Blog - Tobacco Reporter

Firms Shun Track-And-Trace System

More tobacco companies must install Pakistan’s new track-and-trace system to tackle the country’s massive tax evasion problem, according to Project Director Tariq Hussain Shaikh.

Out of the 40-plus companies registered with the Pakistan Tobacco Board, only three—Philip Morris Pakistan, Pakistan Tobacco Co. and Khyber Tobacco—have installed the track-and-trace system that became operational on July 1, reports the Business Recorder.

According to Shaikh, the system has significantly boosted government tax collections in other sectors. In the sugar industry, for example, sales tax collections increased by 34 percent after its implementation at the end of 2021.

Success, however, depends on across-the-board implementation, Shaikh cautioned. Unless more tobacco companies adopt it, the track-and-trace system will not reduce tax evasion, which in Pakistan amounts to PKR80 billion ($335.74 million) per year.

In a letter dated June 30, 2022, Pakistan’s Federal Board of Revenue directed all cigarette manufacturers to apply tax stamps to their products from July 1, 2022. Nine tobacco companies have challenged the directive on technical grounds.

July 28, 2022

Turning Point Brands’ Sales And Profits Down

Turning Point Brands (TPB) reported net sales of $102.9 million in the second quarter ended June 30, 2022, down 16.1 percent from the comparable 2021 quarter. Net sales of new-generation products declined by 45.1 percent while gross profit decreased 14.2 percent to $51.5 million. Combined net sales for Zig-Zag and Stoker’s products demonstrated comparative resilience and decreased by 0.9 percent for the quarter.

“We are pleased with the stable performance of both the Zig-Zag and Stoker’s segments during the quarter in light of a heightened inflationary environment for our customers, with rising prices at the pump impacting consumer traffic in convenience stores,” said TPB President and CEO Yavor Efremov in a statement.

“While overall sales decreased 16 percent from the previous year, Zig-Zag and Stoker’s sales were steady despite weakness in the wraps and loose leaf subsegments. Zig-Zag maintained its leading positions in both the roll-your-own paper and cigar wraps markets while Stoker’s MST experienced accelerated share gains driven by consumer trade-down to the value category.

“Despite NewGen revenue decreasing 45 percent from last year, the segment remained relatively stable from the previous quarter and profitable as we continue to monitor FDA regulatory developments. We continued to deploy a substantial amount of our free cash flow toward share repurchases during the quarter while maintaining a strong balance sheet, providing us with optionality on further capital deployment.”

“Going forward, we maintain a favorable outlook on our underlying business and our competitive positioning. However, given the market environment during the second quarter, along with continued inflationary pressures and resulting uncertainty of consumer confidence, we feel it is prudent to adjust our outlook for the year.”

July 28, 2022

Philippines Vaping Bill Lapses Into Law

A bill seeking to lower the purchase age for e-cigarettes and heated-tobacco products has lapsed into law in the Philippines, reports ABS-CBN, citing a tweet sent by Presidential Press Secretary Trixie Cruz-Angeles.

The measure moves the regulation of vapes to the Department of Trade and Industry from the Food and Drug Administration. It also lowers the age of sale from 21 to 18.

The proposal was reportedly submitted to the Presidential Palace on June 24, days before then President Rodrigo Duterte stepped down from office.

A bill will lapse into law if the chief executive fails to act on it 30 days after receipt from Congress, according to the Official Gazette.

The vape regulation bill was approved by both the Senate and the House of Representatives of the 18th Congress in January but remained on the Speaker’s table until the final days of the Duterte administration. As a consequence of its delayed transmission to the presidential office, the bill was inherited by President Ferdinand “Bongbong” Marcos Jr.

In addition to lowering the purchase age for e-cigarettes and heated-tobacco products, the bill removes a two-flavor limit on the products’ flavors or juices, allows sponsorships beyond industry associations and trade events and allows tobacco companies to conduct corporate social responsibility-related activities.

Anti-vape advocates vowed to contest the new legislation in court.

July 27, 2022

Russia Exit Hits BAT Profits

BAT took a £957 million ($1.15 billion) impairment charge related to the transfer of its Russian business, lowering its half-year earnings by a quarter.

The London-based firm, which controlled almost a fourth of the Russian market, said earlier this year that it was in advanced talks with its distributor in the country to sell the business in the wake of Russia’s invasion of Ukraine.

BAT reported a 25 percent drop in profit from operations on a reported basis to £3.68 billion for the six months to June 30 as a result of the charge. The company expects global tobacco industry volume to be down about 3 percent, partly because of the Russia-Ukraine crisis.

