Tobacco industry representatives are talking to the European Union about postponing the deadline to sell off stock that does not comply with the upcoming ban on menthol cigarettes and new track-and-trace requirements.
On May 20, two new EU directives are set to come into effect. Article 7 bans the sale of cigarettes with “characterizing flavors” such as menthol. Article 15 requires all tobacco products sold in the EU to comply with track-and-trace rules such as carrying a “unique identifier” to cut down on illicit trade.
The May 20 deadline was chosen to give suppliers a chance to sell off stock that does not comply with the new rules. Article 15 came into effect in May 2019 but offered a grace period for noncompliant products to be removed.
The Covid-19 shutdown has left many retailers unable to sell off their noncompliant products and facing losses now that the lockdowns and travel restrictions in many EU countries have been extended into next month.
The EU Parliament has not commented on a possible extension.
Institutional Shareholder Services (ISS) is recommending that investors oppose British American Tobacco’s (BAT) remuneration report at its annual meeting later this month.
The proxy advisory firm says support for BAT’s pay report is unjustified because of the increase in CEO Jack Bowles’ salary from £1.18 million ($1.45 million) to £1.29 million. Many leaders at FTSE peers have taken temporary pay cuts because of the Covid-19 outbreak, according to ISS.
BAT defended the pay increase. “Jack Bowles was appointed on a package that was 21 percent lower than that of his predecessor,” a company spokesman said on Friday.
“Following the 9.5 percent pay increase for Jack following a very strong first year in role, his total fixed remuneration is still 15 percent lower than his predecessor.”
The company also noted that its remuneration report had won the backing of Glass Lewis, another proxy adviser.
Imperial Brands will delay the release of its half-year earnings for fiscal year 2020 by two weeks due to the coronavirus outbreak. The company will now release its report on May 19 instead of May 5.
The two-week delay is intended to give auditors more time to prepare and review statements. “With an already tight reporting timetable and with newly appointed auditors, we have therefore agreed with Ernst & Young that the steps both businesses are taking in relation to Covid‐19 mean it will take longer to prepare and review Imperial Brands’ interim financial results,” the company said in a statement.
Japan Tobacco International (JTI) will open a global business service (GBS) center in Manila, Philippines.
The GBS center is expected to help bring jobs to those who lost employment due to the coronavirus outbreak.
“The Manila GBS center becomes JTI’s third global hub after recently opening two similar centers in Warsaw, Poland, and in St. Petersburg, Russia,” JTI said. “The GBS center will employ up to 350 people within the next three years, bringing the total number of JTI employees in the Philippines to 5,000 including those in a manufacturing plant in Batangas province.”
Living up to its reputation for recession resilience, the cigarette industry appears to offer a safe haven in the current uncertain business environment too.
Morgan Stanley analysts Pamela Kaufman and Christine Yang expect cigarette fundamentals to be relatively strong against the current challenging consumer and economic backdrop, reflecting consumer pantry loading, greater ease of smoking while at home and greater consumption from the anxiety brought on by the coronavirus pandemic.
Smoker behaviors and attitudes toward cigarettes do not appear to have been altered by the pandemic, according to Morgan Stanley’s weekly AlphaWise survey of 2,000 consumers.
Nonetheless, Kaufman and Yang expect Philip Morris International (PMI) and the Altria Group to reduce their 2020 guidance along with their first-quarter results
PMI must cope with unfavorable currency exchange rates and moderating IQOS growth in Italy and Russia while Altria must deal with a higher minimum age for tobacco purchases in the United States. While lower gasoline prices may boost cigarette purchases at gas stations, Altria also faces the prospect of consumer downtrading to less profitable cigarette brands due to high U.S. unemployment.
Altria Group today announced Howard Willard’s retirement as chairman of the board of directors and chief executive officer of Altria, effective April 14, 2020. Willard, who was recovering from Covid-19, decided to step down following 28 years of distinguished service to Altria and its subsidiaries.
Following Willard’s retirement, Altria’s board of directors elected Billy Gifford to serve as Altria’s CEO. Gifford has served in numerous senior leadership roles during his more than 25-year career at Altria, including most recently vice chairman and chief financial officer where he was responsible for Altria’s financial functions as well as its core tobacco businesses, sales and distribution business, and consumer & marketplace insights team. Previously he served as Altria’s senior vice president, strategy and business development and president and CEO of Philip Morris USA. Gifford currently serves as a director at Anheuser-Busch InBev SA/NV as one of Altria’s designees.
Altria also announced the board’s decision to separate the roles of chairman and CEO. The board elected Thomas Farrell, formerly the board’s independent presiding director, as independent chairman of the board, effective April 16, 2020.
“The board thanks Howard for his nearly 30 years of distinguished service to Altria and for helping to set the course for Altria’s 10-year vision to responsibly lead the transition of adult smokers to a non-combustible future,” said Farrell. “Our election of Billy as the next CEO reflects the board’s belief that his collaborative leadership style, strategic mindset and deep financial and industry expertise are right to lead Altria towards that future.”
“We believe we’re well positioned to make significant progress against our vision,” said Gifford. “I’m excited to work with our strong leadership team, fantastic employees and key stakeholders to lead Altria forward in its pursuit of the 10-year vision.”
