Blog - Tobacco Reporter

Universal Reports Flat 2022 Results

Universal Corp. reported sales and other operating revenue of $2.1 billion for fiscal 2022 compared with sales and other operating revenue of $1.98 billion in fiscal 2021. Reported operating income was $160.3 million, up 8 percent over that reported in 2021. The company’s tobacco operations contributed sales and other operating revenues of $1.84 billion in fiscal 2022, down slightly from the previous year.

“I am proud of our fiscal year 2022 results, which were generally comparable to those in fiscal year 2021,” said George C. Freeman III, chairman, president and CEO of Universal Corp., in a statement. “During fiscal year 2022, we continued to face a very challenging logistical environment in many of our key tobacco regions. Strong performance from our Ingredients Operations segment offset some challenges that reduced results in our Tobacco Operations segment.

“Our plant-based ingredients platform is coming together nicely and is exceeding our expectations. With the acquisition of Shank’s Extracts, we are now positioned to offer our customers a broad range of products, from fruit and vegetable juices, concentrates and dehydrated ingredients to botanical extracts and flavorings. In fiscal year 2022, the Ingredients Operations segment saw increased demand for organic-based products and continued strong volumes for human and pet food categories as well as for vanilla extracts.

We continue to see opportunities to increase market share and expand the supply chain services we provide our customers.

George C. Freeman III, chairman, president and CEO, Universal Corp.

“Ongoing shipping constraints reduced our Tobacco Operations segment results for the year and quarter ended March 31, 2022, as a result of continued limitations in worldwide shipping availability stemming from the Covid-19 pandemic. Due to the logistical constraints in fiscal year 2021, we had carryover tobacco volumes, which shipped in fiscal year 2022. Similar logistical constraints impacted fiscal year 2022, which led to an even larger amount of tobacco volumes, reflecting a difference of about $70 million in revenue, which did not ship in fiscal year 2022, compared to the carryover volumes from fiscal year 2021. Tobacco shipment volumes in fiscal year 2022 were also reduced due to smaller African burley crops.

“We experienced volatile tobacco and currency markets in Brazil during the fourth quarter of fiscal year 2022. Appreciation of the Brazilian currency coupled with strong demand for leaf tobacco led to unprecedented increases in green prices for leaf tobacco and earlier purchasing of the 2022 Brazilian crop, resulting in disruptions to market dynamics. To fulfill our customers’ orders, leaf tobacco purchases from our contracted farmers this season have been at the prevailing inflated market price for all leaf tobacco regardless of the quality of leaf tobacco. This resulted in larger inventory write downs in the quarter ended March 31, 2022, compared to the prior year’s fourth quarter.

“As we move into fiscal year 2023, we are seeing strong demand for our plant-based ingredients and tobacco products. We believe leaf tobacco supply for flue-cured, burley, dark air-cured and oriental tobaccos to be in an undersupply position. At the same time, we continue to see opportunities to increase market share and expand the supply chain services we provide our customers. We expect continued logistical constraints as well as higher costs, particularly freight, raw materials, labor, fertilizer and energy, in both our tobacco and ingredients businesses. We are actively working to mitigate these challenges, and I am confident that we can deliver another good ye

May 26, 2022

Study: Vapes Have Higher Health Costs Than Smokes

The use of electronic cigarettes costs the United States $15 billion annually in healthcare expenditures—more than $2,000 per person a year—according to a study by researchers at the University of California San Francisco School of Nursing.

The study, published on May 23 in Tobacco Control, is the first to look at the healthcare costs of e-cigarette use among adults 18 and older, according to the release.

“Our finding indicates that healthcare expenditures for a person who uses e-cigarettes are $2,024 more per year than for a person who doesn’t use any tobacco products,” said lead author Yingning Wang of the UCSF Institute for Health and Aging.

According to the U.S. Centers for Disease Control and Prevention, combustible cigarette smoking-related illness in the United States costs more than $300 billion each year, including more than $225 billion for direct medical care for adults.

The researchers based their estimates of healthcare costs and utilization on data from the 2015–2018 National Health Interview Survey. Healthcare utilization included nights in the hospital, emergency room visits, doctor visits and home visits.

