Category: News This Week

Weed legalized
Malawi has passed a bill decriminalizing cannabis for medicinal and industrial purposes.
The bill comes five years after a motion to legalize industrial hemp.
Zimbabwe, Zambia and Lesotho previously legalized medicinal cannabis; medicinal and recreational use was decriminalized in South Africa in 2018.
“Today is a very glorious day for me personally and, I think, for the entire nation,” said Boniface Kadzamira, the former Member of Parliament who tabled the topic in 2015, following the successful passage of the bill.
The economic potential of the industry was the main driver behind the passage of the bill. The national poverty rate in Malawi was 50 percent in 2016, and Malawi remains one of the poorest countries in the world, according to the World Bank.
“It is my strong view that cannabis will in the long run replace tobacco to become our major cash crop—that will contribute hugely to the GDP,” said Kadzamira. Nearly 80 percent of Malawi’s population is employed in agriculture, and authorities want the newly legalized cannabis sector to be processed in-house unlike tobacco.
March 4, 2020
No incentive for Willard
Howard Willard, CEO of Altria, will not receive an annual incentive award as a result of the company’s declining investment in Juul Labs.
“The compensation committee considered the significant impact that Altria’s 2018 minority investment in Juul Labs Inc. has had on shareholder value. As a result … Willard should not receive an award under the Annual Incentive Plan for 2019,” the company stated.
Willard’s base salary in 2020 will not increase from $1.25 million, according to Altria. His 2018 annual incentive was $2.25 million.
Altria’s stake in Juul Labs was valued at $4.2 billion at the end of 2019, down from $12.8 billion in 2018.
According to Reuters, U.S. regulators have opened a probe into Altria’s investment.
March 4, 2020
Vaping still preferable
Public Health England is sticking to its long-held conviction that vaping is a better alternative to smoking combustible cigarettes and that never-smokers should be encouraged not to smoke or vape.
Its sixth report on e-cigarettes, “Vaping in England: 2020 evidence update summary,” shows a decline in adults who view vaping as less harmful than smoking—from 45 percent in 2014 to 34 percent in 2019. The report also states that there has not been a major increase in youth vaping and that only 1 percent of youth never-smokers are current vapers.
Based on the report, PHE concluded that vapor products, both nicotine and non-nicotine products, should be regulated, but banning flavors would negatively affect adult smokers who are attempting to quit smoking using vapor products. The report also states that “NHS [National Health Service] England should issue guidance on vaping in mental health trusts to ensure consistency and equity across the NHS” and “the spate of lung injuries and deaths in the U.S. is not attributable to the regulated nicotine vaping products currently sold in England. But all suspected adverse reactions or suspected deaths need to be assessed.”
According to the report, perceptions of harm from vaping among smokers are increasingly out of line with the evidence. “Safety fears may well be deterring many smokers from switching, leaving them on a path to years of ill health and an early death due to their smoking,” said John Newton, director of health improvement at PHE.
Vaping advocates welcomed the report. “[The report] provides further and concrete evidence that vaping has a crucial role to play in changing the lives of smokers around the country, and it dispels the myths that youth vaping is currently a major issue,” said John Dunne, director of the U.K. Vaping Industry Association.
“However, it also tells us that the gross misinformation that has been spread about the safety of vaping has had an effect on consumers’ perceptions of e-cigarettes, which could greatly influence their decision to switch from smoking, which carries significantly more health risk.”
March 4, 2020
Babeau joins PMI
Philip Morris International has appointed Emmanuel Babeau as its chief financial officer, replacing Martin King. King will be taking on a new role as CEO, PMI America, a newly created function. Reporting to global CEO Andre Calantzopoulos, King will coordinate both international services based in the U.S. and all U.S. representation, including PMI’s relationship with Altria, which is commercializing IQOS in the American market.
Babeau will join PMI on May 1, 2020, from Schneider Electric, where he served most recently as deputy CEO in charge of finance and legal affairs. A native of France and graduate of ESCP Business School, he has spent nearly three decades leading fundamental change across industries.
“PMI is undergoing a period of intensive change as we transition away from cigarettes to our science-based smoke-free products—products that are much better alternatives than continued cigarette smoking,” said Calantzopoulos. “We are thrilled that Emmanuel will be joining us to further accelerate the PMI transformation towards a smoke-free future. He has an enviable track record of challenging the status quo and growing businesses under the most complex circumstances.”
During his 10 years at Schneider Electric, Babeau helped to grow the company from €18 billion market cap to approximately €60 billion ($66.73 billion), while transforming the business model from hardware products for electrical distribution into digital technologies driving the energy transition and industry 4.0. In 2019, Harvard Business Review cited Schneider Electric as one of the top 15 business transformations of the past decade. The company now has €27 billion in revenues and is a leader in digital solutions for efficiency and sustainability.
“PMI is precisely the challenge I was looking for: a global leader in its industry with a commitment to fundamental change—and one that is prompted not only by business strategy but also by a desire to operate more sustainably and in the interest of public health,” said Babeau. “I am excited about working with André Calantzopoulos, Jacek Olczak and the rest of the leadership team to achieve PMI’s business objectives.”
March 2, 2020
Flavor ban passed
The U.S. House of Representatives passed a ban on flavored vapor and tobacco products, including menthol cigarettes, on Friday, reports The Hill.
Sponsored by Energy and Commerce Committee Chairman Frank Pallone Jr. and Representative Donna Shalala, the legislation aims to curb the rise of youth vaping rates by banning nontobacco flavors such as mint and mango that public health experts say lure children into smoking.
