Category: News This Week

  • Flavored Vapes Still Available After Ban

    Flavored Vapes Still Available After Ban

    Image: Olga

    Californians, including minors, are still able to buy flavored vapes online a year after the state enacted a ban on such products, reports The Conversation, citing a study published in Jama Network Open.

    In effect since Dec. 21, 2022, California Senate Bill 793 prohibits the sale of most flavored tobacco products, including e-cigarettes, to people of all ages. Hookahs, premium cigars and loose-leaf tobacco are exempted from the legislation.

    Posing online as minors under the age of 21, researchers tried to buy flavored e-cigarette products from 26 websites that sold them in California. Before SB 793, they succeeded in 52 percent of attempts. After SB 793, the team’s success rate rose to almost 61 percent.

    The study did not explain why flavored e-cigarettes are still available from online retailers in California. “It may be that vendors are flouting the new law, are ignorant of it, or do not believe the new law applies to online sales,” speculated corresponding author John-Patrick Allem, associate professor of social and behavioral sciences at Rutgers University.

    Allem urged authorities to conduct a comprehensive evaluation of SB 793 compliance among brands and vendors that sell their products online in California to help determine the extent to which flavored e-cigarettes are still available.

    Another research team collected weekly Google search rates related to online shopping for cigarettes and vaping products in California from January 2018 to May 2023. They found that shopping queries were 194 percent higher than expected for cigarettes and 162 percent higher than expected for e-cigarettes—which according to the authors suggests consumers are searching on Google for vendors promoting banned products.

  • Tobacco Theft Down in Brazil

    Tobacco Theft Down in Brazil

    Photo: Souza Cruz

    A program to prevent container theft in southern Brazil is proving successful, according to the Interstate Tobacco Industry Union, SindiTabaco.

    In 2019, the sector recorded 26 thefts throughout the region; in 2022, there were only eight, and only one of these occurrences took place in Rio Grande do Sul, the center of Brazil’s cigarette tobacco industry.

    In 2023, the industry lost six containers to theft, including four raw tobacco cargoes and two containers with processed tobacco for export.

    Iro Schuenke

    During a Dec. 12 meeting with public security officials, SindiTabaco president Iro Schuenke urged stakeholders to remain vigilant as movements of containers intensify during the next months.

    Thieves are increasingly targeting processed tobacco, he noted, citing recent thefts of cargos heading to the port of Rio Grande.

    During the meeting, participants discussed theft-prevention measures such as increased police escorts, traveling in truck convoys and predetermining stops for drivers.

    Tobacco exporters and shippers, meanwhile, are evaluating ways to reduce the time it takes for the containers to arrive at the port, so as to avoid, for example, evening transportation.

    “If evening transportation is absolutely necessary, the companies can previously contact the security organs asking for an escort to accompany the truck”, said Regional Police Chief Officer Luciano Fernandes Menezes.

    To help tobacco shippers improve security, SindiTabaco has prepared an information leaflet with best practices.

  • Zimbabwe Growers Plant 55,170 Hectares

    Zimbabwe Growers Plant 55,170 Hectares

    Photo: Taco Tuinstra

    Tobacco growers have planted 55,170 hectares of leaf for the 2023–2024 season in Zimbabwe, reports The Sunday Mail.

    Last year, the country’s tobacco farmers planted 57,411 ha, according to the Tobacco Industry and Marketing Board (TIMB), which regulated the trade in Zimbabwe.

    This year’s figure includes 19,202 hectares of irrigated tobacco and 35,968 of dryland tobacco.

    Meanwhile, 112,447 growers have registered with the TIMB.

    Zimbabwe’s tobacco growers delivered nearly 300 million kg this year, which are currently being processed, sorted and exported. As of November, the country had exported more than 210 million kg of tobacco worth more than $1 billion.

    As part of the government’s Tobacco Value Chain Transformation Plan, Zimbabwe aims to build a $5 billion tobacco industry by 2025.

