Category: News This Week

Acceptance Period for Swedish Match Offer Expires Today

Photo: Swedish Match
Shareholders of Swedish Match must decide today whether to tender their shares to Philip Morris International.
In May, PMI bid about $16 billion for Swedish Match. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp., objected, saying the bid undervalues their firm.
In October, PMI increased the price of its bid to SEK116 per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.
Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.
Earlier this week, Framtiden Partnerships said it would not accept PMI’s sweetened offer, according to Reuters.
The investor, which owns nearly 1 percent of the Swedish nicotine products manufacturer, believes Swedish Match is better off as an independent company. Framtiden managing member Dan Juran estimates Swedish Match to be worth close to SEK200 per share.
Framtiden said it would urge Swedish Match management to initiate a share buyback and potentially a special dividend if the deal does not go through.
“As we wrote in our white paper, there is incredible long-term value in this asset, but we also think that there is great value to be realized in the short term as well,” Chris Anderson, a partner in Framtiden, was quoted as saying by Reuters, adding that a planned U.S. cigar business spinoff will also provide additional shareholder value.
On Oct. 28, Elliott Management Corp. raised its stake in Swedish Match to over 10 percent—enough to scupper the deal if it opposed the bid.
November 4, 2022
Smoking Prevalence Halved Since 2009

Photo: Comugnero Silvana
The smoking prevalence in Russia nearly halved between 2009 and 2021, reports Interfax, citing Health Minister Mikhail Murashko.
“Tobacco consumption among adults went down from 39.5 percent in 2009 to 20 percent in 2021,” Murashko told participants in a recent public health forum.
The news comes as multinationals are retreating from the Russian cigarette market in response to Moscow’s military assault on Ukraine.
Following the Feb. 24 invasion, international cigarette manufacturers announced they would end their operations in Russia, but retreating from such a major market is easier said than done. Tobacco companies have had to carefully navigate shifting regulations and avoid missteps that could prompt the government to seize the business, for example—all the while trying to protect employees from becoming targets for arrest.
Earlier this year, Philip Morris International CEO Jacek Olczak described the process as “bloody complex.” In a July interview, he said the company was unlikely to be able to leave Russia before the end of 2022.
An analysis of Russian Treasury figures conducted by The Telegraph revealed that the leading international cigarette manufacturers have provided the Russian government with at least $7.25 billion in additional income through tax payments since Feb. 24.
Russia is the world’s fourth-largest cigarette market. Prior to the war, Japan Tobacco International led the market with a 36.7 percent share, followed by PMI (31.7 percent) and BAT (23.5 percent), according to Cowen & Co.
November 4, 2022
Half-Year Revenue and Income Up at Universal

Photo: Taco Tuinstra
Universal Corp. posted sales and other operating revenue of $1.08 billion for the first half of 2022, up 34 percent over that reported in the comparable 2021 period. Reported operating income increased 27 percent to $51.2 million. Sales and other operating revenues from the tobacco business were $918.1 million compared with $690.6 million in the first six months of 2021. Tobacco operations contributed $41.9 million in operating income, 17 percent more than in the comparable 2021 period.
“Demand for both our tobacco and plant-based ingredients products remains very strong, and we are excited about how our fiscal year 2023 is developing,” said Universal Corp. Chairman, President and CEO George C. Freeman III in a statement.
“We are seeing improvement in shipping availability, particularly in Brazil, where we were able to ship large amounts of carryover tobacco in both the six months and quarter ended Sept. 30, 2022. We also remain very pleased with our strategic investment in our plant-based ingredients platform. Our Ingredients Operations segment diversifies our earnings and delivered higher results driven by higher sales in both the six months and quarter ended Sept. 30, 2022, compared to the same periods in the prior fiscal year.
“We believe we are through our peak seasonal working capital requirements for fiscal year 2023, and we expect a considerable reduction in debt levels over the next two fiscal quarters. We have already seen significant working capital receipts in October 2022. Our tobacco shipments, which are weighted to the second half of our fiscal year, should enable us to reduce our debt levels from the elevated Sept. 30, 2022, levels as payments are received from our customers.”
All types of leaf tobacco, but particularly burley, are currently in an undersupply position, according to Freeman. By the end of September, Universal’s tobacco inventories were nearly 90 percent committed for sale.
November 4, 2022
KT&G Net Profit Jumps by a Third

