Category: News This Week

  • FDA Announces Plan for Menthol Ban

    FDA Announces Plan for Menthol Ban

    The U.S. Food and Drug Administration today announced a plan to ban the sale of menthol cigarettes in the United States. Menthols account for about one-third of the U.S. cigarette market.

    The agency expects that taking menthol cigarettes off the market will reduce smoking levels and lower the number of young people taking up the habit.

    “The proposed rules would help prevent children from becoming the next generation of smokers and help adult smokers quit,” said U.S. Health and Human Services Secretary Xavier Becerra in a statement.  “Additionally, the proposed rules represent an important step to advance health equity by significantly reducing tobacco-related health disparities.”

    With the FDA plan, the U.S. is following in the footsteps of Canada and the European Union, which banned menthol cigarettes in 2017 and 2020, respectively. Menthol is the only cigarette flavor that wasn’t banned under the 2009 Family Smoking Prevention and Tobacco Control Act, which gave the FDA authority over tobacco products.

    In 2019, there were more than 18.5 million current menthol cigarette smokers ages 12 and older in the U.S., with particularly high rates of use by youth, young adults and African American and other racial and ethnic groups, according to the FDA. The agency cited modeling studies suggesting that there would be a 15 percent reduction in smoking within 40 years if menthol cigarettes were no longer available in the U.S. These studies also estimate that 324,000 to 654,000 smoking attributable deaths overall (92,000 to 238,000 among African Americans) would be avoided over the course of 40 years.

    Health advocates oppose menthol because the ingredient’s “cooling” effect makes it easier to start smoking and harder to quit. The health consequences have disproportionally fallen on Black smokers, 85 percent of whom use menthols.

    Critics have cautioned that a menthol ban could have unintended consequences. For example, Guy Bentley, director of consumer freedom at the Reason Foundation, warned of increased black market sales and more incarceration. The desired public health gains, he wrote, could also be achieved by applying the harm reduction model to tobacco policy.

    Along with its menthol ban, the FDA also announced product standards to prohibit all characterizing flavors (other than tobacco) in cigars.

    “Characterizing flavors in cigars, such as strawberry, grape, cocoa and fruit punch, increase appeal and make cigars easier to use, particularly among youth and young adults,” the FDA wrote in its announcement. “More than a half million youth in the U.S. use flavored cigars, and in recent years, more young people tried a cigar every day than tried a cigarette.”

    Beginning May 4, the public can provide comments on these proposed rules. The FDA also will convene public listening sessions on June 13 and June 15.

  • Myanmar Postpones Plain Packaging

    Myanmar Postpones Plain Packaging

    Photo: Taco Tuinstra

    Myanmar has postponed the implementation of standardized tobacco packaging until April 2023, following a lobbying campaign by opponents of the measure, reports Eco-Business. The law was originally set to take effect on April 10, 2022.

    The new packaging regulations require the outer surfaces of tobacco product packages to be a standardized dull dark brown, flat, smooth and devoid of any attractive designs or decorative elements.

    Health advocated criticized the delay.

    “Instead of postponing its implementation by 12 months, the government should have penalized tobacco companies for not complying by the April 10 deadline,” said Ulysses Dorotheo, executive director of the Southeast Asia Tobacco Control Alliance.

    “Only the tobacco industry will profit from this bad decision while the government and people of Myanmar will suffer more diseases, healthcare costs, deaths and their related socioeconomic burden,” added Dorotheo.

  • Fortuna Possible New Owner Imperial’s Russian Business

    Fortuna Possible New Owner Imperial’s Russian Business

    Photo: ASDF

    Fortuna Cigar House (FCH) could become the new owner of Imperial Brands’ Russian business, according to an Interfax report citing the Kommersant newspaper.

    Following Russia’s military invasion of Ukraine, several tobacco companies said they would scale back their operations in Russia. On April 20, Imperial Brands announced the transfer of its Russian business to local investors, subject to finalization of the registration of the transaction with local authorities. The company estimates a noncash write-off of around £225 million ($279.86) for this transaction.

    Founded in Odessa in 1999, FCH has been operating in Russia since 2011 as a joint venture with the distributor Megapolis, which was previously associated with Russian tobacco mogul Igor Kesaev. The company sells cigars, tobacco, smoking accessories and materials and equipment. It also has its own retail outlet.

    According to SPARK-Interfax, 50.01 percent of FCH belongs to Megapolis, and 49.99 percent belongs to BVG Cigar House Fortuna of Cyprus. In 2021, FCH posted revenue of RUR4.09 billion ($67.12 million) and a net profit of RUR404 million.

    In March, Imperial Brands said it was suspending operations in Russia, including production at its factory in Volgograd, as well as sales and marketing. The company then began talks with a Russian legal entity on transferring the business.

