Category: News This Week

Juul Labs to Exit South Korea, Five EU Markets
Juul Labs said today it would end operations in South Korea, a year after it entered the market. The company states the cause was its inability to gain market share amid government health warnings.
In a statement, Juul Labs stated that since the beginning of the year it was working through a restructuring process aimed a re-establishing a viable business in South Korea by significantly reducing costs and making changes to its products.
“However, these innovations will not be available as anticipated,” the statement said. “As a result, we intend to cease our operations in South Korea.”
In October last year, South Korea’s health ministry advised people to stop vaping because of growing health concerns, especially after a case of pneumonia was reported in a 30-year-old e-cigarette user that month, according to Reuters news article.
The announcement prompted convenience store chains and duty free shops to suspend the sale of flavored liquid e-cigarettes, including those made by Juul Labs.
In December, South Korean health authorities said they had found vitamin E acetate, which may be linked to lung illnesses, in some liquid e-cigarette products made by Juul Labs, but the company denied using the material, according to Reuters.
Juul Labs launched a product portfolio that was specifically developed for the Korean market in May 2019, but “our performance has not met expectations in terms of meeting the needs of our Korean adult smokers to successfully transition from combustible cigarettes,” according to the statement. “We have learned through this process and are focused on innovating our product portfolio.”
Juul Labs is also reportedly ready to withdraw from a handful of EU markets as well, claiming the regulatory environment has become overly hostile to the device.
According to BuzzFeed News, Juul will soon remove its products from shelves in Austria, Belgium, Portugal, France, and Spain.
The news outlet reports the European Union’s strict requirement that e-cigs contain no more than 20 milligrams of nicotine makes it difficult for Juul to do business there.
Austria, Belgium, and Portugal are very small markets for Juul, but the leading e-cig manufacturer generates significant sales from France and Spain. It will exit France by the end of the year, but withdraw from the other countries in July, paring its presence in global markets to a narrow selection that includes Germany, Italy, Russia, and the U.K.
May 6, 2020
Richard Flaherty Retires From Swedish Match

Rich Flaherty
Photo: Swedish Match
Swedish Match’s Rich Flaherty has decided to retire from his position as president of the U.S. division effective Oct. 2, 2020.
Flaherty joined Swedish Match in 2000 as the chief financial officer for the U.S. division and has led the business since 2008.
Tom Hayes will transition from his current position as group chief financial officer effective Aug. 1, 2020, to take on the role of president of the U.S. division. Hayes has served in his current role since 2018. He joined Swedish Match in 2006 and was previously the chief financial officer for the U.S. division.
Effective Aug. 1, 2020, Anders Larsson will be appointed chief financial officer of the Swedish Match Group. Larsson joined Swedish Match in 2008, and his current position is vice president of group finance.
“Rich has been a driving force behind the phenomenal success of our U.S. business, and his leadership will be missed,” said Lars Dahlgren, president and CEO. “On behalf of all the employees of Swedish Match, I wish Rich and his family the very best for the future.
“We have a comprehensive succession planning process in place at Swedish Match and have been well prepared for this transition. Tom spent most of his time at the company with the U.S. division and has been a great contributor these past few years in his current role. Anders has been working closely with Tom since 2018 and is well prepared for his move to the CFO role.”
May 5, 2020
FOREST Worries About Timing of Menthol Ban

Simon Clark, speaking at the 2019 TABEXPO conference in Amsterdam
Photo: Taco Tuinstra
Simon Clark, director of the smokers’ group Forest, says the upcoming ban on menthol cigarettes in the EU and the U.K. will hit consumers at the worst possible time.
“The Covid-19 pandemic is having a huge impact on people’s daily lives,” he said. “This is not the moment to prohibit a product many smokers enjoy and take comfort from. Given the current crisis, and the disruption and anxiety it is causing, the ban is going to hit consumers at the worst possible time.”
From May 20, 2020, it will be an offense for manufacturers to produce menthol cigarettes and for retailers to sell menthol cigarettes in the U.K. and throughout the European Union.
The ban also applies to hand-rolling tobacco with mentholated filters or papers if they are supplied together in the same product.
Clark worries that the menthol ban will catch many smokers unprepared. “We believe that a significant number of smokers are unaware of the forthcoming ban,” he said. “They will be shocked when they find that their favorite brands are no longer available via legitimate retailers. The government is understandably preoccupied with more serious issues, but imposing prohibition on so many consumers without a proper awareness campaign is inexcusable.”
May 5, 2020
Juul Moving to Washington DC

