Category: News This Week

  • Vaping Down Among U.S. Youth

    Vaping Down Among U.S. Youth

    Photo: Daisy Daisy

    One in 10 U.S. middle and high school students reported using of any type of tobacco, according to data from the 2023 National Youth Tobacco Survey (NYST) that were collected between March and June 2023 and released today.

    Among U.S. high school students, current overall tobacco product use declined during 2022-2023 from 16.5 percent to 12.6 percent, a development attributed primarily to reduced e-cigarette use, which dropped from 14.1 percent to 10 percent. Among high school students, declines in current use were also observed during 2022-2023 for cigars and overall combustible tobacco smoking, representing all-time lows.  

    “It’s encouraging to see this substantial decline in e-cigarette use among high schoolers within the past year, which is a win for public health,” said Brian King, director of the U.S. Food and Drug Administration’s Center for Tobacco Products, in a statement. “But we can’t rest on our laurels. There’s more work to be done to build on this progress.”

    Among middle school students there was an increase in current overall tobacco product use (4.5 percent to 6.6 percent) and multiple tobacco product use (1.5 percent to 2.5 percent). However, among middle school students overall, no significant change was observed during 2022-2023 for current use of any individual tobacco product type, including e-cigarettes.

    It’s encouraging to see this substantial decline in e-cigarette use among high schoolers within the past year, which is a win for public health. But we can’t rest on our laurels.

    E-cigarettes remained the most commonly used tobacco product among both high school and middle school students for the 10th year in a row. Among youth who reported current e-cigarette use, approximately one-quarter reported using e-cigarettes every day. Disposable e-cigarette products were the most common product type used by youth who reported e-cigarette use. However, the most popular brands included both disposable and cartridge-based products. Among current youth e-cigarette users, the most commonly reported brands were Elf Bar (56.7 percent), Esco Bars (21.6 percent), Vuse (20.7 percent), Juul (16.5 percent) and Mr. Fog (13.6 percent).  

    Among youth who reported current e-cigarette use, nearly all used flavored products (89.4 percent), with fruit, candy, mint and menthol being the most commonly used flavors. For the first time in NYTS, the 2023 questionnaire asked about use of flavors that included the word “ice” or “iced” in their name, along with other concept flavor names—that is, names that imply flavor but do not explicitly indicate any particular flavor, such as “island bash.”

    R.J. Reynolds Tobacco Co. said it welcomed the decline in overall youth tobacco use. “This is good news, and we agree with Dr. King that more needs to be done,” the company wrote in an e-mailed statement.  “Future progress requires regulators—especially FDA—to seriously address the influx of irresponsibly marketed, illegal flavored disposable vapor products.”

    In October, Reynolds filed a complaint with the International Trade Commission charging multiple manufacturers, distributors and retailers of disposable vaping devices with unfair importation.

  • Tobacco Income Up at Vector

    Tobacco Income Up at Vector

    Image: Vadym

    Vector Group announced financial results for the three months and nine months ended Sept. 30, 2023.

    Consolidated revenues for the third quarter were $364.1 million, down 3.7 percent, or $13.9 million, compared to the prior year period.

    The tobacco segment wholesale market share declined to 5.3 percent from 5.7 percent in the prior year period, and retail market share increased to 5.9 percent from 5.7 percent in the prior year period.

    Montego wholesale market share increased to 3.5 percent from 2.8 percent in the prior year period, and retail market share increased to 3.8 percent from 2.8 percent in the prior year period.

    Operating income was $90.5 million, up 7.9 percent, or $6.6 million, compared to the prior year period.

    Tobacco segment operating income was $94.8 million, up 7.6 percent, or $6.7 million, compared to the prior year period.

    Adjusted EBITDA was $94.9 million, up 8.8 percent, or $7.7 million, compared to the prior year period. Tobacco Adjusted EBITDA was $96.3 million, up 7.4 percent, or $6.7 million, compared to the prior year period.

    Year-to-date consolidated revenues were $1.06 billion, down 1.2 percent, or $13.3 million, compared to the prior year period. Tobacco segment revenues were $1.06 billion, up 0.2 percent, or $2.6 million, compared to the prior year period. Tobacco segment wholesale and retail market share increased to 5.5 percent and 5.8 percent from 5.4 percent and 5.4 percent, respectively, in the prior year period.