Photo: KT&G
KT&G’s quarterly net profit jumped 29 percent from a year earlier on increased exports and a strong dollar, reports the Yonhap News Agency.
Net profit for the three months ended in September rose to KRW463.14 billion ($325 million) from KRW359.58 billion during the same period of last year, the company said in a statement.
According to the company, the bottom line was boosted by increased sales of heat-not-burn products in the domestic market and increased overseas sales amid a weak won against the dollar.
The dollar rose to an average of KRW1,338 in the third quarter from KRW1,157 a year earlier, according to the Bank of Korea.
Operating profit fell 2.7 percent to KRW405.61 billion during the quarter from KRW417.03 billion a year ago. Sales were up 8.5 percent to KRW1.62 trillion from KRW1.49 trillion during the cited period.
Domestically, KT&G sold 11.05 billion cigarettes in the third quarter, down 0.4 percent from a year earlier. The company held a 65 percent share of the local cigarette market.
Overseas sales jumped 30 percent to 12.2 billion cigarettes in the September quarter from 9.4 billion a year ago, driven by rising demand from emerging markets.
KT&G earns 90 percent of its sales from cigarettes and 10 percent from heat-not-burn products.
From January to September, net income climbed 21 percent to KRW1.06 trillion from KRW878.58 billion in the same period of last year.
November 3, 2022
Sri Lanka Mulls Cigarette Price Increase

Photo: MemoryMan
Sri Lanka may increase the price of cigarettes as part of its upcoming budget, according to the National Authority on Tobacco and Alcohol (NATA), reports Sri Lanka Mirror.
A suggestions has also been put forward to ban the retail sale of single cigarettes in Sri Lanka. The objective of this proposal is to reduce the number of people who smoke.
Meanwhile, a survey jointly conducted by the Department of Census and Statistics, NATA and the Ministry of Health has revealed that 51 percent of adults who smoke in Sri Lanka believe that they should quit smoking.
November 3, 2022
‘Reduced Nicotine Decreases Smoking in the Depressed’

Photo: bramgino
Lowering the amount of nicotine in cigarettes to nonaddictive levels may reduce smoking without worsening mental health in smokers with mood or anxiety disorders, according to a study conducted by Penn State College of Medicine and Harvard Medical School researchers. They said reducing nicotine content in cigarettes could also lessen addiction, lower exposure to toxicants and increase a smoker’s chances of quitting.
Recent proposals by the U.S. Food and Drug Administration and the New Zealand government seek to limit the amount of nicotine in cigarettes to minimally addictive levels. Prior research indicates that reducing nicotine content could help smokers quit, but there is little evidence to demonstrate if these policies could adversely affect smokers with current or prior affective disorders like depression and anxiety disorders—which affect an estimated 38 percent of U.S. cigarette smokers.
According to Jonathan Foulds, professor of public health sciences and of psychiatry and behavioral health, smokers with mental health conditions are more likely to have severe nicotine withdrawal symptoms and less success at quitting. He also said there is speculation that lessening nicotine content to very low levels could worsen psychiatric symptoms in smokers with mental health conditions and lead to heavier smoking and increased exposure to toxicants, or harmful chemicals.
The researchers studied 188 smokers with a history of or who had a current mood or anxiety disorder and had no plans to quit. Volunteer participants were randomly assigned to a group that received either research cigarettes containing the usual amount of nicotine (11.6 mg nicotine per cigarette) or a progressively reduced amount of nicotine for an additional 18-week period (the final amount was 0.2 mg nicotine per cigarette). At the beginning and conclusion of the study, the researchers measured levels of cotinine, a metabolite of nicotine, levels of harmful chemicals, cigarette dependence indexes and various mental health measures.

