Category: News This Week

  • RJR and ITG Resolve Texas Payments Dispute

    RJR and ITG Resolve Texas Payments Dispute

    Photo: Alex

    R.J. Reynolds Tobacco Co. and ITG Brands have reached a financial settlement with the state of Texas that resolves the question of responsibility for annual Master Settlement Agreement-type payments on four traditional cigarette brands, reports the Winston-Salem Journal.

    ITG has accepted all payment obligations to the Texas settlement agreement for the Kool, Maverick, Salem and Winston brands.

    The dispute stems from the 2014 purchase by Reynolds American of Lorillard. To obtain federal regulatory approval for the deal, RJR and Lorillard sold the four brands to ITG’s parent company, Imperial Brands.

    After the sale, a dispute broke out about which company was responsible for settlement payments on the brands.

    The MSA was a 1998 agreement in which tobacco companies settled litigation with state attorneys general over the cost of treating sick smokers. Several states, including Texas, made their own deals with tobacco companies.

    In December 2020, the Florida Supreme Court declined to hear an appeal by RJR in a dispute over the four brands, leaving responsibility for the MSA payments with Reynolds.

    The four ITG brands combined currently represent about 7.5 percent of the U.S. market share for traditional cigarettes.

  • Study: 1.1 billion Smokers in 2019

    Study: 1.1 billion Smokers in 2019

    Photo: vchalup

    The number of smokers worldwide has increased to 1.1 billion in 2019, with tobacco smoking causing 7.7 million deaths, according to three new studies published by the Global Burden of Disease collaboration in The Lancet and The Lancet Public Health. The studies were led by the Institute for Health Metrics and Evaluation and funded by Bloomberg Philanthropies and the Bill and Melinda Gates Foundation.

    Using data from 3,625 nationally representative surveys, the studies provide global estimates on smoking prevalence in 204 countries in men and women aged 15 and over, including age of initiation, associated diseases and risks among current and former smokers as well as the first analysis of global trends in chewing tobacco use.

    Published ahead of World No Tobacco Day on May 31, the authors called on all countries to urgently adopt and enforce a comprehensive package of evidence-based policies to reduce the prevalence of tobacco use and prevent initiation, particularly among adolescents and young adults.

    “Smoking is a major risk factor that threatens the health of people worldwide, but tobacco control is woefully insufficient in many countries around the world,” said says Emmanuela Gakidou, senior author, Institute for Health Metrics and Evaluation, University of Seattle, Washington, USA, in a press note.

    “Persistently high smoking prevalence among young people in many countries, along with the expansion of new tobacco and nicotine products, highlight an urgent need to double down on tobacco control. If a person does not become a regular smoker by age 25, they are very unlikely to become a smoker. This presents a critical window of opportunity for interventions that can prevent young people from starting smoking and improve their health for the rest of their lives.”

    Since 1990, global smoking prevalence among men decreased by 27.5 percent and by 37.7 percent among women. However, 20 countries saw significant increases in prevalence among men, and 12 saw significant increases among women.

    In half of countries, reductions in prevalence have not kept pace with population growth, and the number of current smokers has increased. The 10 countries with the largest number of tobacco smokers in 2019, together comprising nearly two-thirds of the global tobacco-smoking population, are China, India, Indonesia, the U.S., Russia, Bangladesh, Japan, Turkey, Vietnam and the Philippines. One in three current tobacco smokers (341 million) live in China.

    Persistently high smoking prevalence among young people in many countries, along with the expansion of new tobacco and nicotine products, highlight an urgent need to double down on tobacco control.

    Emmanuela Gakidou, senior author

    7.4 trillion cigarette equivalents of tobacco (combining smoked tobacco products include manufactured cigarettes, hand-rolled cigarettes, cigars, cigarillos, pipes, shisha and regional products such as bidis and kreteks) were consumed in 2019, amounting to 20.3 billion each day worldwide. Countries with the highest consumption per person were mostly in Europe. Globally, one in three male and one in five female smokers consume 20 or more cigarette equivalents per day.

    In 2019, there were an estimated 155 million smokers aged between 15 and 24—equivalent to 20.1 percent of young men and 5 percent of young women globally.

    Two-thirds (65.5 percent) of all current smokers began smoking by age 20, and 89 percent of smokers began by age 25.