With Gifford’s new position, the board also elected Salvatore Mancuso executive vice president and chief financial officer. Over the course of his more than 29 years with Altria, Mancuso has held a variety of leadership roles across the finance, compliance and strategy & business development organizations. In his most recent role as senior vice president, finance and procurement, Mancuso oversaw Altria’s treasury, tax, audit, financial planning & analysis, and controller functions while also overseeing the procurement and information services teams, among others.
“Sal is a well-respected leader across our finance organization and the Altria family of companies. I look forward to continuing to work closely with him in his new role as our CFO,” said Gifford.
The CEO change does not come as a complete surprise, given the recent underperformance of Altria’s stock. Altria faced multiple setbacks during Willard’s two-year tenure, including two write-downs of its Juul investment and a Federal Trade Commission investigation of the December 2018 deal.
In a note to investors, Morgan Stanley said the leadership change offers Altria the opportunity to create shareholder value by, among other things, accelerating investment in reduced-risk products and accelerating share buybacks.
The U.S. Food and Drug Administration (FDA) has set May 18, 2020, as the deadline for the submission of public comments on 22nd Century Group’s Modified Risk Tobacco Product (MRTP) application.
The application seeks authorization from the FDA to allow 22nd Century to market its reduced nicotine content cigarettes under the brand name VLN, with packs and advertising stating that the product contains 95 percent less nicotine than conventional tobacco cigarettes, as well as related claims regarding reduced nicotine exposure.
“We are very pleased with the progress our team continues to make towards receiving FDA authorization to market our VLN reduced nicotine content cigarettes,” said Michael Zercher, president and chief operating officer of 22nd Century Group. “With the imminent closing of the public comment period, we are hopeful that we will receive a positive decision from FDA allowing us to introduce our reduced nicotine content cigarettes to adult smokers looking to reduce their exposure to nicotine.”
22nd Century’s reduced nicotine content cigarettes enable adult smokers to experience the same taste and smell as conventional cigarettes but with minimal exposure to nicotine. Numerous independent scientific studies funded by the National Institutes of Health and other U.S. federal government agencies using the company’s reduced nicotine content cigarettes studies show that smokers who use 22nd Century’s reduced nicotine content cigarettes reduce their nicotine exposure and dependence, smoke fewer cigarettes per day, experience reduced withdrawal symptoms, increase their number of smoke-free days, and double their quit attempts.
The company believes that bringing its reduced nicotine content cigarettes to market will be an important step towards the implementation of the FDA’s proposed plan to require all cigarettes sold in the U.S. to be made “minimally or non-addictive.”
By limiting the nicotine content of all combustible cigarettes to just 0.5 milligrams of nicotine per gram of tobacco, a level already achieved in VLN, FDA projects that 5 million adult smokers would quit one year after implementation and more than 8 million American lives would be saved by the end of the century.
Coresta will hold its 2020 congress in Vienna, Austria, from Oct. 11–15.
The theme of the congress is “Integrated Science: Opportunities and Challenges,” and it will be hosted by Japan Tobacco.
The congress will be held at the Hilton Vienna Hotel. Early-bird registration will run through Aug. 5, 2020, and a working program will be available at the end of June.
“The forthcoming congress is an opportunity for delegates to share their experiences and advancements in science with a focus on opportunities and challenges now and in the future,” Coresta wrote in its newsletter.
Those wishing to present papers at the congress can submit abstracts through Coresta’s website. Submissions close May 15.
The Tobacco Board of Zambia (TBZ) says measures have been put in place to protect farmers from contracting Covid-19 during the marketing season.
Chief Executive Officer James Kasongo said the booking of tobacco for sale during the marketing season will be done electronically—through email or text messaging.
The TBZ bright leaf system will book tobacco at Lusaka main sales floor and will be linked to the organization’s regional offices, according to Kasongo.
Reynolds American Inc. (RAI) has submitted two new premarket tobacco product applications (PMTAs) to the U.S. Food and Drug Administration (FDA). RAI is seeking marketing orders for its Vuse Vibe and Vuse Ciro vapor products, which would allow these products to remain on the market after the FDA’s deadline for PMTAs for electronic nicotine-delivery systems.
The applications include a range of scientific studies for Vuse Vibe and Vuse Ciro using well-known methodologies, including the comparative assessment of cigarettes and associated health risks. Though the PMTAs themselves are considered commercially proprietary and are thus confidential, the data and information submitted to the FDA include the results of product analyses, nonclinical health risk information and human health and population information, including the impact to both users and nonusers of tobacco products.
According to RAI, the results of these studies demonstrate that the continued marketing of the Vuse Vibe and Vuse Ciro products is appropriate for the protection of the public health.
“I am incredibly proud of our diverse team of scientists, researchers and regulatory experts, who have worked tirelessly together to complete these applications well ahead of the FDA’s May deadline for ENDS products,” noted Reynolds’ executive vice president and head of scientific and regulatory afairs, James Figlar.
The PMTAs for Vuse Vibe and Vuse Ciro are the second and third complete grouped PMTA applications submitted by Reynolds to the FDA for review, following the initial PMTA applications for Vuse Solo submitted in October 2019.
Living up to its reputation for recession resilience, the cigarette industry appears to offer a safe haven in the current uncertain business environment too.