    Imperial Brands operates in Russia through Imperial Tobacco Volga, the production entity, and Imperial Tobacco Sales and Marketing. The company has held around 5.5 percent of the Russian tobacco market, according to business analysts cited by Kommersant.

    Tobacco analysts Maxim Korolyov told Kommersant that Imperial Brands’ products will likely continue to be produced in Russia under a temporary license.

  • JT: Strong Quarter Despite Uncertainty

    JT: Strong Quarter Despite Uncertainty

    JTI’s headquarters in Geneva

    The JT Group reported revenues of ¥581.5 billion ($4.45 billion) in the first quarter of 2022, up 6.2 percent over that reported in the first quarter of 2021. Adjusted operating was ¥194.9 billion during the quarter, 9.4 percent more than in the comparable 2021 quarter. The JT Group posted an operating profit of ¥178.4 billion and a profit of ¥124.1 billion in the quarter, up 11.4 percent and 9.1 percent, respectively, over the 2021 quarter.

    “Following the combination of the tobacco businesses this year, the JT Group delivered strong results with adjusted operating profit at constant FX increasing by 4.5 percent,” said JT Group CEO Masamichi Terabatake in a statement. “However, several uncertainties remain, such as the changing operating environment in Russia, the rapidly evolving operational costs and a very volatile inflation. Considering these factors, as of the first quarter, we have decided not to revise the full year guidance.

    On March 10, the JT Group announced the suspension of new investments and marketing activities in Russia. The company is currently evaluating various options for its Russia business, including potentially transferring its ownership.

    Russia is one of the JT Group’s largest markets. The company has four factories and employs nearly 4,000 people in the country. Terabatake said the company remains committed to its employees in Russia, including to secure their employment.

    “We will continue to closely monitor the situation and prioritize the safety of our employees and their families by extending all possible support to affected people. We will take all necessary decisions to address the changing situation in accordance with the group’s management principle, which is to pursue the 4S model.”

    Under the 4S model, the JT Group strives to fulfill its responsibilities to consumers, shareholders, employees and the wider society.

  • Altria Businesses ‘on Track’

    Altria Businesses ‘on Track’

    Photo: Casimiro

    Altria Group reported its 2022 first-quarter business results and reaffirmed its guidance for 2022 full-year adjusted diluted earnings per share (EPS).

    “We are off to a strong start to the year and believe our businesses are on track to deliver against their full-year plans. Our tobacco businesses performed well in a challenging macroeconomic environment, and we continued to make progress toward our vision to responsibly lead the transition of adult smokers to a smoke-free future,” said Billy Gifford, Altria’s CEO, in a statement.

    “We reaffirm our guidance to deliver 2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93. This range represents an adjusted diluted EPS growth rate of 4 percent to 7 percent from a $4.61 base in 2021. We continue to expect that adjusted diluted EPS growth will be weighted toward the second half of the year.”

    Net revenues decreased 2.4 percent to $5.9 billion, primarily driven by the sale of the company’s wine business in October 2021. Excluding the wine segment, net revenues were essentially unchanged. Revenues net of excise taxes decreased 1.3 percent to $4.8 billion.

    A conference call to discuss results with the investment community and the news media was held today at 9 a.m. Eastern Time.

  • Smoking Down for Those with Certain Psychiatric Disorders

    Smoking Down for Those with Certain Psychiatric Disorders

    Photo: mitarart

    Significant reductions in cigarette use were found among U.S. adults with major depression, substance use disorder or both from 2006 to 2019, according to a new analysis of nationally representative survey data published in JAMA.

    The study was conducted by researchers at the National Institute on Drug Abuse (NIDA), part of the National Institutes of Health, and the Substance Abuse and Mental Health Services Administration (SAMHSA). These findings suggest that groups at higher risk of cigarette smoking can be reached by, and may have benefitted from, tobacco use prevention and cessation efforts that have led to significant declines in tobacco use in the general population. At the same time, the findings highlight remaining disparities, documenting higher smoking rates in people with psychiatric disorders than in those without.

    “This study shows us that, at a population level, reductions in tobacco use are achievable for people with psychiatric conditions, and smoking cessation should be prioritized along with treatments for substance use, depression and other mental health disorders for people who experience them,” said Nora Volkow, director of the NIDA and co-author of the study. “Therapies to help people stop smoking are safe, effective and may even enhance the long-term success of concurrent treatments for more severe mental health symptoms in individuals with psychiatric disorders by lowering stress, anxiety, depression and by improving overall mood and quality of life.”