In a press release announcing the half-year results, BAT emphasized the growth of its New Categories products and the performance of its combustible business, which continues to grow value share enabled by robust pricing.

“I am very proud that our continued New Categories growth momentum is driving faster transformation, with revenue growth of 45 percent in the first half of 2022, on top of 51 percent growth in fiscal year 2021,” said BAT CEO Jack Bowles. “I am especially proud that the number of consumers using our noncombustible brands has passed the milestone of 20 million in the first half.”

Noncombustible products now represent 14.6 percent of BAT’s revenue.

While acknowledging the geopolitical and macroeconomic challenges, Bowles was upbeat about the outlook for BAT.

“We are not immune, of course, to the increasing macroeconomic pressures, exacerbated by the conflict in Ukraine,” he said. “However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”

July 27, 2022

New Tobacco Health Warnings in India

Tobacco manufacturers selling in India will have to print a new health warning on their products starting Dec. 1, reports Mint.

The Union Health Ministry has specified two sets of warning messages and images to be used on both sides of the pack. The first, “Tobacco causes painful death,” must be printed with an image on one side of a pack, and the message “Tobacco users die young” must be displayed with an image on the other side of a pack.

The packs must also display a toll-free helpline for smokers wishing to quit.

Health activists welcomed the new warnings.

“It’s a proven fact that the lives of tobacco users are shortened by up to 10 years as compared to nontobacco users,” said S.K. Arora, medical superintendent of the Sanjay Gandhi Memorial Hospital and renowned tobacco control expert. “The warnings play a significant role in helping tobacco users quit the habit.”

In the second round of the Global Adult Tobacco Survey, 61.9 percent of cigarette smokers, 53.8 percent of bidi smokers and 46.2 percent of smokeless tobacco users were considering quitting due to the warning label on packets. The number is significantly higher compared to the 2009–2010 figures.

According to government data, tobacco use causes more than 1.3 million deaths every year

July 27, 2022

CTP’s Matt Holman Joins PMI

Matt Holman, director of the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) Office of Science, is leaving the agency to join Philip Morris International effective immediately, reports The Hill, citing a memo from CTP Director Brian King. Holman has been director since 2017.

“I know that he led the Office through a critical time, including preparing for and overseeing review for the bolus of PMTA [premarket tobacco product application] applications,” King said in the memo. “I’m grateful to Matt for his contributions to the Center and unwavering commitment to you all over the years, and I wish him well in his next chapter.”

Holman’s departure comes after Mitch Zeller, the longtime CTP head, retired in April. King was appointed director earlier this month.

According to King’s memo, Holman has been on leave and has recused himself from all CTP and FDA work while exploring career opportunities outside government.

While free to pursue employment outside of the government, FDA employees are required to immediately disclose that they are exploring opportunities outside the government.

In March, the FDA signed off on a third-generation version of PMI’s IQOS heat-not-burn product, which was first authorized for sale in 2019. In 2020, FDA authorized it as a Modified Risk Tobacco Product, allowing the company to legally claim that fully switching from regular cigarettes to IQOS can reduce a person’s exposure to harmful chemicals.

Holman leaves the CTP as the agency faces series of major tobacco-related decisions, including a potential ban on menthol cigarettes, lowering nicotine levels, and the next step in its ongoing attempt to regulate Juul and other electronic cigarettes.

A spokesperson for Philip Morris said Holman “is committed to helping existing adult smokers access scientifically substantiated smoke-free alternatives while protecting youth. We are looking forward to him joining our team as we continue to pursue a smoke free future.”

July 26, 2022

‘Endgame’ Revised to Those Born After 2007

After considering the views of stakeholders, the government of Malaysia has pushed the year limit of its tobacco generational endgame law to 2007 from 2005, reports New Straits Times.

Earlier this year, Health Minister Khairy Jamaluddin tabled a new Tobacco and Smoking Control bill to replace the current tobacco product control legislation under the Food Act 1983. Modeled on similar legislation in New Zealand, the proposal included a provision to ban smoking and prohibit the ownership of tobacco and vape products by those born after 2005.

Postponing the year limit will allow more time for community education, a robust implementation plan and to ramp up enforcement, according to Khairy.

The health minister has been pushing for the Tobacco and Smoking Control Bill in line with efforts to make Malaysia a tobacco-free country by 2040.

He said cigarette smoking would cost the government MYR8 billion ($1.8 billion) to treat lung cancer, heart problems and chronic obstructive pulmonary disease by 2030.

The cabinet gave the green light for the bill on July 14, and it will be tabled and put to a vote in the Parliament’s Lower House this week.

