Blog - Tobacco Reporter

Mativ Reports Second-Quarter Results

Mativ Holdings, the company that was recently created out of the merger between Schweitzer-Mauduit International (SWM) and Neenah, reported earnings results for the three months ending June 30, 2022.

Including SWM legacy results, sales increased 13 percent to $426.4 million. Organically, sales grew 11 percent with strong demand and pricing actions across the business, driving top-line gains and offsetting cost increases.

“With the completion of our merger in early July to form Mativ and the close of a strong second quarter for the legacy SWM and Neenah businesses, we are poised to carry our momentum into the rest of 2022 as a unified and more scaled global leader in specialty materials,” said Mativ Holdings CEO Julie Schertell in a statement.

The company’s Engineered Papers segment sales were up 10 percent, to $138.3 million, driven by volume growth and price increases. Volumes benefited from broad-based gains across the portfolio, highlighted by continued rapid growth in heat-not-burn reduced-risk products.

GAAP operating profit was $22.4 million, down 7 percent. Adjusted operating profit was $21.5 million, down 19 percent. While contractual and market price increases and negotiated volume gains more than offset higher pulp and other material costs, operating profit and margin percentage reductions resulted mainly from rapidly escalating energy costs, particularly in Europe.

Mativ Holdings expects semi-annual contractual price increases, additional market price increase and surcharges to mitigate the impacts of escalating pulp and energy costs during the second half of the year.

August 11, 2022

FDA Starts Reviewing Menthol and Flavored Cigar Feedback

The U.S. Food and Drug Administration has received nearly 175,000 comments on its proposed Tobacco Product Standard for Menthol in Cigarettes and approximately 71,000 comments on its proposed Tobacco Product Standard for Characterizing Flavors in Cigars.

On May 4, 2022, the FDA published the proposed tobacco product standards in the Federal Register. Initially, the FDA provided a 60-day comment period for the rules, but the FDA later extended the comment period to a total of 90 days. On Aug. 2, the comment period closed.

In addition to accepting written public comments, the agency convened public listening sessions on June 13 and June 15.

The agency stressed that it would take a while to review the submitted comments, scientific data, expert opinions and facts. “FDA is committed to completing the rulemaking process as quickly as possible; however, the agency will need ample time to comprehensively review and analyze all of the comments,” wrote FDA Public Health Analyst Beaza Yeheyes in an email.

August 11, 2022

World Tobacco Asia: The Countdown is on!

World Tobacco Asia is returning Sept. 7-8, 2022, to Surabaya, Indonesia, co-located with the award-winning World Vape Show. The first major tobacco event to take place in the region for over three years, WT Asia is a unique opportunity for professionals to see the next generation of innovative products, ingredients, materials and insight for the tobacco industry all in one place.

Registration for the event is free for all industry-related personnel and includes the following:

Exclusive show-only offers and deals from 60+ leading suppliers, including Evergrowing, Mcairlaids, Prestige Leaf, Indesso, Aiger, Truewell Filter, Focke & Co, Voedsel, BMJ, Miquel Y Costas and Aroma King.
Access to a large and growing market at one of the most prestigious events for the industry
The chance to improve and gain new industry insights by getting hands on with machinery and equipment that is designed for the next generation of smokers
Face-to-face networking with influential business leaders and senior decision makers within the tobacco industry, as well as friends – old and new
Better your understanding of available alternative tobacco and nicotine products. As this sector of the industry continues to grow, learn what sourcing and procurement options are available to help you create and build your own range of products
Insight into what the future holds for leaf tobacco-associated businesses: machinery, services, communities, and more
Access to the co-located World Vape Show, which provides free insight to exhibitors and the vaping industry

Trusted by the industry’s biggest brands and manufacturers, Quartz Business Media now delivers the world’s largest network of smoking-related B2B events in the world. In the last 12 months alone, World Tobacco, World Vape Show and World Shisha events have gathered more than 17,000 professionals in Dubai, London, Sofia and now Surabaya.

WT Asia will take place on the Ground Floor of the Grand City Convex Convention Hall in Surabaya. For more information and free registration, visit http://www.wtprocessandmachinery.com/asia.

August 11, 2022

Avanti Cigar Moves to the Dominican Republic

The Avanti Cigar Co. is moving its production from the United States to the Dominican Republic, citing high labor cost and difficulty in finding employees as reasons for the decision, according to a report in the Standard-Speaker.

After manufacturing premium cigars for more than 90 years in Dunmore, Pennsylvania, Avanti will shut down its U.S. factory on Aug. 31.

“The last two years have been difficult due to the Covid-19 pandemic; it is getting harder and harder to hire skilled people, able to learn and manage production activities and to guarantee business sustainability in the medium [term] and long term,” the company wrote in a statement.

Founded in 1912 in New York City as Suraci Brothers, the company moved to Scranton, Pennsylvania, around 1930, then to Dunmore in 2013.