    In 12 countries and territories in 2019, more than one in three young people were current smokers, including Bulgaria, Croatia, Latvia, France, Chile, Turkey and Greenland, as well as five Pacific islands.

    Globally, smoking prevalence among young people decreased between 1990 and 2019 among both young men (-32.9 percent) and young women (-37.6 percent). Progress varied across countries, with 81 achieving a significant decrease in prevalence among young people. More than half of countries experienced no change.

    In many countries, progress in reducing the prevalence of smoking has not kept pace with population increases, resulting in significant increases in the number of young smokers. India, Egypt and Indonesia had the largest absolute increases in number of young male smokers. Turkey, Jordan and Zambia had the largest increases in number of young female smokers.

    Globally, the average age at which individuals began smoking regularly is 19. The youngest average ages of initiation were observed in Europe and the Americas—with the youngest average age of initiation in Denmark (16.4). The oldest average ages of initiation were seen in East and South Asia and sub-Saharan Africa—with the oldest average age of initiation in Togo (22.5 years).

    Globally, 273.9 million people used chewing tobacco in 2019, equivalent to age-adjusted prevalence of 6.5 percent among men and nearly 3 percent among women over the age of 15. Most people (228.2 million; 83.3 percent) who used chewing tobacco in 2019 resided in the South Asia region. The largest population of people who use chewing tobacco are in India with 185.8 million users, corresponding to 68 percent of all chewing tobacco users globally. Bangladesh, Nepal and Bhutan also had very high prevalence of chewing tobacco use.

    In many countries, progress in reducing the prevalence of smoking has not kept pace with population increases.

    The authors of the studies lamented the lack of progress in tobacco control among signatories of the World Health Organization’s Framework Convention on Tobacco Control (FCTC).

    Since 2005, the FCTC has been ratified by 182 parties, but as of 2018, only 62 countries had comprehensive smoke-free policies, according to the studies. Twenty-three offered the full range of cessation support services; 91 mandated pictorial health warnings; 48 had comprehensive advertising, promotion and sponsorship bans; and 38 had the recommended level of tobacco taxation.

    Measures to decrease the affordability of cigarettes through taxation have been lagging too, according to the authors.

    Between 2008 and 2018, the affordability of cigarettes decreased in only 33 percent of low-income countries compared with 38 percent in middle-income countries and 72 percent of high-income countries. Low-income and middle-income countries face the additional challenge of population growth expanding their smoking population. Despite this, only one low-income country, Madagascar, taxes tobacco at the rate recommended by the WHO.

    Links to the studies:

  • BAT: Vuse First Global Carbon Neutral Vape

    BAT: Vuse First Global Carbon Neutral Vape

    Photo: BAT

    Vuse has become the first global carbon neutral vape brand, according to BAT.

    Vuse’s carbon neutrality has been delivered through carbon offset through reforestation projects. This includes a project in Uruguay to plant trees across 21,298 ha, where intensive cattle grazing has eroded soil and degraded land. As well as removing carbon dioxide and delivering better soil quality and biodiversity, the project will also result in increased availability and quality of employment opportunities, BAT noted.

    The carbon neutrality of Vuse has been independently validated by Vertis based on product life cycle assessment data provided by an independent third party.

    “Vuse becoming the first global carbon neutral vaping brand is a significant milestone,” said Kingsley Wheaton, chief marketing officer at BAT, in a statement. “It is testimony to BAT’s deep and long-standing commitment to being a responsible business and reducing our impact on the environment.”

    Vuse becoming the first global carbon neutral vaping brand is testimony to BAT’s deep and long-standing commitment to being a responsible business and reducing our impact on the environment.”

    Kingsley Wheaton, chief marketing officer, BAT

    According to BAT, Vuse’s carbon neutrality status is part of a bigger ambition to become an environmentally sustainable vape brand with initiatives including:

    • Implementing a global device and pod collection scheme, with approximately 200,000 pods collected since the start of the pilot in 2020
    • Cutting single use plastics from packaging, which has saved 100 tons of plastic or the equivalent of 4 million plastic bottles in 2020
    • Transitioning from air to sea freight through changes to the distribution chain; Vuse aims to have 80 percent of international shipments transported by sea by the end of 2022

    BAT says it is also reducing its carbon footprint by improving the energy efficiency of factories by upgrading to more efficient and lower impact equipment and by increasing the use of renewable energy through renewable energy purchases and on-site energy generation.