  • RELX Recognized for Sustainability

    RELX Recognized for Sustainability

    Image: RLX Technology

    RLX Technology’s (RELX) score rose 13 percent in S&P Global’s most recent corporate sustainability assessment. The company ranked first among all global e-cigarette companies for the second consecutive year.

    The Chinese company scored well above the industry average in many ESG topics, such as product innovation management, business ethics, talent development, greenhouse gas emissions and transparency of information disclosure.

    “RELX views sustainability not just as a goal but as a fundamental part of our DNA,” said RELX Senior Manager for External Affairs Elgin Seah in a statement. “The impressive rating from S&P Global reaffirms that our efforts in environmental conservation, social responsibility and corporate governance are making a meaningful difference.”

    In addition to complying with China’s recently created product standards for e-cigarettes, RELX has established a full life-cycle quality assurance program to ensure product quality and safety in a holistic manner.

  • Cambodia urged to raise tobacco taxes

    Cambodia urged to raise tobacco taxes

    Image: laurent dambies

    The World Health Organization and the Cambodia Movement for Health Organization have urged the Cambodian government to increase tobacco taxes, reports the Khmer Times.

    Cambodia levies comparatively low taxes on tobacco products. Domestically produced cigarettes attract a duty of 25 percent, and imported cigarettes are taxed at a rate of 31 percent. According to the Ministry of Economy and Finance, Cambodian tobacco product taxes are 20 percent lower than in other ASEAN countries.

    According to the WHO, increasing tobacco taxes is the single most effective way of reducing tobacco use and associated health problems. A recent WHO study found that raising the price of a pack of cigarettes by KHR500 ($0.12) now would not only deter at least 30,000 people from smoking next year but also prevent 10,000 deaths in the next 10 years and generate tax revenues of approximately $53 million per year.

    Between 2011 and 2021, the number of smokers in Cambodia increased from 1.47 million to 1.63 million, according to the Public Health Centre.

  • Illicits Top Quarter Of Ukrainian Market

    Illicits Top Quarter Of Ukrainian Market

    Image: IvanSemenovych

    The share of illegal tobacco products reached 25.7 percent of the Ukrainian market in October, up from 19.5 percent in June and 20.2 percent in February, reports Interfax-Ukraine, citing data from the most recent Kantar Ukraine study.

    The figure represents the highest share since Kantar began collecting information on the Ukrainian tobacco market.  

    The share of counterfeit products increased to 11.3 percent, and the share of products labeled for duty-free sales or export but sold illegally in Ukraine grew to 12.9 percent.

    Measured over the entire year, illegal cigarettes accounted for 21.8 percent of the Ukrainian tobacco market.

    The Ukrainian government missed out on an estimated UAH23.5 billion ($625.67 million) in tobacco tax revenues in 2023 due to illicit cigarette trade, according to calculations by Kantar.

  • Singapore Cracks Down on Travelers With Vapes

    Singapore Cracks Down on Travelers With Vapes

    Image: monticellllo

    Singapore authorities will step up checks at air, land and sea checkpoints to prevent e-cigarettes from entering the city state, reports the South China Morning Post.

    “Incoming passengers may be screened for e-vaporizers and their components at the arrival halls, and those found with e-vaporizers or their components will be fined,” said the Ministry of Health and the Health Sciences Authority in a media release.

    Vaping is illegal in Singapore, and offenders can be fined up to SGD2,000 ($1,490). Those who import, distribute or sell such products face stiffer penalties, including a possible jail term.

    Despite the ban, the number of people caught using and possessing vapes has been rising, including among underage consumers.

    Apart from the border checkpoints, checks will be stepped up at places such as the central business district, shopping centers, parks and smoking areas as well as public entertainment outlets such as bars and clubs.

    Since Dec. 1, enforcement officers from the National Environment Agency have been empowered to take action against people who use or own vapes.

    Singapore authorities said that their multi-agency approach is aimed at protecting its population.