“Healthcare costs attributable to e-cigarette use are already greater than our estimates of healthcare costs attributable to cigar and smokeless tobacco use,” said Wang. “This is a concerning finding given that e-cigarettes are a relatively new product whose impact is likely to increase over time.”

May 25, 2022

Latest PATH Data Files Released

The U.S. Food and Drug Administration’s Center for Tobacco Products and the National Institute of Health’s National Institute on Drug Abuse announced the availability and location of newly released and updated data files from the Population Assessment of Tobacco and Health (PATH) Study, including the following:

New data sets:

Updated datasets:

The Wave 5.5 Special Collection data were collected from youth participants ages 13 to 19 between July and December 2020. Data in the PATH-ATS were collected between September and December 2020 from a subsample of adult participants ages 20 and older, complementing the Wave 5.5 Special Collection. Additionally, Restricted-Use Files have been updated to include Wave 5 Ever/Never Reference Data, and the Restricted-Use and Public-Use Master Linkage Files have been updated.

Questions about the collection, content, weighting, documentation, or structure of PATH Study data (this excludes questions on statistical analysis or analytic guidance) may be submitted to PATHDataUserQuestions@Westat.com.

May 25, 2022

John Miller Joins 22nd Century Group

John J. Miller has joined 22nd Century Group to help the company achieve the full potential of its reduced-nicotine business.

Miller has more than 35 years of experience in the tobacco and consumer packaged goods industries. He will work directly with Jim Mish, CEO, and with Michael Zercher, chief operating officer of 22nd Century Group.

“We are absolutely delighted to welcome John Miller to our team,” said Mish. “His significant hands-on expertise and insight in strategic planning, assessing and implementing strategic partnership opportunities, and leading sales and marketing efforts will be instrumental in accelerating revenue, profit and market share growth for the company. We look forward to John’s contributions to the success of the company’s launch of VLN, our reduced nicotine cigarettes with 95 percent less nicotine than conventional cigarettes, which is the first and only modified-risk tobacco product approved by the FDA.”

“I am extremely impressed with the team of outstanding professionals at 22nd Century Group and their commitment to product innovation,” said Miller in a statement. “I am very enthusiastic to be joining the company at this pivotal time in its history and leading the VLN initiative on the heels of the product’s successful pilot launch. VLN is a transformative brand with tremendous market potential. I am incredibly optimistic about the meaningful difference it could make in the lives of people to help them smoke less.”

Most recently, Miller was the president and CEO of Swisher International, a 160-year-old leading lifestyle brands company that is the largest manufacturer and exporter of cigars and smokeless tobacco products in America. Miller joined Swisher in November 2012 as senior vice president of sales and marketing, was promoted to president in 2017 and was named CEO in March 2021.

Miller’s experience also includes more than 20 years in various management positions at U.S. Smokeless Tobacco Co. As regional vice president, he had direct oversight and responsibility for all sales, planning and operations for key brands in the Western United States. U.S. Smokeless Tobacco Co. was acquired by Altria in 2009.

Miller holds a Bachelor of Science degree in finance from the University of Nevada, Las Vegas and a Master of Business Administration degree from the George L. Graziadio School of Business Management at Pepperdine University.

May 24, 2022

Lucy Submits PMTAs for Modern Oral Products

Lucy Goods has submitted premarket tobacco product applications (PMTAs) to the U.S. Food and Drug Administration seeking marketing authorization of 42 of its modern oral nicotine products, including its innovative line of capsule pouches.

Lucy is a developer, marketer and distributor of next-generation nicotine products that offer adult tobacco consumers alternatives to conventional tobacco. One of the key product innovations described in Lucy’s recently submitted PMTAs is its use of nontobacco nicotine.

The nontobacco nicotine in Lucy products is manufactured using principles of green chemistry but is otherwise chemically identical to tobacco-derived nicotine in other modern oral products on the market, according to Lucy Goods. The low-waste manufacturing process does not require arable land or pesticides used in the cultivation of tobacco for tobacco-derived nicotine.

Lucy’s recent filings represent the second round of FDA applications from the company. In 2020, Lucy submitted PMTAs for its modern oral nicotine products containing tobacco-derived nicotine, which are currently under review by the FDA. Even before the FDA was granted regulatory authority over nontobacco nicotine products, the company had been engaged in serious efforts to prepare PMTAs for its suite of nontobacco nicotine products.