Democrats hope to pass the bill to present a contrast to the Trump administration’s approach to youth vaping rates. The Food and Drug Administration began enforcing a limited ban earlier this month on flavored pod-products with exemptions for menthol and tobacco flavors. It also exempted open-tank and disposable e-cigarettes.
Leading public health groups, including the American Cancer Society, American Heart Association and the American Lung Association, argue the bans represent the best way to tamp down rising youth vaping rates.
“This legislation is exactly what’s needed to reverse the youth e-cigarette epidemic and end the tobacco industry’s long and lethal history of targeting kids and other vulnerable groups with flavored products,” said Matthew Myers, president of the Campaign for Tobacco-Free Kids
The Senate is unlikely to consider the bill, however, and President Donald Trump’s advisers said Thursday they would recommend he veto it in its current form.
While most Democrats supported the measure, some voted against the bill, worrying it could give police a way to target African Americans. Menthol cigarettes are disproportionately used by African Americans.
“Law enforcement would have an additional reason to stop and frisk menthol tobacco users because menthol would be considered illegal under this ban,” said Representative Yvette Clarke, a member of the Congressional Black Caucus.
She also took issue with the fact that the bill exempts premium cigars favored by white people but took aim at products used by black people.
March 2, 2020
KT&G signs UAE deal
KT&G has signed a KRW2.2 trillion ($1.8 billion) contract with Alokozay of Dubai for a period of seven years and four months.
Industry officials said the deal will help KT&G avoid the huge costs required to set up an independent sales network in the region. The deal also brings predictability to the South Korean company’s business because it requires Alokozay to purchases certain volumes of KT&G product for the duration of the agreement.
On Jan. 29, KT&G signed a supply deal signed with Philip Morris International to export e-cigarettes globally for the next three years.
In recent years, KT&G has been deriving a significant portion of profits from real estate revenue rather than cigarettes and vapor products. With the recent export deals, however, analysts and the tobacco maker expect a long-term improvement in corporate value and growth.
“Following the deal, we expect long-term growth potential and profitability from our global tobacco business and improvements in overall corporate value,” a KT&G official said.
KT&G has been expanding outside its home market and aims to be one of the world’s largest tobacco firms by 2025.
The firm plans to expand its operation from 80 countries to 100 countries this year.
March 1, 2020
New leadership in Bangladesh
Japan Tobacco International (JTI) has appointed Neil Coupland as its new managing director in Bangladesh, reports The Daily Star, citing a company press release.
According to JTI, Coupland has nearly three decades’ experience in tobacco and related industries, working for companies such as British American Tobacco, Imperial Tobacco and security solutions provider Sicpa.
Coupland joined JTI in 2008 as general manager of Romania, Moldova and Bulgaria before taking on the role for Poland and Middle Americas.
“I am really excited to be in Bangladesh where the country is going through a transformation with a thriving economy, improved investment climate and pulsating energy around,” said Coupland.
“I am looking forward to work with the different stakeholders in and outside of our business to create JTI in Bangladesh as a role model of foreign investment contributing to the economy, people development and community investment.”
March 1, 2020
Parkside anniversary
Parkside, a supplier of conventional, functional and sustainable paper and plastic flexible packaging solutions, is celebrating its 15th anniversary.
The company was established in 2005 to manufacture high-quality flexible packaging mainly for the European tobacco and food markets. It has since shifted its tobacco focus into Asia and developed into a major flexible packaging manufacturer in the U.K. and Europe for sustainable packaging solutions.
“We’re incredibly proud to be celebrating 15 extremely successful years in the packaging industry,” said Robert Adamson, managing director of Parkside. “This milestone is a great testament to our highly committed team who strive to innovate and respond to ever-evolving market trends.”
February 27, 2020
ST reports results
Scandinavian Tobacco Group reported net sales of DKK6.87 billion ($1 billion) and EBITDA before special items of DKK1.51 billion for the full year 2019. This corresponds to an organic decline of 2.6 percent in net sales and organic increase of 7.1 percent in EBITDA, and it is in line with the financial guidance for the year.
Net profit increased to DKK748 million from DKK666 million.
“In 2019, we saw strong financial performance across our four divisions with 7.1 percent organic EBITDA growth and free cash flow before acquisitions of DKK1,187 million,” said Niels Frederiksen, CEO of Scandinavian Tobacco.
“During the year, we also took significant steps in shaping the future of Scandinavian Tobacco Group by announcing our biggest acquisition in recent history—namely Royal Agio Cigars—and by accelerating the implementation of ‘Fueling the Growth,’ our groupwide transformational program.”
February 27, 2020
‘Progress in all areas’
British American Tobacco (BAT) reported an increase in revenue of 5.7 percent to £25.88 billion ($33.3 billion) for the year ending Dec. 31, 2019.
Profit from operations declined 3.2 percent to £9.02 billion from the previous year. However, adjusted profit from operations rose by 7.6 percent to £11.13 billion from 2018.
BAT’s new product categories revenue grew by more than one-third to £1.21 billion at constant rates with strong growth in all categories, despite the slowdown in the U.S. vapor market. Excluding U.S. vapor, new categories grew by 39 percent at constant rates.
“I am delighted with the progress we have made in all areas,” said Jack Bowles, CEO of British American Tobacco. “We have delivered value growth from our combustible business and grown our new categories business, now providing potentially reduced-risk products to close to 11 million consumers.
“In September, we announced a significant restructuring and simplification program, which is largely complete. This will create the capabilities and resources to continue investing in new categories and allow us to deliver on our financial commitments. Looking into 2020, we are confident of another year of high single-figure adjusted constant currency earnings growth.”
February 27, 2020