Category: News This Week

  • Liquid Makers Get Another Shot at PTMA

    Liquid Makers Get Another Shot at PTMA

    Photo: alexkich

    Two e-liquid companies will be able to resubmit their marketing applications to the U.S. Food and Drug Administration following a court ruling, reports Bloomberg Law.

    On Jan. 3, the U.S. Court of Appeals for the Fifth Circuit ruled that the FDA acted “arbitrarily and capriciously” in rejecting the premarket tobacco product applications (PMTA) of Wages and White Lion Investments, doing business as Triton Distribution, and Vapetasia for approval to sell their products in the United States.

    The agency “sent manufacturers of flavored e-cigarette products on a wild goose chase,” telling them what would be needed to approve their products, and then denying all applications, the court said in an opinion by Judge Andrew S. Oldham. The FDA “never gave petitioners fair notice that they needed to conduct long-term studies on their specific flavored products,” Oldham said.

    In a dissenting opinion, Judge Catharina Haynes said the agency “properly fulfilled its statutory mandate by considering the relevant portions of Petitioners’ PMTAs and coming to a reasonable conclusion that marketing Petitioners’ products is not appropriate for public health.”

  • RAI Names VP Strategy and Transformation

    RAI Names VP Strategy and Transformation

    Photo: RAI

    Reynolds American Inc. appointed Wade Huckabee to the role of senior vice president of strategy and transformation, the company announced on its website. In this role, Huckabee will be responsible for the development and realization of the U.S. strategy and serve on the Reynolds American Leadership Team, effective Jan. 1, 2024.

    Huckabee joined the Reynolds organization in April 2016 as vice president of strategy and planning, where he oversaw development of the function, including building stronger analytical capabilities and retail insights. He was named senior vice president of combustibles in December 2018 and in 2019 assumed the role of general manager of the Reynolds organization’s traditional categories.

    Huckabee was appointed global head of revenue growth in 2022, where he was responsible for accelerating the BAT Group’s sales and category objectives in priority markets around the world. In 2023, he became group head of customer and commercial, adding the development of global trade marketing to his accountabilities.

    Prior to joining the Reynolds organization, his extensive experience in other consumer goods categories included roles in strategy and investor relations at Hanesbrands and progressive leadership roles in finance, revenue and margin management, and strategic accounts at Keurig Dr Pepper.

    In his new role, Huckabee will lead and oversee Reynolds’ strategy, encompassing key pillars related to commercial, organizational and regulatory strategies. A native Texan, Huckabee has Bachelor of Arts degrees in history and English from the University of Texas at Austin and a Master of Business Administration degree in finance from Pepperdine University in Malibu, California.

  • McKinney Specialty Labs launched

    McKinney Specialty Labs launched

    Willie McKinney

    Jan. 1, 2024, marked the official launch of McKinney Specialty Labs, a scientific organization with expertise in testing nicotine and other aerosolized products.

    “We are excited to announce the launch of McKinney Specialty Labs and to offer our scientific knowledge and regulatory expertise to support the growing market of inhalable products across different industries,” said Willie McKinney, CEO. “We believe that our commitment to science, quality, innovation and customer service makes us a preferred aerosol testing provider for companies of all sizes.”

    McKinney Specialty Labs provides a wide range of testing and consulting services to ensure that product quality and performance are maintained throughout the life cycle of the product: chemical analysis, physical testing, microbiological testing, toxicology testing and regulatory compliance.

    McKinney Specialty Labs employs nearly 100 experienced scientists and technicians with expertise in aerosol science, analytical chemistry, toxicology and regulatory compliance. The lab is equipped with state-of-the-art equipment and adheres to strict quality standards.

  • Court Approves Warehouse Monitoring

    Court Approves Warehouse Monitoring

    Image: Alexey Novikov

    The South African Revenue Service (SARS) will move forward with installing closed-circuit television cameras at tobacco warehouses, after defeating a legal challenge in the Guateng High Court, reports Daily Maverick.

    The surveillance plan was drafted to help plug fiscal gaps due to illicit tobacco trade. The South African government misses out on an estimated ZAR8 billion ($431.06 million) in revenue annually due to tobacco tax evasion.

