Category: News This Week

Philip Morris International’s (PMI) progress in shifting business away from combustible cigarettes is becoming apparent in its revenue mix, according to an article in Forbes about sustainable investing.

Smoke-free products accounted for 13.8 percent of the company’s $29.6 billion revenue in 2018, according to CFRA Research, compared with 0.2 percent of sales in 2015.

Combustible unit shipments fell by 13 percent over the same period. PMI aims to reach at least 38 percent smoke-free sales by 2025 in conjunction with a reduction in cigarette shipments of nearly 40 percent.

In three markets, smoke-free revenue even accounts for the company’s majority of sales today.

Moving away from tobacco smoking not only benefits public health, it also has environmental benefits. The curing of leaf tobacco is an energy-intensive process associated with deforestation and carbon emissions.

Through various efforts, PMI has reduced its absolute carbon emission by 36 percent compared to a 2010 baseline and by 34 percent through its supply chain, according to the company.

The District Court of Maryland on July 12 issued an order that will set the U.S. Food and Drug Administration Center for Tobacco Products’ (CTP) Premarket Tobacco Application (PMTA) deadline for vapor products to May 12, 2020—10 months from now.

The new deadline is more than two years ahead of the current August 8, 2022 PTMA deadline that was reset in 2017 when former FDA Commissioner Scott Gottlieb took over his position.

As part of the order Judge Grimm noted that products can remain on the market for a year while the FDA-CTP reviews their applications and that the CTP has the ability to exempt new products from filing on a case-by-case basis.

The FDA last month proposed the shorter timeline after the court ruled in a lawsuit filed by anti-tobacco groups that the agency had exceeded its authority in allowing e-cigarettes to remain on the market until 2022 before companies applied for regulatory approval.

Morgan Stanley tobacco analyst Pamela Kaufman does not expect the CTP to contest the judge’s decision.

The Philippines will mandate licensing for all makers, sellers and distributors of e-cigarettes and vaporizers under the new guidelines covering the sector, reports The Business World.

On June 9, the Department of Health issued an administrative order requiring all participants in the vapor business to obtain a license from the Philippine Food and Drug Administration (FDA). The obligation pertains also to products without nicotine.

The FDA said it hopes to ban refills formulated to appeal to young users and will require tamper-resistant packaging and health warnings for refills and devices.

Users are also prohibited from vaping in public, which is allowed only in designated vaping areas.

Trade and Industry Secretary Ramon M. Lopez meanwhile called for more consultation with the industry, which he said has the potential to generate jobs.

The Department of Elections in San Francisco, California, USA, certified a ballot measure on July 10 seeking to overturn the city’s sales ban on vapor products, reports The San Francisco Examiner.

The measure was placed on the ballot through a signature campaign by the Coalition for Reasonable Vaping Regulations, funded by Juul. The group collected more than double the approximately 9,400 signatures needed to qualify for the ballot and submitted them to the department for certification last week.

“This initiative will bring the strongest regulation for an age-restricted product in the city—more than alcohol and other tobacco products,” Nate Allbee, spokesperson for the Coalition for Reasonable Vaping Regulation, said in a statement.

“We are confident voters do not want to ban the best mechanism for quitting smoking while leaving cigarettes, the leading cause of preventable death in the U.S., on the shelves. These regulations are the best way to stop youth vaping.”

“Juul will continue to work hard to deliberately deliver misguided messages to the residents here in San Francisco,” responded city supervisor Shamann Walton. “I am excited that we have a voting populace that will see right through their messaging and know that their ballot measure focuses on regulations that are already in place.”

Juul reported spending $1.5 million on the campaign.

Beginning in November, digital tax stamps will be required on all water pipe tobacco and e-cigarettes in the United Arab Emirates (UAE).

The Federal Tax Authority said in a statement that the decision supports its efforts to collect taxes, combat tax evasion and implement uniform procedures to ensure transparency, guarantee rights and highlight the responsibilities of all taxable persons.

