Blog - Tobacco Reporter

Revenue Down as RLX Adjusts to New Rules

RLX Technology reported net revenues of RMB2.23 billion ($333.5 million) for the second quarter of its fiscal year 2022 compared with RMB2.54 billion in the same period of 2021. Gross profit was RMB977.9 million compared with RMB1.15 billion in the comparable 2021 period.

The company attributed the decrease in net revenues primarily to the suspension of store expansions and new product launches to comply with regulatory requirements.

Chinese authorities have recently moved the vapor business under the regulatory framework for tobacco products. E-cigarette manufacturers now require operating licenses from the State Tobacco Monopoly Administration (STMA) while vapor products must satisfy various standards and technical requirements before entering the market.

On June 10, 2022, one RLX Technology subsidiary obtained an STMA license to manufacture e-liquids. On July 22, 2022, another subsidiary was licensed to own the RELX brand and manufacture RELX branded e-vapor rechargeable devices, cartridge products and products sold in combination with e-vapor rechargeable devices and cartridge products.

“Over the past several months, we have made meaningful strides in adapting our business and product development to the new regulatory framework,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we have obtained the License for Manufacturing Enterprise and received regulatory approvals for some of our new products, demonstrating our operational excellence and industry-leading R&D capabilities.”

“In light of the regulatory changes, we are off to a slow start of the sales of our new products that are compliant with the National Standards in the new transaction system mandated by the regulators,” said Chao Lu, chief financial officer of RLX Technology. “Despite the macro headwinds, we will continue to steadily focus on cost optimization while reinforc[ing] our product competitiveness under the new regulatory regime to create sustainable, long-term growth for our shareholders.”

September 21, 2022

22nd Century Partners With Eagle Rock

22nd Century Group will start placing its VLN reduced-nicotine cigarettes in thousands of stores across Colorado with Eagle Rock Distributing Co. With more than 90 years of history, Eagle Rock Distributing Co. is a leading beverage distributor of premium alcoholic beverages servicing license retailers across Georgia and Colorado.

“We’re thrilled to partner with Eagle Rock as we open VLN sales across Colorado. In addition to our existing retail partnerships from our Chicago pilot, we now have access to nearly 7,000 prospective new locations through Eagle Rock’s network, to include both on-premise and off-premise locations,” said John J. Miller, president of 22nd Century’s tobacco business, in a statement.

“We are excited to partner with 22nd Century Group to market VLN across the state of Colorado,” said Michael Economos, president of Eagle Rock Distributing Co. “We want Colorado to be the first state to have a combustible cigarette brand that meets the U.S. Food and Drug Administration[‘s]

and Biden administration’s proposed nicotine cap broadly available to adult smokers across the state to truly help them smoke less. We have had similar ‘nonalcoholic’ adult beverage offerings for decades, and we are way overdue for adult cigarette smokers to have an analogous option.”

22nd Century also partners with Circle K, one of the largest convenience chains in North America, and Smoker Friendly, a leading pioneer in the cigarette and tobacco store category with more than 800 independently owned and operated retail stores.

September 20, 2022

Christoph Peternell to Lead Hoffmann’s Tins Business

Hoffmann has named industry expert Christoph Peternell as managing director for its tins business. He replaces Andre Seiler and will be based at the company’s headquarters in Thun, Switzerland.

Peternell brings over 25 years of international experience managing production facilities and their corresponding supply chain logistics. He has an accomplished history of strategic and operational successes in various fast-moving consumer goods companies, where he served many years as interim or plant manager. His most recent position was in the infant food sector as chief operating officer of Hochdorf Swiss Nutrition, Switzerland.

Peternell joins Hoffmann amid a period of heightened investment in its tins business, which includes upgraded equipment, renewable energy to decarbonize the plant, new production lines and expanded product features.

“Christoph has demonstrated the ability to lead production and logistics teams worldwide and to maximize growth potential in various consumer sectors consistently,” said Mark Aegler, CEO of Hoffmann Neopac, in a statement. “He is joining Hoffmann at an exciting, forward-thinking time highlighted by significant near-term investments to expand capacity and product versatility. We’re delighted to welcome him to the Hoffmann family.”

Peternell holds a master’s degree in food technology, and he has completed various further diplomas in business administration. He lives with his family in Konstanz, Germany.

September 20, 2022

PMI Renews Call to Help End Smoking

Philip Morris International is calling on policymakers, regulators, public health advocates, tobacco companies and activists to unite behind the goal of ending cigarette smoking.

As the United Nations General Assembly convenes to discuss global challenges, the company is releasing a white paper, “Rethinking Disruption: Innovating for Better in an Era of Division,” which previews select findings from a new international survey highlighting the broad societal support for disruptive innovations to improve public health and address other critical issues. The white paper explores how the world’s most significant challenges—including smoking—can be solved through pragmatic solutions and decisive, concerted action.

