Category: News This Week

  • Cut Rag’s Harare Factory Nearing Completion

    Cut Rag’s Harare Factory Nearing Completion

    Photo: Tobacco Reporter archive

    Cut Rag Processor’s factory in Harare, is nearing completion, reports The Sunday Mail.  The plant will process cut rag tobacco and manufacture cigarettes for domestic and export markets.

    According to Cut Rag Processors Managing Director Nyasha Chinhara, the project, which will triple the company’s current production is about 85 percent finished. Construction is almost complete and technicians have been installing production machinery and ancillary services.

    The company expects to commence production of cut rag tobacco before the end of 2024.

    “With this facility providing both cut rag processing and cigarette manufacturing, coupled with the increased installed production capacity, there shall be an increase in value addition of Zimbabwean tobacco products,” Chinhara told The Sunday Mail.

     “The sustainable growing, processing and manufacturing of tobacco products in Zimbabwe shall play a key role in Zimbabwean tobacco’s competitiveness in future.”

  • Inaccurate Disclosures Nicotine Analogs: Study

    Inaccurate Disclosures Nicotine Analogs: Study

    Photo: ryanking999

    Companies are inaccurately disclosing the ingredients in products containing nicotine analogs, according to researchers at Duke University and Yale University. Remarkably, in many instances, the levels measured were lower than those labeled on the packaging.

    Nicotine analogs are currently not subject to the U.S. Food and Drug Administration’s marketing authorization process and have not been extensively studied for their health effects. One chemical, known as 6-methyl nicotine, has been shown in rodent experiments to be far more potent than nicotine in targeting the brain’s nicotine receptors.

    The scientists analyzed a Spree Bar e-cigarette, which is listed as containing 5 percent 6-methyl nicotine. Study results showed the actual amount of the chemical was about 88 percent less than labeled. The e-cigarettes also included an artificial sweetener that is up to 13,000 times sweeter than table sugar, and an artificial coolant that mimics menthol’s effects.

    A second brand of e-cigarettes, marketed as Nixotine, Nixodine, Nixamide and Nic-Safe, contained a nicotine analog called nicotinamide, also at levels lower than the labels indicated, and combined with undisclosed amounts of 6-methyl nicotine. This brand did not include sweeteners or coolants.

    The researchers speculated that companies are using nicotine analogs to bypass health regulations covering vaping products.

    “These products appear to be designed to circumvent the laws and regulations in place to protect people—especially children—from the harmful effects of smoking and tobacco use,” said senior author Sven Eric Jordt in a statement. “We do not know what these chemicals do when they are heated and inhaled. These are questions that should be answered before we allow products on the market.”

  • Activists Concerned About Vape Rules

    Activists Concerned About Vape Rules

    Image: Butenkow/Usama

    The Malaysian Vapers Alliance (MVA) is voicing concerns about the potential impact of the Control of Smoking Products for Public Health Act 2024 (Act 852) on the vaping community.

    With Act 852 currently in its final review at the Attorney-General’s Chambers, the MVA is urging lawmakers to consider the consequences of overly stringent regulations on vapers, especially ex-smokers who have quit smoking by switching to vaping.

    A survey conducted by the MVA last year revealed 73.7 percent of vapers in Malaysia are former smokers. The MVA cautions the government that classifying vaping products in the same category as cigarettes under the new regulations, including strict measures like a ban on display of vape products, could drive these ex-smokers back to smoking cigarettes. This shift would undermine public health efforts to reduce smoking rates.

    We urge the government to adopt a balanced approach that recognizes the harm reduction potential of vape and provide a supportive environment for vapers to stay off tobacco.

    Khairil Azizi Khairuddin, president, Malaysian Vapers Alliance

    Khairil Azizi Khairuddin, president of the Malaysian Vapers Alliance emphasized the importance of separate regulations between vape and tobacco products to prevent a regression in public health outcomes.

    “Harsh regulations that fail to distinguish between vaping and smoking, like banning the display of vape products, could see many vapers, who have successfully quit smoking traditional tobacco, to revert to their old habits,” Khairil Azizi Khairuddin said. “Such a shift not only jeopardize their health but also reverses nationwide progress in reducing smoking prevalence in Malaysia.”

    “We urge the government to adopt a balanced approach that recognizes the harm reduction potential of vape and provide a supportive environment for vapers to stay off tobacco.”

    The MVA survey also revealed that the majority of vapers (80.1 percent) switched to vape as it helped them quit smoking. The implementation of harsh regulations, that do not consider these facts, could undermine the progress of reducing smoking rates in the country.

    “MVA calls on the ministry of health to ensure that the final version of Act 852 includes sensible regulations that support harm reduction and do not classify vaping products the same as cigarettes. We believe that informed and balanced regulation can protect public health while ensuring that vapers do not revert to smoking,” Khairil Azizi Khairuddin said.

  • KT&G Reports Growth in Second Quarter

    KT&G Reports Growth in Second Quarter

    Photo: Taco Tuinstra

    KT&G Corp. reported consolidated revenue of KRW1.42 trillion ($1.03 billion) and operating profit of KRW321.5 billion for its second quarter of 2024, marking a year-over-year growth rate of 6.6 percent and 30.6 percent, respectively.

