Blog - Tobacco Reporter

BAT Withdraws from Russia

BAT is withdrawing from Russia, the company announced on its website.

“Building on our announcement of 9th March 2022, we have now completed the review of our presence in Russia. The context is highly complex, exceptionally fast-moving and volatile,” the company said in a statement, referring to the Russian military invasion of Ukraine.

“We have concluded that BAT’s ownership of the business in Russia is no longer sustainable in the current environment,” the company wrote.

“Today, we have initiated the process to rapidly transfer our Russian business in full compliance with international and local laws. Beyond continuing to pay our 2,500 employees, we will do our utmost to safeguard their future employment.

“Upon completion, BAT will no longer have a presence in Russia.

“Following our decision today, and in light of the continuing uncertainty related to Ukraine and Russia and the possible indirect impact on the rest of the group, we consider it prudent to revise our guidance for full-year 2022. We now expect constant currency group revenue growth of 2 percent to 4 percent and mid-single figure constant currency adjusted diluted EPS [earnings per share] growth. In 2021, Ukraine and Russia accounted for 3 percent of group revenue and a slightly lower proportion of adjusted profit from operations.”

BAT faced heavy criticism for an earlier decision to continue operating in Russia. “If you are a member of the board of British American Tobacco, courting popularity was probably never a top personal priority. Even so, the people overseeing a large and widely held FTSE-100 company might still feel obliged to explain why, amid the broad boycott of Russia by multinationals, they think its fine to carry on business in the country roughly as normal,” wrote Nils Pratley in The Guardian.

Earlier, Philip Morris International, Japan Tobacco International and Imperial Brands announced the suspension of their operations in Russia.

March 11, 2022

Reduced-Exposure Claim for IQOS 3

The U.S. Food and Drug Administration has issued a modified-risk granted order authorizing Philip Morris Products to market the IQOS 3 system holder and charger with the following reduced-exposure information:

The IQOS system heats tobacco but does not burn it.
This significantly reduces the production of harmful and potentially harmful chemicals.
Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.
This reduced-exposure information is the same as the information previously authorized by FDA in July 2020 for an earlier version of the device.

Today’s action follows the FDA’s review of a new modified-risk tobacco product (MRTP) application submitted by the company for the IQOS 3 system holder and charger. This MRTP application primarily cross-referenced the supplemental premarket tobacco product application for this device, which was authorized for legal sale and distribution in the United States in December 2020, as well as the MRTP application for the previous version of the device.

The IQOS 3 device is similar in design to the previous version (with mainly aesthetic changes), uses the same tobacco source, and the company requested to use the same exposure reduction claim as authorized for the previous version of the device. Given these similarities, FDA largely relied on its past evaluations of the IQOS 3 device and previous version of the device in determining that the IQOS 3 device meets the authorization criteria to be marketed as an MRTP.

Headquartered in Switzerland, Philip Morris is currently banned from importing the product into the United States following an adverse ruling in a patent dispute with BAT’s Reynolds American subsidiary.

In an interview with Bloomberg, PMI CEO Jack Olczak said the company plans to manufacture IQOS in the U.S. to get around the import ban.

March 11, 2022

Huub Vizee Announces Retirement from Delfort

Huub Vizee, based in Austria, will retire from his position as head of regulatory and corporate affairs at Delfort on March 31.

Vizee started at Delfort in Austria as head of regulatory affairs in September 2011. In 2020, he became head of regulatory and corporate affairs. In this role, he dealt with tobacco-related regulatory developments worldwide, advised the R&D department and represented Delfort on the Coresta board of directors.

From 2014 to 2016, Vizee served as vice president of the Coresta board of directors, and from 2016 to 2018, he served as its president. He has been a member of the GTNF advisory board since 2015.

Vizee worked in the tobacco industry for 35 years in areas such as leaf, research, engineering, quality assurance, product development and corporate affairs.

Prior to joining Delfort in September 2011, he worked for Van Nelle, Douwe Egberts and Imperial Tobacco, where his last position was head of group regulatory development. In this role, he was responsible for leading Imperial Tobacco’s regulatory engagement as an active participant on a global, regional and market level. Vizee also represented Imperial Tobacco on the boards of the Confederation of European Community Cigarette Manufacturers, the European Cigar Manufacturers Association and Coresta.