The survey respondents (17,207 adults aged 21 and older in 14 countries) believe that the development and adoption of new technologies, innovations and capabilities can enable significant progress against a range of issues over the next 10 years to 20 years, including: encouraging healthier eating habits (78 percent); ensuring quality and affordable healthcare for all (72 percent); reducing smoking rates (65 percent); and eliminating hunger and malnourishment (62 percent).

“We believe that there exists a real opportunity for activists, public health leaders and policymakers to significantly improve public health by helping millions of adults who would otherwise continue to smoke switch to better alternatives,” said Jacek Olczak, CEO of PMI. “For more than a decade, PMI has been transforming for good, directing our resources and energy to provide better options to adult smokers and deliver a smoke-free future as quickly as possible. Though the best choice is never to start smoking or to quit if you do, we know that, realistically, many smokers will not quit—and, frankly, those adults deserve better.”

Senior PMI executives, including Olczak, will address international forums during the week of Sept. 19, talking about the pressing need for collaboration on solutions that are real, practical and grounded in science to achieve meaningful progress in the tobacco sector and beyond.

“Innovation is a crucial piece of the solution of eliminating cigarettes, but it’s not the only piece,” said Gregoire Verdeaux, senior vice president of external affairs at PMI. “Once scientific and technological advances have been made, regulations need to keep up. Policies should reflect that certain tobacco and nicotine products are less harmful and ensure that adult smokers who do not quit can access and afford these better alternatives to cigarettes. This is especially true in developing countries, where most smokers are.”

A list of events can be found on the company’s website.

September 19, 2022

Studies Refute Vaping-Smoking Link

There is no evidence that the use of e-cigarettes and heated-tobacco products is leading nonsmokers and youth toward smoking, according to several studies.

Action on Smoking and Health (ASH) U.K. cited the results of five large surveys of 11-year-olds to 16-year-olds in the U.K. between 2015 and 2017 showing that “most young people who experiment with e-cigarettes did not become regular users,” according to media reports.

“Overall, there is no evidence that e-cigarettes have driven up smoking prevalence in this age group. In fact, smoking prevalence among young people has declined since e-cigarettes came onto the market,” ASH U.K. stated.

A time-series analysis led by Emma Beard between 2007 and 2018 in the U.K. showed that the increase in the prevalence of e-cigarette use in England among the entire sample does not appear to have been associated with an increase in the uptake of smoking among young adults aged 16 to 24.

A 2022 study by University of Bristol researchers found that, based on the “current balance of evidence, using triangulated data from recent population-level cross-contextual comparisons, individual-level genetic analyses and modeling, we do believe, however, that causal claims about a strong gateway effect from e-cigarettes to smoking are unlikely to hold while it remains too early to preclude other smaller or opposing effects.”

A 2020 study by Colin Mendelsohn and Wayne Hall concluded that claims of vaping serving as a gateway to smoking are unconvincing. “Smoking more often precedes vaping than vice versa, regular vaping by never-smokers is rare, and the association is more plausibly explained by a common liability model,” they stated.

Another comprehensive analysis of whether vaping causes smoking uptake was published by the University of Queensland in Australia. That study also concluded that there was little evidence of a gateway effect. If a gateway effect does exist, it is likely to be small, the study said.

A 2021 study by Wayne Hall and Gary Chan on the “gateway” effect of e-cigarettes found that “e-cigarette use has not been accompanied by increased cigarette smoking among young people in the United States as would be the case if e-cigarette use were a major gateway to cigarette smoking.”

September 19, 2022

New Vaping Quality and Safety Specs in Britain

The British Standards Institution has developed a fast-track informal standard, PAS 8855, to address quality, performance and safety issues related to vaping products, reports ECigIntelligence.

The new PAS (publicly available specification), sponsored by Juul Labs, recognizes the progress made in the construction and use of e-cigarettes since PAS 54115 was issued in 2015.

September 19, 2022

Kathmandu to Ban Public Tobacco Use

Kathmandu will ban the consumption of tobacco products in public places starting Sept. 17, reports Onlinekhabar.

According to Nepal’s Tobacco Products (Control and Regulatory) Act 2011, no person shall be allowed to smoke or consume tobacco in public places.

The ban will cover cigarettes, bidis and cigars as well as smokeless products such as chewing tobacco and gutka.

Violators of the rules risk fines of up to NPR100 ($0.78) and will be removed from the premises.

The city defines public places as government offices, educational institutions, libraries, health posts, airports, old age homes, orphanages, public toilets, cinema halls, theaters, restaurants and factories.

September 16, 2022

Sub-Saharan Africa Urged to Embrace THR

With more than 200,000 smoking-related deaths each year in sub-Saharan Africa, there is an urgent need for the region to embrace tobacco harm reduction, according to a new briefing paper published by Knowledge Action Change (KAC).