    The company attributed the growth to robust performance in its overseas cigarette business, which achieved growth in all key metrics, including revenue, operating profit and sales volume. Revenue reached an all-time high of KRW359.1 billion, reflecting a growth rate of 35.3 percent. Operating profit soared 139.1 percent year-over-year.

    KT&G’s domestic next-generation product business also grew in in all three key metrics: revenue increased by 10.8 percent, operating profit by 42.8 percent and sales volume by 7.7 percent year-over-year. The overseas business continued to improve its profitability, driven by an increased proportion of stick sales volume, which is the key growth driver of the business.

    During an earnings call, KT&G said it intends to accelerate progress toward its goal of becoming “a global top-tier company” by strengthening fundamental competitiveness and structural reforms. To that end, the company in July announced an agreement with Philip Morris International under which the partners will collaborate on premarket tobacco product application submissions for KT&G’s new next-generation products in the United States.

    KT&G also updated its full-year outlook during the earnings conference call. The company projects the annual consolidated revenue to grow between 2.5 percent and 3 percent, with operating profit expected to remain flat, reflecting changes in the business environment in the company’s health functional food and real estate sectors.

    “We achieved growth in both revenue and operating profit in the second quarter by expanding our overseas business, which delivered solid performance in our core growth areas. We will continue to maximize corporate value by strengthening the competitiveness of our core growth businesses and enhance shareholder value through our best-in-class shareholder return policy,” KT&G wrote in a press release.

  • Tanzania President Lays First Stone for Factory

    Tanzania President Lays First Stone for Factory

    Photo: The office of President Samia Suluhu Hassan

    Tanzanian President Samia Suluhu Hassan on Aug. 6 laid the foundation stone for a $300 million cigarette factory in Morogoro, reports The Citizen.

    The Serengeti Cigarette Co. factory will supplement the recently reopened Mkwawa leaf-processing facility, which is in the process of expanding its annual capacity from 80 million kg to 200 million kg. Upon completion, the factory will be the world’s second-largest leaf-processing facility, according to Minister of Agriculture Hussein Bashe.

    During the previous administration, the Mkwawa plant ceased operations due to financial and regulatory challenges, including fines totaling TZS2 trillion ($740.66 million) imposed by The Fair Competition Commission and the Tanzania Revenue Authority.

    When President Hasan’s government took office in March 2021, it annulled the fines as part of a program to revive and expand Tanzania’s tobacco business.

    According to Bashe, these actions allowed tobacco production to increase from 65 million kg in 2021 to 122 million kg in the most recent growing season, catapulting Tanzania to the No. 2 position among tobacco producers in Africa, after Zimbabwe.  

    The ready market also boosted prices from $1.40 per kilogram three years ago to $2.40 during the just-completed season, said Bashe. Tanzania earned $400 million from tobacco exports this year.

    Upon completion, the new cigarette factory will employ 12,000 permanent and seasonal positions and generate additional demand for local leaf.

    Keen to reduce the environmental impact of tobacco production, Mkwawa has been encouraging farmers to dry their tobacco in the sun rather than in wood-fueled curing barns. The company aims to have at least 30 percent of its contracted farmers cure their tobacco this way.

  • Tabesa Sanctioned

    Tabesa Sanctioned

    Tabesa operates a factory near Ciudad del Este.
    (Photo: Taco Tuinstra)

    The United States is imposing sanctions on Tabacalera del Este (Tabesa) of Paraguay for allegedly enriching the country’s former president, Horacio Manuel Cartes Jara, a cigarette tycoon sanctioned by the White House for corruption.

    One of Paraguay’s richest men, Cartes Jara served as president from 2013 to 2018 and still wields significant political power in the country, according to the Associated Press.

    In 2023, the U.S. Treasury Department sanctioned Cartes Jara over accusations that he had paid millions of dollars in bribes to lawmakers to pave his way to power and that he had cultivated ties to Lebanon’s Hezbollah militant group, which is believed to operate in the tri-border area where Argentina, Brazil and Paraguay meet.

    On March 31, 2023, the Treasury Department’s Office of Foreign Assets Control (OFAC) identified Tabesa as an entity in which Cartes Jara owned a 50 percent or greater interest. Pursuant to a sales agreement between Tabesa and Cartes Jara, Tabesa has made payments worth millions of dollars to Cartes Jara, according to the OFAC.

    “Today’s actions reinforce the United States’ sanctions on former President Cartes and demonstrate the U.S.’ commitment to ensuring the integrity of our sanctions programs and inhibiting Cartes’ ability to receive financial benefits,” said State Department spokesperson Matthew Miller in a press note.

    “The United States remains dedicated to ensuring accountability for Cartes and to promoting meaningful anti-corruption reform in Paraguay.”

    The OFAC’s designation of Tabesa was taken in the context of the Global Magnitsky Human Rights Accountability Act. 

    Cartes Jara says he no longer owns nor is actively involved in the management of Tabacalera del Este, a company that has drawn scrutiny because of its massive volumes of cigarette sales in a relatively small market.

