Category: Business

Bank Policies Threaten Egypt’s Leaf Imports

Photo: Taco Tuinstra
The reluctance of banks to open the documentary credits required to import leaf tobacco is endangering the operations of Egypt’s tobacco factories, reports Egypt Independent, citing the Tobacco Division of the Federation of Egyptian Industries ((FEI).
FEI Division Head Ibrahim al-Embabi warned that more than 23 factories will close following the Eid al-Fitr holiday, after which they will have used their entire stock of raw tobacco. Due to a ban on tobacco cultivation in Egypt, the country’s tobacco industry is entirely dependent on leaf imports.
Earlier this year, Egypt’s Central Bank of Egypt stopped collecting documents upon import, requiring importers to cover the entire value of the shipment before importing. The decisions forced many factories, including tobacco manufacturing plants, to suspend their imports of raw materials.
Al-Embabi said that stopping the import of raw materials and the consequent disruption of production will lead to the displacement of nearly 30,000 direct workers in the sector, and threaten the state’s intake of taxes and fees paid by cigarette and tobacco companies, which exceed EGP79 billion ($4.27 billion) annually.
Tobacco factories import raw materials worth about $500 million each year while exports reach $120 million annually.
The remaining percentage is used to satisfy the needs of the local market. Despite its high consumption of imported raw materials, the tobacco sector is the state treasury’s most important source of revenue, according to al-Embabi.
April 27, 2022
Russian Tobacco Mogul Faces Scrutiny

Photo: GAlexS
Metro published a profile of Russian tobacco mogul Igor Kesaev, who has been sanctioned by the EU and the U.K. for aiding Russia’s invasion of Ukraine.
Listed by Forbes as Russia’s 35th-richest person last year, Kesaev’s holdings have included a major stake in the V.A. Degtyarev factory, which makes machine guns, anti-tank and anti-aircraft weapons, some of which have been used in Ukraine, according to sources.
Until recently, Kesaev was also the board chairman of Russia’s leading tobacco distributor, TC Megapolis. Kesaev resigned from the board on April 11, 2022, according to a Russian-language press release, which stressed that Megapolis was not subject to EU sanctions and Kesaev did not influence the company’s business.
Kesaev’s involvement in tobacco dates to the early 1990s. As the Soviet Union broke up into its constituent republics, he started an importing business that worked with international tobacco companies eager to get their products into the Russian market, according to a 2014 profile of the magnate published on Forbes’ Russian website.
Russia was—and continues to be—an attractive market for international tobacco companies, with its large population of around 145 million people and one of the highest smoking rates in the world. More than 40 percent of men there light up, according to the World Health Organization.
According to the Forbes profile, Kesaev graduated from Russia’s prestigious Moscow State Institute of International Relations. In the 1990s, he lived in Switzerland, where he developed personal connections with executives at Philip Morris International’s regional headquarters in Lausanne.
Over time, Kesaev built the largest tobacco distributor in Russia through acquisitions of regional competitors, according to Forbes’ Russian website. Today, Megapolis delivers to 160,000 retailers across the country, according to the firm’s website. In 2013, PMI and Japan Tobacco International both purchased 20 percent stakes in Megapolis’ holding company for $750 million each.
Kesaev has also been involved with the tobacco business in Ukraine. Following the toppling of Ukraine’s pro-Russian president, Viktor Yanukovych, in 2014 and Russia’s subsequent annexation of Crimea, Ukrainian officials began scrutinizing the role of Russian companies in various sectors of its economy.
At the time, Trading Company Megapolis-Ukraine controlled 99 percent of Ukraine’s tobacco distribution market, according to research from the Anti-Monopoly Committee of Ukraine.
Kyiv sanctioned Kesaev in 2016 for unspecified actions that it said threatened Ukraine’s national security. A top Ukrainian prosecutor later accused Kesaev of supporting “terrorist organizations” by supplying arms to Russian-backed separatist groups that have been fighting for nearly a decade to carve out two independent states—Donetsk and Luhansk—in eastern Ukraine.
April 26, 2022
Egypt Legalizes E-Cigs

