Category: News This Week

NATO Celebrates 20th Anniversary
The U.S. National Association of Tobacco Outlets (NATO) is celebrating its 20th anniversary this month, reports CStore Decisions. The organization was founded in 2001 to fill a need for a national association that served tobacco outlet stores but has expanded to include every category of retail store that sells tobacco products.
NATO’s mission is to improve business conditions for retailers that sell tobacco in the U.S. while providing information to members on federal, state and local regulations and laws that pertain to the sale, advertising, promotion, regulation and taxation of tobacco products.

For convenience stores, there is a need for up-to-date information on local, state and federal legislation as well as FDA regulations. NATO has a special expertise on each of these levels of government, which is beneficial to the convenience store segment.
Thomas Briant, executive director, NATO
The association also offers retailers information on how best to comply with various regulations and laws as well as how to respond to proposed regulations. NATO’s membership comprises more than 62,000 retail stores (tobacco stores, convenience stores, service stations, grocery stores, liquor stores and corner retail markets).
NATO counts nearly 30 manufacturers from every segment of the tobacco industry and numerous wholesalers among its members. “For convenience stores, there is a need for up-to-date information on local, state and federal legislation as well as FDA regulations,” said Thomas Briant, executive director of NATO. “NATO has a special expertise on each of these levels of government, which is beneficial to the convenience store segment.”
March 19, 2021
Egypt Asked to Broaden Manufacturing Bid

Photo: Taco Tuinstra
Nakhla Tobacco Co., Imperial Tobacco, British American Tobacco and Al-Mansour International Co. have asked Egypt to broaden the conditions of a prospective license to manufacture cigarettes in the country, reports Reuters.
Egypt has invited tobacco companies to bid for a license to manufacture cigarettes in the country, which has been dominated for decades by the Eastern Co. state monopoly. The winning bid must include a plan to begin production within three years and at a rate of at least 15 billion cigarettes per year.
The companies that were invited to bid said the license’s conditions were too narrow and asked the prime minister to halt the bid round until they could be made fairer.
The bid deadline has been set for April 4, with the auction to be held on June 6.
The cigarette industry contributes more than EGP60 billion Egyptian ($3.8 billion) to government coffers yearly, according to the state Industrial Development Authority.

March 19, 2021
FDA Accepts Halo Market Application
Photo: Nicopure
The U.S. Food and Drug Administration has accepted all Halo products’ premarket tobacco product applications (PMTA) for the substantive scientific review phase.
Just over six months after submission, Nicopure Labs’ PMTAs for Halo Turkish Tobacco E-liquid, Halo Triton II Starter Kit, Halo ZERO Starter Kit and all supporting consumable components have been accepted and advanced to the final phase, substantive scientific review, by the FDA.
Halo’s first round of products was accepted and advanced three days after submission.
“Halo’s more than 12 years of commitment to producing the highest quality vaping products available for adult consumers has been our organization’s mission for more than a decade,” said Jeffrey Stamler, co-founder of Nicopure Labs, in a statement.
“We believe in science, and we believe in transparency; we are honored to continue to work with the FDA, and as always, in the best interest of the industry and the most important thing of them all, our loyal customers.”
Halo FDA accepted premarket tobacco product applications include:
Halo Tribeca Tobacco e-liquid
Halo SubZero Menthol e-liquid
Halo Turkish Tobacco e-liquid
Halo Fusion Unflavored Tobacco e-liquid
Halo Triton II Starter Kit (and supporting consumable components)
Halo ZERO Starter Kit (and supporting consumable components)
March 19, 2021
Baek Reappointed as Chief Executive of KT&G

Bok-In Baek
Bok-In Baek was appointed CEO of KT&G Corp. at the company’s 34th annual general meeting held on March 19 in Daejeon. Baek will lead KT&G for another term of three years.
Baek joined Korea Tobacco & Ginseng Corp. in 1993 and has held key roles in the company’s core businesses, including strategy, marketing, global business, manufacturing and R&D.
As CEO, Baek focused on the growth of the company’s global business, expanding into more than 100 countries and executing a KRW2.2 trillion export agreement in the Middle East. Baek also achieved an export agreement under which Philip Morris International commercializes KT&G’s Lil tobacco-heating device outside of South Korea. On Baek’s watch, KT&G breached the KRW5 trillion revenue mark for the first time in the corporation’s history.
A hands-on leader, Baek has a deep understanding of the industry. His strong planning and management skills have allowed the company’s main pillars—e-cigarettes and traditional tobacco products—to grow simultaneously.
I will devote myself to seeking a new growth engine through business diversification.
Bok-In Baek
“I feel a great sense of responsibility in leading the organization amid a management environment of growing uncertainties across the world,” said Baek in a statement. “With further sophistication of the overseas business, KT&G will establish a strong foothold as a global corporation, and I will devote myself to seeking a new growth engine through business diversification. I will also do my utmost to create social values based on ESG management.”
Also at the general meeting, KT&G appointed its chief of strategy and planning, Kyung Man Bang, as an executive director. Former SK Materials CEO Min-Kyu Lim was reappointed as independent nonexecutive director, and Jong-Soo Baek, former chief prosecutor of the Busan district prosecutor’s office, was reappointed as auditor and nonexecutive director.
Tobacco Reporter profiled KT&G in its July 2020 issue.
March 19, 2021
Competition Watchdog Fines Distributor

