Category: News This Week

  • Elfbar to Rebrand as EB Design

    Elfbar to Rebrand as EB Design

    Photo: Olivier Le Moal

    Shenzhen Weiboli Technology Co. plans to relaunch its Elfbar e-cigarettes under the name EB Design in the United States after losing a trademark dispute in court, reports 2Firsts.

    On Feb. 23, a federal judge ordered Weiboli to stop marketing its Elfbar e-cigarettes in the U.S., finding that VPR Brands, which makes and sells Elf brand vapes, is likely to succeed on its claims that the Elfbar vapes infringe its trademark.

    In an interview with 2Firsts, Elfbar’s North American public relations manager said that while Elfbar would launch its new name in March, the brand would retain its original logo. The letters E and B in “EB Design” are believed to represent the initials of Elfbar.

    Elfbar’s American PR manager said the company would continue to focus on the United States. The brand’s U.S. suppliers and distributors market are aware of the name change and prepared for it, he noted.

  • Hong Kong: Record Cigarette Seizures

    Hong Kong: Record Cigarette Seizures

    Photo: Panksvatouny

    Hong Kong customs seized 730 million illicit cigarettes in 2022, 76 percent more than in 2021 and the highest annual figure in more than two decades, reports The Standard.

    Officers processed 7,148 cases last year, including 3,436 involving cigarette smuggling and 931 involving drug trafficking.

    The illicit cigarettes confiscated in 2022 had a market value of HKD2.01 billion ($256.07 million) and a taxable value of around HKD1.4 billion, according to Customs and Excise Commissioner Louise Ho Pui-shan.

    Customs officials attributed the spike in illicit cigarettes to the rising tobacco price under inflation.

    The increased seizures follow a relaxation of immigration measures in multiple countries after the Covid-19 pandemic, Ho added, noting Customs would recruit 90 inspectors and 170 officers to strengthen the city’s enforcement capability.

  • Altria in Talks to Buy Njoy

    Altria in Talks to Buy Njoy

    Image: Tobacco Reporter archive

    Altria Group is in advanced talks to buy e-cigarette startup Njoy Holdings for at least $2.75 billion, the Wall Street Journal reported, citing people familiar with the matter, according to Reuters.

    The Njoy deal could be announced as soon as this week, though the talks could still fall through, according to the report.

    The proposed deal includes an additional $500 million earnout if regulatory milestones are met.

    The potential deal follows Altria’s decision last year to be released from its noncompete deal with Juul Labs almost four years after buying a 35 percent stake in the company. Altria was planning to divest its stake in Juul. As of Dec. 31, Altria valued the stake at $250 million.

    It was reported in July that Njoy had hired bankers for a possible sale of the company. The privately held firm is likely to be valued at up to $5 billion.

    Njoy has a roughly 2 percent of the U.S. vape market by volume, according to Jefferies, Juul, by contrast, accounts for around a quarter of American vapor product sales.

    Unlike Juul, however, Njoy is one of the few vape brands that have permission from the U.S. Food and Drug Administration to continue to sell its products. Juul is waiting to hear whether the FDA will allow its e-cigarettes to remain on the market.

    In June 2022, the agency ordered Juul to remove its products from the market after finding that premarket tobacco product application failed to prove they would “appropriate for the protection of public health.

    The FDA agreed to take another look at Juul’s application after the company appealed the marketing denial order in court. The company can continue selling its products at least until the agency makes a final decision.

    Altria is keen to supplement its income from combustible products with earnings from smoking alternatives, such as e-cigarettes.

    Its cigarette sales volumes fell 9.5 percent last year as high gasoline prices and general inflation pinched smokers’ disposable income.

  • Top Court Declines to Hear Flavor Ban Appeal

    Top Court Declines to Hear Flavor Ban Appeal

    Image: Tobacco Reporter archive

    The U.S. Supreme Court on Feb. 27 declined to hear an appeal by three Reynolds American Inc. subsidiaries seeking to overturn the county of Los Angeles ban on flavored tobacco products, reports Law360.

    R.J. Reynolds Vapor Co., American Snuff Co. and Santa Fe Natural Tobacco Co. had petitioned the high court in October to take another look at the case after the full 9th Circuit upheld a lower court’s dismissal of the suit.

    The RAI companies said the 9th Circuit had twice before erred in allowing sales bans at the state and local level that were preempted by federal law.

    While the federal Tobacco Control Act grants state and local municipalities broad authority to regulate the sale of tobacco products, it does not allow them to completely prohibit the sale of those products for failing to meet state or local tobacco product standards, the companies argued.

    In dismissing their initial suit, District Judge Dale S. Fischer in 2021 found that the ban doesn’t regulate tobacco product standards. The judge said the ordinance is protected by the federal law’s preservation clause, which allows states and localities to prohibit the sale of tobacco products even if those bans are stricter than federal law.

    The companies appealed, calling the ban unconstitutional and saying state and local governments can’t bar the sale of tobacco products because they disagree with federal tobacco standards.

    L.A. County countered that the ban doesn’t pose an obstacle to federal policy since the FDA announced it intends to ban menthol cigarettes and all flavored cigars.