According to Vizee, working in the tobacco industry has been interesting, challenging, entertaining and incredibly rewarding. “The best thing about working in the tobacco industry was being [a] member of a large family and having an astonishing network all over the world in which everybody is equal, appreciates each other and where friendships last forever,” he reflects.

Upon retirement, Vizee plans to move back to his native Netherlands.

March 11, 2022

Australia Urged to Include Vaping in Smoking Strategy

Australia is lagging well behind many other countries in the Asia-Pacific region when it comes to successfully tackling smoking through vaping, says the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA).

The CAPHRA’s observation comes as Australia’s Department of Health seeks feedback on its Draft National Smoking Strategy 2022–2030, with public submissions closing on March 24.

“We encourage vapers and supporters of a progressive tobacco harm reduction (THR) approach to have their say. Australians desperate to quit smoking and those keen to stay off deadly cigarettes need all the help they can get,” says Nancy Loucas, executive coordinator of the CAPHRA.

On Oct. 1, 2021, Australia’s Therapeutic Goods Administration expanded its prescription-only model with customs clamping down at the border on personal imports of nicotine vaping liquids from overseas websites.

Not only does Australia’s draft strategy ignore the potential of safer nicotine products, it also lacks ambition, according to Loucas. The strategy aims for a smoking rate of 10 percent or less by 2025 while New Zealand is pursuing a 5 percent smoke-free goal and looks on target to achieve it. “Instead of banning vaping, New Zealand has regulated it, making it tough for minors to access but available to all adults keen to keep off the cancer sticks. New Zealand is seeing its overall smoking rate tumble, yet the Australian government fails to accept that the most effective smoking cessation tool available is staring it in the face,” says Loucas.

“Australia is well down the world rankings when it comes to adopting effective THR policies and is light-years behind the U.S. and U.K. Subsequently, Australia’s overall smoking rate has fallen very little over the past decade, and without reasonable access to vaping, Australia will struggle to even achieve its 10 percent smoking goal,” says Loucas.

March 11, 2022

Taiwan: Stakeholders Debate Policy Proposals

A demonstrative policy debate event on whether e-cigarettes should be regulated was held on March 8, 2022, in Taipei, showing how different public policy viewpoints can be rationally discussed, according to The Taipei Times. The debate was held by the Chinese Debate Promotion Association (CDPA) at the Taipei NGO House.

CDPA Chairman and Founder Chia Pei-te said that the Executive Yuan in January approved a draft amendment to the Tobacco Hazards Prevention Act proposed by the Ministry of Health and Welfare for legislative review. The proposed regulations on emerging tobacco products have sparked discussions, he said.

The amendment would classify emerging tobacco products as “tobacco-like products” and “designated tobacco products.” E-cigarettes would be classified as “tobacco-like products” and be fully banned while heated-tobacco products would be classified as “designated tobacco products” and be subject to regulation.

The reasoning behind banning e-cigarettes includes keeping curious teenagers away from the products, preventing consumers from adding nicotine to e-cigarette e-liquids and lowering the risk of teenage users turning to smoking.

The debate participants went back and forth discussing the pros and cons of regulating e-cigarettes versus banning them, bringing up subjects such as public health, tax revenue options and teenage use.

National Yang Ming Chiao Tung University (NYCU) College of Pharmaceutical Sciences Dean Kang Jaw-jou said that he was moved by opinions for and against e-cigarettes. He said the affirmative side proposed to directly manage e-cigarette use through regulations and an approval system while the opposing side stressed their attitude to life—banning a substance if the public consensus deems it harmful to society.

Many aspects of the topic can be argued, but e-cigarettes can cause negative health effects, and supporters and opponents must clearly present this fact to the public in further discussions, stated Wang Hsiang-tsui, NYCU Faculty of Pharmacy associate professor.

March 11, 2022

Zimbabwe: Good Quality Leaf Expected

Zimbabwe is expecting good quality tobacco leaf this year despite an expected reduction in output. The quality should attract higher prices, according to xinhuanet.com.