Photo: Dzmitry
The vapor industry has welcomed Egypt’s decision to allow the import and commercialization of e-cigarette product.
“The lifting of the ban highlights the Egyptian authorities’ progressive approach to e-cigarettes and sets the stage for the creation of a regulated market rich with business opportunities, through serving the demand for easily accessible, quality products by legal age (adult) consumers across the country,” wrote RELX International, a leading player in the segment, in a statement dated April 24.
With its recent decision, Egypt joins global and regional markets, such as Kuwait, Saudi Arabia and the United Arab Emirates, which have legalized and commercialized the consumption of e-cigarettes. As regulators around the world become more accepting of e-cigarettes, the market is expected to continue its steady growth in the coming years.
As of March 2022 global e-cigarette market revenues were $22.95 billion, and the market is expected to expand annually at a compound annual growth rate of 4.19 percent until 2027, according to Statista.
“The decision by Egyptian authorities reflects its commitment to support legal businesses in the country while cracking down on the illicit trade of those products, in line with what we are seeing in an increasing number of markets around the globe,” said Robert Naouss, REXL International’s external affairs director for the Middle East, Northern Africa and Europe
“The business and investment environment in the country will significantly benefit from this decision, as will adult consumers who can now conveniently, and legally, purchase better alternatives to combustible cigarettes. We look forward to working with our partners to grow and protect their income via our portfolio of quality products”
By lifting the ban on e-cigarette products, Egyptian authorities have opened the door to a plethora of business and investment options, according to RELX International. “Authorized e-cigarette products are traditionally retailed by small- and medium-sized businesses, so the move will bolster existing businesses that sell such products, and will attract entrepreneurs wishing to set up new retail points across the country. It will likewise draw investment into the country from e-cigarette brands who wish to set up shop in the country and address the market,” the company wrote in its statement.
“Adult consumers stand to benefit from the move, as they now have legal access to e-cigarettes whether they wish to switch to a better alternative to traditional cigarettes. Several health authorities and regulators including the U.K.’s NHS and the Ministry of Health of New Zealand have positively clarified their position on vaping as a way for people to move away from smoking combustible cigarettes.
“In addition, the decision will contribute to the country’s economic recovery post-pandemic via the collection of tax revenues from legally imported products. Simultaneously, it will allow Egyptian authorities to clamp down on tax evasion issues associated with illegal market players. In a similar vein, the move and balanced regulation of the market offers authorities and e-cigarette vendors a path to stem the spread of inferior and dangerous black-market products that do not meet the standards and regulations outlined by Egyptian and international authorities. In doing so, adult consumers can rest assured the products they do find on sale are indeed a reliable alternative to traditional cigarettes.”

April 25, 2022
Imperial to Transfer its Russian Business

Photo: GerMann
Imperial Brands today announced the transfer of its Russian business to investors based in Russia, subject to finalization of the registration of the transaction with local authorities, which is expected to take place shortly.
The transaction aligns with the company’s desire to divest its entire Russian operation as a going concern in order to provide the best outcome for its 1,000 Russian employees.
Imperial Brands’ Russian operations include a sales and marketing business, and a factory in Volgograd.
“We continue to support our Ukrainian colleagues and their families, including with transport and accommodation to enable them to escape the areas most heavily affected by war, and resettlement assistance for those who have left Ukraine,” the company wrote in an update.
Imperial Brands said its previous guidance on the financial impact of its exit from Russia and suspension of our Ukraine operations remains unchanged.
In fiscal year 2021, Russia and Ukraine represented in total around 2 percent of Imperial Brands’ net revenues and 0.5 percent of adjusted operating profit. The company anticipates a non-cash write off of around £225 million ($293.78 million) for this transaction, which it expects to be treated as an adjusting item.
April 21, 2022
Kate Wang Resigns from RLX Committees

Ying (Kate) Wang (Photo: RLX Technology)
Ying (Kate) Wang has resigned as a member and the chairperson of the compensation committee and the nominating and corporate governance committee of RLX Technology’s board of directors to help the company comply with the relevant New York Stock Exchange’s listing requirements on board committees’ independence.
Wang is the co-founder, chairperson of the board of directors and CEO of RLX Technology’s.
Going forward, the compensation committee and nominating committee will be composed entirely of independent directors, namely Zhenjing Zhu and Youmin Xi, RLX Technology announced in a press note. Concurrent with Wang’s resignation from the compensation committee and the nominating committee, Xi was appointed as the chairperson of the nominating committee and the chairperson of the compensation committee.
April 11, 2022
BAT invests in Bangladesh