  • Youth Protection Guidelines Updated

    Youth Protection Guidelines Updated

    The U.K. Vaping Industry Association has updated its guide to retailers on preventing underage sales.

    UKVIA Director General John Dunne said tackling the sale of vaping products to minors was “one of the most fundamental challenges facing the industry.”

    The UKVIA is making its “Preventing Underage Sales Guide” freely available via its website.

    The 20-page guide has been developed in partnership with the association’s Primary Authority Partners, Buckinghamshire and Surrey and Trading Standards.

    Dunne said: “The entire UKVIA membership is united behind the message that we must do all in our power to stop underage sales.

    “This is one battle that we simply have to win, but we need the support of government, regulators and enforcement authorities in order to do so.

    “Our underage sales guide will give retailers all the information they need so that they don’t inadvertently sell to someone under 18.

    “Policymakers, politicians and consumers must have confidence that the vaping industry is a responsible sector, and this will be undermined if businesses do not implement and uphold robust age verification processes.

    “The guide gives clear advice on how to implement a ‘Challenge 25’ policy and why it is important that anyone who appears to be younger than 25 should be asked to provide ID.”

  • Industry Unimpressed by CTP ‘Reset’

    Industry Unimpressed by CTP ‘Reset’

    Photo: aleksandar kamasi

    Vaping industry representatives are unimpressed by the U.S. Food and Drug Administration’s plan, announced Feb. 24, to address the shortcomings in the operations of its Center for Tobacco Products (CTP) identified by independent evaluators working through the Reagan-Udall Foundation.

    “While the devil is in the details, nothing in today’s announcement hinted at any material shift in FDA’s perpetual attack on every nicotine-containing product,” Tony Abboud of the Vapor Technology Association told AP News.

    The CTP has come under fire from various sides, with health advocates urging the agency to more aggressively police regular cigarettes and flavored e-cigarettes, and tobacco companies complaining that the FDA is unwilling to approve new products, including e-cigarettes, which might help adults quit smoking.

    To address such criticisms, FDA Commissioner Robert Califf in July 2022 ordered an independent investigation into the CTP’s operations.

    On Dec. 19, 2022, the Reagan-Udall panel issued a blistering report. Evaluators described the FDA as “reactive and overwhelmed,” with a demoralized workforce that struggles to oversee both traditional tobacco products and a freewheeling e-cigarette market.

    In response, the FDA pledged a reset to the agency’s tobacco program. The CTP director promised to develop a five-year plan by the end of 2023 outlining priorities, including efforts to clean up a sprawling market of largely unauthorized electronic cigarettes. The agency also said it would provide more transparency to companies about its decisions, following the rejection of more than 1 million applications from e-cigarette makers seeking to market their products as alternatives for adult smokers.

    Nothing in today’s announcement hinted at any material shift in FDA’s perpetual attack on every nicotine-containing product.

    Tony Abboud, executive director, Vapor Technology Association

    Vaping industry representatives expressed disappointment with the FDA announcement, which they said would continue to result in denials for most vaping products.

    “After the scorching findings from the Reagan-Udall report, the FDA should be issuing a mea culpa to the American public for the calamity created by the agency’s insistence on crushing the nicotine vaping market,” the American Vapor Manufacturers Association wrote in a statement.

    “But instead of taking responsibility, the agency is proposing yet more task forces, more bureaucrats and even a so-called ‘five-year plan,’ which is government shorthand for punt, retreat, and see you later. It’s not good enough, not by a long shot, and the millions of Americans relying on vaping products to stay off cigarettes have once again been bast to the wind by the FDA’s chronic negligence and indifference.”

    Americans for Tax Reform described the CTP’s response as “inadequate,” saying it fails to address the critical issues highlighted by the Reagan-Udall Foundation. “Since [CTP] Director King and FDA are clearly unwilling to step in and fix the problems plaguing the Center for Tobacco Products, this falls upon Congress, and specifically the new Republican House Majority, to use oversight powers to reestablish trust in FDA and improve public health,” the group wrote in a statement.

    While welcoming the CTP’s new commitment to transparency, the Premium Cigar Association (PCA) expressed concern that the CTP continues to view industry engagement as an afterthought rather than a means to better understand how its approach can be better designed in the developmental phase of regulations, guidance or strategic planning.

    The PCA also questioned the CTP’s desire to increase its workforce and raise more funds through user fees. “Until the systemic failures are addressed, growing an agency that already spans over 1100 employees will only complicate and compound its problems,” the PCA wrote in a statement. “Rather, CTP should embrace Congressional oversight, as does every other Federal Agency, to ensure that its ongoing efforts remain in-line with its statutory mission and public demands.

  • ITC shares Surge on Adani Worries

    ITC shares Surge on Adani Worries

    Image: Amazing Studio

    Shares in tobacco manufacturer ITC have increased more than 75 percent as investors seek stability in the Indian stock market, which has been churning with concerns about corporate governance following Hindenburg Research’s allegations against the Adani Group.