    The Fair Trade Independent Tobacco Association (FITA), representing 80 percent of licensed cigarette manufacturers in Southern Africa took SARS to court in an attempt to stop the installation of the cameras. In two separate applications, 11 tobacco companies sought to prevent SARS from implementing the rule promulgated under the Customs and Excise Act.

    The tobacco companies argued that the new rule is unconstitutional and that it was an unjustified violation of the right to privacy, dignity and property.

    Acting judge Jacques Minnaar on Dec. 29 rejected their case, arguing, among other things, that companies applied for warehouse licenses in the knowledge that these are conditional on SARS officials having unrestricted access to install cameras.

    The companies were all aware of the installation of CCTV cameras at British American Tobacco and Gold Leaf in February 2023, the court added.

  • Ukraine Tobacco Taxes to Match EU’s by 2029

    Ukraine Tobacco Taxes to Match EU’s by 2029

    Image: andriano_cz

    Ukraine will reform its tobacco and fuel excise taxes, gradually introducing excises minimal for the European Union market over the next five years, reports Interfax.

    The country previously aimed to increase its tobacco excise tax rates to the EU’s minimal rates before 2025, but the anticipated windfall has since been eaten away by inflation due to the use of the hryvnia as its base rather than the euro. Under the new strategy, Ukraine’s tobacco excise tax rates will be tied to the euro.

    The government expects the measure to generate additional revenue equal to between 1.5 percent and 2.2 percent of GDP.

    Ukraine also plans to implement an electronic tracking system for tobacco products and e-liquids.

    The 2024-2029 National Revenue Strategy is one of the structural benchmarks of the cooperation program with the International Money Fund that Ukraine pledged to fulfill before the end of 2023.

  • Investors Challenge Juul Bailout

    Investors Challenge Juul Bailout

    Image: vectortatu

    A group of Juul Labs investors is challenging a November 2022 financial bailout by directors Nick Pritzker and Riaz Valani, alleging that the deal benefited insiders at the expense of other investors, reports The Wall Street Journal.

    A pioneer in the vaping business, Juul Labs went from dominating the U.S. market to fighting for its survival in a short time. Following its initial success, the company came under regulatory scrutiny over its marketing practices. Thousands of lawsuits alleging the company contributed to an “epidemic” of underage vaping took a toll on the company’s finances.

    After the Food and Drug Administration ordered its e-cigarettes off the market and a court stayed the order, Juul began exploring bankruptcy in June 2022.

    To avoid bankruptcy, Pritzker and Valani in September 2022 refinanced a Juul term loan and later that fall loaned Juul more money to cover operating costs. Finally, the two directors, along with Juul co-founders James Monsees and Adam Bowen, backstopped a sweeping legal settlement and made an equity investment in Juul.

    Juul, after approaching dozens of potential investors, closed a funding round in October 2023 that raised $1.27 billion. That sum included money that entities connected to Pritzker, Valani, and Juul’s two co-founders committed for Juul’s legal settlement and an additional $45 million from the same four investors.

    Entities tied to Valani and Pritzker now own nearly half of Juul, while most other investors have had their stakes sharply diluted amid the rescue.

    Affiliates of hedge fund D1 Capital Partners and two other investors sued Juul in October 2023 alleging that Pritzker and Valani “leveraged a distressed situation for their own personal gain to the detriment of Juul’s other stakeholders.”

    Juul in 2024 aims to raise another $330 million as it fights to keep its existing products on the U.S. market and submits new vaping products for federal authorization.

  • Tobacco Bonds Outperforming Peers

    Tobacco Bonds Outperforming Peers

    Image: larryhw

    Despite declining cigarette sales, U.S. tobacco bonds have done better than the average municipal bond index, according to The Wall Street Journal.

    An index of tobacco bonds maintained by S&P Dow Jones Indices had a 10-year total return of 134 percent through the middle of December compared with just 34 percent for a general municipal bond index. And between late October and mid-December, the tobacco index rallied by 13 percent as overall bond yields fell.

    In 1998, the largest U.S. tobacco companies agreed to pay $206 billion over 25 years to 52 U.S. states and territories in exchange for those jurisdictions giving up future legal claims relating to the cost of treating sick smokers. 