    Year-to-date Montego wholesale market share increased to 3.4 percent from 2.4 percent in the prior year period, and retail market share increased to 3.6 percent from 2.4 percent in the prior year period. Operating income was $236.4 million, down 5.3 percent, or $13.3 million, compared to the prior year period. Tobacco segment operating income was $248.5 million, down 2.2 percent, or $5.5 million, compared to the prior year period. Adjusted EBITDA was $267.1 million, up 2.9 percent, or $7.6 million, compared to the prior year period. Tobacco adjusted EBITDA was $271.0 million, up 5.6 percent, or $14.4 million, compared to the prior year period.

    Tobacco segment wholesale and retail market share increased to 5.5 percent and 5.8 percent from 5.1 percent and 5.2 percent, respectively, in the last 12 months ended Sept. 30, 2022.

    Montego wholesale and retail market share increased to 3.3 percent and 3.5 percent from 2 percent and 2 percent, respectively, in the last 12 months ended Sept. 30, 2022.

    “We are proud that Montego grew to be the largest discount brand in the United States in the third quarter of 2023, demonstrating the strength of our strategy and the skillful execution by Liggett to offer the best value proposition in the U.S. cigarette industry,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “As Liggett continues to outperform the market, we remain focused on optimizing long-term profit and driving value for stockholders by effectively managing its volume, pricing and market share.”

  • Nicotine a Top ‘Intangible’ Sector

    Nicotine a Top ‘Intangible’ Sector

    Photo: Smoore

    The tobacco and vaping business is the world’s most “intangible” sector in relative terms, according to the brand valuation consultancy Brand Finance.

    Intangible assets are identifiable, non-monetary assets without physical substance. They can be grouped into three broad categories—rights (including leases, agreements, contracts), relationships (including a trained workforce) and intellectual property (including brands, patents and copyrights).

    According to Brand Finance, intangible assets account for 91 percent of the tobacco and vaping sector’s total enterprise value—a condition that the consultancy attributes to tobacco and e-cigarette companies’ heavy investments in proprietary vaping-related technology and patented intellectual property. The China National Tobacco Corp., BAT and Philip Morris, for example, have each accumulated significant disclosed intangibles and goodwill due to large acquisitions.

    “While tobacco products are increasingly regulated in developed markets, e-cigarettes are at nascent stage and currently proving to generate high intangible value thanks in part due to lack of regulation of marketing these products in some jurisdictions,” Brand Finance writes in its report.

    Remarkably, the tobacco and vaping business was the second-largest contributor (after semiconductors) to the performance in the rankings of Japan, which saw the value of its intangible assets jump by $587 billion this year.

    “Our research aims to demonstrate the continued growing importance of intangible assets like strong brands and innovative technology in driving productivity and growth potential,” said Annie Brown, general manager at Brand Finance UK, in a statement. “Companies that strategically deploy their intangible assets have the ability to significantly outperform their competitors.”

  • Growers Demand Voice

    Growers Demand Voice

    Photo: ITGA

    Stakeholders in the nicotine business gathered in Dar es Salaam from Oct. 29 to Nov. 1 for the annual meeting of the International Tobacco Growers’ Association (ITGA).

    Hosted by the Tanzanian Minister of Agriculture Hussein Bashe, the conference focused on environmental social governance (ESG) practices and the socioeconomic impact of tobacco, among other topics.

    ITGA’s President José Javier Aranda urged governments to consider tobacco growers as partners, given the contribution of tobacco as an income generator and employer. He cited the example of Tanzania, where tobacco provides livelihoods to more than 2.5 million people and generates around $180 million annually in export revenue.

    The ITGA president also highlighted the lack of alternatives to tobacco production: “Tobacco is still among the main cash crops in most of the countries where it is grown,” he said. “There is no room for crop substitution at this moment and only complementary crops can be considered as a way of transitioning away from tobacco in the long term.”

    Participants in the conference also debated the increasing regulatory pressure on the tobacco industry. For example, the EU Supply Chain Due Diligence Directive, which is expected to enter into force in 2024, will require total transparency in the social and environmental sourcing of products imported into the EU. The ITGA delegates agreed that compliance is key, as compliant markets will have better opportunities to position their products and remain stable in the long term.

    Speakers encouraged growers to actively pursue ESG initiatives in their communities. Such efforts, they said, will contribute to the long-term viability of the sector.

    The forum also reflected on the Conference of the Parties (COP10) to the Framework Convention on Tobacco Control (FCTC), which is scheduled to take place Nov. 20-25 in Panama. As the only global tobacco growers association, the ITGA is looking forward to seeing the evolution of FCTC Article 17 (economically viable alternatives to tobacco growing) because the group has yet to see any evidence of viable alternatives to tobacco growing, ITGA CEO Mercedes Vazquez noted.