    “ITC’s stable cash flow and dividends have won hearts of investors in this volatile environment amid Adani’s troubles and inflation,” Sameer Kalra, founder of Target Investing in Mumbai, told Bloomberg. “The company is also expected to unlock value of its noncigarette businesses.”

    ITC not only offers attractive dividend yields and returns on equity, but it also ranks top in a Bloomberg Economics analysis of governance, liquidity and leverage at Indian conglomerates.

    ITC has gotten a further boost from stronger-than-expected third-quarter earnings. In early February, ITC reported a profit of INR50.31 billion ($614.52 billion) in the October–December quarter, up from INR40.56 billion in the comparable 2021 period. The company attributed the increase to strong cigarette sales and steady demand for its packaged foods.

  • General Cigar Appeals Cohiba Ruling

    General Cigar Appeals Cohiba Ruling

    Photo: Dmitry Ersler

    Scandinavian Tobacco Group’s (STG) General Cigar Co. has appealed the Trademark Trial and Appeal Board’s (TTAB) December 2022 cancelation of the Cohiba trademark registration in the United States.

    “By initiating this lawsuit to appeal the TTAB decision and to obtain a declaration of its rights, General Cigar expects the court will ultimately rule it has exclusive U.S. rights to the Cohiba marks,” Regis Broersma, president of STG’s North America and Rest of the World division was quoted as saying by Cigar Journal.

    STG and Empresa Cubana del Tabaco (Cubatabaco) have fought over the U.S. rights to the Cohiba trademark since 1997. The TTAB sided in favor of the Cuban cigar conglomerate in its claim on the name, saying that General Cigar Co.’s registrations on the Cohiba trademark are to be canceled due to a violation of an international agreement that dates back to 1929.

    However, General Cigar believes the TTAB decision is improperly based on the re-litigation of a claim that was decided in General Cigar’s favor by a U.S. Court of Appeals for the 2nd Circuit more than a decade ago.

    In February 2005, the 2nd Circuit Court of Appeals in New York ruled unanimously in favor of General Cigar.

    While there are more trademark conflicts between Cuban and American cigar companies, Cohiba is a unique case due to both its prominence on the global stage and its creation by the state-run tobacco company after the Cuban Revolution, whereas other brands with Cuban roots that General Cigar Co. owns, such as Partagas, Hoyo de Monterrey and La Gloria Cubana, were assumed by the Cuban government in 1959.

    While the lawsuit moves forward, General Cigar said it will continue to manufacture, market, sell and enforce its Cohiba trademarks.

  • Texas Court to Hear Exploding Battery Case

    Texas Court to Hear Exploding Battery Case

    Photo: unlimit3d

    The Supreme Court of Texas has agreed to hear a lawsuit by a vaper burnt by an exploding battery to determine if Texas courts have jurisdiction over LG Chem America, a subsidiary of South Korea-based LG Chem, which made the battery, reports Law360.

    In 2016, Texas resident Tommy Morgan bought an 18650 lithium-ion battery manufactured by LG Chem. He claims it unexpectedly exploded and caught on fire, leading to him suffering permanent and severe injuries, according to his lawsuit filed in 2019 in Brazoria County District Court.

    The companies are facing other lawsuits by Texas residents with similar claims concerning batteries exploding. But intermediate appeals courts have come to different conclusions on whether LG Chem has enough contacts in the state to face claims.

    LG Chem America and LG Chem have argued that Texas courts lack jurisdiction because the companies don’t sell individual batteries in Texas nor directly to Texas customers. LG has consistently stated in litigation throughout the country that this battery was never intended to be used in e-cigarettes or vaping devices.

    Morgan told the Texas high court that the company deliberately shipped its products to Texas customers who were later injured, therefore Texas courts have jurisdiction.

  • Investors Press KT&G on Ginseng Spinoff

    Investors Press KT&G on Ginseng Spinoff

    Photo: KT&G

    A group of activist funds has filed an injunction at the Deajeon District Court in South Korea demanding that KT&G address their demand to spin off its lucrative ginseng business, appoint certain outside directors and strengthen its shareholder return policy, reports The Korea Times.

    Led by the Singaporean activist private equity fund Flashlight Capital, the group has repeatedly demanded that the ginseng business be spun off for to recover corporate value and share prices.

    However, during an investor relations event last month, KT&G rebuffed the request. “The spinoff will have little to no benefit to the company’s corporate value and shareholders from a long-term perspective,” said KT&G Senior Executive Vice President Bang Kyung-man.

    Bang expressed concern that KT&G would potentially lose “synergy” in the event of the ginseng unit’s separation.

    During the meeting, KT&G also dismissed the funds’ demand to strengthen KT&G’s shareholder return policy. The cigarette and ginseng product manufacturer said the current policy “should hold for now.”

    Flashlight Capital founder Lee Sang-hyun believes KT&G’s share price will bounce back to over KRW140,000, a level last seen in 2016, once the firm reorients its investment portfolio to better achieve environmental, social and governance goals.

    KT&G’s share price hit a low of KRW87,100 on Feb. 17 but has recovered since.