Photo: Juul
Juul Labs is moving its headquarters from San Francisco to Washington, D.C., according to Market Watch.
The company has faced much regulatory backlash in the past years as they have been accused of marketing to youth and faced many lawsuits. Moving headquarters to Washington will put the company closer to regulators and distance it from “Silicon Valley’s growth-at-all-costs culture,” according to people familiar with the matter.
The move follows other restructuring efforts, such as cutting the workforce, closing some U.S. offices, and scaling back in Europe and Asia.
Juul Labs will remain a large presence in San Francisco, where the company will continue product and software development.
May 5, 2020
U.S. Fourth Circuit Denies PMTA Appeal

The Fourth Circuit on Monday dismissed an appeal from various vaping groups challenging a compliance deadline for vapor products. The decision states that January directives from the U.S. Food and Drug Administration (FDA) have rendered the appeal moot.
In a per curiam opinion, the appellate judges held that guidance issued by the FDA in January moots the vape groups’ appeal because that guidance supersedes older directives from August 2017 at issue in the appeal and leaves “no possible meaningful relief” that the court could grant, according to law360.com.
“Any ruling by this court as to the procedural or substantive reasonableness of the August 2017 guidance would amount to nothing more than an advisory opinion,” the court said.
The appeal stems from a Maryland district court ruling that ordered the agency to set a May 2020 deadline for premarket tobacco product applications (PMTA) on smokeless tobacco products. The FDA, along with various health and anti-vaping groups, had argued that the January guidance restricting the sale of flavored, cartridge-based vapes rendered moot the vape groups’ appeal.
“Because the enforcement timetable for e-cigarettes set out in the January 2020 guidance is independent of the district court’s order, an order by this court reversing the district court would have no effect on FDA’s enforcement of the statute and regulations against e-cigarette manufacturers,” the agency had previously said.
But the vape groups disagreed, saying the January guidance was enacted without proper notice-and-comment procedures, according to the opinion.
While the court said it can’t offer the vape groups relief in this case, the panel added in a footnote that the groups can challenge the January guidance in a separate action in federal court. The panel also ruled that a Maryland district court did not abuse its discretion in denying cigar industry groups’ motion to intervene, saying those groups did not intervene in a timely manner.
Counsel for the cigar and vape groups and a representative of the FDA did not immediately respond to requests for comment Monday.
Last month, a Maryland federal judge said that in light of the coronavirus pandemic, he would grant a 120-day extension to the May 12 deadline for e-cigarette PMTAs, which have proceeded slowly since the FDA first determined vapes should be regulated like tobacco products. The new deadline is Sept. 9, 2020.
The FDA had previously asked the Fourth Circuit for approval for the lower court to extend the May deadline, saying it would not affect the merits of the appeal brought by the industry groups. The FDA said many of the laboratories and research organizations conducting the clinical trials for the regulatory applications have shut down or otherwise halted in-person testing in light of the COVID-19 pandemic.
Public health groups previously sought to accelerate the FDA’s regulation of vaping products under the Tobacco Control Act, citing vaping-related lung injuries that sickened thousands of people and left nearly 70 dead in 2019. In July 2019, a Maryland district judge effectively allowed the FDA to set the May 2020 deadline, prompting the vape groups to claim the decision was an arbitrary overextension of both the FDA and the court’s authority.
The vape groups had also argued that the May deadline left too little time for manufacturers to file complete applications. Cigar industry groups that filed joint briefs on appeal argued that the district court’s order on deadlines unfairly ensnared cigar and pipe tobacco manufacturers as well.
May 5, 2020
High Rejections Mar Chinkhoma Market

Photo: Taco Tuinstra
Tama Farmers Trust president Abel Kalima Banda called for an emergency meeting of all stakeholders following high tobacco rejections at the Chinkhoma auction floors in Kasungu, Malawi.
As of Wednesday, the rejection rate was hovering at 59 percent, according to The Nyasa Times.
However, auction floors officials are attributing this to a new auction system which they call secret bidding.
They say things will be back to normal when tobacco farmers and officials get used to the new system.
As of Wednesday, tobacco on auction was fetching $1.50 per kg whilst contract tobacco was fetching $2.50 per kg.
May 1, 2020
‘Male smokers suffer higher Covid mortality’

According to researchers in Spain from the Universitat Oberta de Catalunya, men are dying from Covid-19 at twice the percentage rate of women in Spain because men have a higher smoking prevalence rate than women in the country.
The researchers’ findings, which can be found in the journal Tobacco Induced Diseases, noted that smoking tobacco can upregulate the angiotensin-converting enzyme 2 (ACE2), which Covid-19 uses as a cellular entry receptor by joining itself to ACE2 receptors in the lower respiratory tract of infected individuals to gain access to the lungs.
The researchers confirm that “existing data suggests that patients with COPD, or chronic obstructive pulmonary disease, or who smoke have a higher risk of becoming more seriously ill from Covid-19, since it increases ACE2 expression in weaker airways, which this type of patient has.”
May 1, 2020
Zimbabwe: First Bale Fetches $4 per Kilo

