Category: News This Week

  • Court Won’t Throw Out ‘SE’ for Premium Cigars

    Court Won’t Throw Out ‘SE’ for Premium Cigars

    Photo: Tobacco Reporter archive

    The U.S. District Court for the District of Columbia on Feb. 4 refused a request to throw out the U.S. Food and Drug Administration’s substantial equivalence requirements for premium cigars, reports Halfwheel.

    Three cigar trade groups had asked the court to “clarify” an August ruling that delayed those requirements until after the U.S. Food & Drug Administration completes a review of whether it should create a new, streamlined process for “premium cigars.”

    As the court pointed out, that “clarification” was in fact a request to have the substantial equivalence requirements thrown out.

    Judge Amit P. Mehta concluded that the court had no authority to vacate the substantial requirements under that argument. By giving the FDA the authority to regulate cigars under the Tobacco Control Act, Congress also gave FDA the authority to require premarket review for cigars, the court reasoned.

    The next phase of the lawsuit will likely focus on the question of whether FDA acted properly when deciding to regulate “premium cigars” the same way as other tobacco products.

    The plaintiffs will argue that FDA neither went through the proper steps nor had sufficient evidence to regulate “premium cigars” the same way FDA has chosen to regulate e-cigarettes, little cigars or hookah tobacco.

    The FDA will not enforce its substantial equivalence requirements until it completes the review mandated in August. There is no established timeline for when that review might be completed.

  • Critics: Beating Cancer Plan Protects Tobacco

    Critics: Beating Cancer Plan Protects Tobacco

    Tobacco harm reduction activists have expressed concern about new measures proposed in the European Union’s recently published Beating Cancer Plan. According to the European Tobacco Harm Reduction Advocates (ETHRA), the measures would make low-risk products such as e-cigarettes and smoke-free tobacco products less effective and attractive as alternatives to combustible cigarettes.

    According to the ETHRA, the plan fails to make a distinction between harmful smoking products and smoke-free alternatives, and signals that the European Commission intends to turn its back on innovation and science by cracking down on vaping.

    “The effect would be to protect the tobacco industry, reduce the number of Europeans quitting smoking by switching to low-risk alternatives, and add to the overall burden of cancer—exactly the opposite of the aim of Europe’s Beating Cancer Plan,” the ETHRA wrote in a letter to the European Parliament members on the Special Committee on Beating Cancer.

    The ETHRA also expressed concern about plans to ban nontobacco flavors for e-liquids. “Such an approach is one step short of outright prohibition,” the organization wrote. “It will trigger a range of undesirable reactions among both vapers and smokers—including relapse to smoking among vapers, reduced switching among smokers, increased illicit activity and cross-border trade, workarounds, more home mixing, and the formation of informal, unregulated markets.”

    According to the EHTRA, other proposed measured, such as taxes, public vaping bans and plain packaging would provide further regulatory protection of the cigarette category. “The plan fails to recognize the interaction between smoking and vaping and is naïve about the perverse consequence of the regulatory intervention,” the ETHRA wrote.

    The Independent European Vape Alliance (IEVA), meanwhile, welcomed the EU Beating Cancer Plan but urged regulators to use all means at hand to minimize smoking rates.

    “We welcome the EU Beating Cancer Plan,” said IEVA Chairman Dustin Dahlmann in a statement. “The strategy needs to consider all means available to reduce the burden of cancer related risks: It is of utmost importance that preventive measures are flanked by tobacco harm reduction. Otherwise, millions of smokers might miss the opportunity to tremendously reduce their risk of cancer.”

  • Higher Income, Lower Revenues for PMI

    Higher Income, Lower Revenues for PMI

    Photo: PMI

    Philip Morris International (PMI) reported operating income of $11.69 billion in 2020, up 10.8 percent over 2019. Net revenues were down 3.7 percent to $28.69 billion for the full year.

    PMI sold 628.52 billion cigarettes in 2020, down 11 percent 11.1 percent from 706.71 billion in 2019. The company’s shipments of heated tobacco units (HTU) increased 27.6 percent to 76.11 billion in 2020. Its combined volume of cigarettes and HTUs was 704.63 billion in 2020, 8.1 percent less than in the previous year. Sales of PMI’s flagship Marlboro brand declined by 11.3 percent to 233.16 billion cigarettes.

    Andre Calantzopoulos

    “In 2020, PMI delivered a robust business performance despite the unprecedented headwinds of the Covid-19 pandemic, with adjusted diluted EPS [earnings per share] organic growth of 7.0 percent, supported by stronger-than-anticipated fourth quarter results,” said André Calantzopoulos, chief executive officer, in a statement.

    “IQOS continued to deliver impressive growth in 2020, driving significant increases in our total users, as well as both HTU shipment and in-market sales volumes. During the fourth quarter, we reported record HTU market shares in key IQOS geographies and exited the year with double-digit national shares in ten markets.”