    “These declines tell a public health success story,” said Wilson Compton, the NIDA’s deputy director and the senior author of the study. “However, there’s still a lot of work to be done to ensure tobacco use in patients with substance use disorder, depression or other psychiatric conditions continue to decrease. It is crucial that healthcare providers treat all the health issues that a patient experiences, not just their depression or drug use disorder at a given point in time. To do this, smoking cessation therapies need to be integrated into existing behavioral health treatments. The result will be longer and healthier lives for all people.”

     

  • Smoore Flattered by FDA Marketing Orders

    Smoore Flattered by FDA Marketing Orders

    Photo: Timothy S. Donahue

    When the U.S. Food and Drug Administration authorized the NJOY Ace vaporizer and its tobacco-flavored e-liquid pods on April 26, the Ace became the first e-cigarette authorized by the FDA equipped with a ceramic coil. That coil is manufactured by FEELM, Smoore International’s flagship atomization tech brand.

    The Ace marketing orders mark the first approval by the FDA of a pod vaping product. It is also the first approval of any vaping product manufactured by a company that is independent of the tobacco industry.

    Smoore products have a good record of securing FDA authorizations. The first brand to receive marketing orders through the premarket tobacco product application (PMTA) pathway, Vuse Solo, is a strategic partner of Smoore, a Smoore representative told Tobacco Reporter’s sister publication, Vapor Voice. The second set of approved electronic nicotine-delivery system (ENDS) products, produced by Logic, are also manufactured by Smoore.

    “NJOY has partnered with Smoore since 2009. The NJOY Ace was launched in 2018 and is powered by FEELM inside, the world’s first black ceramic atomization coil with metallic film. As the first ceramic coil e-cigarette and pod vape authorized by the FDA, NJOY Ace’s approval for sale fully showcases the harm reduction potential of FEELM ceramic coil,” the representative said.

    “According to the FDA, NJOY Ace is authorized for sale because ‘chemical testing was sufficient to determine that overall harmful and potentially harmful constituent (HPHC) levels in the aerosol of these products is lower than in combusted cigarette smoke.’”

    Based on PMTA requirements, Smoore established a comprehensive analytical testing and safety assessment system, including the vaping industry’s first corporate toxicology laboratory, which explores the health impacts of exposure to e-cigarette vapor by means of cytotoxicity test, evaluating the reaction of living cells to different components of e-cigarette vapor, according to Smoore.

    The company has also developed the third generation of in-house safety standards—Smoore 3.0—that covers all of the PMTA tests, including harmful and potentially harmful constituents (HPHCs) listed by the FDA.

    “The principle of PMTA is to scientifically and systematically substantiate harm reduction performance of the vaping product and show it is appropriate for the protection of the public health (APPH),” said Long, director of the Smoore Analytical Testing and Safety Assessment Center. “The manufacturer must demonstrate the product’s potential to switch adult smokers while preventing youth and non-smokers from nicotine addiction.”

    Long said this could explain why all the FDA-authorized vaping products so far have been for tobacco flavors, and popular flavored products the agency has said promote youth use have been issued marketing denial orders. It is also an indication that vaping manufacturers should focus on “tobacco flavor reproduction and improve harm reduction performance” in order to be approved under the PMTA pathway.

    According to Nielsen, for the two weeks ended April 9, 2022, Vuse has now surpassed Juul and become No.1 in U.S. e-cigarette sales with a market share of 35 percent. Its flagship product Vuse Alto is also equipped with FEELM ceramic coils.

    As the No. 3 player in the U.S., NJOY accounts for approximately 3.1 percent market share. Moreover, a federal judge has required the FDA to provide progress reports on PMTAs submitted by major vaping brands and the first reports are due on April 29.

    The FDA also found that the risk to youth initiation with NJOY’s Ace was outweighed by the benefit to adult smokers, warning that NJOY must comply with strict post-marketing requirements.

  • Match Sets Dividend and Elects Directors

    Match Sets Dividend and Elects Directors

    Photo: Swedish Match

    Participants in Swedish Match’s annual general meeting on April 27 resolved to pay a dividend of SEK1.86 ($0.19) per share distributed to the shareholders in two equal payments of SEK0.93 per share, the company announced in a press note.

    The record date for the right to receive a cash dividend for the first payment is April 29, 2022, and payment through Euroclear Sweden is expected to be made on May 4, 2022. The record date for the second payment is Nov. 14, 2022, and payment through Euroclear Sweden is expected to be made on Nov. 17, 2022.

    The board of directors and the CEO were granted discharge for the financial year 2021.

    Charles A. Blixt, Jacqueline Hoogerbrugge, Conny Karlsson, Alexander Lacik, Pauline Lindwall and Joakim Westh were reelected as members of Swedish Match’s board of directors. Sanna Suvanto-Harsaae was elected as a new member of the board of directors. Conny Karlsson was reelected as chairman of the board.