Photo: Taco Tuinstra
Ukraine’s Anti-Monopoly Committee (AMCU) on March 17 fined Ukraine’s largest tobacco distribution company, Tedis, $9.8 million for noncompliance with an earlier ruling, reports the Kyiv Post.
In December 2016, the AMCU fined Tedis $16 million for abusing its monopoly position in 2013–2015, when the distributor’s market share reached 99.4 percent. The company was also instructed to restore competition in the tobacco market.
Tedis plans to appeal, calling the decision “absolutely groundless.” The company says it paid $11.5 million in 2017 and $4.5 million in 2020 and complied with all the other requirements of the committee.
Tedis’s monopoly first caught the eye of AMCU in 2014, when cigarette retailers started to complain about the lack of competition in the tobacco distribution market. A report by the Redcliffe Partners law firm published in January 2020 showed that by 2015, there were 22 tobacco products distributors on the market, but only one was actually selling them—Tedis.
Tedis entered Ukraine in 2010, when the market had more than 50 cigarette distributors. Gradually, Tedis began to acquire other distributors, taking a bigger share of the market. At the time, AMCU approved the acquisitions.
Within a few years, Tedis dominated the market, selling products of Philip Morris International (PMI), Japan Tobacco International, Imperial Tobacco and British American Tobacco (BAT). According to the Redcliffe Partners report, those tobacco companies, together with Tedis, restricted market access of other players.
In 2019, AMCU fined Tedis and four tobacco producers $265 million for creating a monopoly—one of the biggest fines in Ukraine’s history. Tedis never paid because Ukraine’s Supreme Court in February 2021 exempted Tedis from paying the fine.
Tobacco firms appealed the ruling but lost their initial cases. The American Chamber of Commerce in Ukraine expressed concern about the fairness of the trial.
In August 2020, PMI paid UAH1.18 billion ($66.07 million) for its share in the case. In February 2021, a Ukrainian court upheld BAT’s appeal of the fine.
March 19, 2021
Swisher and EAS Expand Partnership

Photo: EAS
Swisher and E-Alternative Solutions (EAS) have expanded their partnership to support the marketing, sales and distribution of EAS’s Leap and Leap Go vapor brands. Both companies will remain separate entities with EAS benefitting from the additional support and strength of Swisher’s world-class sales and marketing organization.
Jeffrey Brown, formerly vice president of sales for EAS, has been named general manager of EAS and will take the lead in the evolution of the partnership.
“Jeff is a well-respected leader with more than three decades of industry experience, and as general manager, he is the natural choice to take the EAS business to the next level and drive our respective brand expansion goals,” said John Miller, president and CEO of Swisher, in a statement. “In the short term, the expanded partnership between EAS and Swisher will remain transparent to our valued customer base, and we will be following up with additional details as they become available.”

I look forward to working with the Swisher sales and marketing teams and taking the Leap and Leap Go brands to the next level.
Jeffrey Brown, general manager, EAS
“I couldn’t be more excited about this arrangement and look forward to working with the Swisher sales and marketing teams and taking the Leap and Leap Go brands to the next level,” said Brown. “EAS was built from the ground up to prosper in the highly regulated tobacco environment, and with the bench strength of the Swisher sales and marketing teams, we have the power to broaden our reach and expand the distribution of these great brands,” he added.
Over the past several years, Swisher has continued to expand its offerings to include smokeless tobacco products, premium cigars and modern oral nicotine products to appeal to diverse and changing consumer tastes. Broadening its strategic partnership with EAS is another step toward becoming a more consumer-centric company.
March 19, 2021
Law Firm: Florida Ruling a Cautionary Tale

