Blog - Tobacco Reporter

Spain Asked to Rethink Vape Shop Ban

The Independent European Vaping Association (IEVA) has called on the Spanish government to reconsider a proposal to ban vape shops. According to the IEVA, the legislation under consideration would hand the entire electronic cigarette business to big tobacco companies.

“Against all principles of EU law (proportionality, good regulation, good administration, fair competition and harmonization), the Spanish government has proposed to ban and close all vape shops across Spain (transferring the sale of electronic cigarettes and e-liquids to the state monopoly of tobacco shops and to prohibit all online sales,” the IEVA wrote on its website.

According to the IEVA, these measures not only contravene EU rules on free competition and free movement of goods, but will also generate unemployment at a time or economic crisis. What’s more, the proposal will deprive vaper from personalized access to vaping products, forcing them to buy them at tobacco shops, which could temp them back to more risky combustible products, the group said.

As part of the legislative process, Spain submitted a so-called TRIS notification to the European Commission on June 21 The IEVA shared its views on the proposal and the full submission is available here.

June 24, 2022

Juul Requests Stay of FDA Order

Juul Labs today asked a federal appeals court to temporarily block the U.S. Food and Drug Administration’s marketing denial order until it can petition the court for an emergency review.

In its filing, Juul said the FDA’s order was extraordinary and unlawful and it would suffer significant irreparable harm without a stay.

On June 23, the regulatory agency ordered Juul Labs to remove its products from the market, saying the e-cigarette company had provided insufficient evidence in its premarket tobacco product application to demonstrate that its products are “appropriate for the protection of public health.”

In particular, the FDA noted that its concerns about genotoxicity and potentially harmful chemicals leaching from the Juul Labs’ proprietary e-liquid pods had not been adequately addressed.

“We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency,” said Joe Murillo, chief regulatory officer at Juul Labs, in a statement.

We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency.

Joe Murillo, chief regulatory officer, Juul Labs

“In our applications, which we submitted over two years ago, we believe that we appropriately characterized the toxicological profile of Juul products, including comparisons to combustible cigarettes and other vapor products, and believe this data, along with the totality of the evidence, meets the statutory standard of being “appropriate for the protection of the public health.”

In its court filing, Juul said the FDA’s decision followed “immense political pressure from Congress once it became politically convenient to blame [Juul] for youth vaping, even though several of its competitors now have a larger market share and much higher underage-use rates,” according to The Wall Street Journal.

Juul said that the FDA’s order to immediately remove all Juul products from U.S. stores was a departure from the agency’s practices, which typically have a transitional period. The e-cigarette maker also questioned the agency’s handling of the announcement, pointing to the fact that the order had reported in the press before it was officially announced.

“Regulation through leaks and press releases is no way to handle agency action, much less to order a company to cease essentially all business operations,” Juul said in the court filing.

In a press note, Juul Labs said it is exploring all of its options under the FDA’s regulations and the law. “We remain committed to doing all in our power to continue serving the millions of American adult smokers who have successfully used our products to transition away from combustible cigarettes, which remain available on market shelves nationwide,” the company wrote.

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Meanwhile, the announcement that Juul products must come off the market triggered a run on stores, according to various news outlets, including Bloomberg. “Gonna clear the shelves and hoard ’em like our incandescent bulbs!” one user wrote on Twitter following the news.

June 24, 2022

It’s Official: FDA Denies Juul Market Access

Today, the U.S. Food and Drug Administration confirmed what many had already been anticipating: Juul Labs must remove all currently marketed Juul products from the U.S. market.

“Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic nicotine delivery system products currently being marketed to consumers meet our public health standards,” said FDA Commissioner Robert M. Califf. “The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize these make up a significant part of the available products and many have played a disproportionate role in the rise in youth vaping.”

These marketing denial orders (MDO) pertain only to the commercial distribution, importation and retail sales of these products, and do not restrict individual consumer possession or use—the FDA cannot and will not enforce against individual consumer possession or use of Juul products or any other tobacco products.

After reviewing the company’s premarket tobacco product applications, the FDA determined that the applications lacked sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health. In particular, some of the company’s study findings raised concerns due to insufficient and conflicting data—including regarding genotoxicity and potentially harmful chemicals leaching from the company’s proprietary e-liquid pods—that have not been adequately addressed and precluded the FDA from completing a full toxicological risk assessment of the products named in the company’s applications.

The FDA says that, to date, it has not received clinical information to suggest an immediate hazard associated with the use of the Juul device or Juul pods. However, the MDOs issued today reflect FDA’s determination that there is insufficient evidence to assess the potential toxicological risks of using the Juul products.

“There is also no way to know the potential harms from using other authorized or unauthorized third-party e-liquid pods with the Juul device or using Juul pods with a non-Juul device,” the agency wrote in a statement.