    The annual general meeting elected Deloitte as auditor until the end of the annual general meeting 2024.

    The board of directors’ remuneration report for 2021 was adopted. Furthermore, the annual general meeting approved the board of directors’ proposal that it be authorized to resolve on acquisition of the company’s own shares, on one or several occasions prior to the next annual general meeting, provided the company’s holding does not at any time exceed 10 percent of all shares in the company. The shares shall be acquired on Nasdaq Stockholm at a price within the price interval registered at any given time, i.e., the interval between the highest bid price and the lowest selling price. Swedish Match owns 59,285,810 treasury shares as per April 27, 2022.

    In addition, the company’s share capital was reduced by SEK13,559,080.98 by means of withdrawal of 55,000,000 previously repurchased shares held in treasury, with a simultaneous bonus issue, without issuing any new shares, of a corresponding amount to restore the share capital. The shareholders further approved the proposal that the reduction will be allocated to a fund for use pursuant to a resolution adopted by the annual general meeting.

    The annual general meeting approved all other proposals made by the board of directors and the nominating committee. The proposals are outlined in the published notice of the annual general meeting.

  • Bank Policies Threaten Egypt’s Leaf Imports

    Bank Policies Threaten Egypt’s Leaf Imports

    Photo: Taco Tuinstra

    The reluctance of banks to open the documentary credits required to import leaf tobacco is endangering the operations of Egypt’s tobacco factories, reports Egypt Independent, citing the Tobacco Division of the Federation of Egyptian Industries ((FEI).

    FEI Division Head Ibrahim al-Embabi warned that more than 23 factories will close following the Eid al-Fitr holiday, after which they will have used their entire stock of raw tobacco. Due to a ban on tobacco cultivation in Egypt, the country’s tobacco industry is entirely dependent on leaf imports.

    Earlier this year, Egypt’s Central Bank of Egypt stopped collecting documents upon import, requiring importers to cover the entire value of the shipment before importing. The decisions forced many factories, including tobacco manufacturing plants, to suspend their imports of raw materials.

    Al-Embabi said that stopping the import of raw materials and the consequent disruption of production will lead to the displacement of nearly 30,000 direct workers in the sector, and threaten the state’s intake of taxes and fees paid by cigarette and tobacco companies, which exceed EGP79 billion ($4.27 billion) annually.

    Tobacco factories import raw materials worth about $500 million each year while exports reach $120 million annually.

    The remaining percentage is used to satisfy the needs of the local market. Despite its high consumption of imported raw materials, the tobacco sector is the state treasury’s most important source of revenue, according to al-Embabi.

  • TPB’s Quarter ‘In Line With Expectations’

    TPB’s Quarter ‘In Line With Expectations’

    Yavor Efremov (Photo: TPB)

    Turning Point Brands announced financial results for the first quarter ended March 31, 2022.

    Net sales for the first quarter of 2022 decreased 6.3 percent to $100.9 million compared to the previous year. Net sales for Zig-Zag and Stoker’s Products increased 10.1 percent over 2021. Gross profit decreased 2.8 percent to $51.8 million while net income decreased 6.7 percent to $11 million.

    “Our first- quarter results were in line with our expectations as we continued to grow our market share for both Zig-Zag and Stoker’s while navigating a difficult consumer and regulatory environment to drive profitability in each of our segments, including NewGen. Sales decreased 6 percent from the previous year driven by a 37 percent decline in NewGen sales but showed double-digit growth excluding NewGen,” said Yavor Efremov, president and CEO of Turning Point Brands, in a statement.

    “Zig-Zag delivered another strong growth quarter led by our U.S. papers business, which built on its market-leading share during the quarter. At the same time, Stoker’s maintained its growth trajectory driven by double-digit growth in the moist snuff tobacco business, which benefited from consumer trade-down as a leading value brand. Despite the expected sales decline, NewGen maintained positive profitability during the quarter while improving the distribution reach for its regulated products.”

    “We continue to monitor FDA developments. While added regulation may cause short-term disruption, this is a necessary step to fully regulate the industry, create a level playing field and provide consumers with additional reduced-risk alternatives to cigarettes,” continued Efremov.

    “We maintain a strong balance sheet that is allowing us to deploy a substantial amount of our free cash flow toward share repurchases, which continued during the quarter. While inflationary pressures, including a spike in gas prices, are impacting the consumer wallet, we remain favorably positioned as we continue to execute and outpace the overall industry. In addition to solid execution on the business side, we have completed both the ERP and CRM scopes we discussed on our last earnings call. I am particularly proud of the fact that the organization undertook a detailed review of the business with heavy involvement from every level of the company while delivering a solid quarter.”