David Ozgo, president of the Cigar Association of America, said Avanti’s move overseas fits a trend.

“This is a trend that’s been going on for decades,” Ozgo said. “In the U.S., we make a lot of premium tobacco. There is a real issue in hiring employees that probably makes it more attractive for them to move to the Dominican Republic.”

August 10, 2022

22nd Century Reports Second-Quarter Results

22nd Century Group reported net revenue of $14.48 million for the three months ended June 30, 2022, up 73 percent over the comparable 2021 quarter. Gross profit was $892,000 for the quarter compared with $449,000 for the second quarter of 2021.

The increase in net revenue was due to increased contract manufacturing volumes as well as the addition of GVB Biopharma revenue for approximately half of the second quarter. 22nd Century Group acquired GVB Biopharma on May 13.

Revenue from tobacco-related products was $10 million, an increase of 19 percent from 2021. Revenue from hemp/cannabis-related products was $4.5 million compared to zero in the prior year, reflecting a partial quarter of GVB revenues.

22nd Century Group said it will step up the rollout of its VLN King and VLN Menthol King reduced-nicotine content cigarettes. After receiving permission from the Food and Drug Administration in December to market its VLN brands as modified-risk tobacco products (MRTPs), 22nd Century started a pilot program to sell the product at select Chicagoland Circle K stores.

“Our VLN pilot in Chicago is exceeding expectations, driving us to accelerate and expand our launch plans,” said 22nd Century Group CEO James A. Mish in a statement. “The pilot and consumer studies have made clear that our approach focusing on awareness, education and trial is working with adult smokers. We are now testing specific offers designed to increase trial and repeat purchase among existing smokers looking to smoke less/reduce their nicotine consumption while also expanding our presence in Chicago and the state of Illinois.

“We are also expanding our VLN launch to the state of Colorado ahead of plan. Colorado offers a reduced taxation rate for MRTP-authorized products, providing a favorable cost structure for our VLN products in that state as compared to traditional premium cigarettes.

“Additionally, and more importantly, we are working closely with a major consumer packaged goods distributor and a longstanding specialty distributor covering convenience, grocery and drug stores across the state, giving us full access to a broad range of more than 3,000 targeted statewide potential points of sale.”

August 10, 2022

PMI Extends Period for Swedish Match Offer

Philip Morris Holland Holdings has extended the acceptance period for its offer to Swedish Match shareholders until Oct. 21, 2022, as the bid awaits approval in Europe.

On May 11, Philip Morris International, through its Dutch subsidiary, offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer commenced on June 29, 2022, and was initially set to expire on Sept. 30, 2022.

In a statement, PMI said it has obtained all international approvals required for the transaction other than merger control approval from the European Commission, which is still pending.

Based on customary pre-notification discussions with the European Commission, the company believes the European Commission will not complete its review of the transaction before the Sept. 30 expiry date of the initial acceptance period.

Other than the extension of the acceptance period, the terms and conditions of the offer remain unchanged.

The Swedish Match board of directors has recommended shareholders accept PMI’s offer, but some shareholders have raised objections.

Earlier this year, Swedish Match shareholder Bronte Capital opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.

Another shareholder has also said it was not clear whether the long-term value of Swedish Match was reflected in PMI’s offer price.

Meanwhile, Elliot Investment Management has reportedly been building a stake in Swedish Match and plans to oppose the pending takeover of the Scandinavian tobacco company by PMI under its current terms.

However, according to Danske Bank analyst Mads Rosendal, it is unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own

August 10, 2022

Delnevo to Chair TPSAC

Cristine Delnevo has been appointed chairperson of U.S. Food and Drug Administration’s Tobacco Products Scientific Advisory Committee (TPSAC).

Delnevo is the director of the Rutgers Center for Tobacco Studies and a professor of health behavior, society and policy at the Rutgers School of Public Health. She was appointed to serve on the TPSAC in March 2021. Her appointment as chair will run through Jan. 31, 2025.

Established in 2009, TPSAC reviews and evaluates safety, dependence and health issues related to tobacco products and provides advice, information and recommendations to the FDA’s commissioner. The FDA commissioner selects the committee members from among people with expertise in medicine, medical ethics, science or technology involving the manufacture, evaluation or use of tobacco products.

“I have valued the importance of this FDA advisory committee since the signing of the Family Smoking Prevention and Tobacco Control Act in 2009,” said Delnevo in a press note published by Rutgers. “This advisory committee plays an important role in several ways, perhaps most notably on the review of modified risk tobacco product applications, as required under the Tobacco Control Act.

“I value the service of Dr. Jonathan Samet and Dr. Robin Mermelstein who served admirably before me as chair, and I look forward to working with an esteemed group of colleagues to help the FDA make regulatory decisions to protect public health and reduce tobacco-related morbidity and mortality.”