“The FDA is tasked with ensuring that tobacco products sold in this country meet the standard set by the law, but the responsibility to demonstrate that a product meets those standards ultimately falls on the shoulders of the company,” said Michele Mital, acting director of the FDA’s Center for Tobacco Products. “As with all manufacturers, Juul had the opportunity to provide evidence demonstrating that the marketing of their products meets these standards. However, the company did not provide that evidence and instead left us with significant questions. Without the data needed to determine relevant health risks, the FDA is issuing these marketing denial orders.”

June 23, 2022

KPMG: Illicit Trade up in Europe

Illicit cigarette consumption increased by an estimated 3.9 percent, or 1.3 billion cigarettes, in 2021, reaching 35.5 billion cigarettes consumed across the European Union, according to a KPMG study commissioned by Philip Morris International. Meanwhile, the study estimates that total EU cigarette consumption declined over the same period.

The increase of illicit consumption was largely driven by an estimated 33 percent increase in counterfeit consumption in France, where it grew to 8 billion cigarettes last year. Overall, France remains the largest market for illicit cigarettes in the EU, with a total of 15.1 billion illicit cigarettes consumed in 2021, comprising 29 percent of total cigarette consumption in the country, which represents a significant growth from 13 percent in 2017.

“The findings of the KPMG Report should be a real wake-up call. It’s alarming that in countries that maintain high excise taxes on cigarettes, such as France, instead of driving a decrease in smoking prevalence, we see a rise in counterfeit cigarette consumption. In fact, in France in the past five years, while the average price of a pack of legitimate cigarettes has increased by more than half, the number of adult smokers has only marginally decreased,” said Gregoire Verdeaux, senior vice president, external affairs, PMI, In a statement.

“But there is also hope. Other EU countries have adopted differentiated policies on alternatives to cigarettes that support the continued decline of cigarette consumption while reducing illicit trade, and they are already yielding encouraging results. The European Commission in Brussels should make this the foundation for the future.”

The annual KPMG report focuses on the consumption and flows of illicit cigarettes in 30 European countries—the 27 EU member states, as well as the United Kingdom, Norway, and Switzerland—and indicates that had these cigarettes been legally purchased, an additional €10.4 billion ($10.93 billion) in taxes would have been collected by governments in the EU.

Tax revenue losses will limit governments’ ability to invest in areas such as public safety, public services, or infrastructure, at a time when people across Europe are also facing higher prices of many basic goods. The risk that more adult smokers—especially those among the lower-income population—turn to illicit trade is now significant. This creates an even more urgent need to ensure that smoke-free alternatives are available and affordable for all, to enable them to make a better choice instead of buying from the black market,” said Verdeaux.

Consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives.

Gregoire Verdeaux, senior vice president, external affairs, PMI

The KPMG report also shows that roughly half—16 out of 27—of the member states experienced declining or stable consumption of illicit cigarettes in 2021. Among these countries, Poland saw one of the largest declines in illicit volumes, showing a 3.7 percentage point decrease in its share of illicit cigarette consumption.

“The decreasing consumption of illicit cigarettes in countries like Poland is remarkable and reassuring. It showcases the impact of effective law enforcement against criminals profiting from illicit trade in a market where better alternatives to smoking are available and more affordable to adult smokers. These are outcomes other countries should aspire to emulate,” said Alvise Giustiniani, vice president, illicit trade prevention. “It has never been more important to provide in particular the most vulnerable in society with access to information, as well as to develop and implement innovative policies that truly include everyone and facilitate access to better alternatives.”

Counterfeit consumption was the main driver of illicit trade in the EU; consumption of fake cigarettes reached an estimated total of 12.3 billion—accounting for 34.6 percent of total illicit consumption. The study indicates that due to continued travel and border restrictions related to the Covid-19 pandemic, organized criminal groups shifted their focus toward manufacturing counterfeit cigarettes directly within EU borders. Interviews conducted by KPMG with seven different law enforcement agencies found that illegal manufacturing sites are increasingly moving west in Europe to get closer to higher-priced end markets, such as France and the U.K.

The continued growth of a black market where fake and unregulated cigarettes are easily available seriously undercuts legitimate efforts to reduce and eventually eliminate cigarette smoking.

“We are convinced that consumers need to be incentivized so that they don’t have to turn to illicit cigarettes. This means focusing on education and awareness, and ensuring the availability of better alternatives, such as scientifically substantiated smoke-free products,” said Verdeaux. “Making them accessible as a better option for millions of adult smokers in Europe who don’t quit should be our common top priority.”

June 23, 2022

AOI-Bayer Partnership Boosts Maize Yields

Alliance One International announced the Phase Two results of the partnership of its Brazilian subsidiary with Bayer Crop Science, which was formed with the goal of providing quality maize seeds and agronomic support to smallholder tobacco farmers in Brazil. Following the completion of the 2021 growing season, participating farmers reported a 15 percent average increase in maize yield compared to the 2020 growing season.

