Category: News This Week

  • PMI Revenues Up by One-Fifth

    PMI Revenues Up by One-Fifth

    Image: Tobacco Reporter archive

    Philip Morris International announced its 2023 second-quarter results.

    Reported net revenues were up by 19 percent, excluding currency. Pro forma (including Swedish Match in all periods) adjusted net revenue growth was 11.1 percent, excluding currency. Combustible tobacco net revenue growth was 6 percent; growth was 7.4 percent on an organic basis driven by pricing of over 9 percent.

    Market share for heated-tobacco units (HTUs) in IQOS markets were up by 1.6 points to 9.2 percent. Adjusted in-market sales volume for HTUs, which excludes the net favorable impact of estimated distributor and wholesaler inventory movements, was up by an estimated 16 percent.

    Total IQOS users at quarter end were estimated at approximately 27.2 million (up by 1.4 million versus March 2023), of which approximately 19.4 million had switched to IQOS and stopped smoking.

    Zyn nicotine pouch shipment volume in the U.S. was 89.9 million cans, representing growth of 53.1 percent versus second-quarter 2022 Swedish Match shipments of 58.7 million cans.

    Declared regular quarterly dividend was $1.27 per share, or an annualized rate of $5.08 per share.

    “Our strong business momentum continued with an excellent second quarter,” said CEO Jacek Olczak in a statement. “Total cigarette and HTU shipment volume grew by 3.3 percent, underpinning double-digit growth in net revenues and currency-neutral adjusted diluted EPS.

    “The outstanding performance of Swedish Match—fueled by the growth of Zyn in the U.S.—is accelerating our smoke-free transformation and is complementing IQOS in growing our smoke-free leadership whilst we also deliver resilient combustibles performance with enhanced pricing.

    “Our strong fundamentals give us further confidence as we enter the second half of the year, particularly as certain inflationary and operational pressures ease. We are therefore raising our full-year 2023 forecast for organic net revenue growth to a range of 7.5 percent to 8.5 percent and currency-neutral adjusted diluted EPS growth to a range of 8 percent to 9.5 percent.

    “As we look to the longer term, we are complementing our smoke-free transformation with the further development of our wellness and healthcare business. While we have experienced some initial headwinds, we remain committed to wellness and healthcare, with a focused strategy on several attractive growth opportunities.”

  • Juul Seeks FDA Authorization for Juul2

    Juul Seeks FDA Authorization for Juul2

    Juul Labs has submitted a premarket tobacco product application (PMTA) for its next-generation vapor platform to the U.S. Food and Drug Administration. The company says its submission includes comprehensive science and evidence for a new device and new tobacco-flavored pods at 18 mg/mL nicotine concentration, as well as information on novel, data-driven technologies to restrict underage access.

    “Our company DNA is product innovation,” said Chief Product Officer Kirk Phelps in a statement. “With our next-generation platform, we have designed a technological solution for two public-health problems: improving adult-smoker switching from combustible cigarettes and restricting underage access to vapor products. This is only the beginning of new tech being developed and refined for the U.S. market and abroad to eliminate combustible cigarettes and combat underage use.”

    Launched initially in the U.K. in 2021 as the JUUL2 System, the new vapor platform delivers an improved vapor experience for adult smokers, utilizes unique Pod ID authentication to address illicit products and incorporates age-verification technology capabilities.

    Our next-generation vapor platform PMTA is built on new technology that advances public-health objectives and compelling science that demonstrates a clear public-health benefit, as required to secure a marketing authorization.

    Joe Murillo, chief regulatory officer, Juul Labs

    According to Juul, features of the next-generation platform include:

    • A more consistent vapor experience that better competes with combustible cigarettes
    • A Bluetooth-enabled device with a larger, long-lasting battery and a “smart light system” that communicates battery life and e-liquid level to the user
    • Newly designed, tamper-resistant pods that enable improved aerosol delivery
    • An innovative heating element that improves product performance and temperature-control precision
    • A unique Pod ID chip that, among other tech capabilities, prevents the use of illicit counterfeit and compatible pods with the next-generation device
    • A mobile and web-based app that enables age-verification technology, including device-locking, and real-time product information and usage insights for age-verified consumers with industry-leading data-privacy protections

    Initial behavioral research of the new platform in the U.K. has demonstrated compelling adoption and switching among adult smokers. Over 32 percent of JUUL2 System users had switched completely from combustible cigarettes six months after purchasing the product. While the currently marketed Juul System has switched over 2 million adult smokers in the U.S., the company looks forward to bringing this new technology to over 28 million adult smokers in the country who continue to smoke combustible cigarettes.