“Lucy’s commitment to working with the FDA is essential to its goal of delivering innovative nicotine products for switching adult smokers,” said Willie McKinney, CEO of McKinney Regulatory Science Advisors and a regulatory advisor to Lucy, in a statement. “These PMTAs for Lucy’s NTN [nontobacco nicotine] modern oral products demonstrate the company’s ability to drive such innovation responsibly.”

“Submitting PMTAs for our nontobacco nicotine products is a key milestone for us as we continue to create the highest quality and most innovative products in the industry,” stated David Renteln, CEO of Lucy. “We are proud of the evidence we have provided to the FDA in these PMTAs, and we look forward to working with the agency as the process moves forward.”

Lucy is an independently owned and operated nicotine alternative company formed with the mission of reducing tobacco-related harm to zero.

May 24, 2022

Malawi Makes $26 Million From Tobacco

Malawi has sold 13 million kg of tobacco generating over $26 million during the ongoing tobacco sales at the country’s four tobacco floors, according to Malawi24.com.

The Tobacco Commission (TC) has described the current situation in tobacco markets as “promising” despite challenges leading to low volumes of leaf.

“For illustration purposes, burley tobacco grades of NG (nondescript) that would ordinarily be bought at the government’s set minimum price of $0.95 because of reflecting on its quality had been bought at a price as high as $1.76, which is 85 percent higher than the set minimum price,” said Joseph Chidanti Malunga, the TC’s CEO.

“As of [May 18], the average price of the leaf was $2.04 per kg. We anticipate that we can get even better prices, but these are positive developments on the market.”

“Even the rejection rate has tremendously reduced, and, in some cases, we don’t even have rejection. I went to Mzuzu [and] the other time Chinkhoma—there was no rejection at a particular point. So, this is exciting not just to the commission but [to] the growers as well,” he added.

Chidanti Malunga indicated that this year the commission will only manage to sell at least 100 million kg of the product against the required 161 million kg, which he attributed to a change of rainfall patterns.

May 23, 2022

Bangladesh: MPs Want Tobacco-Free Country

About 40 Members of Parliament (MPs) adopted a declaration to achieve tobacco-free status in Bangladesh by 2040, according to The Dhaka Tribune.

MP Habibe Millat presented the declaration at a media briefing on May 20, 2022, in Cox’s Bazar. The three-day Conference on Achieving a Tobacco-Free Bangladesh by 2040 was organized by the Bangladesh Parliamentary Forum for Health and Well-Being (BPFHW) at the Sea Pearl Resort. The conference was organized in association with the Shastho Shurokkha Foundation and Campaign for Tobacco-Free Kids (CTFK) Bangladesh.

Signed by Habibe, chairman of the BPFHW, the 16-point declaration acknowledged the progress on the commitment so far, recognized the urgent need for action and recommended some key actions to realize the vision.

Officials noted progress through the Smoking and Using of Tobacco Products (Control) Act 2005, as amended in 2013, and the Smoking and Tobacco Products Usage (Control) Rules 2006 and 2015, which led to a reduction in overall adult smoking rates from 43.3 percent in 2009 to 35.3 percent in 2017.

May 23, 2022

RLX Results Impacted by Pandemic

RLX Technology reported net revenues of CNY1,71 billion ($270.4 million) for the first quarter ended March 31, 2022, compared with RMB2.4 billion in the same period of 2021. Gross margin was 38.3 percent, down from 46 percent in the same period of 2021. U.S. GAAP net income was RMB687.1 million, compared with a U.S. GAAP net loss of RMB267 million in the same period of 2021. Non-GAAP net income was RMB361.8 million, compared with RMB610.5 million in the same period of 2021.

“During the first quarter of 2022, we continued to focus on our core strategy and maintain our leading position in the industry while preparing for the anticipated regulatory changes,” said Ying (“Kate”) Wang, co-founder, chairperson and CEO of RLX Technology, in a statement.