KAC argues that tobacco harm reduction could generate significant public health gains for the countries in sub-Saharan Africa and is particularly crucial at a time when the number of tobacco users across the continent as a whole is set to increase to 62 million by 2025.

“Many people either cannot or do not want to quit nicotine use, but smoking is deadly,” KAC wrote in a press note. “Tobacco harm reduction offers smokers the choice to switch from combustible cigarettes to safer nicotine products that pose fewer health risks, including nicotine vapes (e-cigarettes), tobacco-free nicotine pouches, Swedish-style snus (an oral tobacco) and heated-tobacco products.”

Authored by THR Malawi founder Chimwemwe Ngoma, Tobacco Harm Reduction in Sub-Saharan Africa investigates the current status of tobacco harm reduction in the 48 countries of sub-Saharan Africa.

As well as considering the economic role of tobacco in the region, the paper provides a country-by-country guide on the availability and legal status of safer nicotine products. It notes progress is being made with tobacco harm reduction across sub-Saharan Africa, highlighting the work of consumer advocacy groups offering tobacco users accurate information about combustible cigarettes and safer nicotine products.

However, the availability and accessibility of products such as nicotine vapes remains poor in many countries while appropriate regulation is needed for product safety. Many smokers cannot access smoking cessation support. Some governments are unable to meet basic requirements for a robust healthcare system, and there is a lack of funding to prevent the noncommunicable diseases linked to smoking.

There is also widespread and deliberate misinformation circulating about safer nicotine products, and many consumers, healthcare institutions and governments in sub-Saharan Africa remain unaware of tobacco harm reduction’s potential.

“To become smoke-free, sub-Saharan Africa needs safer nicotine products that are locally feasible, affordable, appropriate, accessible and culturally acceptable, supported by sensible product regulation,” says Chimwemwe. “For this to happen, governments in Africa should strive to remain independent, conduct their own social economic impact assessments and make science-based policies that embrace tobacco harm reduction.”

The new briefing paper is part of KAC’s Global State of Tobacco Harm Reduction project, funded by a grant from the Foundation for a Smoke-Free World.

September 16, 2022

Outrage About Inserts

Anti-tobacco activists are outraged about a recent government decree in Uruguay that allows cigarette manufacturers to print information on cigarette sticks and include inserts in tobacco packs.

In 2019, Uruguay became the first country in Latin America to require plain packaging of tobacco products. Pioneered in Australia, plain packaging requires that tobacco packs have a uniform color and texture and prohibits any branding, logos or other promotional elements inside or attached to tobacco products.

The measure is meant to reduce the attractiveness and appeal of tobacco products and increase the noticeability of health warnings.

According to the Campaign for Tobacco-Free Kids (CTFK), the recent government decision allows tobacco companies to market their products in ways the plain packaging legislation was designed to prevent.

“The government has put the interests of the tobacco industry ahead of the health of all Uruguayans,” wrote CTFK President Matthew Myers in a statement, adding that it is not the first time that President Lacalle Pou’s administration “capitulated” to the tobacco industry.

Prior to the administration’s decision on plain packaging, the government reversed a decree that had banned the sale of tobacco-heating products like IQOS and Glo.

September 15, 2022

Dortmund Speakers Call for ‘Nuanced’ Regulation

Speaking during the opening day of the InterTabac trade exhibition in Dortmund, Germany, tobacco industry representatives called for a nuanced regulatory framework in a global economy strained by Covid, supply chain interruptions, inflation and the energy crisis.

Anticipating adjustments to the EU Tobacco Tax and EU Tobacco Products directives, speakers noted that not all tobacco products are created equally. For example, fine-cut tobacco has a different fiscal resilience than cigarettes, protection of minors is not an issue with classic pipe tobacco, and the market for conventional snuff is ever shrinking.

“Especially in the current ongoing crisis management situation, it is of utmost importance not to take a broad-brush approach to regulation,” said Michael von Foerster, CEO of the German Smoking Tobacco Industry Association.

“What we need is not new bans but active promotion of potentially less harmful innovative products, such as e-cigarettes and heated tobacco,” said Jan Muecke, CEO of the German Association of the Tobacco Industry and New Products (BVTE), who also urged Germany to regulate nicotine pouches like e-cigarettes, according to a BVTE press release.

The call for product-appropriate regulation was echoed by the German Cigar Industry Association, whose products are consumed strictly for pleasure, purely occasionally and mainly by older men—which means there are no issues related to the protection of minors, according to the group.

The German Federal Association of Tobacco Retailers drew attention to the uncertainty facing its members due to soaring costs of labor, energy and other expenses.

The InterTabac trade fair takes place Sept. 15–17.

September 15, 2022