    Today’s announcement by BAT coincides with the opening of the 100th Vuse Inspiration Store. Vuse Inspiration Stores are now operating in the U.K., Canada, Poland, Germany, South Africa and the U.S.

  • Florida Supreme Court Asked to Revisit Engle

    Florida Supreme Court Asked to Revisit Engle

    Photo: Felix Mizioznikov

    The Florida Supreme Court will hear a case on June 2 that could make it harder to successfully sue cigarette makers, reports the Tampa Bay Times.

    While the case focuses on an issue involving allegations that the tobacco industry conspired to conceal information about smoking, R.J. Reynolds Tobacco Co. and Philip Morris USA want to use the case to convince justices to reconsider the underlying 2006 decision that spurred roughly 8,000 “Engle progeny” cases, many of which are still tied up in court.

    In 2019, a Florida appeals court overturned a $6.4 million award to the estate of John C. Price, who started smoking at age 12 and died at age 74 of chronic obstructive pulmonary disease. The appeals court objected to the way in which the jury had been instructed to weigh the evidence and ordered a new trial.

    The ruling centered on a claim of conspiracy to conceal information about the dangers of smoking. The appeals court agree with R.J. Reynolds that the estate needed to show that Price relied to his “detriment” on a statement that concealed or omitted information.

    While the outcome of the conspiracy issue could affect numerous Engle progeny cases, R.J. Reynolds and Philip Morris also have asked the Supreme Court to go beyond the appeals court ruling and revisit the 2006 decision. They have been backed by the Florida Justice Reform Institute, a group that lobbies the legislature and becomes involved in court cases to try to limit lawsuits.

    The tobacco companies’ arguments come after a significant change at the Supreme Court since January 2019, when three liberal-leaning justices retired and were replaced by justices appointed by Republican Governor Ron DeSantis.

  • KT&G Distributes Funds to its Tobacco Growers

    KT&G Distributes Funds to its Tobacco Growers

    Kim Sam-soo, chairman of the Leaf Tobacco Production Cooperative (left), and Shin Song-ho, head of KT&G’s raw materials division (right), at the delivery ceremony in Daejeon on May 25
    (Photo: KT&G)

    KT&G delivered KRW400 million ($358,338) in welfare-promotion funds to continue its co-prosperity program with domestic leaf tobacco farmers. The contribution will be used to cover medical examination costs for 960 elderly leaf tobacco farmers and to provide scholarships to 85 children from farming families.

    According to KT&G, farmers are struggling to secure labor due to the continued decline in the rural population and the Covid-19 crisis. Leaf tobacco cultivation is labor intensive due to difficulties in mechanizing, and tobacco farmers are generally older than other farmers, requiring greater attention to healthcare.

    KT&G has been providing welfare support to leaf tobacco farmers annually since 2013. Thus far this year, the company has donated KRW2.85 billion. Nearly 8,000 farmers have received medical checkup fees and scholarships for their children.

    As part of its ESG management, KT&G has initiated various projects to help its farmers. KT&G says it is the only domestic tobacco company that purchases its farmers’ entire harvests to protect their livelihoods. In addition, each year, company employees volunteer to help farmers with leaf tobacco transplantation and harvest. Also, KT&G pays 30 percent of each farmer’s sales in cash up front.

    “We are continuing the project to support farmers’ welfare to solve their difficulties and provide practical help,” said Shin Song-ho, head of KT&G’s raw materials division, in a statement. “I hope this support will help farmers improve their health and economic conditions. We will continue to give back to society.”

  • Foundation Urges Smokers to Quit/Switch

    Foundation Urges Smokers to Quit/Switch

    Photo: auremar

    Ahead of World No Tobacco Day (WNTD) on May 31, the Foundation for a Smoke-Free World (FSFW) is urging smokers to quit or switch to harm-reduction products.

    The fact that more than 1 billion people still smoke and 8 million annual deaths are attributed to tobacco use proves that health policies and actions have been inadequate, according to the FSFW.