The anticipated reduced volumes are likely to push demand and selling price up, according to Tobacco Industry and Marketing Board Chief Executive Meanwell Gudu.

Tobacco hectarage for the season declined by 11 percent, according to results of the first-round crop and livestock survey for 2021–2022.

“Due to anticipated reduced volumes in Zimbabwe this season, there will be more pressure on the demand side to take the crop, which should naturally increase prices upward. This is likely to be experienced in the medium to filler grades,” Gudu said. Top-quality grades for premium brands are likely to remain unchanged, he said. The current price for top-quality grades ranges from $3.50 to $5.40 per kg.

“The high-end market for this grade has reached its ceiling in price increase. The major market for these grades is in China, and there are no indications to change prices upward,” Gudu said.

“We expect top-quality grades. The irrigated crop is medium[-bodied] to heavy-bodied, predominantly lemon in color and reflecting a fair to good quality.

“The main dryland crop is medium-bodied in the commercial sector whilst being light[-bodied] to medium-bodied in the smallholder sector. The late dryland crop has poor stand due to prolonged dry spell, which was experienced post-planting time toward the end of December.”

“Brazil is likely to be 80 million kg short of their usual production level because of drought. This creates less competition for us,” Gudu said.

“Some kind of hoarding of tobacco is likely to happen that may influence prices to be better because of disruptions in logistics caused by Covid-19,” he added.

“Supply chains were disrupted from 2020 into 2021 due to shortage of vessels and closure of some shipping lines. Now that the world has lifted the Covid-19 restrictions and uncertainty in the possibilities of other waves, customers are likely going to grab this opportunity to stock up their tobacco, thereby increasing artificial demand,” Gudu said.

Zimbabwe sold 186.6 million kg of tobacco leaf valued at $515.9 million during the 2021 marketing season, up 16.8 percent in volume and 31 percent in value over 2020 sales.

March 11, 2022

Malaysia: Illicit Cigarette Prevalence Drops

Illicit cigarette prevalence in Malaysia has dropped by 6.5 percentage points from 63.8 percent in 2020, according to Nielsen’s Illicit Cigarettes Study in Malaysia 2021, reports The New Straits Times.

This is the first time since 2014 that illicit cigarette prevalence has registered a decline.

“This indicates that the measures announced by the finance minister in Budget 2021 are starting to bear results,” said a Confederation of Malaysian Tobacco Manufacturers (CMTM) spokesperson. “This is an encouraging development, and CMTM urges the government and all stakeholders to continue all efforts to curb the illicit cigarette trade.”

Malaysia is the number one country for illegal cigarettes, even with the decline. Smuggling syndicates are reacting to Budget 2021 measures by using new methods to illegally import cigarettes into the country.

March 11, 2022

Smoore Launches TPD Compliance Lab

Smoore has established a vaping products risk assessment laboratory for European Union Tobacco Products Directive (TPD) compliance. The lab is part of the Smoore fundamental research center.

Operational since the first half of 2021, the laboratory has already completed 52 product tests for leading vape brands. As China’s first corporate TPD-compliant risk assessment laboratory, it can generate test reports within five working days. Its laboratory equipment is benchmarked against those in world-class analytical testing laboratories, such as Labstat and Enthalpy, according to Smoore.

As the industry’s harm reduction and quality benchmark, the company complies with its in-house Smoore 3.0 safety standards. Based on the risk assessment guidance of the U.S. Environmental Protection Agency and Food and Drug Administration, Smoore 3.0 covers all of the premarket tobacco product application (PMTA) vapor safety tests and FDA-listed harmful and potentially harmful constituents. In addition to vapor safety, Smoore 3.0 also involves extractable and leachable substances of medical-grade atomization materials.

Smoore’s fundamental research center has developed a comprehensive analytical testing and risk assessment system, covering PMTA nonclinical testing and health risk assessment. Accredited by the China National Accreditation Service for Conformity Assessment (CNAS) in 2019, the system is now capable of up to 149 CNAS tests involving the chemical analysis of e-liquids and aerosols, electrical safety, material safety and battery safety.