“Our data showed that there wasn’t a significant difference in mental health measures between the groups, suggesting reduced nicotine cigarettes might not have adverse psychological effects on this population.”
Jonathan Foulds, professor of public health sciences and of psychiatry and behavioral health, Penn State Cancer Institute
The researchers observed no statistically significant differences in mental health measures between the two groups at the conclusion of the study. The team used the Kessler Psychological Distress Scale, a six-item self-report assessment where participants reported on a five-point scale the degree to which they experienced feelings or emotions like “nervous,” “hopeless” or “so depressed that nothing could cheer them up.” Scores are developed by summing points for the six experiences. Participants in the reduced-nicotine content group scored an average of 5.3 at the beginning of the study and finished at an average score of 4.6 while participants in the usual nicotine content group scored 6.1 at the beginning of the study and finished around 4.9.
“These findings are important because we want to understand the effect these policies would have on smokers with anxiety or depressive disorders,” said Foulds, a Penn State Cancer Institute researcher, in a statement. “Our data showed that there wasn’t a significant difference in mental health measures between the groups, suggesting reduced-nicotine cigarettes might not have adverse psychological effects on this population.”
Similar to what prior studies reported, Foulds and his team found that groups in the reduced-nicotine content group were absorbing lower amounts of nicotine and ingesting lower levels of harmful carcinogens such as the biomarker 4-(methylnitrosamino)-1-(3-pryidyl)-1-butanol, more commonly known as NNAL. That group also smoked fewer cigarettes and reported lower levels of nicotine addiction by the end of the randomized phase of the trial.
Unique to this study, participants in both groups were also given the choice to “choose their treatment” after the 18-week period. They could go back to using their own cigarettes, continue smoking the research cigarettes or attempt to quit. Of the 188 participants in the study, those randomized to reduced-nicotine content cigarettes were more likely to have quit smoking 12 weeks later (18.1 percent) compared to those in the control (usual nicotine content) group (4.3 percent).
“We believe this is the first randomized trial to find that smokers who used very low-nicotine cigarettes were significantly more likely to have quit smoking (with biochemical verification) three months after the end of the trial,” Foulds said.
“Our results suggest that these policies will likely result in reduced nicotine absorption from cigarettes without worsening the mental health of smokers with mood or anxiety disorders,” said Eden Evins, Cox Family Professor of Psychiatry at Harvard Medical School. “They also suggest that with proper support and resources, smokers with mood and anxiety disorders could quit successfully as a result of these policies.”
November 3, 2022
Ploom X Debuts in the United Kingdom
Photo: JTI
Japan Tobacco International has launched its Ploom X heated-tobacco device at select locations in the United Kingdom, the company announced in a press release. This product is now available in the Greater London area, at pop-up stores in Shoreditch, online nationwide and in selected online vape stores.
According to JTI, Ploom X represents the cutting edge of the next generation of heated-tobacco products. Technological upgrades include:
A redesigned “HeatFlow” system and a higher heating temperature to ensure a more consistent nicotine delivery and a more enhanced flavor delivery;
One easy-to-use heating mode;
Adjustments to the airflow system enabling a more consistent vapor delivery and increased vapor volume;
Session times of up to 5 minutes and the ability to use more EVO tobacco sticks per charge, with up to 22 sessions with one charge; and
A smaller and more compact device. Users can customize the device with colorful magnetic front panels.
According to JTI, Ploom X reduces the level of nine smoke constituents by an average of 90 percent to 95 percent.
Ploom devices are designed to be used exclusively with EVO tobacco sticks, which contain a tobacco blend made from microground and fine-cut tobacco.
With 20 sticks in a pack and a recommended retail price of £4.50, EVO costs less than half the price of a pack of cigarettes in the U.K. EVO tobacco sticks are available in classic tobacco, menthol, and fruit and menthol infusions. The company also offers capsule variants that offer consumers the option to release an additional burst of flavor.
“The launch of Ploom X marks a milestone in JTI’s story and also sets a new paradigm in the heated-tobacco category,” said JTI Director of Marketing Mark McGuinness. “Ploom X is a truly innovative product that will exceed consumer expectations, making their tobacco moments even more pleasurable and truly unique.”
November 3, 2022
Think Tank Publishes Alternative Strategy
Christopher Snowdon
Ahead of the Nov. 3 parliamentary debate on the independent review of smoke-free 2030 policies, the Institute for Economic Affairs (IEA) has published an alternative strategy to reduce the smoking rate in England, titled The Alternative Smoke-Free 2030 Plan.
This approach stands in contrast with the recent Khan Review, which recommended banning the sale of cigarettes over time. Report author Christopher Snowdon argues that as long as demand exists—only 53 percent of British smokers say they want to quit—prohibitionist policies will result in endemic black market activity, crime and secondary poverty without eradicating smoking.
The alternative 12-point plan emphasizes the success of vaping and other safer alternatives in getting people off cigarettes. In Britain, where 9.3 percent of adults now vape, the smoking rate has dropped from 20 percent to 14 percent since 2012, according to the IEA. In the EU, where only 2 percent of adults vape, smoking prevalence fell by just 1 percent between 2014 and 2020. As of this year, 28 percent of smokers have never even tried an e-cigarette. Removing barriers to consumers accessing low-risk nicotine alternatives is vital.
Snowdon, the IEA’s head of lifestyle economics, recommends that the government tackle pervasive misinformation about the risks of e-cigarettes. Currently, 40 percent of English smokers falsely believe that nicotine causes cancer, and the number of smokers who wrongly think that vaping is as or more dangerous than smoking rose from 36 percent to 53 percent between 2014 and 2020. This is despite the fact that the Royal College of Physicians concluded that the long-term risks are “unlikely to exceed 5 percent of the harm from smoking tobacco.” The government should ensure that public health bodies promote the benefits of vaping relative to smoking.
Snowdon also proposes that the government embrace the freedom provided by Brexit to reform the Tobacco Products Directive (TPD). Article 20 of the TPD exacts punitive regulations on e-cigarettes, covering everything from advertising to the size of refillable vape tanks. According to Snowdon, cutting this red tape will lift powerful barriers to access.
Smokers could also be encouraged to quit by reducing the red tape burdens on other low-risk tobacco alternatives such as snus, heated-tobacco and nicotine pouches. These products are subjected to overzealous regulation, with snus outlawed in the U.K.
The U.K. has generally regulated e-cigarettes sensibly, according to the IEA. But with a greater focus on articulating the benefits of switching to low-risk tobacco alternatives and relaxing the associated regulatory regime, smoking may truly become obsolete, the think tank argues.
“The government’s plan to slash the smoking rate to 5 percent by 2030 is wholly unrealistic unless smokers switch to low-risk alternatives in large numbers,” says Snowdon. “Fortunately, a growing range of alternatives exist. All the government needs to do is create a regulatory environment in which they can flourish and ensure that smokers are not misled by fake news. There are a dozen simple, low-cost reforms that could be implemented that would help the government meet its health objectives without persecuting smokers.”
November 2, 2022
Vector Posts Record Quarterly Revenues

