Business & Finance - Tobacco Reporter

Kingsway in Talks Over AIR Stake Sale

Kingsway Capital has begun meetings with big tobacco firms as the company prepares to sell its stake in Dubai-based tobacco business Advanced Inhalation Rituals (AIR), reports Reuters.

Kingsway is the majority owner of AIR, and the company has held talks with potential investors, including BAT and Japan Tobacco, as part of a dual-track process where a seller pursues a sale and an initial public offering at the same time.

Al Fakher, which manufactures flavored molasses for shisha pipes, is AIR’s most valuable business. An investment in AIR would provide access to the shisha and e-shisha market in the Middle East and elsewhere.

June 9, 2023

BAT Malaysia First-Quarter Profits Down

BAT Malaysia’s first-quarter net profits were MYR40.32 million ($8.76 million) compared to MYR52.28 million a year prior, according to the New Straits Times. Group revenue declined 25 percent.

The decline in revenue was due to lower volume prompted by the increase in vape usage and persistent tobacco black market, according to BAT Malaysia.

The company’s total market share was 51.5 percent, a decline of 0.4 percent compared to the first quarter of 2022.

“BAT Malaysia is maintaining the growth trajectory of its strategic brands within its premium, aspirational premium and value-for-money segments,” said Nedal Salem, managing director of BAT Malaysia.

“This is in tandem with the company’s aim to deliver combustible value growth to support its multicategory portfolio of reduced-risk products.”

“[W]e aim to continue growing our tobacco-heating product, Glo, which represents our efforts to offer a choice of reduced-risk alternatives to adult smokers,” Salem said. “We will also focus on investing in our VFM [value-for-money] brands and maintaining leadership in the premium segment.”

Short term, the company expects the economic environment to continue exerting pressure on financial performance. “We expect this challenging operating landscape to stretch disposable income, leading to downtrading from legal products to tobacco black market options.

“Nevertheless, in the medium term, we are confident that economic conditions will improve whilst the government looks at introducing balanced regulations on vapor and accelerating their interventions to reduce the tobacco black market,” according to the company.

May 31, 2023

New Company Offers Tobacco-Free Nicotine Products

The Public Investment Fund (PIF) has launched Badael, a new company offering tobacco-free nicotine products, reports the Saudi Gazette. Badael will offer its products across Saudi Arabia by the end of 2023 with an aim to expand regionally and internationally in the long term.

The PIF announced the establishment of Badael in the run-up to the World Health Organization’s World No Tobacco Day. The company aims to develop, manufacture and distribute innovative products targeted to reduce smoking prevalence and promote healthier lifestyles by offering tobacco-free and less harmful alternatives.

Badael will also aim to deliver on the PIF’s localization mandate by supporting domestic manufacturing, sourcing raw materials, knowledge transfer and development of intellectual property.

The company’s products will be manufactured in Saudi Arabia. Badael aims to provide new economic opportunities and create jobs in the area.

May 30, 2023

PMI Holds Virtual Annual Meeting

Philip Morris International held its 2023 annual meeting of shareholders. Andre Calantzopoulos, executive chairman of the board, addressed shareholders and answered questions. Jacek Olczak, CEO, gave a business presentation, which included an overview of PMI’s strong performance in 2022 and encouraging start to 2023; robust business fundamentals and rapid progress on its smoke-free transformation; excellent momentum in the heat-not-burn and nicotine pouch categories; further progress on sustainability, with continued recognition by leading external stakeholders; and commitment to rewarding shareholders over time.

“Our smoke-free transformation continued apace in 2022, with the growth of smoke-free products to nearly one-third of total net revenues for the year and the achievement of two important milestones—the acquisition of Swedish Match and the agreement to gain the full rights to commercialize IQOS in the U.S. in April 2024,” said Olczak.

“As a global smoke-free champion with leading brands IQOS and Zyn, we are well positioned to further accelerate our transformation in the years to come to the benefit of the company, our shareholders, other stakeholders and public health,” he said.

