Category: News This Week

  • STG Posts Results in Line With Expectations

    STG Posts Results in Line With Expectations

    Photo: STG

    Scandinavian Tobacco Group (STG) reported net sales of DKK2.18 billion ($338.78 million) in the third quarter of 2021 compared with DKK2.231 million in the third quarter of 2020. EBITDA before special items was DKK627 million, up from DKK614 million in the prior-year period. Organic EBITDA growth was positively impacted by a DKK31 million income from certain duty refunds in the U.S.

    The results were driven by continued strong demand for handmade cigars in the U.S, a favorable market and product mix, and synergies from the integration of Agio Cigars. Supply issues in Europe impacted net sales negatively in the third quarter. 

    “We delivered strong quarterly performance in line with expectations and maintain the positive momentum we have had throughout 2020 and 2021,” said STG CEO Niels Frederiksen in a statement.

    “The combination of the integration of Agio Cigars, the growth in handmade cigars and our underlying transformation have significantly improved our performance and raised our earnings and margins levels. I remain proud and impressed with the way our organization has continued to deliver a strong performance throughout a challenging period.”

  • 22nd Century Reports Third-Quarter Results

    22nd Century Reports Third-Quarter Results

    Photo: MIND AND I

    22nd Century Group reported net sales of $7.8 million in the third quarter of 2021, up 6.9 percent over those posted in the prior-year period. The increase was due to an increase in contract manufacturing sales.

    Gross profit for the third quarter of 2021 improved by 24 percent to $449,000 compared to the prior year period, reflecting the seventh consecutive quarter of year-over-year improvement in gross profit. The improvement in gross margin was primarily the result of increased filtered cigar sales mix due to new customer contracts and price increases on the company’s contract manufactured cigarettes.

    Operating loss for the third quarter of 2021 was $7.9 million, an increase of $3.4 million compared to the prior year period. This was primarily driven by an increase in selling, general and administrative expenses and was partially offset by higher gross profit and lower research and development spend in the third quarter of 2021.

    Net loss in the third quarter of 2021 was $9.4 million, an increase of $5.1 million compared to the prior year period primarily due to an increase in noncash charges offset by benefits to other income and expenses. This compares to the third quarter of 2020 net loss of $4.2 million.

    “I am proud of the tremendous progress we have made during 2021 as we complete the final step to MRTP [modified-risk tobacco product] authorization of our VLN reduced-nicotine tobacco cigarettes and begin to monetize our highly disruptive hemp/cannabis plant lines and IP [intellectual property],” said James A. Mish, CEO of 22nd Century Group, in a statement.

  • Filter: Some PMTAs Not Evaluated on Merits

    Filter: Some PMTAs Not Evaluated on Merits

    Photo: Ronstix

    Confronted with an unexpected large volume of premarket tobacco applications, the U.S. Food and Drug Administration subjected some premarket tobacco product applications (PMTAs) to only a superficial review, according to documents obtained by Filter.

    The report follows the FDA’s denial of more than 1,167,000 marketing applications since Sept. 9, 2021.

    The PMTA review process comprises three phases: Phase I (Acceptance), which essentially means an application has been received; Phase II (Notification or Filing), which entails acknowledging a company had enough information for its applications to be formally filed; and Phase III (Review), which involves a substantive scientific evaluation, followed by a marketing granted order or marketing denial order (MDOs).

    Overwhelmed by the large number of PMTAs and facing a court-ordered deadline of Sept. 9, 2021, the FDA in effect opted for a shortcut, according to Filter.

    The publication cites a memorandum signed on July 9 by Matthew Holman, the director of FDA Center for Tobacco Products Office of Science (OS). “Considering the large number of applications that remain to be reviewed by the September 9, 2021, deadline, OS will conduct a Fatal Flaw review of PMTAs not in Phase III for non-tobacco-flavored ENDS products,” it reads.

    The Fatal Flaw review is a simple review in which the reviewer examines the submission to identify whether or not it contains the necessary type of studies. “The Fatal Flaw review will be limited to determining presence or absence of such studies; it will not evaluate the merits of the studies,” the memorandum states.