    “Our next-generation vapor platform PMTA is built on new technology that advances public-health objectives and compelling science that demonstrates a clear public-health benefit, as required to secure a marketing authorization,” said Juul Chief Regulatory Officer Joe Murillo. “We look forward to engaging with FDA throughout the review process while we pursue this important harm-reduction opportunity.”

    Juul said it continues to pursue its administrative appeal of the FDA’s stayed decision for the Juul System and believes that it too will receive marketing authorization once a decision is made on science and evidence.

  • Smoore Issues Profit Warning

    Smoore Issues Profit Warning

    Photo: Smoore International Holdings

    Smoore International Holdings issued a profit warning for the six months ended June 30, 2023.

    The company’s board of directors expects the group’s comprehensive income for the period to be between RMB717.3 million ($100.1 million) and RMB792.8 million, representing a decrease of between 42.7 percent and 48.2 percent from the income reported for the comparable period in 2022.

    The adjusted net profit will be approximately RMB741.4 million to RMB816.9 million, representing a decrease of approximately 43.1 percent to 48.4 percent from the prior-year period.

    Smoore attributed the decline to a decrease in revenue of 9.4 percent. Revenue from the Mainland China market for the period dropped approximately 96.3 percent, and its proportion to total revenue decreased from approximately 30 percent in the 2022 period to approximately 1.2 percent in the most recent six months.

    Although the revenue from Mainland China in the second quarter of 2023 has significantly increased compared with the first quarter of 2023, it is still far below the same period last year.

    During the period, the group’s revenue from overseas markets was approximately RMB5.06 billion, representing a steady growth of approximately 28 percent year-on-year. Among them, the revenue from the U.S. market was approximately RMB2.22 billion, representing a year-on-year increase of approximately 26.9 percent.

    With the strengthening of supervision and enforcement of noncompliant products, compliant products are expected to gain more room for sustainable growth in the U.S. market.

    Revenue from Europe and other markets was approximately RMB2.85 billion, representing a year-on-year increase of approximately 28.8 percent. The group launched disposable products with a better experience under the compliance framework in this market, which were well received by clients and users, and the revenue from this market continued to grow.

    The increase in revenue from overseas were insufficient to offset the declines in Mainland China.

  • France Struggles with Illicit Market

    France Struggles with Illicit Market

    Image: Europol

    France has one of the largest illicit cigarette trade markets among European Union member states, according to Euractiv.

    “The increase in EU illicit consumption was predominantly due to France (plus-1.8 billion cigarettes), which now accounts for almost half (47 percent) of EU27 illicit consumption,” according to a KPMG study funded by Philip Morris International.

    In 2021, illicit trade in France was 29 percent of total consumption, and in 2022, it increased to 32 percent of total consumption.

    Some attribute the large illicit market to high taxes. France’s excise tax on cigarettes is almost double that of the EU average.

    Ireland, which has the highest tax rate on tobacco, currently ranks second in illicit trade in the EU, supporting this idea. However, Greece has a lower than average tax rate and was the third-worst EU country in illicit trade in 2022.

    French Deputy Minister for Public Accounts Gabriel Attal said that tobacco trafficking sets new records annually. “Faced with the explosion of these trafficking activities, we cannot let France be overwhelmed by illicit tobacco,” he said. “Trafficking is not only accelerating but also undergoing profound changes.”

    “One euro for a tobacco trafficker is one euro for mafia networks and criminal organizations,” Attal said. In 2021, he noted, four illicit tobacco production factories were dismantled in France.

    “In response to your request, we would first like to inform you that French Customs does not comment on estimates made on behalf of the tobacco industry,” French Customs told Euractiv.

    Customs said that “work will be undertaken to improve the level of understanding, analysis and estimation of the parallel market in tobacco products.”

    “For the record, in 2022, the French Customs services seized nearly 650 tons of tobacco, including more than 473 tons of cigarettes, in the course of nearly 17,000 offenses. The value of goods seized on national territory, all products combined, amounted to more than €213 million ($238.24 million) for the same year,” customs said.

