Category: News This Week

  • Merchants to Finance Woodlots in Zimbabwe

    Merchants to Finance Woodlots in Zimbabwe

    Since Zimbabwe’s land reform program at the turn of the millennium, the main source of energy for tobacco curing has been wood—a development that has contributed to deforestation. (Photo: Taco Tuinstra)

    Leaf merchants operating in Zimbabwe will be required to finance the planting of trees on 0.2 hectares for every hectare of tobacco contracted starting this year, reports The Herald. Firewood is the principal source of energy for curing tobacco in Zimbabwe.

    With close to 150,000 farmers, the tobacco industry has been blamed for a massive deforestation in Zimbabwe.

    Prior to Zimbabwe’s land reform program at the turn of the millennium, the main source of energy for curing tobacco was coal. The tobacco industry was dominated by large, mostly white-owned plantations at the time.

    Today’s tobacco sector, by contrast, is dominated by smallholder farmers who cannot afford coal and the associated infrastructure.

    Rodney Abrose, chief executive of the Zimbabwe Tobacco Association, said alternative fuels are needed more than ever.

    “Provision of coal is not a sustainable source, and in the near future, tobacco cured with nonsustainable curing fuel may not be accepted by key customers,” he said.

  • Bhutan to Foster Distribution Competition

    Bhutan to Foster Distribution Competition

    Photo: satori

    Lawmakers in Bhutan are drafting rules to promote greater competition in the distribution of tobacco products, reports Kuensel.

    Currently, the country has only one tobacco distributor—Bhutan Duty-Free Limited (BDFL)—according to Economic Affairs Minister Loknath Sharma. “We cannot allow only BDFL to be the sole distributor because the aim is to stop illegal trade and at the same time make tobacco and tobacco products available,” he said.

    The Tobacco Control Rules and Regulations (TCRR) 2021 would create “a good distributor wholesale system” in Bhutan, Sharma noted.

    The rules are expected to be ready by December, according to Ugyen Tshering, the officiating director general of the Bhutan Narcotics Control Authority (BNCA).

    He said that the revision of TCRR was completed and was awaiting the endorsement from the BNCA board to be submitted to the Cabinet.

    As interim measures, the government has allowed micro-license holders, such as paan shops and grocery shops, to import tobacco products to meet the growing demand.

    With the limited supply of tobacco and tobacco products from BDFL, the paan shops had resorted to the black market.

    Bhutan recently moved to lift a longstanding ban on the sale tobacco products. By legalizing tobacco, legislators hope to help check the spread of Covid-19, which they believe has been worsened by the continuous smuggling of tobacco products through Bhutan’s porous southern border.

    The manufacture of tobacco products remains illegal, however—as does public smoking.

    Tshering said that if someone was caught smoking in a public place—defined as any place with more than two persons—that person would be subject to a BTN500 ($6.77) fine.

    Bhutan banned tobacco sales in December 2004. Tobacco Reporter was the first to report from the world’s only officially smoke-free nation.

  • Zimbabwe OKs Tobacco Transformation Plan

    Zimbabwe OKs Tobacco Transformation Plan

    Photo: Taco Tuinstra

    Zimbabwe’s Cabinet has approved a plan to generate more value from tobacco by localizing financing, increasing production and exporting cigarettes, among other measures, reports The Herald.

    “The initiatives should contribute significantly to gross domestic product growth, foreign currency generation and employment creation, thereby raising household incomes,” said Monica Mutsvangwa, minister of information, publicity and broadcasting services.

    The plan calls for local funding of tobacco production to complement external funders, raising tobacco production to 300 million kg by 2025, and diversifying into crops such as medicinal cannabis. By 2025, farmers should derive 25 percent of their incomes from alternative crops, according to the plan.

    Mutsvangwa said the immediate objective of the plan was to increase tobacco production and productivity through increasing the yield per unit, increasing the area under crop and minimizing losses.