    Filter suggests that CTP reviewers created what’s probably a new method to get through a backlog of millions of PMTAs, searched those applications for longitudinal cohort studies and randomized clinical trials without evaluating any other evidence, and for applications lacking them, did not advance them beyond Phase II and just sent out templated MDOs.

  • Tanzania Leaf Tobacco Sales up

    Tanzania Leaf Tobacco Sales up

    Photo: Taco Tuinstra

    Tobacco sales in Tanzania increased to 57 million kg in 2020-2021 from 39 million kg in 2017-2018, reports All Africa, citing Deputy Minister for Agriculture Hussein Bashe.

    During 2020-2021, about eight local buying companies had entered into contracts with producers of tobacco countrywide, he said.

    Bashe told Parliament the government was continuing to lure farmers by insisting on contract buying, looking for new buyers as well as looking for international markets.

    He added that the government was equally eyeing the Chinese market and already the government had brought another seedling of the product and trials had been made, where the sample had been forwarded to relevant authorities for further procedures.

  • Universal Pleased With Six-Month Results

    Universal Pleased With Six-Month Results

    Photo: Taco Tuinstra

    Universal Corp. reported net income of $25.87 million for the six months that ended on Sept. 30, up from $14.78 million in the first six months of 2020. Operating income was $40.42 million, compared with $24.88 million in the comparable period last year. Sales and other operating revenues came to $803.98 million, against $692.84 million in the 2020 period. Operating income from tobacco operations jumped 52 percent to $35.8 million.

    George Freeman

    “I am pleased with our results for the first six months of fiscal year 2022,” said George Freeman III, chairman, president and CEO of Universal Corp in a statement. “Our tobacco operations have continued to perform well, and our ingredients operations, which include our October 2020 acquisition of Silva International, Inc., are making solid contributions to our results.”

    “In the six months ended Sept. 30, 2021, tobacco operations results improved on a favorable product mix consisting of a higher percentage of lamina tobacco and fewer carryover sales of lower margin tobaccos, compared to the same period in the prior fiscal year.

    “In addition, our uncommitted inventory level of 11 percent of tobacco inventories at Sept. 30, 2021, was significantly below our uncommitted inventory level of 16 percent of tobacco inventories at Sept. 30, 2020. At the same time, we continue to have logistical challenges related to worldwide shipping availability stemming from the ongoing Covid-19 pandemic.

    “To address these challenges, we are working closely with our customers to accelerate tobacco shipments in some origins where vessels and containers have been available while diligently managing slower tobacco shipments in origins with reduced container and vessel availability.”

     

     

  • Star Enters Turkish FVC and Burley Markets

    Star Enters Turkish FVC and Burley Markets

    Photo: MrPreecha

    Following the Turkish government’s decision that all cigarettes produced in Turkey for sale in Turkey must contain 30 percent of Turkish tobacco, Star Agritech International (SAI) has decided to enter the market for locally grown flue-cured Virginia (FCV) and burley tobaccos commencing with the 2022 season.

    Based on current cigarette consumption, local manufacturers will require between 25,000 to 30,000 tons per year of locally produced FCV and burley. SAI has therefore opened its agricultural branch office in Mus, Turkey, as the project center.

    The office is adjacent to the Turkish Tobacco Cooperative Union on which SAI will lean heavily for tobacco production by its farmer members.

    SAI’s project envisages the cultivation 5,000 tons of cured tobacco by 2025, the creation of 110,000-square-meter industrial park encompassing green leaf storage, curing barns, a green leaf threshing line, a hand stripping center, a processed leaf warehouse, a CRES line, a recon line and administration offices.

    The complex is slated for phased completion in 2022 and 2023. The project will be initially managed by Yagiz Turk assisted on the technical front by Furkan Aslan and on the leaf front by Gokhan Akca. Other Istanbul functions will provide support as required.

    The project is SAI’s second direct involvement in tobacco cultivation after its Cameroon cigar leaf plantations. It is projected stimulate the regional economy and create employment.

  • Leaf Exporter Charged With Using Slave Labor

    Leaf Exporter Charged With Using Slave Labor

    Photo: Tobacco Reporter archive

    Brazil has charged a tobacco exporter with using slave labor, reports Reuters. The case comes after labor inspectors found nine workers, including children, living in poor condition on a farm in Venancio Aires, Rio Grande do Sul. The workers were allegedly paid less than a third of Brazil’s minimum wage. They also lacked protective gear, leaving them exposed to high concentrations of nicotine.