    Vazquez also insisted on the inclusion in the discussions of farmers, who have been denied a voice in the FCTC debates for nearly two decades. She said the COP has yet to respond to ITGA’s request for observer status at the conference.

    The Dar es Salaam meeting also took stock of the latest consumption trends. Modest growth in Asia Pacific and Latin America was offset by significant declines in developed markets, leaving total global cigarette volumes largely unchanged. Among emerging products, heated tobacco products continue to make inroads while e-cigarettes face regulatory headwinds, and nicotine pouches struggle to expand beyond their core markets.

    In the leaf market, China, Brazil, Zimbabwe, Malawi and India significantly expanded production in 2023, while volumes in Europe and the United States continued to decline, according to ITGA experts.

  • Quebec: Flavor Ban Takes Effect

    Quebec: Flavor Ban Takes Effect

    Image: Pixel-Shot

    Quebec’s ban on flavored vapes took effect Oct. 31.

    The measure includes vaping products with flavors other than tobacco and will prohibit e-liquid sold in bottles with a capacity greater than 30 mL and prefilled devices with a capacity greater than 2 mL.

    The ban was announced in a draft published in April. More than 30,000 citizens of Quebec commented on the proposed ban, according to the Quebec Vaping Rights Coalition, but the health ministry reportedly didn’t make any changes to the rules in response.   

    Quebec is the largest province in Canada to enact a flavor ban. Four other provinces and territories already ban flavors, and one has passed a ban but has not set an effective date yet. Three other provinces restrict flavored products to adult-only stores.

    Darryl Tempest

    “It’s high time for provinces like Quebec, New Brunswick, Nova Scotia and PEI to reevaluate their stance and stop yielding to the influence of big tobacco companies. These regions must come to the realization that they are inadvertently supporting the very issues they claim to be combating.”

    The Canadian Vaping Association (CVA) has expressed concerns to the Quebec government, arguing that this regulation will not achieve its intended goal of curbing youth experimentation.

    According to the CVA, the consequences will include the closure of specialty vape shops within the province, the loss of over 1,000 jobs and a shift in consumer demand toward foreign suppliers and the illicit market.

    “It’s high time for provinces like Quebec, New Brunswick, Nova Scotia and PEI to reevaluate their stance and stop yielding to the influence of big tobacco companies. These regions must come to the realization that they are inadvertently supporting the very issues they claim to be combating,” said Darryl Tempest, government relations counsel to the CVA.

    The available data consistently finds that flavor bans fail to effectively protect youth and lead to increased tobacco sales among both young people and adults.

  • Former STMA Deputy Prosecuted for Bribery

    Former STMA Deputy Prosecuted for Bribery

    Image: Kampan

    Former Deputy Chief of China’s State Tobacco Monopoly Administration (STMA) He Zehua has been prosecuted for accepting bribes, according to China Daily.

    Zehua was accused of taking advantage of his former positions to seek profits for others, accepting a large amount of money and valuables in return, according to a statement by the Supreme People’s Procuratorate.

    Zehua was arrested in July.

  • Trinidad And Tobago: ‘Illicits Diverting Tax Dollars’

    Trinidad And Tobago: ‘Illicits Diverting Tax Dollars’

    Image: japhoto

    Trinidad and Tobago loses about $30 million annually in uncollected taxes from illicit cigarettes, according to participants in a forum on anti-illicit trade hosted by the T&T Manufacturers’ Association, reports The Trinidad Guardian.

    Policymakers, law enforcement agencies, regulatory bodies and major brands, such as Puma, Moet Hennessy, Servier and BAT, participated in the forum.

    “The illicit cigarette trade makes up 5 [percent] to 10 percent of the market, and British American Tobacco fears this share can grow as consumers tend to favor these brands because they sell at a lower price,” said Arturo Payro of BAT. “Cigarettes are T&T’s most illegally traded products in quantity and value.”

    Randall Karim, permanent secretary (ag) of the Ministry of Trade and Industry, stated that a strong legal framework will act as a powerful deterrent and send a strong message to smugglers that illegal trade is intolerable.

  • Zimbabwe Increases Tobacco Planted Area

    Zimbabwe Increases Tobacco Planted Area

    Image: Taco Tuinstra

    Zimbabwean tobacco growers have planted 21 percent more hectares for the upcoming crop season than they did last year, according to the Tobacco Industry and Marketing Board, reports The Herald.

    The total planted area increased to 19,256 ha from 15,868 ha in 2022. Irrigated area increased 12 percent to 16,962 ha, and dryland increased 232 percent to 2,294 ha.