  • Fuson Joins Kleinfeld, Kaplan & Becker

    Fuson Joins Kleinfeld, Kaplan & Becker

    Photo: RerF

    John Fuson has joined Kleinfeld Kaplan & Becker (KKB) as a partner. Fuson advises clients on a variety of issues relating to U.S. Food and Drug Administration regulation of the tobacco industry and other sectors.

    During his career, Fuson has served as associate chief counsel for enforcement at the FDA, where he represented the agency in major enforcement actions, including in seizure, injunction and other cases relating to violations of the Federal Food, Drug and Cosmetic Act and related laws.

    For the past 11 years, he has maintained a private practice focused on counseling clients on the FDA’s requirements for product approval, safety, manufacturing and labeling. He has dealt with complex enforcement actions and advised senior management on market entry strategies, labeling and promotional activities, regulatory compliance, facility inspections, recalls and the preparation of FDA submissions.

    “John is an outstanding food and drug lawyer,” said Dan Dwyer, KKB’s managing partner, in a statement. “Our firm has one of the most comprehensive FDA regulatory and advertising practices in the country, and John’s strong understanding of FDA’s enforcement practices and his comprehensive experience in the field make him a perfect fit for our firm.”

    Fuson joins KKB from Crowell & Moring. He earned his Juris Doctor degree from the University of Pennsylvania and is a member of the bars of the District of Columbia and California.

  • KT&G Supports Flood Victims

    KT&G Supports Flood Victims

    Photo: Mdv Edwards

    KT&G pledged an emergency donation of KRW500 million ($394,252) in support of the prompt restoration of regions impacted by the intensified rainfall as well as relief for all affected individuals.

    The donation will be directed to the Hope Bridge Korea Disaster Relief Association, and the funds will be utilized for the rehabilitation of damaged infrastructure in the affected areas as well as to support livelihoods and provide relief supplies to those affected by the disaster.

    The contribution is derived from the Sangsang Fund, a charitable fund established by voluntary contributions from KT&G executives and employees. The Sangsang Fund is a unique social contribution fund that combines monthly contributions collected from executive and employee salaries with company contributions equal in amount.

    Additionally, Korea Ginseng Corporation plans to deliver CheongKwanJang red ginseng products worth KRW100 million to residents in the areas severely affected by the intensified rainfall.

    “With the intention of assisting those regions who are facing hardship due to the devastating floods, we have gathered the heartfelt intentions of our employees and executives, which has led to the decision to provide urgent assistance,” said Shim Young-ah, head of KT&G’s social contribution division, in a statement. “We sincerely hope that this donation will contribute, even in a small way, to the rapid recovery and restoration of the affected communities and their daily lives.”

  • Philip Morris to Acquire Syqe Medical

    Philip Morris to Acquire Syqe Medical

    Image: Tobacco Reporter archive

    Philip Morris International plans to acquire Syqe Medical, an Israeli company, according to Calcalist. The deal could reach $650 million.

    Syqe’s main product is a metered-dose inhaler for pain reduction using medical marijuana.

    PMI will initially invest $120 million to aid in the process of obtaining U.S. Food and Drug Administration approval for Syqe’s inhaler. If approval is received, PMI will purchase all shares of Syqe for $650 million.

    PMI subsidiary Vectura will conduct the transaction.

    In 2016, PMI invested $20 million in Syqe.

  • Brazilian Minister Voices Supports for Tobacco Farming

    Brazilian Minister Voices Supports for Tobacco Farming

    Image: SindiTabaco

    Brazil’s minister of agrarian development, Paulo Teixeira, has spoken out against initiatives to replace tobacco as a cash crop.

    During a meeting with representatives of the domestic tobacco industry, Teixeira said farmers must be assured the right to grow tobacco, especially in light of the crop’s economic contribution.

    Industry representatives had requested the meeting to discuss the sector’s concerns about the 10th Conference of the Parties (COP10) organized by the Framework Convention on Tobacco Control. They stressed the economic and social importance of the production and export of tobacco for Brazil and addressed the concern about the Brazilian stance at the meeting in Panama, particularly with regard to a possible interference with the cultivation of tobacco.

    In addition to Iro Schunke of the Interstate Tobacco Industry Union (SindiTabaco), the group comprised Benicio Albano Werner, president of the Tobacco Growers’ Association of Brazil (Afubra); Giuseppe Lobo, the executive director of the Brazilian Tobacco Industry Association (Abifumo); and Marcos Souza the executive director of the Bahia State Tobacco Industry Union (Sinditabaco-BA).