    At least 21 states or territories, plus local entities within some of them, didn’t want to wait for the money to trickle in, taking it up front and transferring that risk to municipal bond investors.

    In the year’s since the Master Settlement Agreement, tobacco bond owners have had to cope with the rise of noncombustible products such as e-cigarettes, which don’t count toward the cash received.

    The U.S. government is also threatening to ban menthol cigarettes, which account for about a third of domestic cigarette sales. Excise taxes are depressing demand, as well. The consumer-price index for tobacco products is up by 530 percent since 1997, compared with 93 percent for overall consumer prices.

    On the other hand, tobacco companies agreed to an annual inflation adjustment for their payments of at least 3 percent. For many years, that was more than the states would have received if the payments were indexed to actual inflation.

    The recent surge in inflation, caused payments to increase by about 20 percent from 2019 to 2020.

  • New Year, New Taxes

    New Year, New Taxes

    Image: Xuejun Li

    Tobacco taxes increased in several countries at the start of 2024.

    In Sri Lanka, an upward revision in excise duty and value added tax prompted market leader Ceylon Tobacco Co. to raise the price of four cigarette categories by LKR5 ($0.02), LKR15, LRK20 and LKR25 per stick, respectively, reports the Asian Mirror.

    The government justified the tax hikes by its desire to boost revenue streams while discouraging tobacco consumption.

    Azerbaijan, meanwhile, increased the excise rate for cigarettes from AZN38 ($22.35) per 1,000 sticks to AZN45.5 per 1,000 sticks, according to AzerNews. The excise rate for cigarillos went from AZN43 per 1,000 sticks to AZN45.5 per 1,000 sticks.

    E-cigarettes and heated tobacco products are now subject to a tax of AZN16 per 1,000 units, compared with AZN14 per 1,000 units in 2023. 

    The excise rate for single-use electronic cigarettes, hookahs and their substitutes went up from AZN0.25 manats to AZN2.

    In Belgium, as new e-liquid tax took of €0.15 per milliliter took effect on Jan. 1

  • U.K.: Levies for Vapes to be Unveiled in March

    U.K.: Levies for Vapes to be Unveiled in March

    Credit: TR Archive

    A new tax will hit vapers in the United Kingdom despite warnings it will punish people who have switched to e-cigarettes after quitting smoking.

    The plans for the levy, which will likely increase the cost of vaping liquid by at least a quarter, will be unveiled in the Budget in March.

    A government source told The Mirror it was now almost inevitable that a tax on vaping will be introduced as part of the Spring Budget, which Chancellor Jeremy Hunt will announce on March 6.

    Ministers are looking to copy European countries such as Germany and Italy that already have levies on vapes.

    A 10ml bottle of e-liquid, which a typical vaper would get through in a week, costs around £4 at present. In Germany, a £1.40 vape tax is slapped on 10ml bottles, with plans to double this to £2.80 in 2026.

    Italy, which in 2014 became the first country to tax e-cigarette fluid, charges a £1.10 levy on 10ml bottles.

  • Vapers Hoarding Ahead of Flavor Ban

    Vapers Hoarding Ahead of Flavor Ban

    Image: fotodiya83

    Vapers in the Netherlands have been stocking up on products ahead of a flavor ban set to take effect in 2024, reports the NL Times, citing Emil ‘t Hart of the Esigbond Trade Association.

    “You see that the consumers are hoarding as much as possible in the specialist stores,” ‘t Hart was quoted as saying. “Especially the real vapers who had switched over from cigarettes are hoarding.”

    From Jan. 1, 2024, stores will not be allowed to sell vapes or fluids with flavors like peach, mango or mint. Only products with the taste of tobacco will be permitted. The government hopes its measure will prevent youngsters from starting the nicotine habit and then migrating to combustible products.

    ‘t Hart believes the measure will be counterproductive, however. “People who have smoked regular cigarettes before turning to e-cigarettes would then be tempted to go back to traditional cigarettes,” he said.

    According to ‘t Hart many vapers have been buying their e-cigarettes online from sellers in France, Spain or China, or at physical stores in neighboring Belgium and Germany.

    A legal challenge against the flavor ban, filed by the Esigbond in April, is currently making its ways through the courts. ‘t Hart expects a ruling this summer.