    “The challenges that smokers face when trying to quit have been largely ignored,” the foundation wrote in a press note. “The calls by the World Health Organization (WHO) for smokers to quit using fairly ineffective interventions suggest we need new approaches. Technology innovation, in the form of harm reduction, offers a new way forward for smokers that complements classic cessation efforts.”

    “Since my involvement in the first WNTD in 1988, we have focused narrowly on cessation, often without engaging smokers in developing ways they feel work best. Too many efforts have failed because they have not addressed the fact that while many smokers want to quit, they are not being presented with options that appeal to them,” said Derek Yach, president of the FSFW.

    “There is growing evidence that a range of harm reduction products, including e-cigarettes (vapes), snus, nicotine pouches and heated-tobacco products, can help smokers quit or at least substantially reduce their harmful exposure to combustible cigarettes. The WHO, supported by heavily funded Bloomberg Philanthropies grantees, continues to blindly ignore scientific evidence, vilifying these products instead of promoting their use to save lives.”

    The FSFW cites a study published this week in The Lancet in which the authors say the current level of tobacco control policy implementation is insufficient in many countries around the world and that evidence-based policies are needed to reduce smoking. According to the foundation, the study ignores the role for tobacco harm-reduction (THR) products as part of tobacco control policy.

    “This study was funded by Bloomberg Philanthropies, which does not support the use of THR products as cessation aides,” said Yach. “This is likely one reason why they were not included in the report. Denying the value and benefits of THR products is irresponsible and blatantly discounts the research showing they can help smokers quit.”

    There is growing evidence that a range of harm reduction products, including e-cigarettes (vapes), snus, nicotine pouches and heated-tobacco products, can help smokers quit or at least substantially reduce their harmful exposure to combustible cigarettes.

    Derek Yach, president, FSFW

    By contrast, The U.K. Royal College of Physicians (RCP) believes THR products should play a prominent role in tobacco control. In a recently released report, “Smoking and health 2021: A coming age for tobacco control?,” the RCP estimates that if the harm-reduction policies it advocated for in 1962 were adopted, smoking would have ended in the United Kingdom by now. The new report calls for doctors to play a more active role in helping their patients who smoke. “We argue that responsibility for treating smokers lies with the clinician who sees them and that our NHS [the U.K. National Health Service] should be delivering default, opt-out, systematic interventions for all smokers at the point of service contact,” the report’s authors write. The RCP also recommends that the U.K. government invest in media campaigns to urge smokers to switch from tobacco to e-cigarettes, which are less harmful. Governments and doctors worldwide should heed their advice.

    A new report by BOTEC Analysis, a public policy research and consulting firm, finds that the availability of regulated alternative nicotine-delivery systems (ANDS) like e-cigarettes and heated-tobacco products (HTPs), combined with traditional tobacco control efforts, such as tobacco taxes, smoke-free laws and cessation services, have helped to lower smoking rates in several countries. Titled “Investigating the drivers of smoking cessation: A role of alternative nicotine delivery systems?,” the report examines the policies in five countries that have long been considered international leaders in tobacco control: The United Kingdom, Canada, Australia, South Korea and Japan.

    According to the FSFW, BOTEC’s key findings presented interesting results per country, including:

    • United Kingdom: A leader in tobacco control, the country has proactively helped smokers switch to e-cigarettes, which have been shown to be 95 percent safer than combustible cigarettes. While the country has some of the highest tobacco prices in the world, the government has chosen not to tax e-cigarettes as tobacco products, making them less costly. Access to regulated e-cigarettes appears to also support smoking cessation services.
    • Canada: Following the introduction of e-cigarettes in 2018, there has been a significant decline in conventional tobacco sales. As stringent regulations and higher prices apply more to traditional cigarettes than e-cigarettes, smoking rates and tobacco purchases have collapsed, especially among young Canadians. Still, the country may be poised to reverse these successes with proposed regulations that would implement a new tax on e-cigarettes and cap the nicotine content of e-liquids.
    • Australia: The country succeeded in driving cessation with a combination of health warnings, tax increases and effective publicity campaigns. The government has implemented de-facto bans on harm reduction products, but many Australians continue to use smuggled and unregulated e-cigarettes, reporting a desire to quit or reduce smoking as a primary motivation.
    • South Korea: The country has more than 250 public health centers that provide comprehensive clinical services, including counseling, prescription medication, nicotine-replacement therapy and text/email follow-ups. Over six months, more than 800,000 adult male smokers used these clinics, with an estimated 46.8 percent quit rate. Despite the South Korean government’s disapproving stance toward ANDS, both e-cigarettes and HTPs appear to be aiding cessation.
    • Japan: Although Japan has imposed an excise tax on cigarettes and banned e-cigarettes containing nicotine, HTPs are widely available and increasingly popular. Moreover, the uptake of HTPs appears to be causally associated with a reduction in demand for combustible cigarettes. However, a lack of regulatory distinction between HTPs and combustible cigarettes appears to limit the numbers of smokers who shift to exclusive HTP use, so their effect on cessation may be muted, thus reducing HTPs’ potential to aid smoking cessation.