  • Juul Plans Research Facility in North Carolina

    Juul Plans Research Facility in North Carolina

    Photo: steheap

    Juul Labs plans to open a research facility in Research Triangle Park, North Carolina, USA, reports WRAL.

    The new facility is expected to create 35 full-time jobs, according to a company spokesman.

    “We will continue to seek to earn the trust of key stakeholders, including local officials, as we advance the potential for harm reduction for adult smokers while combating underage usage,” Juul said in a statement.

    In June, Juul Labs settled a lawsuit brought by North Carolina Attorney General Josh Stein, who accused the company of marketing its product to young people. Juul agreed to pay $40 million but denied wrongdoing or liability. North Carolina was the first state to take legal action against Juul.

    At least 13 states, including California, Massachusetts and New York, as well as the District of Columbia, have filed similar lawsuits. The central claim in each case is that Juul knew, or should have known, that it was hooking teenagers on pods that contained high levels of nicotine.

    A lawsuit brought against Juul by North Carolina’s Wake County Public School System is currently ongoing.

    In 2020, e-cigarette usage decreased by 19.6 percent in high-schoolers and among middle-schoolers by 4.7 percent, according to the U.S. Federal Drug Administration. The U.S. Centers for Disease Control and Prevention contends nicotine can harm adolescent brain development.

  • ENDS Makers Prepare for U.S. Shakeout

    ENDS Makers Prepare for U.S. Shakeout

    Photo: Grispb

    The U.S. vaping industry is about to change fundamentally. By tomorrow, Sept. 9, the U.S. Food and Drug Administration must decide whether millions of electronic nicotine-delivery systems are “appropriate for the protection of public health.” Products that don’t meet its standard will have to come off the market or risk enforcement by the agency.

    To date, vapor companies have operated without many of the restrictions on sales and marketing governing traditional cigarettes. But the FDA has come under increasing pressure from politicians and public health groups in recent years to limit the sale of vapes, largely over concerns about the products’ popularity with teenagers. E-cigarette companies argue that flavored vapes can help smokers switch to less damaging nicotine products.

    Due to the cost and the complexity of submitting a premarket tobacco product application, industry observers expect only a handful of applications, submitted by the wealthiest companies, to survive the vetting process. Many vaping products are produced by smaller companies that lack the resources to thoroughly answer the FDA’s scientific questions about safety, according to Ken Warner, a professor emeritus of public health and tobacco control at the University of Michigan. “Large companies such as Juul only sell a handful of types of e-cigarettes but have the financial resources to stack their applications to make them more likely to be cleared by the agency,” he told Politico.

    The FDA, which has said it will likely miss the Sept. 9 deadline for some applications, is prioritizing its review queue based on applicants’ market share. Juul Labs alone controls over 40 percent of the e-cigarette market.

    The agency has already rejected a significant share of the estimated 6.5 million applications it received from more than 500 companies. On Aug. 9, the agency issued a “refuse to file” letter to JD Nova Group, notifying the company that the applications it submitted for approximately 4.5 million of its products do not meet the filing requirements for a new tobacco product seeking a marketing order.

    In a statement, the FDA said the company’s applications for these products lacked an adequate environmental assessment. Under the FDA’s regulations implementing the National Environmental Policy Act, an environmental assessment must be prepared for each proposed authorization.

    On Aug. 26, the agency issued marketing denial orders (MDOs) for about 55,000 flavored ENDS products from JD Nova Group, Great American Vapes and Vapor Salon. In a news release, the FDA explained that the applications from the three applicants lacked sufficient evidence that they have a benefit to adult smokers sufficient to overcome the public health threat posed by the levels of youth use of such products.

    According to Filter, the FDA on Aug. 31 denied an additional 800 flavored vaping products due to incomplete applications. The companies had reportedly planned to submit additional information after the Sept. 9, 2020, deadline. The FDA did not make a separate announcement of these denials on its website.