    The tobacco exporter countered that the farm’s owner was responsible for hiring. The company said it conducts its operations in accordance with Brazilian legislation and has programs to fight child labor.

    Under Brazil’s integrated tobacco production system, exporters provide credit, seeds and equipment to leaf growers in exchange for exclusive rights to the farm output. Production contracts allow merchants to audit the farm and dictate how to develop the crops. Labor inspectors insists this degree of control makes companies responsible for the working conditions at the farms they contract.

    “The industry’s current position of not being responsible for the illegal exploitation of the workforce … has to be faced,” said labor inspector Leandro Vagliati. “The companies have to be called to account,”

    Brazil’s definition of slavery includes not only as forced labor but also as debt bondage, degrading work conditions, long hours that pose a risk to health and any work that violates human dignity.

    Since its creation in 1995, Brazil’s anti-slavery taskforce has found more than 55,000 people in slavery-like conditions.

    If found guilty of using slave labor after a government review, the accused tobacco exporter could be added to Brazil’s “dirty list” of companies that have engaged in slave labor.

    Companies remain on the list for two years and are barred during that period from receiving state loans. The list is also used by international buyers concerned about supply chains.

  • SWM Adjusts Outlook Following Tough Quarter

    SWM Adjusts Outlook Following Tough Quarter

    Photo: SWM

    Schweitzer-Mauduit International reported GAAP income of $12.2 million in the third quarter of 2021, down from $24.5 million in the third quarter of 2020. Adjusted income was $25.8 million, down 29 percent; Adjusted EBITDA declined 18 percent to $52.8 million. Net currency movements had a $1.8 million negative impact on operating profits.

    “We are clearly operating in an unprecedented economic environment for the second year in a row,” said SWM CEO Jeff Kramer in a statement. “After delivering strong 2020 performance despite a global epidemic, we are now seeing robust demand across many of our end-markets. However, manufacturers around the world are now navigating widespread inflationary pressures and supply chain disruptions.

    “Given the performance to-date and expected lingering fourth quarter pressures, we believe our 2021 Adjusted EPS will finish below our originally guided range. However, we are seeing early signs of relief from several challenges and fully expect our 2022 guidance, when issued in February, to reflect a strong operating profit rebound as we are well positioned for growth as conditions normalize throughout next year.”

  • A Tale of Two COPs

    A Tale of Two COPs

    Image: Tobacco Reporter archive

    This year, the first two weeks of November will witness two COPs (Conference of Parties), large policy gatherings aimed at moving the needle on ratified global U.N.-related conventions. Both have to do with health—individual, population and the planet’s health. Yet, one COP is attracting the leaders of the developed world as well as developing worlds in Glasgow, United Kingdom, along with another 20,000-odd stakeholders. The other COP will be held virtually and quietly from its secretariat in Geneva, Switzerland.

    The United Nations Framework Convention on Climate Change (UNFCCC) secretariat is tasked with supporting the global response to the threat from climate change. With 197 members, the UNFCCC has a near universal coverage. The 26th Conference of the Parties (COP26) Glasgow was kicked off on Oct. 31 with great fanfare, high expectations and drama befitting a Hollywood premiere—e.g., Greta Thunberg arrived on a “climate train,” a test in patience and endurance for Greta, her 150 fellow passengers, the media and the climate activists’ mob at Glasgow Central.

    Throughout the course of these two weeks of negotiations, haggling and posturing, the best possible outcome from COP26 could be that all countries commit to keeping global warming limited to 1.5 degrees Celsius. That calls for some serious re-engineering of human behavior and entire societies. Millions of conventional jobs and livelihoods will be lost, millions more potentially created in the new green economy. Some would argue (and justify): Desperate times call for desperate action. Green economy advocates and solution providers, including transforming oil companies and automobile manufacturers, are in full attendance at the summit and are missing no photo-op to burnish their green credentials.