    “We enter 2021 with favorable momentum, although certain headwinds remain, notably related to Duty Free, Indonesia and the continued effects of the pandemic. For the full year, we are expecting a significant recovery, with mid-single-digit organic net revenue growth—driven by the growing contribution of IQOS—and further efforts on cost efficiencies driving an acceleration in forecasted adjusted diluted EPS growth to a range of 9 percent to 11 percent on the same basis.”

    PMI said it has sufficient access to the inputs for its products and is not facing any significant business continuity issues with respect to key suppliers. All of PMI’s cigarette and heated tobacco unit manufacturing facilities globally are operational, and Covid-related restrictions do not have a significant impact on the availability of PMI’s products to its customers and adult consumers.

    PMI will host a live video webcast of presentations and Q&A session by senior management at its 2021 investor day on Feb. 10, 2021. The webcast will be held in a virtual format and provide live video of the entire session beginning on Wednesday, Feb. 10, 2021, at approximately 8:30 a.m. EST and concluding at approximately 1:30 p.m. EST. An archive of the webcast will be available on the company’s website until 5 p.m. EST on March 11, 2021. A copy of the slides and full transcript will be made available on the company website

  • PMFTC Streamlines Philippine Operations

    PMFTC Streamlines Philippine Operations

    Photo: PMFTC

    Philip Morris Fortune Tobacco Corp. (PMFTC) will eliminate about 300 jobs at a factory in the Philippines as part of a streamlining initiative, reports The Inquirer.

    “In light of a steep decline in production volumes resulting in significant idle capacity at the Marikina plant, PMFTC Inc. confirms making the difficult decision to streamline its manufacturing operations that has been impacted by the market conditions over the past years,” PMFTC said in an official statement.

    According to a September 2020 statement from the Department of Labor and Employment, the Marikina plant has about 1,200 workers.

    While refraining to comment on the number of workers impacted, a PMFTC representative said those laid off would be getting a generous separation package.

    Last January, the major shareholders of the company announced a merger. Lucio Tan’s LT Group, which indirectly owns PMFTC through Fortune Tobacco Corp., will merge with Philip Morris Manufacturing Philippines. PMFTC would be the surviving corporation effective in June.

     

  • Small Business to Bear Brunt of U.S. Mail Ban

    Small Business to Bear Brunt of U.S. Mail Ban

    Photo: dference from Pixabay
    Azim Chowdhury

    The outlook for many small vapor companies and online retailers looks bleak following the enactment of new rules that prohibit the U.S. Postal Service (USPS) from shipping e-cigarettes, according to Keller and Heckman’s Azim Chowdhury and Galen Rende.

    Writing on The Continuum of Risk law blog, the attorneys discuss the fallout of a recent amendment to the 2009 All Cigarette Trafficking (PACT) Act.

    In late December, former U.S. President Donald Trump signed into law a $2.3 trillion coronavirus relief and government funding bill that contains a provision banning the USPS from delivering vapor products. The USPS was already prohibited from delivering cigarettes and smokeless tobacco products to consumers under the PACT Act. The law passed in December extends the Act’s original definition of “cigarette” to include electronic nicotine delivery systems (ENDS).

    Tobacco and vapor companies may use private services to ship their products to consumers, but the PACT Act requires them to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the tobacco tax administrators of the states into which a shipment is made. Delivery sellers are further required to verify the age and identity of the customer at purchase and maintain records of delivery sales for a period of four years after the date of sale, creating substantial administrative burdens.

    Critically for the vapor industry, the most popular carriers, Federal Express and United Parcel Service, have recently announced that they would cease all deliveries of vapor products.

    The prohibition on the mailing of ENDS is scheduled to take effect after the USPS promulgates regulations clarifying the mail ban, which it is required to do within 120 days of the enactment—i.e., by April 27, 2021.

  • Hall Analytical Offers PMTA Webinar

    Hall Analytical Offers PMTA Webinar

    Photo: Bacho | Dreamstime

    Hall Analytical is offering a virtual seminar on Feb. 11, 5-6 pm GMT about the U.S. Food and Drug Administration’s premarket tobacco product application process.

    E-liquid and device manufacturers will have an opportunity to take part in a live Q&A session with subject matter experts.

    Panelists include David Lawson, CEO, Inter Scientific; Patricia Kovacevic, founder and principal, Regulation Strategy; and Sally McGuigan, principal scientist, Hall Analytical

    This session is limited to the first 50 registrants, and therefore places will be offered on a first come, first served basis.

    Participants can register here.

  • WHO reappoints Bloomberg

    WHO reappoints Bloomberg

    Photo: Bloomberg Philanthropies

    The World Health Organization (WHO) will reappoint Michael R. Bloomberg as the WHO Global Ambassador for Noncommunicable Diseases (NCDs) and Injuries.

    Both as mayor of New York City and as a philanthropist, Bloomberg made it a top priority to combat noncommunicable diseases and their underlying causes. As mayor, he introduced the Smoke Free Air Act and other public health initiatives. His foundation, Bloomberg Philanthropies, promotes policy solutions around the world that reduce rates of noncommunicable diseases like cardiovascular disease and hypertension as a result of factors such as poor diet while also supporting road safety and drowning prevention initiatives.