Photo: Phongphan Supphakank
Vector Group reported consolidated revenues of $378 million for the third quarter of 2022, up 26.6 percent over the prior year period.
Tobacco segment unit volume increased 30.1 percent compared to the comparable 2021 period. Liggett’s wholesale and retail market share increased to 5.7 percent each, compared with 3.9 percent and 4.2 percent, respectively, in the prior year period.
Reported net income declined to $38.9 million from $48.9 million.
Reported net income from continuing operations was $38.9 million, up from $29.9 million in the prior year period. Adjusted net income from continuing operations was $37.6 million compared to $33.9 million in the prior year period.
Reported operating income increased by $1.9 million to $83.9 million.
Tobacco segment operating income was down 4 percent to $88.1 million, primarily as a result of the company’s investment in its Montego brand.
“Vector Group delivered record tobacco quarterly revenues in the third quarter as we continued to capitalize on favorable market opportunities to substantially increase value and market share,” said Vector Group President and CEO Howard M. Lorber in a statement.
“Driven by the significant growth of our price-fighting Montego brand, Liggett’s wholesale market share in the third quarter was 5.7 percent, which is its highest market share since 1984. We have begun to gradually shift our growth strategy of Montego, which is now the second-largest discount brand in the United States, from volume-based to profit-based. As we move forward, we will continue to focus on optimizing long-term profit through the effective management of volume, pricing and market share growth.”
November 2, 2022
Tunisia to Sell State Tobacco Factory

Photo: Maksym Yemelyanov
The government of Tunisia has promised the International Monetary Fund (IMF) to sell a state tobacco factory, reports Reuters.
The pledge is part of a preliminary deal with the IMF for a $1.9 billion rescue package in exchange for unpopular reforms, including reducing food and energy subsidies, and reforming public firms.
The leader of Tunisia’s powerful UGTT union said his organization would strongly oppose the move.
November 2, 2022