    The UN climate change conference will consider the input of the manufacturers it seeks to regulate, many of which are eager to show how they can be part of the solution. (Photo: adrian_ilie825)

    The other COP, of the Framework Convention on Tobacco Control (FCTC), created by the U.N.’s World Health Organization and run by the FCTC secretariat, follows a completely different tack. It is notionally intended for addressing the harms to society and the world due to risky forms of smoked (cigarettes, bidis, cigars) and smokeless (khaini, gutkha, zarda, etc.) tobacco products that over a billion people consume today. The FCTC is ratified by most of the countries in the world (the USA and Indonesia being notable exceptions), and the ninth Conference of Parties from Nov. 8–13 will see yet another biannual get together making decisions that affect 1.3 billion tobacco users, their families and millions from the tobacco supply chain globally. However, it is held behind closed doors, driven by health activists that simply see the tobacco industry as the problem and tobacco users as AstroTurf for the tobacco industry. Neither are allowed anywhere near the meeting nor are the lay media.

    The FCTC, in its simplest form, is a demand and supply reduction treaty, underpinned by tobacco harm reduction principles. Broadly, what this could mean in policy as well as practice is that those not currently using risky forms of tobacco products, especially children and young adults, should be disincentivized from initiation, and those currently using risky forms of tobacco should get the necessary help to quit. This may take the form of providing nicotine-replacement therapy, prescription medications and behavioral support. It could also mean that those involved in the supply chain, such as farmers and bidi worker women, should be given support to switch to alternative livelihoods.

    Sixteen years on from the ratification of the FCTC, great progress has been made in adopting parts of the treaty that relate to demand reduction by prevention of initiation into national regulations. Advertising campaigns, tax hikes, health warnings and packaging and sale restrictions have led to significant reductions in initiation, especially among youth. On the other hand, support to current users of risky forms of tobacco remains wanting, lacking innovation and largely under-funded.

    The nicotine in these products makes consumers dependent. The cancers, however, are caused by the toxic chemical mix in the smokeless products and from the smoke itself—but not the nicotine. Pharmaceutically licensed nicotine-replacement therapy products, in the form of gums and patches, are on the WHO’s model essential medicines list for tobacco dependence treatment. It is scientifically proven: Quitting risky forms of tobacco (cessation) is not easy; relapse is very common. The high retail price of the cessation products, poor availability and inadequate training of doctors in prescribing these cessation treatments means that current tobacco users miss out on any meaningful access and support.

    It is easy to point to the tobacco industry’s morally and ethically unacceptable behavior for most of the 20th century that led to the smoking epidemic globally, and even today, to the manufacturers of gutkha and pan masala in India who are fueling an oral cancer epidemic. Based on this historical context, the COP organizers exclude this industry from their deliberations. Sadly, that exclusion extends to consumers, effectively the current and future patients suffering from tobacco dependence.

    This raises a sticky question: Are the global public health community, led by the WHO’s FCTC signatories who meet every two years formally at the COP, simply giving up on the 1.3 billion current users of cigarettes, bidis, khaini and gutkha-like products, letting them die preventable premature deaths, for the want of adequate cessation products and support? Would public health not benefit from a wider range of innovative nicotine-replacement products, manufactured to high standards, regulated appropriately and specifically available as cessation aids for current adult users of risky tobacco products?

    In stark contrast to the climate change COP26, at this tobacco-related COP9, manufacturers of cleaner nicotine products (the “solution providers” to the problem) and consumers (the victims of the problem) will be glaringly absent. (Photo: lezinav)

    This COP season, it may be time to draw parallels between two very similar gatherings with diametrically opposite profiles and approaches. Climate change and tobacco-related harms—both are urgent issues facing humankind. Both are being addressed by global treaties and conventions. For both problems, a wide range of solutions are coming from old and new industries.

    In the case of climate change, the Teslas of the world lead the rally. Conventional fossil fuel giants such as BP (of the Gulf of Mexico spill fame) and Shell are not far behind either, showcasing their renewables’ commitment in every ESG communication. The Volkswagen emissions scandal (from less than five years ago) is distant memory, and the automobile industry is at the table, providing cleaner cars by “electrifying” their offerings.