    The World Health Organization said last week that urgent action is needed to control e-cigarettes to protect children and nonsmokers.

  • Warnings for Vapes Resembling Alcohol

    Warnings for Vapes Resembling Alcohol

    Image: FDA

    On Dec. 20, 2023, the U.S. Food and Drug Administration issued warning letters to three online retailers for selling and/or distributing unauthorized e-cigarettes that imitate packaging for bottles of alcohol. These retailers sold Luckee Vape Daniels brands, which are flavored disposable e-cigarette products that come in a variety of common alcoholic drink flavors that may be appealing to young people, including icy pina colada, frozen strawberry daiquiri, frozen mangorita and watermelon martini.

    Data from the 2023 National Youth Tobacco Survey indicate that disposable products are the most commonly used type of e-cigarettes among U.S. middle and high school students. Among current youth e-cigarette users, approximately nine in 10 reported using flavors, with fruit flavors being the most popular (63.4 percent) and about one in 14 (7.2 percent) reporting use of products with alcoholic drink flavors.

    “FDA is committed to taking action across the supply chain, including among retailers, to remove unauthorized tobacco products from the marketplace,” said Brian King, director of the FDA’s Center for Tobacco Products, in a statement. “This includes continued monitoring of the online marketplace to identify and combat against emerging products of concern.”

  • Lawyers Seize on BAT’s Impairment Notice

    Lawyers Seize on BAT’s Impairment Notice

    Image: Bits and Splits

    British American Tobacco’s recent decision to write down the value of some of its U.S. brands has spawned a frenzy among law firms eager to represent investors who feel shortchanged by the multinational’s move.

    On Dec. 6, BAT disclosed that it would take an impairment charge of approximately $31.5 billion after reassessing the value of certain cigarette brands, including Newport, Pall Mall, Camel and Natural American Spirit.

    The write-down reflects the diminished outlook for combustible tobacco products, according to BAT. CEO Tadeu Marroco described it as “accounting catching up with reality.”

    Following the announcement, BAT’s stock price fell by  8.5 percent, to close at $28.86 per share on Dec. 6, 2023, causing investors to lose money.

    At least three law firms, including Frank R. Cruz, Howard G. Smith and Pomerantz, have started investigating BAT on behalf of investors for possible violations of securities laws.

    Each of them is encouraging investors to join their legal cases.

    While acknowledging the short-term pain, others have praised BAT’s impairment as a realistic move, noting that it would be irresponsible to ignore the reality of a shrinking market for traditional tobacco products.

    In a recent op-ed for Tobacco Reporter, Brand Finance Group Managing Director Richard Haigh described the write-down as “a positive step in BAT’s journey toward a resilient future.”

  • Strategic Impairment

    Strategic Impairment

    Images: BAT

    BAT’s write-down of its U.S. cigarette brands is a positive step in its journey toward a resilient future.

    By Richard Haigh

    Earlier this month, BAT announced a $31.5 billion impairment on the value of some of its U.S. cigarette brands. The affected brands, including Newport, Camel, Pall Mall and Natural American Spirit, will see their value on BAT’s balance sheet adjusted to a finite lifetime of 30 years, resulting in a noncash impairment charge. This signifies the first instance where a major global tobacco company has written off some of the value of its traditional cigarettes business in a significant market such as the United States.

    BAT’s write-down highlights the challenges faced by traditional tobacco businesses in the wake of evolving industry dynamics. BAT attributes the move to economic challenges in the U.S., where inflation-weary consumers are shifting to cheaper brands, as well as the rise of illicit disposable vapes. Furthermore, intensifying regulatory environments and the heightened awareness of health risks have resulted in a decline in cigarette sales volumes in certain markets. These are predicted to continue to fall, with BAT adding that global tobacco industry sales volumes will be down around 3 percent in 2023.

    Responding to Change

    The decision to write down the value of some of its brands was a bold step for BAT because, despite the short-term pain, the reality is that the market for cigarettes is shrinking, and pretending otherwise would be irresponsible on the part of management.

