement.

“2022 has turned out to be a difficult year for Scandinavian Tobacco Group, and we have had to adjust our full-year expectation for organic EBITDA growth,” said STG CEO Niels Frederiksen. “This development is disappointing and is primarily driven by temporary challenges in our supply chain and to a lesser extent by more cautious consumer behavior especially in the important U.S. handmade cigar market.

“Still, we maintain our financial expectations of delivering strong cash flows and positive EPS growth for 2022, and we continue to implement our Rolling Toward 2025 strategy. The acquisition of Room101 as well as the continued expansion of our retail footprint in the U.S. are good examples of this. Overall, we remain confident in the strength of our underlying business and our cash flow.”

August 25, 2022

Vuse Extends Lead Over Juul

The prospect of a potential on sales of Juul Labs e-cigarettes in the U.S. has helped accelerate the market share gains of R.J. Reynolds Vapor Co.’s Vuse brand, reports the Winston-Salem Journal.

According to the latest Nielsen analysis of convenience store data, which covers the four-week period ending Aug. 13, Vuse’s market share rose from 37.4 percent in the previous report to 39 percent compared with Juul declining from 30.7 percent to 29.4 percent.

Meanwhile, No. 3 Njoy dropped 3 percent to 2.9 percent while Fontem Ventures’ blu e-cigarettes slipped from 1.7 percent to 1.6 percent.

In June, the Food and Drug Administration 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 marketing denial order (MDO), citing scientific issues in the application that warrant additional review, the agency stressed that the stay does not rescind the MDO, leaving Juul in limbo.

Vuse, by contrast, has received FDA marketing approval for several product varieties, including Vuse Vibe and Vuse Ciro and Vuse Solo products.

In a note to investors, Goldman Sachs analyst Bonnie Herzog said that Juul’s market share decline occurred in part “following confusion around the FDA’s marketing denial order against Juul.”

As recently as May 2019—before the company started withdrawing flavored products in response to regulatory pressures—Juul accounted for 74.6 percent of the U.S. e-cigarette market.

August 25, 2022

VLN Recognized as ‘Best New Product’

22nd Century Group’s VLN King and VLN Menthol King reduced-nicotine content cigarettes have been awarded Best New Product in the cigarette category by Convenience Store News.

Now in its 26th year, the Best New Products Awards recognize the most innovative, high-quality products introduced into the convenience channel to meet consumers’ evolving needs and fit a convenience store’s value proposition. This is the first Convenience Store News award in the cigarette category.

“We are honored and excited that VLN was recognized with the Best New Product award in the cigarette category by Convenience Store News,” said John J. Miller, president of 22nd Century’s Tobacco Business, in a statement.

“VLN is truly a game-changer, and this award confirms the market’s interest in VLN and their interest in new tools to help adult smokers smoke less. Our VLN pilot has exceeded expectations in Chicago, and we are now expanding our VLN launch statewide in Colorado as we work to broaden availability of this important new product.”

The Best New Products Awards are judged by a panel of consumers on value, convenience, appearance and packaging along with attributes such as taste and ingredients. Judging was supervised and tallied by Past Times Marketing, a New York-based consumer research and product testing firm.

August 25, 2022

Dunne: Illicit Vapes a Big Problem in U.K.

Up to 60 percent of disposable vapor products sold in the U.K. are illicit, according to the U.K. Vaping Industry Association (UKVIA).

Speaking to the U.K. trade publication Convenience Store, UKVIA Director General John Dunne estimated that between 40 percent and 60 percent of disposable vapes currently on sale in the country were either noncompliant with domestic laws or counterfeit.

“Based on the amount of [illicit] products I see in the marketplace, the number of reports of illicit sales and what’s being reported to trading standards, I believe it’s that big and a huge concern,” he explained. “I probably receive between 200 [reports] and 400 reports of illegal sellers in the U.K. every month.”

Dunne warned that noncompliance among retailers could destroy a category with huge potential. “This is a market that has huge growth potential for retailers, if it’s allowed [to] grow in a responsible manner, but having a short-term view and ignoring compliance is going to have a detrimental effect. And potentially lead to things like the category being banned, flavor bans or plain packaging.”

He also called for more action on retailers found to be selling vaping products to those under the age of 18.

August 25, 2022

‘FDA Failed to Consider Marketing Plans’

The U.S. Food and Drug Administration must reevaluate the premarket tobacco product applications (PTMAs) of six e-cigarette manufacturers after an appeals court ruled that the agency failed to adequately consider the companies’ marketing plans, reports Bloomberg Law.

On Aug. 23, the U.S. Court of Appeals for the 11th Circuit granted petitions for review filed by Bidi Vapor, Diamond Vapor and four other companies challenging the FDA’s rejection of their e-cigarette applications. According to Chief Judge William Pryor, the agency didn’t assess “the companies’ marketing and sales-access-restriction plans designed to minimize youth exposure and access.”

The court explicitly labeled the FDA’s decision-making as “arbitrary and capricious.” Prior legal decisions have determined that FDA action must consider all relevant factors in order to be legally justifiable. In the case of these vape manufacturers, the court ruled that the FDA had not performed such consideration.

Vapor industry advocates welcomed the decision. Gregory Conley, director of legislative and external affairs at the American Vapor Manufacturers Association said that while court ruling does not order the FDA to grant PMTAs—and that the agency is likely to deny the applications in the future—the companies involved could end up in the queue for review in 2025, which keeps them in business.