Delnevo’s expertise spans population-level tobacco behavior trends—particularly non-cigarette tobacco products like cigars and e-cigarettes—tobacco control policy and regulation, and survey methods research.

In 2022, she received the John Slade Award from the international Society for Research on Nicotine and Tobacco for outstanding contributions to public health and tobacco control through science-based public policy and public advocacy. Her work has been extensively cited in two FDA proposed rules that would ban menthol in cigarettes and characterizing flavors in cigars and she recently served as an external peer reviewer on the FDA’s Scientific Assessment of Impact of Menthol in Cigarettes.

In addition, she served as a committee member on the National Academies of Sciences, Engineering and Medicine report on the Health Effects and Patterns of Use of Premium Cigars.

Delnevo co-leads one of nine Tobacco Centers of Regulatory Science and has published extensively on tobacco-use behavior patterns. She has authored more than 250 scientific articles, reports and book chapters and serves on the Editorial Advisory Board for the journal Tobacco Control.

“We are excited that an RBHS faculty member was selected to be a member, and indeed the leader, of an important committee like TPSAC,” said Brian Strom, chancellor of Rutgers Biomedical and Health Sciences. “I am confident that Dr. Delnevo will bring to this role her passion, commitment, and leadership skills, which she has already exhibited at the Rutgers Center for Tobacco Studies, and will help FDA make decisions for the country that will help save lives.”

August 9, 2022

Vector Reports Strong Tobacco Revenue

Vector Group reported revenues of $387.2 million for the second quarter of 2022, up 14.7 percent over that for the comparable 2021 quarter. Operating income was $90.71 million and net income was $39.15 million compared with operating income of $93.89 million and net income of $93.3 million in the second quarter of 2021. Tobacco contributed $374.31 million of the 2022 second-quarter revenues, with the balance coming from Vector Group’s real estate business.

“Vector Group delivered strong tobacco revenue performance in the second quarter as we capitalized on favorable market opportunities to substantially increase value and market share,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “Our price-fighting Montego brand is now our largest brand and the third-largest discount brand in the United States. This strong performance demonstrates our commitment to optimizing long-term profit through the effective management of volume, pricing and market share growth.”

According to data from Management Science Associates, the retail market share of Vector Group’s Liggett Group subsidiary increased to 5.5 percent for the second quarter of 2022 from 4.1 percent for the second quarter of 2021. For the six months ended June 30, 2022, Liggett’s retail market share increased to 5.3 percent compared to 4.1 percent for the six months ended June 30, 2021.

August 9, 2022

Ukraine Redefines ‘Tobacco Product’

The government of Ukraine has changed the definition of “tobacco product” to include heated-tobacco products (HTPs), making HTPs subject to the same restrictions as combustible cigarettes, according to the Framework Convention on Tobacco Control.

As a result, it is now illegal to smoke HTPs in public places. Moreover, the new rules prohibit smoking rooms on company premises and empower local authorities to establish additional smoke-free places.

Smoking of tobacco products, hookahs and e-cigarettes has been prohibited in Ukrainian workplaces since 2012, but until recently, smoking areas were still permitted.

The new law holds both smokers and businesses responsible for compliance.

Earlier this year, Ukraine started requiring manufacturers of e-cigarettes and e-liquids to print health warnings covering 30 percent of the packaging.

Starting on July 11, 2023, it will also become illegal to promote e-cigarettes, e-liquids and HTPs or to sell such products with flavors.

From Jan. 11, 2024, traditional, combustible cigarettes will be required to carry pictorial health warnings covering 65 percent of both sides of their packaging.

According to the World Health Organization, up to 85,000 Ukrainians die from smoking-related diseases each year. Experts estimate smoking to result in annual economic losses equivalent to 3.2 percent of Ukraine’s GDP, in part due to the cost of treating smoking-related illnesses.

August 9, 2022

Florida: Drop in Smoking Hits MSA Revenues

Florida will likely collect lower-than-expected revenues from a landmark settlement with the tobacco industry because fewer people are smoking, and the remaining smokers are smoking less, reports The Free Press.

In 1998, America’s largest tobacco companies settled litigation brought by state attorneys general over the cost of treating sick smokers. The tobacco industry agreed to pay billions of dollars over more than two decades, with the level of payments depending on the number of cigarettes sold.

In a report released on Aug. 5, economists anticipated Florida to receive $412.1 million in settlement payments by the end of year, down from the earlier anticipated $413.8 million.

The report pointed to a forecast last month that cigarette sales would decline by 2.5 percent annually over the next decade.

The decline had earlier been projected between 1.44 percent and 1.75 percent. The report also said that tobacco manufacturer payments were $1.7 million less than anticipated for the recently completed 2021–2022 fiscal year.

Meeting at the state Revenue Estimating Conference, the economists also revised anticipated payments for the coming years.

After earlier projecting $442.5 million in revenue for the 2023–2024 fiscal year, the state is now forecast to receive $417.9 million through the settlement during that period.

August 9, 2022