    While expressing support for the industry, Teixeira recommended that the industry use bioinputs to produce tobacco. “The companies have invested in biological pest control methods and have always sought the best solutions when it comes to farmers’ health and safety,” said Schunke in a statement.

    “We have a good grasp of the health issues that involve our product, but while there is demand, we need to preserve the jobs and the income generated by the supply chain.”

    Earlier in July, tobacco industry representatives met with Brazil’s minister of agriculture, Carlos Favaro, to share their concerns ahead of COP10.

  • Jean Gonnell Joins Troutman Pepper

    Jean Gonnell Joins Troutman Pepper

    Jean Gonnell, Partner, Troutman Pepper | Credit: Troutman Pepper

    Jean Gonnell, a regulatory attorney with a significant focus cannabis and tobacco law, has joined Troutman Pepper’s Regulatory Investigations, Strategy and Enforcement (RISE) practice group. Resident in the firm’s Charlotte office, Gonnell joins from her private practice, Gonnell Law.

    Gonnell began her legal career in Colorado, where she was at the forefront of cannabis legislation before the larger movement to legalize the drug. Over the course of her career, she has represented more than 100 clients in the cannabis industry, including approximately 15 percent of all licensed cannabis businesses in Colorado. With a deep commitment to her clients and dedication to the flourishing cannabis field, she continues to expand her practice and make a positive impact in the evolving landscape of cannabis law.

    “Jean’s addition to the firm will deepen the expertise of the firm’s established tobacco and nicotine and cannabis law practices,” said John West, chair of the business litigation department, in a statement. “Her extensive experience will enhance the innovative solutions we provide for our existing cannabis-focused clients as well as expand the services we can offer to potential new clients in the space.”

    “With the possibility of North Carolina passing a new medical marijuana regulatory regime, the timing of Jean joining our Charlotte office could not be better,” said Jason Evans, managing partner of the Charlotte office. “We welcome her and are confident that her guidance will help to expand our reach in providing service to clients.” Gonnell is the second partner to join the Charlotte office in recent months, following the arrival of white-collar partner Matt Orso in May.

    Gonnell is licensed to practice in Arizona, Colorado and North Carolina.

    “I’m thrilled to join Troutman Pepper due to its strong regulatory presence,” said Gonnell. “I chose the firm because it allows me to maintain top client service while also giving me the network to expand my practice to new fronts. I’m excited to continue working with my clients in Colorado while also expanding my client base here in North Carolina.”

  • Jordan: Health Activists Demand Stricter Rules

    Jordan: Health Activists Demand Stricter Rules

    Image: svarshik

    Health activists in Jordan are calling for stricter tobacco rules, given the country’s high rates of smoking-related diseases, according to The Jordan Times.

    Smoking-related deaths in Jordan are estimated to be around 8,000 annually with high rates of cancer and hundreds of cases of chronic disease.

    The smoking rate in Jordan is around 41 percent, according to recent studies. Jordanian households spend more on tobacco products than on food items, according to a World Health Organization study.

    Smoking is defined by the WHO as a pandemic, according to Bassam Hijjawi, head of the Jordanian National Association for Smoking Control, who called for “stricter penalties” and more measures to reduce smoking.

    Smoking cessation is low in the country despite the availability of 29 free specialized clinics for smoking cessation.

    “Healthcare costs associated with smoking-related diseases impose a heavy burden on the healthcare system and contribute to limiting resources available for other health services as well as other important sectors such as education,” said economist Khaled Salameh.

    “The statistics revealing the number of smoking-related deaths and the prevalence of chronic illnesses are alarming,” said Abdel Rahman Shaher, former health director at the Ministry of Health.

    “Stricter regulations on tobacco sales, especially on e-cigarettes for underage individuals, is crucial,” Shaher said, noting that a multi-faceted approach to limit smoking must be prioritized.

    “Social norms and cultural practices play a significant role in shaping individuals’ behavior, and smoking may be perceived as a socially acceptable or even desirable activity in certain contexts,” said sociologist Hussein Khuzai.

    “To address this issue, comprehensive strategies should be implemented, including awareness campaigns, education about the health risks and addressing the underlying social and economic determinants that drive smoking behavior,” Khuzai said.