    BOTEC Analysis is one of several FSFW foundation grantees that are spearheading research to uncover new solutions to combat this global health epidemic. The FSFW collaborates with other nonprofit, advocacy and government organizations to advance smoking cessation and harm reduction science. The FSFW also supports the development of alternative products and methods that may reduce a smoker’s health risks and help them to stop smoking entirely.

    “In light of the billion smokers that remain, one may assume that the world has made little progress since the first WNTD three decades ago,” the FSFW concluded in its press note. “Yet, from a scientific and technological perspective, we have seen profound change. As a result of transformational research and development, we now have harm-reduction products that could end death and disease from tobacco. Still, innovation translates into saved lives only when smokers have access to the full range of cessation and harm reduction options. Thus, in the same way that the foundation calls on smokers to quit, it also calls on policymakers and physicians to embrace the tools that will help them do so.”

  • Court: Vuse Infringes on Fuma Patents

    Court: Vuse Infringes on Fuma Patents

    Photo: R.J. Reynolds Vapor Co.

    R.J. Reynolds (RJR) Vapor Co.’s Vuse Solo and Ciro e-cigarettes infringe patents owned by Fuma International, a federal court in North Carolina ruled, according to Reuters.

    Fuma sued RJR in 2019 for infringing two of its patents that outline types of e-cigarettes made of a cartridge and power source.

    U.S. District Judge Catherine Eagles found that the products included two of the disputed elements and infringed both patents but that the question of whether they included the third element should go to trial.

    The Vuse Solo has one of the patent’s “electrically conductive portion” that couples the cartridge to the power source, and the Vuse Ciro has a type of airflow passageway featured in both patents, Eagles said.

    However, the third disputed element—whether the Solo has the “electrically conductive threaded portion” from a Fuma patent—will be decided at trial. RJR provided enough evidence to show that the relevant part of its device may not be “threaded” under the patent’s definition, according to Eagles.

    RJR spokesperson Kaelan Hollon told Reuters that the company “looks forward to proving at trial that the Fuma patents are invalid” and that Solo doesn’t infringe the part of the patent still at issue.

    Vuse is one of the most popular e-cigarette brands in the United States.

    Earlier this month, a judge ruled that Philip Morris International’s IQOS tobacco-heating device infringes two Vuse Vibe and Vuse Solo patents. That case will likely be reviewed by the full International Trade Commission.

  • Universal Corp. Reports Strong Fiscal 2021

    Universal Corp. Reports Strong Fiscal 2021

    Photo: Universal Corp.

    Universal Corp. reported sales and other operating revenue of $1.98 billion in the fiscal year that ended March 31, 2021, up 4 percent over the amount reported in the previous year. Operating income was up 17 percent to $147.8 million while adjusted operating income increased 22 percent to $172.9 million. Gross profit margin improved 80 base points to 19.5 percent.

    Tobacco operations sales and other operating revenues were $1.84 billion in fiscal year 2021 compared with $1.89 billion in 2020. Tobacco operations operating income grew 15 percent to $168.8 million.

    “I am pleased to report that our net income and diluted earnings per share, and our non-GAAP adjusted operating income for fiscal year 2021, are all up over 20 percent compared to fiscal year 2020,” said George C. Freeman III, chairman, president and CEO of Universal, in a statement.

    “Strong leaf tobacco shipments in the second half of fiscal year 2021, the addition of our plant-based ingredients acquisitions and favorable foreign currency comparisons all contributed to this improvement in our results.

    I am especially proud that we were able to deliver these results in the midst of the Covid-19 pandemic.