    Vapor advocates have criticized Bloomberg for his rejection of tobacco harm reduction (THR) strategies, and his philanthropies’ attempts to influence policymaking around the world.

    Recently, the International Network of Nicotine Consumers Organizations urged Vietnam to exercise “true independence” in its regulation of THR products, citing concern that the country’s regulations would be drafted by Bloomberg-financed organizations.

    Anti-tobacco groups welcomed Bloomberg’s reappointment. “Michael Bloomberg is uniquely qualified to focus global attention on this public health crisis and serve as a catalyst for life-saving action around the world, and we look forward to partnering with him and the WHO on proven policy solutions to reduce NCDs and save lives,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids and the Global Health Advocacy Incubator, in a statement.

  • Broughton Publishes Summary of Final Rule

    Broughton Publishes Summary of Final Rule

    Illustration: Broughton Nicotine Services

    Broughton Nicotine Services has published a summary of the U.S. Food and Drug Administration’s rule for the premarket review of new tobacco products.

    Released on Jan. 19, the FDA’s final rule makes amendments and recommendations to the previous rule and helps ensure that PMTAs contain sufficient information for the agency to determine whether a marketing granted order should be issued for a new tobacco product.

    The purpose of the rule is to improve the efficiency of the submission and review of PMTAs as well as providing applicants with a better understanding of the information a PMTA must contain.

    Amongst other topics, the rule addresses:

    • The submitting of detailed information regarding the physical aspects of the new tobacco product and full reports of information regarding investigations that may show the health risks of the new tobacco product.
    • Whether the product presents the same or different risks compared to other tobacco products. The FDA requires the submission of these health risk investigations to ensure it understands the full scope of what is known about the potential health risks of a new tobacco product.
    • Electronic submission of the PMTA.
    • Post-market reporting requirements for applicants that receive marketing granted orders.
    • Retention of records requirements for PMTAs
    • Procedures by which the FDA reviews a PMTA

    Broughton Nicotine Services summarized the 516-page recommendations and requirements report into a digestible guide, which is available for download here.

  • ‘JT’s Strategy Not Paying Off’

    ‘JT’s Strategy Not Paying Off’

    Photo: Taco Tuinstra

    Diversifications and acquisitions have not paid off for Japan Tobacco (JT), according to Seeking Alpha, a crowd-sourced contents service for financial markets. Despite relatively stable sales trends and operating margins, JT shareholder value has declined in recent years.

    Confronted by sales declines in its domestic market, JT in recent years shifted its focus to nontobacco markets, investing in pharmaceuticals, bakeries and processed foods, among other sectors. JT also acquired other tobacco brands and businesses, including Natural American Spirit; PT Karyadibya Mahardhika; United Dhaka and Donskoy Tabak, for large sums.

    According to Seeking Alpha, these acquisitions have not yielded the desired results.

    “Since 2017 when ESG [environmental, social and corporate governance] started to gain momentum, JT’s performance has not been good enough to support the share price despite relatively stable free cash flow generation,” Seeking Alpha wrote. “We conclude that the risk profile of the business continues to rise, and the company has not allocated its capital successfully in order to mitigate these risks. With a lack of progress and no easy answers, we rate these shares a sell.”

  • Scorecard: Tobacco Taxed Ineffectively

    Scorecard: Tobacco Taxed Ineffectively

    Illustration: Tobacco Reporter archive

    Many countries are failing to effectively tax cigarettes, the most recent Tobacconomics Cigarette Tax Scorecard reveals.

    According to Tobacconomics, raising taxes and prices is the most effective way to reduce the negative health and economic impact of tobacco use. The organization recommends a uniform specific excise tax that comprises at least 70 percent of the retail price and is automatically updated to stay ahead of inflation and income growth.

    The Tobacconomics Cigarette Tax Scorecard evaluates cigarette tax policy performance in more than 170 countries on a five-point scale using data from the World Health Organization’s biennial Report on the Global Tobacco Epidemic.

    The top-performing countries in this assessment are Australia and New Zealand, scoring the highest at 4.63, which reflects their high, uniform specific cigarette excise taxes with regular increases that have significantly reduced the affordability of cigarettes. The highest-performing region is Europe, with an average score of 2.79. According to Tobacconomics, higher-income countries generally have higher taxes and prices and more effective tax structures than lower-income countries.

    The countries with the greatest improvement in cigarette tax policy are Bahrain (an overall three-point improvement), Saudi Arabia (+2.75), the United Arab Emirates (+2.75), Kyrgyzstan (+2.50), and the Philippines (+2.50). The improvements in Bahrain, Saudi Arabia, and the United Arab Emirates reflect the introduction of significant cigarette excise taxes, while those in Kyrgyzstan and the Philippines result from the simplification of previously complicated tiered cigarette excise tax structures accompanied by large tax increases.

    Nearly half of countries surveyed scored less than two out of the maximum five points, and there has been little improvement over the past six years. The global average score rose only slightly, from 1.85 in 2014 to 2.07 in 2018. Although overall scores improved in 89 countries, they, became worse in 43 countries.