Approximately 81 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 12 nominees for director; approved, on an advisory basis, the compensation of named executive officers; approved, on an advisory basis, a one-year interval for the vote on the compensation of named executive officers; ratified the selection of PricewaterhouseCoopers SA as independent auditors; and voted against the shareholder proposal. Final voting results will be included in a Form 8-K that PMI will file with the SEC in the coming days.

An archived copy of the webcast of the meeting will be available for approximately one year from the date of the meeting. The presentation slides and script will be available as well.

May 4, 2023

22nd Century Signs Deal with Old Pal

22nd Century announced its second exclusive license, manufacturing and distribution agreement in the hemp/cannabis industry, signed with Old Pal, a consumer company started in California and now operating in eight U.S. states.

“Old Pal is the second leading consumer hemp/cannabis brand to adopt 22nd Century’s innovative strategic license, manufacturing and distribution agreement. This model enables brands to focus on product development, customer engagement and marketing while we provide expansive access to mass market channels urgently seeking new, high-margin, high-velocity products to meet growing consumer demand,” said James A. Mish, CEO of 22nd Century.

Initially launched in California in 2018, Old Pal gained recognition for its nostalgic branding. In addition, Old Pal’s continuously growing line of apparel, accessories and home goods has firmly established it as a prominent cultural figure in the world of cannabis, according to 22nd Century.

The exclusive license with 22nd Century covers Old Pal branded non-delta-9 THC, hemp-derived cannabinoid consumer products and accessories. Similar to 22nd Century’s first single-source integrated production, sales and distribution agreement in hemp/cannabis, signed with Cookies, the Old Pal agreement will leverage 22nd Century’s formulation, ingredient and manufacturing infrastructure plus the company’s turn-key sales and distribution platform for alternative consumer products in a complete go-to-market solution.

Combined, the company estimates that its agreements with Cookies and Old Pal represent more than $140 million in revenue opportunity with attractive margins over the terms of the contracts. 22nd Century is now advancing its initial mass market retail efforts for these products across the United States, leveraging a network of more than 200 wholesale distributors. The company continues to pursue additional exclusive license opportunities with industry brands interested in its innovative integrated solution.

May 2, 2023

BAT Partners with Charlotte’s Web

BAT has partnered with CBD firm Charlotte’s Web to develop a drug for an undisclosed neurological condition, reports Bloomberg. The partnership is part of BAT’s plan to diversify away from cigarettes.

A joint venture between BAT’s subsidiary AJNA BioSciences PBC and Charlotte’s Web, which BAT invested in last year, plans to seek approval from the U.S. Food and Drug Administration for a treatment made from hemp extract. AJNA invested $10 million in the deal. Charlotte’s Web and AJNA each own 40 percent of the entity while BAT controls the remaining stake, according to a statement.

April 7, 2023

22nd Century Enters Agreement with Cookies

22nd Century Group announced a new three-year exclusive license and distribution agreement with Cookies, a global hemp/cannabis company. The brand was founded in 2010 by CEO, rapper and entrepreneur Berner and Bay Area breeder and cultivator Jai.

“This transformational strategic license, manufacturing and distribution agreement with Cookies establishes the foundation of an innovative new CDMO plus distribution business model for 22nd Century at a time when mass market channels urgently need to find new, high-margin, high-velocity products to meet the rapidly growing consumer demand for CBD products,” said James A. Mish, CEO of 22nd Century. “Our complete, vertically integrated capabilities represent the first and only industry option providing Cookies’ category-leading CBD brand with a single-source, national solution across its entire family of products.”

“We are incredibly excited to expand our partnership beyond GVB with the 22nd Century Group. They have undoubtedly put together one of the most impressive teams in the space, and we look forward to expanding the national distribution of Cookies non-THC products together,” said Parker Berling, president of Cookies.

The exclusive license with 22nd Century covers all Cookies branded non-Delta-9 THC, hemp-derived cannabinoid consumer packaged goods, including sourcing of all ingredients and APIs; white-label manufacturing of vapes and other CBD products; and category management through retail distribution.