    George C. Freeman III, chairman, president and CEO, Universal

    “I am especially proud that we were able to deliver these results in the midst of the Covid-19 pandemic and would like to thank our employees, growers, customers and other partners for their support, adaptability and hard work that made this a successful year.”

    Leaf tobacco shipments, which started slowly in fiscal year 2021, accelerated in the second half of the fiscal year, according to Freeman. The company ended the year with leaf tobacco volumes that were just slightly below those in fiscal year 2020, in part due to some tobacco shipments that were delayed and will ship in fiscal year 2022.

    “As we move into fiscal year 2022, we currently expect global supply for flue-cured leaf tobacco to be in line with anticipated demand and for burley leaf tobacco to be in a slight undersupply position,” said Freeman. “We are continuing to monitor freight costs as the Covid-19 pandemic disrupted shipping patterns, which has resulted in cost increases due to limited container availability.”

  • FDA Issues Guidance on User Fees

    FDA Issues Guidance on User Fees

    Photo: Grandbrothers

    The U.S. Food and Drug Administration has issued a draft guidance that helps answer frequently asked questions around tobacco product user fees.

    The draft guidance provides information regarding the submission of information needed to assess user fees owed by each domestic manufacturer or importer of tobacco products and how FDA determines whether a company owes user fees in each quarterly assessment. Starting May 27, public comments related to this draft guidance may be submitted through July 26, 2021.

    The Federal Food, Drug & Cosmetic (FD&C) Act requires FDA to “assess user fees on, and collect such fees from, each manufacturer and importer of tobacco products subject to” the tobacco product provisions of the FD&C Act. Under the calculations required by the FD&C Act, the tobacco products that are subject to user fee assessments are cigarettes, snuff, chewing tobacco, roll-your-own tobacco, cigars and pipe tobacco.

    The FD&C Act provides for the total quarterly assessment to be allocated among specified classes of tobacco products. The class allocation is based on each tobacco product class’ volume of tobacco products removed into commerce. Within each class of tobacco products, an individual domestic manufacturer or importer is assessed a user fee based on its market share for that tobacco product class.

  • ‘Reforestation Efforts Paying off in Brazil’

    ‘Reforestation Efforts Paying off in Brazil’

    Photo: Joao Bispo

    Tobacco industry reforestation efforts are paying off in southern Brazil, reports industry association SindiTabaco on National Atlantic Forest Day. Over the past 40 years, the tobacco sector has been working to eradicate the consumption of wood from native trees for curing. As a result, Forest cover on small-scale tobacco farms has now reached 24 percent, split into 15 percent native forests and 9 percent planted forests, according to data released by the Tobacco Growers’ Association of Brazil.

    “For some decades now, the sector has been self-sufficient in fuel wood for curing tobacco, and thus native forests are preserved,” said SindiTabaco president Iro Schunke. “Incentives provided by the industries, which started in the mid-1970s, and the farmers’ willingness to plant eucalyptus trees played a fundamental role in the present enviable forest cover rates.”

    In 2019, SindiTabaco partnered with the Federal University of Santa Maria to preserve forests while providing farmers with a sustainable source of energy.

    “Tobacco is a centuries-old crop, and when it was brought to our region, it was strongly dependent on natural forests as a source of fuel wood, particularly because back then there were no planted forests,” says research coordinator Jorge Antonio de Farias.

    For some decades now, the sector has been self-sufficient in fuel wood for curing tobacco, and thus native forests are preserved.

    Iro Schunke, president, SindiTabaco

    “Such common tree species as eucalyptus and acacia were rare at that time and little known, and, on the other hand, native forests were in great abundance. As of the 1970s, when the sector set targets to eradicate the consumption of wood from native trees, the farmers began to use wood from planted forests.

    “Within this context, the target of the project consists in strengthening the conquests achieved so far—that is to say, the maintenance of the existing native forests—and at the same time come up with new elements and technologies capable of increasing the productivity rates of existing reforested plots whilst establishing new reforestation areas.

    “To this end, we are creating reference units in tens of tobacco farms, testing new technologies and techniques, like spacing—distance between trees—new genetic materials and forest species that lead to higher productivity and energy performance.”

    The results of the research will be shared through social media channels with tobacco farmers.