    In tobacco cessation, underpinned by tobacco harm reduction principles, innovation came from a wide range of inventors and manufacturers globally: e-cigarettes from China, heated-tobacco products from Switzerland and the U.K., nicotine pouches from Sweden and cessation apps from the USA. Pharmaceutical manufacturers of conventional nicotine-replacement products and prescription medications are either withdrawing from the markets or not innovating any more. They have not made any visible effort to make their products available at affordable prices in the developing world—and there was never a huge hue and cry about that from public health.

    None of the new innovative products are a silver bullet but promise to provide cleaner, safer nicotine to the billion-plus current consumers of risky forms of tobacco. In countries such as the U.K. and USA, where regulators are informed by scientific evidence and risk assessment, these products are regulated and allowed. Slowly but surely, this will transform the nicotine use profile in these countries, no doubt saving millions of lives and billions of dollars in future health costs from tobacco-related diseases. In Japan, previously known for its high smoking incidence among men, nearly 30 percent of the cigarette market has been replaced by heated-tobacco devices. These devices are increasingly acknowledged for their reduced toxicant exposure vis-a-vis cigarettes. The U.S. Food and Drug Administration has authorized the sale of a specific brand of heated device, an e-cigarette and a Swedish snus-style smokeless tobacco product for their reduced toxicant exposure and potential to reduce tobacco-related harms. In the U.K., e-cigarettes are one of the many options of quitting tools supported by national health bodies.

    In stark contrast to the climate change COP26, at this tobacco-related COP9, manufacturers of cleaner nicotine products (the “solution providers” to the problem) and consumers (the victims of the problem) will be glaringly absent. In countries where regulators do not need the WHO’s blessings to make their own policies (the U.S., U.K. and increasingly the EU), innovation and better regulation will lead to a reversal of harms from risky 20th century tobacco products. In the developing world, including South Asia, the harms from tobacco will remain unabated in the absence of strong regulatory leadership and industry transformation.

    Whether or not we can manage to curb the global temperature rises to a maximum of 1.5 degrees Celsius by 2050, today’s direction of tobacco control as symbolized by COP9 will hinder access to safer nicotine alternatives to over 1.3 billion current users, 80 percent of whom live in developing countries, accounting for millions of preventable deaths in the next three decades.

  • Report: Tobacco Took Advantage of Pandemic

    Report: Tobacco Took Advantage of Pandemic

    Photo: Olivier Le Moal

    A new report from tobacco industry watchdog STOP suggests that the tobacco industry embraced the Covid-19 pandemic as an opportunity to gain influence, sway health policies and secure preferential treatment. Reports from civil society organizations in 80 countries, analyzed in the Global Tobacco Industry Interference Index 2021, show that no country was immune to the industry’s efforts to use lobbying and donations, often connected to the pandemic response, to its advantage.

    “The tobacco industry’s behavior during Covid-19 wasn’t just business as usual—this research suggests it’s been far worse in terms of scale and impact,” said Mary Assunta, head of global research and advocacy for the Global Center for Good Governance in Tobacco Control, a partner in STOP and lead author of the index, in a statement. “In the middle of a pandemic, health should be the primary consideration in all policy decisions, but it was often sidelined in favor of the industry’s commercial interests. Where policy isn’t well protected, more lives will be lost to tobacco, and post-Covid economic recovery may be impacted, with higher health costs and potentially less tax revenue to fund recovery.”

    During the pandemic, many governments were short of public health resources. Some, like Botswana, Spain, Chile and India stepped up efforts to protect health policy, but others accepted the tobacco industry’s donations or lobbying, according to the report. Increases in tobacco taxes, for example, were delayed and the industry was able to open up new markets for electronic products. Among countries in the 2021 index report, 18 governments improved how they shield themselves from industry influence while 31 governments deteriorated in their efforts.

    The tobacco industry’s use of CSR donations that target the pandemic response stands in direct contrast to the importance of stopping tobacco use, according to STOP. Since the start of the pandemic, independent studies have found that smokers are more likely to develop severe Covid-19 as compared to nonsmokers. Tobacco use is a known risk factor for a range of chronic conditions that also place people at greater risk from Covid-19.

    “While the pandemic wreaked havoc around the world and the global economy suffered, two of the world’s biggest tobacco companies reported earnings before tax of more than $10 billion each,” said Assunta. “Governments must hold this industry accountable, and it must not be permitted to meddle in policy. It is time for all countries to ban tobacco-related CSR activities.”