GVB Biopharma, a 22nd Century company, has manufactured various Cookies products for the past three years and under this new agreement will manufacture Cookies’ market-leading products, expected to account for more than half of Cookies’ non-Delta-9 cannabinoid sales.

The integrated go-to-market sales and distribution components of the agreement will leverage 22nd Century’s veteran consumer packaged goods sales team, which plans to distribute Cookies products in up to 18 markets targeted for the rollout of the company’s innovative VLN products during 2023.

The CPG sales team will target a market of approximately 60,000 retail stores consisting of independent retail, discount tobacco outlets and vape shops in nonrecreational states serviced by its network of top regional distributors and chain discount tobacco outlets. Products will also be available on the Cookies e-commerce website.

“Cookies products are a natural fit to the same points of sale as our FDA [U.S. Food and Drug Administration] MRTP [modified-risk tobacco product]-authorized VLN products. The combination of these two offerings will enhance our sales team’s product portfolio with a larger suite of small-footprint, high-velocity, high-margin CBD products, with Cookies’ internationally recognized products serving as a cornerstone brand as we build out this innovative hemp/cannabis CDMO+D platform,” said John Miller, president of tobacco products at 22nd Century.

April 5, 2023

PMI Releases Integrated Report

Philip Morris International released its fourth annual Integrated Report. Informed by a formal sustainability materiality assessment, the report aims to provide an objective description of the company’s business model, governance and management, strategy and performance.

“Despite its many tests, 2022 was a remarkable year that brought our employees closer and saw us make measurable strides toward achieving our purpose,” said Jacek Olczak, CEO of PMI. “We are progressing toward our 2025 aspiration of becoming a majority smoke-free company and ultimately phase out cigarettes. While a transformation of this magnitude and complexity cannot be achieved overnight, we are committed to making it happen as fast as possible. It is through constructive engagement that we will accelerate the pace of meaningful and impactful change and complete our transformation for good.”

Building on its ESG framework, PMI developed eight strategies targeting the company’s most pressing areas of impact. To accompany these eight strategies, PMI established 11 goals, which form the basis of its 2025 Roadmap, and 19 key performance indicators (KPIs) to measure progress via its Sustainability Index. Each KPI is also aligned with one of two drivers: product sustainability (11 KPIs) or operational sustainability (8 KPIs).

“Nonfinancial information is increasingly being used by external stakeholders to assess and compare a company’s performance to others, including the financial community in their analyses and investment decisions. It is key to the integrity of PMI’s reporting that the information and data that we publicly disclose accurately reflect our company’s progress, following clear calculation methods,” explained Emmanuel Babeau, chief financial officer of PMI.

April 5, 2023

STG Announces Annual Meeting

Scandinavian Tobacco Group’s annual general meeting will be held Thursday, April 13, 2023, at 4:30 p.m. (CEST) at the office of Kromann Reumert, Sundkrogsgade 5, 2100 Copenhagen.

Instead of attending in person, shareholders have the opportunity to follow the general meeting via live webcast transmission on the Investor Portal (available at http://investor.st-group.com). The general meeting and the webcast will commence on April 13, 2023, at 4:30 p.m. (CEST).

March 21, 2023

Universal Recognized as Supplier Engagement Leader

Universal Corp. has been recognized as a 2022 Supplier Engagement Leader by CDP, a nonprofit charity that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. This is the second straight year Universal has earned this recognition. The CDP’s Supplier Engagement Rating system independently evaluates how effectively companies are engaging their suppliers on climate change, using the CDP’s annual climate change questionnaire that covers governance, targets, scope 3 emissions and value chain engagement. The top 8 percent of assessed companies were selected as 2022 Supplier Engagement Leaders.

“We are honored to once again be recognized by CDP as a Supplier Engagement Leader,” said George C. Freeman III, Universal’s chairman, president and CEO. “At Universal, we work in partnership with our suppliers to reinforce the sustainability of our supply chains and meet our climate change goals. Universal is committed to setting high standards of social and environmental performance.”

March 21, 2023

Category: Business & Finance