“Additionally, this leaves the door open for further litigation on these and other PMTAs,” Conley wrote on Twitter. “The FDA’s vague and undefined ‘appropriate for the protection of public health’ standard has long been open for attack. This is just the start.”

The 11th Circuit decision follows revelations that forced the FDA to admit to not considering all evidence when issuing marketing denial orders (MDOs) to vape products made by Juul and Turning Point Brands. In the interests of public health, future FDA decision-making must engage with all available evidence, not just evidence that leads to their preferred outcomes.

August 24, 2022

22nd Century to Ring Nasdaq Closing Bell

Representatives of 22nd Century Group will ring the Nasdaq Closing Bell on Aug. 26, 2022, celebrating the launch of VLN reduced-nicotine cigarettes.

In December 2021, the U.S. Food and Drug Administration gave 22nd Century Group permission to market VLN cigarettes as modified-risk tobacco products, making them the first combusted cigarettes to be authorized as such and the second tobacco products overall to receive “exposure modification” orders.

Since that time, the company has launched VLN cigarettes in various pilot markets, including in the Chicago area.

According to 22nd Century Group, the Chicago pilot has exceeded expectations, leading the company to accelerate and expand its launch plans to the state of Colorado.

“Our VLN pilot program in Chicago has confirmed the market’s interest in VLN as adult smokers look for new tools to help them smoke less, an important step to improving overall public health,” said John J. Miller, president of 22nd Century’s tobacco business, in a statement.

“Based on the better-than-expected results of our pilot, we are accelerating our launch plans and commencing sales in the state of Colorado through multiple partners committed to helping us offer adult smokers a real choice, a product that can help them smoke less.”

August 24, 2022

CTP: ‘Grandfathered’ Becomes ‘Pre-existing’

The U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) has updated the term “grandfathered tobacco product” to “pre-existing tobacco product” to describe these products more appropriately.

Additionally, the term “grandfathered,” when used to describe someone or something exempt from a new law or regulation has its roots in 19th century racist voting laws, according to the FDA.

Like the grandfathered products before it, a pre-existing tobacco product is any tobacco product (including those products in test markets) that was commercially marketed in the United States as of Feb. 15, 2007.

As was the case with submitting a grandfathered determination request, submitting a request to determine the pre-existing status of a tobacco product is voluntary and not required under the Federal Food, Drug and Cosmetic Act.

According to the CTP, the terminology update requires no additional action by companies with pending grandfathered determination request.

August 24, 2022

Study Warns of ‘Thirdhand’ Smoke

A new U.S. study, published in Environmental Science and Technology, warns against the risk of “thirdhand” smoke, which forms when particles from a cigarette seep into materials like hair, clothes and furniture.

Researchers at the Berkeley Lab in California carried out a series of experiments on humans and mice.

In one study, three volunteers who did not smoke were asked to wear the clothes of a heavy cigarette user for three hours.

Tests showed they had up to 86 times higher levels of the toxic compounds NNK and NNN in their urine after the experiment.

In another study, researchers exposed the same carcinogens to human lung tissue and showed they can cause DNA damage, which is one of the triggers of cancer.

“These findings illustrate the potential health impacts of thirdhand smoke, which contains not only TSNAs but hundreds of other chemicals, some of which are also known carcinogens,” said author Neal Benowitz, a medic at the University of California, San Francisco.

“Next steps for this research will explore in more detail the mechanisms of adverse health effects associated with tobacco and cannabis residues, effective remediation strategies and translation of scientific findings to tobacco control practice.”

August 24, 2022

Bidi Vapor Prevails Over FDA in PMTA Denial Suit

The U.S. Court of Appeals for the Eleventh Circuit has ruled that the U.S. Food and Drug Administration’s marketing denial orders (MDOs) for Kaival Brands’ Bidi Vapor products are arbitrary and capricious.

“The Administration refused to consider the marketing and sales access restrictions plans based on both its need for efficiency and its experience that the marketing and sales access restrictions do not sufficiently reduce youth use of electronic nicotine products,” Chief Judge William Pryor wrote. “Because ‘agency action is lawful only if it rests on a consideration of the relevant factors,’ and the Administration failed to consider the marketing and sales access restrictions plans, the marketing denial orders were arbitrary and capricious.”

In the court’s 2-1 split decision, additionally, the majority stated:

The court recognizes relevant distinctions between closed/cartridge systems (that are easy to conceal and use) and the open tank liquids sold in vape shops;
FDA’s refusal to review marketing plans was error and not harmless (disagreeing with Fifth and DC Circuits).

In the 70-page opinion, Bidi Vapor, Diamond Vapor, Johnny Copper, Vapor Unlimited, Union Street Brands and Pop Vapor, the petitioners in the case, had all appeals granted, denial orders vacated and remanded.

In her dissent, Judge Robin Stacie Rosenbaum wrote, “Spoiler alert: This opinion contains spoilers on how the U.S. Food and Drug Administration will resolve petitioner vaping product companies’ premarket tobacco product applications on remand from this appeal.”

She then stated “never mind. There’s nothing to spoil here. Anyone who knows all the relevant facts necessarily already knows how this one ends.”

She stated that the while the majority faulted the FDA for not considering the companies’ proposed restrictions on youth use, the FDA’s framework for evaluating PMTAs leaves “no room for doubt that the FDA will deny—in fact, under the Family Smoking Prevention and Tobacco Control Act, must deny—the applications on remand. To paraphrase the Borg, then, remand is futile.”

August 24, 2022