“Due to strong farmer interest, we expanded the opportunity to participate in phase two of the program to 100 percent of our Brazilian grower base,” said Helio Moura global agronomy director for AOI, in a statement. “we distributed 5,700 bags of Bayer maize seed to our contracted farmers as well as provided fertilizer and additional agronomic guidance related to maize production. As a result, farmers reported that they experienced improved crop quality and yield, in turn, increasing the farmers’ bottom lines.”

Through the partnership, Alliance One Brazil’s goal is to help its contracted farmers diversify their income by strengthening the quality and yield of a crop that is complementary to tobacco. Farmers that participated in phase two of the program earned an average of $270 more per hectare of maize when compared to the prior crop.

We are very excited about the future of this program and its potential to improve farmer livelihoods not only in Brazil but [also] around the globe.

Alex Strohschoen, president, AOI

“Alliance One Brazil’s contracted farmers produced an additional 5.150 metric tons of maize this past crop year, which is primarily sold for use in animal feed,” said Moura. “Given the threat of a global food crisis, it is increasingly important to help our farmers scale production in order to help offset shortages and high costs.”

In response to the positive results of the program’s second phase, Alliance One Brazil is evaluating the inclusion of additional crops as part of the program and AOI is assessing the potential to expand the program to other countries within its footprint.

“We are very excited about the future of this program and its potential to improve farmer livelihoods not only in Brazil but around the globe,” said Alex Strohschoen, president of AOI. “As we enter the 2022 growing season, we plan to introduce the program to our contracted farmers in Argentina, where a significant portion of our grower base could benefit from improving the quality and yield of their maize crops.”

The improvement of farmer livelihoods is a key priority for AOI. It is committed to maximizing all farmers’ income potential by 2030 through appropriate training in good agricultural practices and the opportunity for crop diversification.

Tobacco Reporter profiled the AOI-Bayer partnership in its June edition (See, “Fruitful Cooperation.”)

June 23, 2022

‘BAT key beneficiary of Juul MDO’

The removal of Juul products from the U.S. market would boost the prospects of British American Tobacco, create opportunities for Philip Morris International but represent a problem for Altria Group, according to Morgan Stanley.

In a letter to investors, the financial institution evaluated the impact of the U.S. Food and Drug Administration’s leaked plans to deny Juul Labs’ premarket tobacco product application (PMTA). While the FDA has not issued a formal statement yet, shares in Altria Group were down more than 9 percent in the immediate wake of the news. Altria owns about a third of Juul Labs.

According to Morgan Stanley, Juul is Altria’s only exposure to the growing vapor category. While a Juul marketing denial order (MDO) would give Altria an opportunity to terminate its noncompete agreement with Philip Morris International, allowing it to step-up its vapor product research and development or acquire vapor technology, the company would not be coming from a position of negotiating leverage, according to the investment bank.

“In addition, there are few larger scale independent e-vapor assets on the market,” wrote Morgan Stanley.

The investment bank believes that removing market leader Juul from U.S. store shelves would create opportunities for other products, such as PMI’s IQOS heat-not-burn device, which has already received PMTA approval.

The key beneficiary of a Juul MDO, however, would be British American Tobacco, according to Morgan Stanley.

Several of the company’s products have already received PMTA authorizations, the investment bank points out. Though its Vuse brands, BAT recently overtook Juul as the leading U.S. e-cigarette player with a market share of more than 33 percent. The company has gained significant momentum in the category over the past 24 months and a Juul MDO could lead to further BAT market share gains, according to Morgan Stanley.

June 23, 2022

Zinwi Receives E-Liquid Production License

Zinwi Bio-Tech has secured a production license for electronic cigarettes (e-liquid category) in China, becoming one of the first manufacturers to do so under the country’s new regulatory framework.

In March, the State Tobacco Monopoly Administration passed the Electronic Cigarette Administration Measures, which took effect May 1. Under the new rules, a production license issued by the STMA is a precondition for the incorporation of a company involved in the manufacture of vapor hardware, e-liquids or e-cigarette nicotine.

Companies applying for the license must supply documents showing financial and manufacturing fitness, among other evidence.

Zinwi Bio-Tech was established in 2016 and is headquartered in Shenzhen’s Guangming District. A high-tech enterprise integrating the R&D, production and sales of e-liquid, the company ships more than 2,000 tons of e-liquid and approximately 1.3 billion pods per year. Products are exported to Europe, America and Canada, the Middle East, Russia and other destinations.

In a press note, the company said its commitment to quality is demonstrated by numerous accreditations, including the ISO9001 quality system, national CNAS laboratory and GMP certifications.