BAT Malaysia said the proposed generational smoking ban is a prohibitive way to reduce the health impact of smoking and will only fuel the illicit tobacco market, which already accounts for almost 60 percent of tobacco sold in Malaysia.

“It has never been tested in the real world, lacks any scientific evidence of effectiveness and is likely to be detrimental to our country’s health agenda,” BAT Malaysia Managing Director Nedal Salem was quoted as saying by The Edge Markets.

He said the Ministry of Health (MOH) should pursue a science-based regulatory framework, informed by the positions of countries such as the U.K., where vaping is acknowledged as significantly less harmful and a viable alternative to reduce smoking prevalence.

BAT Malaysia called on the MOH to include industry players in the overall consultation process in developing appropriate regulations for vapor products.

July 26, 2022

Kiwi Generational Ban Gets First Reading

A historic smokefree bill to ban smoking for next generation up for first reading in New Zealand, reports the NZ Herald.

Announced last year, the proposed legislation prohibits people born after Jan. 1, 2009, from purchasing tobacco products.

The plan is part of a push to drop daily smoking rates in New Zealand to less than 5 percent across all population groups by 2025. In 2019–2020, it sat at 13.4 percent.

Introduced by the labor party, the legislation already enjoys broad support in Parliament.

The sole voice opposing it outright is the ACT party, with health spokeswoman Brooke Van Velden saying prohibition will only fuel a black market.

Critics say the measure will likely fuel an already growing black market for cigarettes and that more support is needed for people to transition to vaping.

The Ministry of Health acknowledges as much. Its regulatory impact statement says there is already a growing illicit market and that the policy changes were “likely to exacerbate this.”

The government aims to pass the bill by December, meaning that, all going to plan, those aged 14 in 2023 will be banned from purchasing tobacco.

July 26, 2022

RAI Transitioning to Electric/Hybrid Vehicles

Reynolds American Inc. (RAI) is transitioning its vehicle fleet to hybrid and electric models. The move will replace aging vehicles on a rolling basis over the next three years, resulting in a projected annual reduction in carbon emissions of more than 1,000 tons.

“Our sales and trade marketing representatives average nearly 27,000 miles a year in their territories across the 50 states—that’s a lot of time on the road,” said Ed Mirana, senior vice president of national sales and strategic accounts at RAI, in a statement. “With this move to hybrid vehicles, our sales and operations teams are driving progress on our sustainability ambitions.”

RAI is collaborating with Ford Pro to transition its current fleet to a mix of vehicle models, including the Escape SEL Hybrid, Explorer Limited Hybrid, Ford E-Transit and Ford-150 Lightning.

Included in the fleet of more than 1,800 vehicles are nearly 50 light-duty operations vehicles used across RAI’s North Carolina and Tennessee facilities, which will be transitioned to a combination of hybrid and electric models as part of this initiative.

“We continue to push for new ways to reduce our use of resources and environmental impact. We have a bold global ambition for carbon neutral operations by 2030, and reducing carbon emissions in our fleet is an important step on this journey. In addition, by 2024, more than 95 percent of all industrial vehicles used in operations will be electric,” said Bernd Meyer, executive vice president of operations at RAI. “With these significant changes and investments over the next few years, we are currently on track to meet a fleet carbon emission reduction of 50 percent by 2025.”

In 2022, approximately 650 hybrid and electric vehicles will replace internal combustible engine vehicles organization-wide.

RAI joins BAT Group’s growing list of markets across the globe, including Australia, Colombia, Germany, Mexico and the Netherlands, where trade and operations fleet transitions to hybrid and electric vehicles are well underway.

July 26, 2022

Kaival Launches PMI’s Veeba in Canada

Kaival Brands Innovations Group (KBI) announced the launch of Philip Morris International’s Veeba disposable e-cigarette in Canada.

In June, Kaival and PMI signed an agreement for the development and distribution of electronic nicotine-delivery system products in markets outside of the U.S.

“The agreement with Philip Morris Products was a remarkable accomplishment for the company, and now we have advanced to the next phase of international distribution with the actual launch of their custom branded product, Veeba,” said Eric Mosser, president and chief operating officer of Kaival Brands, in a statement.

“We are excited to support PMI’s efforts to provide a range of alternatives compared to cigarettes. The commercialization of Veeba complements PMI’s already strong smoke-free portfolio, providing adult smokers with an even broader range of usage, taste, price and technology options.”

The agreement licenses PMI to manufacture, promote, sell and distribute the Bidi Stick and any newly developed devices in certain markets outside of the United States, with potential royalties owed to KBI.

July 26, 2022