  • Vuse Becomes No. 1 Global Vaping Brand

    Vuse Becomes No. 1 Global Vaping Brand

    Photo: BAT

    Vuse is now the No. 1 global vaping brand by value share, according to its manufacturer, BAT.

    Vuse is the category value share leader in four of the top five vapor markets (Canada, France, Germany and the U.K.), and BAT’s U.S. momentum in vapor means Vuse is now leader by value share in 22 states, up from 20 in July, BAT announced on its website.

    In May this year, BAT also announced that Vuse became the world’s first global carbon neutral vape brand.

    “We are delighted that Vuse has become the number one global vaping brand,” said Jack Bowles, CEO of BAT. “It is proof that we are building brands of the future, underpinned by strong innovation, as part of our vision for ‘A Better Tomorrow.’

    “In the first half, we delivered 50 percent New Category revenue growth and added 2.6 million consumers of our noncombustible products, our highest ever increase, to reach 16.1 million consumers. This momentum is powered by our strong global brands Vuse, Glo and Velo. Each New Category brand grew its category share by more than 280 base share points [bsp] across key markets and recorded volume growth of 70 percent or more.”

    At its half-year results, BAT reported that its vapor business performed strongly, with revenue up 59 percent, volume grew by 70 percent and consumer numbers were up by 0.9 million to reach 7.5 million. Since December 2020, Vuse’s value share is up 340 bsp, reaching 34 percent in July 2021.

  • PMI Reaffirms Full-Year Guidance

    PMI Reaffirms Full-Year Guidance

    Photo: vfhnb12

    Philip Morris International reaffirmed the company’s 2021 full-year reported diluted earnings per share forecast range of $5.76 to $5.86.

    Speaking at the Barclays Global Consumer Staples Conference, PMI CEO Jacek Olczak said the company remained on track for an excellent performance in 2021 underpinned by better combustible volumes and continued strong demand for IQOS. “We are today reaffirming our full-year EPS forecast and now expect to be toward the upper end of our 12 percent to 14 percent organic growth range,” he told investors.

    Even as the current global shortage of semiconductors limits PMI’s ability to realize the full potential of IQOS, the underlying momentum of the brand is clear, said Olczak, citing the positive early results for IQOS Iluma in Japan following the launch last month.

    At the same time, PMI cautioned that the ongoing global semiconductor shortage could reduce device assortment and availability impacting IQOS user acquisition and the timing of second-half 2021 Iluma launches in certain markets. As a result, full-year 2021 heated-tobacco unit shipment volume could be toward the lower end of the 95 billion to 100 billion unit range, if shortages persist, with third-quarter heated-tobacco unit shipment volume of 23 million to 24 billion units.

    An archived copy of the Barclay’s presentation and Q&A session will be available at http://www.pmi.com/2021barclays%20 until Oct. 7, 2021.

  • Universal to Acquire Shank’s Extracts

    Universal to Acquire Shank’s Extracts

    Photo: Africa Studio

    Universal Corp. has entered into a definitive agreement to acquire Shank’s Extracts, a privately held specialty ingredient, flavoring and food company with bottling and packaging capabilities. Following the close of the transaction, Shank’s will operate as part of Universal’s plant-based ingredients platform, which includes the previously acquired companies Silva International and FruitSmart.

    Founded in 1899, Shank’s has established a strong presence within the flavoring, extracts and bottling marketplace, with significant vanilla expertise. In addition to pure vanilla extract products, Shank’s offers a robust portfolio of over 2,400 other extracts, distillates, natural flavors and colors for industrial and private label customers worldwide. Headquartered in Lancaster, Pennsylvania, USA, Shank’s employs more than 200 people and has a 191,000-square-foot manufacturing campus.

    “This agreement with Shank’s marks another important step forward in Universal’s efforts to identify and execute on opportunities that broaden and enhance our plant-based ingredients platform,” said George C. Freeman III, chairman, president and CEO of Universal Corp, in a statement. “The Shank’s acquisition fits squarely in our new platform and our capital allocation strategy, bolstering our offerings for customers and expanding our value-added services by adding flavors, custom packaging and bottling, and product development capabilities.” 