June 23, 2022

Greenbutts Taps Luis Sanches as Chief Strategy Officer

Greenbutts, a company that specializes in biodegradable filter technology, has appointed tobacco veteran Luis Sanches as chief strategy officer.

Sanches is a senior corporate executive with more than 30 years of international, cross-functional and cross-cultural experience responsible for managing business teams, supporting growth and leading transformations across multiple geographies such as Australasia, North and South America and Europe.

He was previously the senior vice president of R&D for Reynolds American Inc., a subsidiary of British American Tobacco. His corporate tenure under BAT spanned 31 years in total, including the position of group head of product development in the United Kingdom and vice president of Kentucky BioProcessing KBP, a leader in developing and employing cGMP processes to manufacture recombinant proteins using novel plant-based technology. He successfully led the development of novelty scientific knowledge and multi-category consumer lead product innovations.

“Never before in history have industry and humanity at large shared such a commitment to understand and urgently address matters that negatively impact the sustainability of our planet and, ultimately, our lives,” said Sanches in a statement.

“Greenbutts is pioneering solutions that will allow business partners to focus on their growth strategy and deliver their product innovation pipeline while materially advancing their ESG agendas. I am proud to join the Greenbutts team and am committed with them ‘to give every fiber of our being’ to offering meaningful sustainable solutions to our partners.”

“We are delighted to have an executive of Mr. Sanches’ caliber and industry presence, knowledge and experience join our already accomplished team,” said Tadas Lisauskas, founder and CEO of Greenbutts.

“For the past 11 years, Greenbutts has been focused on developing a viable alternative to cellulose acetate filters for the global cigarette industry, through extensive R&D and cross-continental partners. While we have had much success in achieving this goal; patenting our technology, continuously adding intellectual property to our portfolio and validating business cases on a global stage, the addition of Luis Sanches to the team is an opportunity to reintroduce ourselves to the global cigarette industry and assist in their efforts to make the inevitable transition to a zero-plastic alternative as seamless as possible,” said Tadas.

Sanches will oversee the company’s global expansion strategy regarding material and filter production. In addition, Sanches will work on optimizing the company’s filter manufacturing process to meet the regulatory needs and customer specifications.

June 23, 2022

Bidi Workers Demand Protection Against Cigarettes

Bidi workers in Bangladesh formed a human chain on June 21 outside of the Pabna Deputy Commissioner’s office, demanding protection against competition from “foreign” cigarettes, reports The New Nation.

According to the leaders of the group, the biggest competitors to bidis are low-quality cigarettes, which are mostly owned by foreign companies and have not been set to increase in price much in the 2022/2023 budget.

“Bidi industry is a domestic worker-friendly industry,” the group leaders said. “Bidi is a 100 percent indigenous technology-based industry. On the other hand, everything in cigarettes is imported from abroad and depends on technology. Foreign multinational companies are smuggling thousands of crores of rupees by burning the lungs of the people of this country.

“If all kinds of conspiracies against the domestic bidi industry, including the withdrawal of discriminatory advance income tax, are not stopped, we will be forced to wage a fierce agitation.”

After the protest, the leaders of the group presented a memorandum to the prime minister through the deputy commissioner of Pabna.

The group demanded an increase in the price of low-quality cigarettes, withdrawal of a 10 percent tax on bidis, and legislation to protect bidi workers.

June 22, 2022

Feelm Joins Carbon Disclosure Project

Feelm has joined the Carbon Disclosure Project (CDP), as part of the listing of its parent company, Smoore.

CDP is an independent not-for-profit organization that manages a global disclosure system and repository for environmental reporting by corporations, municipalities and organizations around the world.

In 2021, more than 680 financial institutions, representing $130 trillion in assets, supported CDP’s request for data sharing, while over 13,000 companies, accounting for 64 percent of the world’s market capital, disclosed through CDP’s database. Phillip Morris International, British American Tobacco, Japan Tobacco International, Altria Group and Imperial Tobacco also take part in the CDP.

In May 2022, Feelm announced its commitment to achieve carbon neutrality by 2050, with a strategic executive plan that includes introducing zero-carbon vape technology solutions, adopting eco-friendly materials and green packaging, supporting the global supply chain in de-carbonization and activating a recycling program of vape pod cartridges and devices with clients.

“Carbon neutrality is an important component of our integrated ESG strategic plan as it helps to accelerate our business transformation, said Sofia Luo, marketing director of Feelm’s business division, in a statement.

“That is why Feelm follows the measures and roadmap outlined in the ‘Corporate Net-zero Pathway’ published by the UN in 2021. Feelm will press ahead with its commitment to comply with UN standards, disclose information transparently, and welcome scrutiny from international organizations and the public; in order to reach our vision of developing an eco-friendly and low-carbon economy.”

June 22, 2022