    Farmers increased dryland area cultivation as a precaution for expected harsh weather conditions forecast for the second part of the rainfall season in 2024.

    Tobacco export value increased to $934.17 million in the 2022–2023 selling season, up from $717.178 million during the previous year. Tobacco exports increased 23 percent in volume to 180.54 million kg.

    The average price increased by 6 percent to $5.17 per kilogram.

    The number of registered growers decreased by 24 percent. To date, 102,098 growers are listed for the 2023–2024 season compared to 133,724 last year. Of the registered growers, 92 percent are contract growers.

    “That is a very much appreciated reduction, which will impact on tobacco cost of production as irrigated tobacco uses raw water,” said Zimbabwe Tobacco Growers Association chairman George Seremwe. “We also encourage other stakeholders like the Zimbabwe Electricity Supply Authority to follow suit and reduce electricity charges as cost of irrigation is affected by power bills. The same reduction must be stretched to other inputs like chemicals, fertilizers, and this will result in more tobacco being produced profitably.”

    Zimbabwe Tobacco Association CEO Rodney Ambrose stated that the change was welcome if the water price reduction was spread to other crops apart from maize. “We are seeking clarity on a number of areas in the statement, such as the mention of only irrigated maize as being the beneficiary. What about other crops?” he said.

    Anxious Masuka, Lands, Agriculture, Fisheries, Water and Rural Development minister, said that the move to reduce water charges by 31 percent is meant to incentivize farmers to commit more hectarage to irrigation for the 2023–2024 summer season.

  • KT&G Celebrates Korea-Indonesia Ties

    KT&G Celebrates Korea-Indonesia Ties

    KT&G celebrated the 50th anniversary of South Korea-Indonesia diplomatic relations by organizing various global CSR activities, including support for university student startups, cultural festivals and improvements in the education environment.

    On Sept. 28, KT&G selected the finalists in a competition for business ideas at UNTAR University’s Imagination Entrepreneurship School in Jakarta, Indonesia. A day earlier, the South Korean cigarette maker hosted a similar event at the State University of Jakarta.

    Meanwhile, the KT&G Welfare Foundation finished renovating an elementary school in the Bogor region, transforming an old building into a new educational facility with an earthquake-resistant construction.

    In 2014, KT&G established the KT&G Korean Language Institute in Indonesia, providing approximately 2,800 people with opportunities to learn Korean. In addition, the company operates Imagination University, which supports the development of the capacity and cultural experiences of Indonesian youth. In 2021, it established the KT&G Vocational Training Center at Malang’s UKCW University, teaching marginalized youth sewing, computer technology and other skills.

    “We are taking the lead in promoting communication between the two countries through cultural exchanges in celebration of the 50th anniversary of Korea-Indonesia diplomatic relations,” said a KT&G representative. “We will continue to make efforts to spread Korean culture and enhance exchanges through various platforms.”

    Indonesia is an important market for KT&G, which aims to earn half of its sales from overseas business by 2027. The company operates a tobacco factory in Indonesia and recently announced the construction of a second manufacturing facility.  

  • Disposable Vape Waste a Problem for Cities

    Disposable Vape Waste a Problem for Cities

    Photo: bennyrobo

    Disposable e-cigarettes are creating a new waste management challenge for U.S. local governments. One of the main issues is that the battery-powered products are classified as hazardous waste.

    The devices, which contain nicotine, lithium and other metals, cannot be reused or recycled. Under federal environmental law, they shouldn’t go in the trash.

    “We are in a really weird regulatory place where there is no legal place to put these and yet we know, every year, tens of millions of disposables are thrown in the trash,” Yogi Hale Hendlin, a health and environmental researcher at the University of California, San Francisco, told the Associated Press.

    In late August, sanitation workers in Monroe County, New York, packed more than 5,500 e-cigarettes into 55-gallon steel drums for transport to a giant industrial waste incinerator in northern Arkansas, where they would be melted down. Local officials said it’s the only way to keep the devices out of waterways and landfills.

    “These are very insidious devices,” said Michael Garland, director of the county’s environmental services. “They’re a fire risk, and they’re certainly an environmental contaminant if not managed properly.”

    Elsewhere, the disposal process has become both costly and complicated. In New York City, for example, officials are seizing hundreds of thousands of banned vapes from local stores and spending more than $1 each for disposal.

    Vaping critics say the industry has skirted responsibility for the environmental impact of its products while federal regulators have failed to force changes that could make vaping components easier to recycle or less wasteful.

    Disposable e-cigarettes currently account for about 53 percent of the multibillion U.S. vaping market, according to U.S. government figures, more than doubling since 2020.