Photo: Michal Kalasek | Dreamstime.com
The recent Florida Supreme Court ruling that R.J. Reynolds must continue tobacco settlement payments to the state, despite having sold the cigarette brands in question, is a warning to settling parties that their agreements will be strictly construed, write Agustin Rodriguez and Dascher Pasco at Troutman Pepper.
This cautionary tale is important as state attorneys general and other regulators continue to resolve disputes via individual or multistate settlement agreements.
In December 2020, the Florida Supreme Court refused to take up R.J. Reynolds Tobacco Co.’s appeal of a ruling requiring the company to continue to make annual tobacco settlement payments to the state of Florida.
The court’s refusal to hear the case leaves in place, in perpetuity, Reynolds’ obligations to make payments under Florida’s 1997 tobacco settlement agreement on the volumes of certain cigarette brands that Reynolds sold to ITG Brands after its acquisition of Lorillard in 2015.
As a result, Reynolds’ parent company, British American Tobacco, took a $555 million charge and stands to owe more than $75 million per year in unanticipated settlement payments going forward.
A settlement agreement is a binding contract between the parties with effects that may very well impact future business decisions.
Agustin Rodriguez and Dascher Pasco
In their article, Rodriguez and Pasco explore the background of the case and the lessons that companies should draw from the episode.
“As demonstrated by the Reynolds case in Florida, a settlement agreement is a binding contract between the parties with effects that may very well impact future business decisions,” they write.
“In order to ensure future contracts have the desired effect, parties should not only carefully consider any past settlement’s requirements but also ensure that the later contracts clearly and adequately express the parties’ desired outcome.”
March 18, 2021
Cambodian Leaf Tobacco Exports Down

Image: Gordon Johnson from Pixabay
Cambodia exported more than 5.8 million kg of leaf tobacco worth more than $17 million to nine countries last year, reports The Phnom Penh Post, citing figures provided by the ministry of agriculture. The numbers were down 14 percent and 28 percent, respectively, over 2019.
Buyers of Cambodian leaf included Vietnam, Indonesia, Hungary, the United Arab Emirates, Belgium, South Africa, Greece, Singapore and Germany.
In 2016, Cambodia and Vietnam agreed on preferential duties for agriculture products crossing their shared border. The Kingdom was allowed to export 3,000 tons of dried tobacco to Vietnam duty-free each year starting in 2016 under the agreement, which was renewed thrice for 2017–2019.
The average wholesale price for high-quality tobacco now ranges from KHR8,500 ($2.10) to KHR10,000 per kg.
Last year, the area under tobacco cultivation in Cambodia was 5,175 ha, of which 4,875 ha was harvested, representing a 1 percent drop from 2019, ministry statistics show.
March 18, 2021
Kaival Brands Reaches $100 Million in Revenue
Kaival Brands Innovations Group reported significant revenue and profitability milestones in the quarter ended Jan. 31, 2021. The company achieved a cumulative $100 million in revenues since it commenced business operations in March 2020, despite revenue slowdowns during the fourth quarter of 2020 due to packaging and labeling updates.
During the fourth quarter of 2020, the company and Bidi Vapor made the decision to wash out inventory and repackage the entire product line in an effort to go “above and beyond” U.S. Food and Drug Administration packaging and labeling guidelines.
First quarter 2021 revenues were $37.3 million compared to revenues of $0 in the first quarter of 2020. “Given the significant expenses associated with infrastructure, startup costs, marketing, legal and many other business necessities, we are proud of our ability to reach profitability so early on in our development,” said Niraj Patel, Kaival’s president and CEO, in a statement.
“The gross profit number provides a glimpse into our future net profits as we continue to scale the business in a smart and efficient operational manner.”
The gross profit number provides a glimpse into our future net profits as we continue to scale the business in a smart and efficient operational manner.
Niraj Patel, president and CEO, Kaival
From a revenue perspective, February and March have benefited from the company’s new distribution partnerships as well as the rollout of the Bidi Pouch. As such, the company expects revenues to increase during the second fiscal quarter ending April 31, 2021. “Given our current visibility, we remain very confident in our full-year fiscal 2021 revenue guidance of $400 million to $450 million,” Patel said.
March 18, 2021
Korea Urged to Embrace Harm Reduction

Economists have called on South Korea to develop risk-proportionate regulation for nicotine products.
Speaking at the Western Economic Association International (WEAI) virtual conference, Kwon Ill-Oong, a professor at the Seoul National University Graduate School of Public Administration, argued for implementing an inflation-indexed tobacco tax.
Kwon emphasized that tobacco taxes should be inflation-indexed like taxes on alcohol, with a different level of tax applied to products based on their levels of harm and price elasticities. Not only does an inflation-indexed tobacco tax raise consumer predictability; it also eases societal pushbacks from a sudden increase of the tax on tobacco.
Woo-Hyung Hong, professor at the Hansung University Department of Economics, agreed that tobacco taxes should be differentially imposed based on a product’s economic external costs. According to him, the system should consider medical costs, loss of labor capital costs, costs from cigarette-related fires and “avoidance costs,” among others.
Park Young-bum of Hansung University Department of Economics explored the current state and limitations of the current tobacco control policy in Korea and proposed harm reduction measures to encourage smokers to switch to less harmful products.
David Sweanor from the University of Ottawa urged South Korea to follow the example of New Zealand, which passed a bill acknowledging e-cigarettes as a less harmful alternative to combustible products. “It is time for Korea to implement a harm reduction policy like Western countries,” said Sweanor
Created in 1992, the WEAI currently has more than 2,000 members.
March 18, 2021