  • Profitability and Revenue up at Pyxus

    Profitability and Revenue up at Pyxus

    Photo: Pyxus International

    Pyxus International reported sales of $634.9 million for the first quarter of 2025, up 33.1 percent from the comparable 2024 quarter. Operating income grew to $40.5 million, and net income was $4.6 million.

    Pieter Sikkel

    “We are pleased with our strong first-quarter results, which are underscored by gains in revenue and profitability, as well as the significant growth of shipments for the period,” said Pyxus President and CEO Pieter Sikkel in a statement.

    “Earlier leaf purchasing compared to the prior year remained a theme in the first quarter, particularly in South America and Africa. This trend was driven by a highly competitive market environment, which was influenced by reduced crop sizes due to El Nino and sustained, strong demand.

    “Our crop purchases in South America were completed early in the quarter, and we are nearing completion of our buying activities across Africa. We are pleased with our teams’ ability to navigate the competitive market to successfully secure leaf volumes on an expedited crop purchasing schedule.

    “As mentioned last quarter, we do expect some margin pressure in coming quarters, particularly related to shipments out of South America. This is mainly due to impacts on this crop from El Nino on volume and margin, as well as shipping container shortages, primarily from Asia.”

    For fiscal year 2025, Pyxus continues to expect sales in the range of $2.1 billion to $2.3 billion and adjusted EBITDA in the range of $165 million to $185 million.

  • Zimbabwe Poised to Set New Records

    Zimbabwe Poised to Set New Records

    Photo: Taco Tuinstra

    Zimbabwe is poised to plant a record area of tobacco for the 2024–2025 growing season, reports The Herald.

    As of Aug. 1, growers had purchased more than 1 million grams of seed with potential to cover 201,036 hectares, according to the Kutsaga Tobacco Research Board. By the same time last year, they had bought only 831,000 grams with the capacity to plant 164,200 hectares.

    Zimbabwe Tobacco Growers Association chairman George Seremwe said the likelihood is high that the country will eclipse both the area record of 146,000 hectares, set in 2019, and the output record of 296 million kg, established in 2023.

    “This could be a record-breaking year encouraged by last season’s good prices and the absence of alternative crops paying better than the golden leaf,” he was quoted as saying.

    Tobacco Farmers Union Trust Vice President Edward Dune noted that seed sales were a reliable index for hectarage estimations. “Given the tobacco pricing matrix over the years, coupled with the positive effects of the forecast La Nina weather, farmers will have no choice but do anything possible to get good quality leaf that will fetch high prices,” he said.

  • Revenue and Income up at Vector

    Revenue and Income up at Vector

    Photo: Mind and I

    Vector Group reported consolidated revenues of $371.9 million for the second-quarter of 2024 financial results, up 1.7 percent compared to the prior-year period.

    Tobacco segment wholesale market share increased to 5.7 percent from 5.4 percent in the prior-year period, and retail market share remained at 5.8 percent, unchanged from the prior-year period.

    Montego wholesale and retail market share both increased to 4.1 percent from 3.4 percent and 3.5 percent, respectively, in the prior-year period.

    Operating income was $97.8 million, up 36.5 percent, or $26.1 million, compared to the prior-year period.

    Tobacco segment operating income was $102.9 million, up 37 percent, or $27.8 million, compared to the prior-year period.

    Adjusted EBITDA was $103.3 million, up 9.7 percent, or $9.2 million, compared to the prior-year period.

    Tobacco adjusted EBITDA was $104.4 million, up 10.2 percent, or $9.7 million, compared to the prior-year period.

    “Vector Group delivered strong performance in the second quarter, bolstered by the impressive growth of our Montego brand,” said Vector Group President and CEO Howard M. Lorber in a statement.

    “Montego’s continued expansion as the largest discount brand in the U.S. highlights the effectiveness of our strategic approach, expert market analysis and proven execution. We are confident in our ability to sustain our momentum in the second half of the year and to drive long-term value for our stockholders.”

  • Activists Slam Cellulose Heat Sticks

    Activists Slam Cellulose Heat Sticks

    Photo: Kuznyechova Yevgenia

    Anti-tobacco activists contend that Philip Morris International is trying to circumvent the Dutch ban on flavored tobacco and vape products with its Levia heat sticks, reports Dutch News.

    Made with cellulose rather than tobacco, Levia heat sticks are considered an herbal product and are thus not covered by the country’s tobacco legislation. The sticks retail online for €6.60 ($7.21) per pack of 20 and are sold in two flavors—“island beat,” which is menthol, and berry-flavored “electro-rouge.”

    The Netherlands banned menthol in cigarettes in May 2020 and outlawed flavored vape products in early 2024.

    Campaign group Rookvrije Generatie says Levia is “a trick” to keep on selling smoking products with flavor. “They might not contain tobacco, but they are packed with addictive nicotine,” spokesman Dave Krajenbrink was quoted as saying.

    Legislators are reportedly considering an amendment that would extend the flavor ban to tobacco-free nicotine products.