The decision also stipulated that as of March 1, 2020, it will be prohibited to import designated excise goods not bearing the stamps into the UAE. Then, as of June 1, 2020, it will no longer be permissible to supply, transfer, store or possess unmarked designated excise goods in the UAE.

U.S. Food and Drug Administration (FDA) Acting Commissioner Ned Sharpless has released a statement on how he plans to regulate e-cigarettes, saying that the FDA oversight of these products is a top priority for the agency.

Some of the FDA’s plans include:

• Restricting youth access to electronic nicotine-delivery systems (ENDS)
• Conducting retailer and manufacturer checks
• Increasing requirements for ENDS manufacturers
• Utilizing premarket review requirements
• Providing data to inform premarket applications
• Preventing youth tobacco use through enforcement actions, policy and education
• Continuing to invest in more science and research

“While ENDS products appear to hold some promise in helping addicted adult smokers transition away from combustible tobacco to a potentially less harmful form of nicotine delivery, these products are not safe, and we cannot allow the next generation of young people to become addicted to nicotine,” Sharpless said.

Altria’s smokeless products division could earn the company close to $930 million in additional revenue over the next five years while also increasing its share in the company’s total revenue base, reports Forbes, citing research by Trefis Team.

Led by MIT engineers and Wall Street analysts, Trefis Team attributed the anticipated growth in part to demand from millennials for heated tobacco products.

Additionally, the FDA marketing approval for Philip Morris’ IQOS product is expected to open up the U.S. market further for heated-tobacco players. The company’s investment in Juul (which controls 70 percent of the smokeless market in the U.S.) is also expected to lead to a boost in segment revenues.

Overall, Trefis team expects Altria’s total net revenue to increase to $20.4 billion by 2023.

South Korea was the world’s second-largest heat-not-burn (HNB) cigarette market after Japan last year, and its growth will gather pace, reports Yonhap News citing Euromonitor International data.

The value of South Korea’s HNB market reached $1.67 billion last year, up from $453 million in 2017, according to Euromonitor. The country’s overall tobacco market reached $15.6 billion last year.

While South Korea’s overall tobacco market is anticipated to post limited growth through 2023, the industry tracker said the heat-not-burn tobacco market in the country is expected to grow 21 percent annually to reach $4.4 billion.

“In less than two years after the first release of heat-not-burn e-cigarettes in South Korea, the country became the world’s second-largest player next to Japan,” Euromonitor International said in its report.

Tobacco deliveries in Zimbabwe have surpassed the national projected production target of 185.7 million kilograms, with farmers having delivered 211 million kilograms since the marketing season started in March, reports The Herald.

However, this is still a decline of 6 percent from the 225 million kilograms that were sold by farmers during the same season last year.

Despite surpassing their target, many farmers have described the 2018/2019 season as a difficult one due to the late rains that affected production and quality of the crop in some areas.

The U.S. Food and Drug Administration (FDA) has gone too far in its bid to regulate the cigar industry, according to Florida Senator Marco Rubio.

Writing in the Tampa Bay Times, Rubio said that the 2016 FDA rule finalized by the Obama administration threatens the livelihood of America’s premium cigar manufacturers and retailers.

“The rule was intended to protect children from cigarettes and other tobacco products marketed to youth,” he wrote. ‘I agree that children should not be targeted for tobacco consumption. However, the federal government’s own research proves what we already knew—children are not smoking hand-rolled premium cigars, and those manufacturers are not marketing premium cigars to kids. This rule’s practical effect will be devastating for the premium cigar industry.”

Rubio has been an outspoken advocate for the premium cigar industry. In April, he held a field hearing in Tampa, Florida, about FDA regulations. Earlier this year, he reintroduced a bill to exempt the handmade cigar industry from FDA regulation. In July 2018, he referred to the FDA regulations on cigars as “the epitome of government overreach” during a speech on the Senate floor.

“If the FDA fails to recognize that the practical effect of its rule will put America’s premium cigar industry out of business,” Rubio wrote, “Congress must act to save this iconic industry.”