    “Shank’s has been providing high-quality products and services for more than 120 years, earning a reputation for consistency, traceability and dependability. This has allowed us to build a strong portfolio of long-tenured, blue-chip customers. As part of Universal Corporation, Shank’s will benefit from the resources and scale of a global organization as we look to expand our offerings and enter new, lucrative end markets,” said Jeffrey Lehman, president-owner of Shank’s.

    Universal Corporation expects the transaction to close in the calendar-year fourth quarter, subject to customary closing conditions, and anticipates the acquisition will be accretive to earnings in fiscal year 2023. Following the close of the transaction, the existing management team will continue to run the business and report to J. Patrick O’Keefe, senior vice president of Universal Global Ventures.

  • Illicit Cigarette Market Retreats in Poland

    Illicit Cigarette Market Retreats in Poland

    Photo: Tobacco Reporter archive

    Illegal products accounted for 6.3 percent of all cigarettes sold in Poland during the first quarter of 2021, down from 9.4 percent in 2020, reports the Warsaw Business Journal, citing a study by the Almares Market Research and Consulting Institute.

    The share of illegal trade in cigarettes in the Polish tobacco market has been gradually decreasing since 2015 when it exceeded 18.3 percent. Each percentage of the market recovered for the legal sale of cigarettes equates to an estimated PLN250 million ($65.63 million) in additional revenues for the government. The Almares Institute report shows that the market share of counterfeit tobacco products has also decreased from 1.3 percent in 2020 to 0.7 percent in the first quarter of this year.

    “In the first half of 2021, we seized nearly 169 million cigarettes and 410 tons of tobacco while liquidating 10 illegal cigarette factories,” Iwona Jurkiewicz, chief inspector of Poland’s Central Bureau of Investigation, was quoted a saying.

    The market for legal tobacco products is estimated at 60 billion pieces of cigarettes and e-cigarettes.

    Poland has performed comparatively well recently in the fight against the illegal cigarette trade. In the Schengen countries, the average share of illegal products in 2020 was 7.8 percent, 0.5 percent higher than the year before.

    A KPMG report shows that in 2020, the illegal market accounted for 23.1 percent of the market in France, 22.4 percent in Greece and 20.2 percent in Lithuania.

  • Dalli to Face Charges in Snus Bribery Scandal

    Dalli to Face Charges in Snus Bribery Scandal

    Photo: highwaystarz

    Former European Commissioner John Dalli will face charges as part of a tobacco bribery scandal that resulted in his resignation from the commission in 2012, reports the Times of Malta.

    Dalli’s aide Silvio Zammit allegedly tried to obtain a €60 million ($71.17 million) bribe from Swedish Match to reverse the EU ban on snus (the company rejected the offer as improper and reported it to the European Commission). Dalli was the European commissioner for health at the time, in charge of managing reforms to the EU’s tobacco rules. Zammit was charged in December 2012 for trading influence and complicity in the request.

    Dalli, however, escaped charges, returning to Malta only after the newly elected Labour government removed Police Commissioner John Rizzo from his job.

    Rizzo has always maintained that Dalli, too, had a case to answer to.

    His successor as police commissioner, Peter Paul Zammit, decided there was not enough proof to bring charges against the former EU commissioner.

    Contacted by Times of Malta, Dalli said the charges were part of a deal struck between current Police Commissioner Angelo Gafa and former Olaf head Giovanni Kessler, who led the EU Anti-Fraud Office’s investigation in 2012.

    Dalli will appear in court in Malta on Sept. 17. He said the charges were part of a “campaign” against him. “This is another fraud,” he told the Times of Malta.

    In February, Dalli lost his final appeal before the EU high court against a lower court ruling that dismissed the politician’s claim for €1 million in damages stemming from his resignation over the scandal.

    Denying knowledge of the bribe, Dalli claimed that he was illegally forced from his post.