Photo: Taco Tuinstra
Zimbabwe’s 2020 tobacco marketing season opened Wednesday, April 29, with the first bale selling at $4 per kg, reports The Herald.
Lands, Agriculture, Water and Rural Resettlement Minister Perrance Shiri opened the selling season at Tobacco Sales Floor (TSF) at a ceremony witnessed by his deputies—Vangelis Haritatos and Douglas Karoro—Tobacco Industry and Marketing Board (TIMB) officials, farmers’ unions, merchants and farmers.
Tobacco is largely funded through private contractors and loans, and tobacco farmers are considered among the most skilled in Zimbabwe, hence the calls for them to expand operations into other crops and for other farmers to emulate their skills.
Last year, the first bale sold at $4.50 per kg, and 259 million kilograms were delivered.
April 30, 2020
Methods for Lower Nicotine Validated

Photo: Matt Mullen
22nd Century Group and North Carolina State University (NCSU), have completed successful research field trials that have validated new non-GMO methodologies for reducing nicotine in tobacco plants. The research was partially funded by 22nd Century and was conducted by NCSU’s Department of Crop and Soil Science with project oversight provided by 22nd Century’s R&D team.
The research findings and paper can be viewed here.
As an alternative to older, genetic-engineering technologies that result in the creation of plants regulated as GMOs, the NCSU researchers used newer, non-CRISPR, non-GMO, gene editing technologies to consistently achieve reductions in nicotine levels by as much as 99 percent, when compared to conventional tobacco plants. This reduction in nicotine levels is believed to be caused by the inactivation of several genes believed to encode for enzymes involved in nicotine biosynthesis in the plant. 22nd Century has earlier filed a patent application with the U.S. Patent and Trademark Office to secure intellectual property rights for this non-GMO genetic approach that achieves very low nicotine content (VLNC) levels in tobacco plants using non-GMO methodologies.
“We are very pleased with the outcome of the research field trials completed in collaboration with NCSU, which demonstrate that non-GMO methodologies can be applied reliably to reduce nicotine levels in tobacco plants by up to 99 percent,” said Juan Sanchez Tamburrino, vice president of research and development for 22nd Century. “To further validate our research, 22nd Century and NCSU will conduct larger scale and more extensive field trials in additional geographies.”
The additional field trials will test these new, non-GMO, VLNC tobacco lines in multiple locations and soil conditions, allowing 22nd Century to select VLNC tobacco plants for optimal performance in different locations.
“This research marks a key milestone in 22nd Century’s reduced nicotine content tobacco R&D program and further extends our product development opportunities by enabling the creation of VLNC tobacco plants of many varieties, including bright, burley and oriental tobaccos,” said Michael Zercher, 22nd Century’s president and chief operating officer. “This non-GMO technology is also key to commercializing our VLNC tobacco cigarettes in international markets where non-GMO products are important. We are pleased with our R&D team’s progress and excited about this unique technology developed in collaboration with NCSU.”
April 30, 2020
BAT Resilient in Uncertain Times

Photo: British American Tobacco
British American Tobacco (BAT) has achieved all its 2019 financial targets, according to a company press release.
The company has consistently delivered on its high single-figure constant currency earnings growth target and continues to maintain this guidance for 2020, BAT wrote in its statement.
The beginning of 2020 has seen continued volume and value share growth of 40 basis points and 20 basis points, respectively; positive volume growth; and strong price mix with pricing in line with the company’s plan.
Despite the coronavirus outbreak, most BAT factories are open and operating at full capacity. The company has built up an average stock of about two months of finished goods with further stock throughout its wholesale and retail footprint. About 75 percent of BAT’s global revenue is in developed markets where distribution and availability are largely unchanged.
In a small number of markets where mandated by governments, the company’s combustibles manufacturing facilities have faced limited periods of shutdown. To date, though, BAT has seen limited impact on consumer demand, pricing or consumers’ ability to access products. Sales in global travel retail have been significantly impacted, although this represents less than 1 percent of the company’s sales. Only a few governments have restricted the sale of cigarettes in their countries.
BAT is anticipating a reduction in trade and consumer stocks and some effect on industry volume and revenue growth in the second quarter of 2020. This, together with some delayed launches in new categories, means results are expected to be weighted to the second half.
The company expects constant currency adjusted revenue growth around the low end of the 3 percent to 5 percent range in fiscal 2020 and continued progress toward the company’s 2023–2024 ambition of £5 billion ($6.2 billion) in revenue in new categories.
April 30, 2020