    In the past, failure to embrace change has decided the fate of several top brands. Blockbuster, a giant in the video rental industry with thousands of stores worldwide, failed to recognize the shift toward online streaming and mail-order DVD services. In 2010, Blockbuster filed for bankruptcy, unable to compete with the likes of Netflix. Kodak, which resisted the shift to digital cameras, suffered the consequences, filing for bankruptcy in 2012. Nokia, once a dominant force in the mobile phone industry, struggled to adapt to the rise of smartphones and the popularity of app ecosystems. Nokia’s market share declined rapidly, and eventually, it sold its mobile phone business to Microsoft in 2014. These all serve as cautionary examples.

    BAT’s move is crucial in the context of the company consciously steering away from potential pitfalls, showcasing a commitment to survival and growth in new categories. The company is already investing heavily in alternative products, focusing on vaping and oral nicotine and wants 50 percent of its revenues to come from these by 2035.

    Appointed CEO in May 2023, Tadeu Marroco has played a crucial role in guiding the company through a transformative phase, emphasizing growth in emerging categories such as vapes and e-cigarettes.

    Correlation Between Leadership Tenure and Impairments

    Tadeu Marroco assumed the role of CEO in May 2023. Having previously served as BAT’s finance director, Marroco has played a crucial role in guiding the company through a transformative phase, emphasizing growth in emerging categories such as vapes and e-cigarettes.

    The correlation between tenure length and significant impairments is an interesting one to note. When assessing 2019’s largest impairments, a common thread emerges: new leadership, as depicted in the charts accompanying this text. In this context, BAT’s decision is not an isolated incident but rather a strategic response to industry challenges, reflecting a broader pattern observed in companies experiencing changes in leadership.

    When looking at 2019’s biggest goodwill impairments, except for Procter and Gamble and CenturyLink, all companies listed had either a new CEO, a new chief financial officer (CFO) or both. Most of these companies’ previous leaders decided not to take an impairment in 2018. CenturyLink did take an impairment in 2018, when it also had both a new CEO and CFO. Therefore, new leadership appears to have a significant impact on the likelihood a company will impair its goodwill. Among the entire sample, we found that 30 percent of all impairments occur within the first year of having a new CEO or CFO.

    For larger impairments, where the impairment represents at least half of the goodwill carrying amount, 41 percent of these occur within the first year of new leadership. At best, this analysis suggests that goodwill impairment can be influenced by varying personal opinions of management personnel and their perceptions of outlook and risk. At the worst, this analysis suggests that there may be an ulterior motive within the decision to impair goodwill. By taking an impairment at the beginning of your tenure as a CEO or CFO, it helps you to either set a precedent that suggests your predecessor was negligent/overoptimistic about their acquisitions or influence the share price to fall initially then rise throughout the rest of your tenure.

    Given these insights, the timing of the impairment—just nine months into Marroco’s tenure as CEO—aligns with broader trends observed in companies with leadership changes. Adding to the leadership transition, BAT has recently appointed a new CFO, scheduled to assume the role in April 2024.

    Looking Ahead

    BAT’s impairment announcement should be viewed as a positive and necessary step in the company’s journey toward a resilient future. Rather than focusing solely on the financial implications, stakeholders should recognize the strategic foresight behind this decision.

    However, the industry is consistently grappling with challenges. Plain packaging laws have notably evolved, gaining increased comprehensiveness in some countries. These regulations now extend their coverage from traditional tobacco products to encompass heated tobacco, tobacco accessories and other nicotine-containing items. Adding to the recent developments, this month, the World Health Organization has shifted its focus to vaping, urging governments to apply tobacco-style control measures to address this emerging concern.

    Therefore, BAT and other tobacco companies must proactively adapt their strategies, leveraging innovation and regulatory compliance, to navigate the evolving landscape and ensure long-term success in an industry marked by ever increasing health-related safeguards and regulatory barriers.