Smoore entered the EU market in 2018 with its FEELM atomization brand.

March 11, 2022

U.S. Youth Smoking at Historical Low

Youth cigarette smoking rates in the United States are at historically low levels with just 1.9 percent of high school students reporting current use of cigarettes, according to the National Youth Tobacco Survey 2021.

In 2021, an estimated 34 percent of high school students (5.22 million) and 11.3 percent of middle school students (1.34 million) reported ever using a tobacco product, a definition that includes e-cigarettes, cigarettes, cigars, smokeless tobacco, hookahs, pipe tobacco, heated-tobacco products, nicotine pouches and bidis.

Current (past 30-day) use of a tobacco product was 13.4 percent for high school students (2.06 million) and 4 percent for middle school students (470,000). E-cigarettes were the most commonly currently used tobacco product cited by 11.3 percent of high school students (1.72 million) and 2.8 percent of middle school students (320,000) followed by cigarettes, cigars, smokeless tobacco, hookahs, nicotine pouches, heated-tobacco products (HTPs) and pipe tobacco.

The report also shows that 170,000 middle school students and high school students used HTPs in 2021, which appears odd given that the only HTP sold in the United States last year—Philip Morris International’s IQOS—was available only in a handful of test markets. Jim McDonald of Vaping360 suspects that this group of survey participants confused HTPs with another product, possibly cannabis vaporizers.

Interestingly, while 85 percent of youth vapers reported using flavored products, the availability of flavors was not listed as a top consideration by survey participants. When asked about their reasons for using e-cigarettes, they ranked friends and family, curiosity, anxiety and “I can use them to do tricks” as more important factors in their decisions.

Administered from January to May 2021, this NYTS was the first to be fully conducted amid the Covid-19 pandemic, with about half the students completing the online survey in schools and half completing it at home or at other locations. The Centers for Disease Control and Prevention and the Food and Drug Administration cautioned that the 2021 results cannot be compared to previous years because of pandemic-related changes in methodology.

March 11, 2022

Synthetic Nicotine Rule Clears Senate

Synthetic nicotine products will soon require U.S. Food and Drug Administration marketing approval. The U.S. Senate approved a $1.5 trillion spending bill that includes language that changes the definition of a tobacco product to include synthetic nicotine. The legislation now heads to President Joe Biden, who looks forward to signing it into law, according to White House spokesperson Jen Psaki.

Synthetic nicotine—nicotine that is made in a lab rather than derived from tobacco—has long existed in a legal gray area, and many companies started using it after their natural nicotine products were denied market access by the FDA. Public health groups have been warning that synthetic nicotine e-cigarettes, such as Puff Bar, have grown in popularity among teens while skirting FDA oversight.

The Food, Drug and Cosmetic Act, which includes the 2009 Tobacco Control Act, defines a tobacco product as “any product made or derived from tobacco that is intended for human consumption, including any component, part or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part or accessory of a tobacco product).”

At a time when FDA is under scrutiny from multiple federal courts for unlawful regulatory overreach on nicotine, handing the agency even more powers to prevent Americans from switching to vaping is like handing car keys and a bottle opener to your drunk uncle.

Amanda Wheeler, president of the American Vapor Manufacturers Association

Proponents of the policy change refer to it as closing a loophole. “By using synthetic nicotine, e-cig companies are avoiding public health protections for flavored tobacco products and still hooking teens,” tweeted billionaire philanthropist Michael Bloomberg. “With millions of kids still using e-cigs, we must get synthetic nicotine products off the market.”

Critics contend that, given the flaws and deficiencies in the FDA approval process, the new rules will likely result in the prohibition of products that smokers have been using to quit cigarettes.

Amanda Wheeler, president of the American Vapor Manufacturers Association, said banning synthetic products will drive millions back to combustible cigarettes.

“At a time when FDA is under scrutiny from multiple federal courts for unlawful regulatory overreach on nicotine, handing the agency even more powers to prevent Americans from switching to vaping is like handing car keys and a bottle opener to your drunk uncle,” she said.

March 11, 2022