“As the new regulatory framework has come into effect and detailed implementation measures have been released, we are proactively adapting our business to the new market environment by applying for the relevant licenses and developing qualified products that meet the requirements of the most recent national standards. We believe that, by leveraging our leading research and development abilities, we are able to launch market-leading products that conform to the national standards and satisfy our users’ needs.

RLX Technology attributed the decline in net revenues to the impact of the Covid-19 pandemic on its factory in Shenzhen, which limited the company’s production and shipment volumes.

“Our cash position remains solid, which will support us as we navigate the market dynamics and agilely adjust our business to the fluctuating macro environment,” said Chao Lu, chief financial officer of RLX Technology. “Looking ahead, we will remain focused on the business elements under our control, such as product innovation, cost optimization and operating efficiency, to reinforce our fundamentals and position ourselves to seize future opportunities. As always, we are committed to delivering sustainable growth for our shareholders in the long run.”

May 21, 2022

FDA Names New CTP Director

The U.S. Food and Drug Administration has named Brian A. King as the new Center for Tobacco Products (CTP) director.

“After a robust executive search, I have selected Dr. Brian A. King as FDA’s new Center for Tobacco Products Director,” Robert Califf wrote on Twitter. “Dr. King brings extensive and impressive expertise in tobacco prevention and control and has broad familiarity with FDA from his more than 10-year tenure at CDC.”

King is the deputy director for research translation in the Office on Smoking and Health (OSH) within the National Center for Chronic Disease Prevention and Health Promotion at the Centers for Disease Control and Prevention. In this capacity, he is responsible for providing scientific leadership and technical expertise to CDC/OSH, the lead federal agency for comprehensive tobacco prevention and control.

King joined the CDC in 2010 as an epidemic intelligence service officer before which he worked as a research affiliate in the Division of Cancer Prevention and Population Sciences at Roswell Park Comprehensive Cancer Center in Buffalo, New York. During his time at Roswell Park, his primary research focus related to tobacco prevention and control.

King has worked for over 15 years to provide sound scientific evidence to inform tobacco control policy and to effectively communicate this information to key stakeholders, including decision makers, the media and the general public. He has authored or co-authored over 200 peer-reviewed scientific articles pertaining to tobacco prevention and control, was a contributing author to the “50th Anniversary Surgeon General’s Report on Smoking and Health,” was the lead author of CDC’s 2014 update to the evidence-based state guide, “Best Practices for Comprehensive Tobacco Control Programs,” and was the senior associate editor of the 2016 Surgeon General’s report, “E-cigarette Use Among Youth and Young Adults” and the 2020 Surgeon General’s report, “Smoking Cessation.” He was also the renior official for the CDC’s emergency response to the 2019 outbreak of e-cigarette, or vaping, product use-associated lung injury.

King holds a doctorate degree and a Master of Public Health degree in epidemiology from the State University of New York at Buffalo.

May 20, 2022

Senator Calls on U.S. FDA to End Enforcement Discretion

In a speech on the Senate floor, U.S. Senator Dick Durbin blasted the U.S. Food and Drug Administration for its delays in completing its public health review of e-cigarette premarket tobacco product applications (PMTAs). The deadline for the FDA to finish reviewing e-cigarette applications was Sept. 9, 2021, more than eight months ago.

On June 13, the regulatory agency submitted an update on the agency’s review of e-cigarette applications and stated it will not finish reviewing e-cigarettes until July 2023 and that products under review may continue being sold.

“These companies have flooded the market with addictive devices. Companies like Juul, partially owned by the tobacco companies, understand that they’ve promoted their products to children,” Durbin said, according to a release from his office. “For years, none of these products were legally authorized. Who was supposed to be the cop on the beat? The Food and Drug Administration, but they were nowhere to be found.”

In March, Durbin led a bipartisan letter with 14 of his colleagues calling on the FDA to finish its review of e-cigarettes immediately; reject applications for e-cigarettes, especially kid-friendly flavors, that do not prove they will benefit the public health; and clear the market of all unapproved e-cigarettes.

“I am calling on the FDA to immediately halt its enforcement discretion and remove all unauthorized e-cigarettes from the market,” Durbin stated. “Don’t allow Juul and other tobacco companies one more day of endangering our children. Stop cowering before Big Tobacco’s highly paid lawyers.”

May 20, 2022