Photo: Piotr Pawinski
British American Tobacco will invest BDT5.74 billion ($66.55 million) in its Savar, Bangladesh, operations to cater to export opportunities and create contingency capacity, reports The Daily Star.
The announcement follows a BDT5.14 billion investment in 2021 to increase the facility’s production capacity.
“With an eye on future exports, the board has approved an investment of about Tk 574 crore to further expand the Savar factory’s production capacity,” said Sheikh Shabab Ahmed, head of external affairs at BATBC.
“We believe with the improved capacity we will be equipped for any future demand,” he added.
In 2021, the company’s net turnover rose 24 percent to BDT74.87 billion, up from BDT60.29 billion the previous year, according to its annual report. In the same period, BAT Bangladesh logged profits of BDT14.96 billion, up 37.5 percent over that posted in 2020.
BATBC has cigarette factories in Dhaka and Savar, a green leaf threshing plant in Kushtia, a green leaf re-drying plant in Manikganj, and a number of leaf and sales offices throughout the country.
April 4, 2022
Walmart to Limit Tobacco Sales

Photo: Sundry Photography
Walmart will stop selling cigarettes in select stores across the U.S., reports AP.
Cigarettes will be removed from some stores in California, Florida, Arkansas and New Mexico; however, Walmart did not make it clear how many of its stores will remove tobacco entirely.
In place of cigarettes, the chain has added more self-checkout registers and items like candy and grab-and-go foods in some of these stores.
Decisions on removing cigarettes will be made on a store-by-store basis according to the business and particular market, Walmart said. “We are always looking at ways to meet our customers’ needs while still operating an efficient business.”
March 29, 2022
SWM and Neenah Paper Agree to Merge

Photo: Mikael Damkier
Neenah Paper and Schweitzer-Mauduit International (SWM) have agreed to merge, creating a specialty materials company with a combined $3 billion in sales. The new company does not have a name yet.
The combined company would be headquartered in Alpharetta, Georgia, USA. Neenah President and CEO Julie Schertell will lead the new company while SWM CEO Jeff Kramer will take a role as a strategic advisor. Five SWM board members and four Neenah board members will make up the combined company’s board of directors.
The two companies expect to trim at least $65 million from their operating costs over the next two to three years. It will do so through production synergies and “highly complementary technologies, geographies and product portfolios in specialty materials,” the companies said in a news release. The new company would have strong market share in growing categories like healthcare and wellness, protective and adhesive solutions, industrial solutions, packaging paper and specialty paper.
“This merger is an exciting next step on our journey and one that will deliver significant shareholder value,” said Kramer. “The combination with Neenah is a continuation of our strategic intent to solve our customers’ most complex design challenges. We are excited by the numerous benefits of this merger, including the significantly broadened customer base, product lines and technical expertise.”
“This combination is a unique opportunity to accelerate our growth strategy and continue the transformation of our business, creating a global leader in specialty materials with strong and defensible positions in attractive end markets,” said Schertell. “Merging our two companies enhances our ability to grow and solve the needs of our customers for demanding, innovative products that address global challenges, such as the necessity for clean water and air, sustainable alternatives, and enhanced health and wellness.”
The deal has been approved by both companies’ boards but still must be approved by shareholders for both companies and regulators.
Neenah was founded in 1873. It was acquired by Kimberly-Clark in 1902 and operated until Kimberly-Clark spun off its regular paper-making operations under the Neenah name in 2004. Schweitzer-Mauduit is also a former division of Kimberly-Clark that was spun off as an independent company in 2015.
March 29, 2022
RAI Announces Site Closures

Photo: RAI
Reynolds American Inc. (RAI) will reduce its U.S. manufacturing footprint and close of some sites to position the company for future growth, the company announced.
The decision follows a detailed strategic review of the company’s operations.
Guy Meldrum
“These decisions are never easy,” said RAI President and CEO Guy Meldrum in a statement. “We are focused on delivering long-term, sustainable growth in a rapidly evolving environment. While these changes are necessary to support the future of our business, they will be extremely difficult for our employees at the manufacturing sites that are closing and today we are focused on providing support to them through this transition.”
Beginning next month and progressing through 2024, Santa Fe Natural Tobacco Co.’s operations in Oxford, North Carolina, and American Snuff Co.’s operations in Winston-Salem, North Carolina will move to Tobaccoville, North Carolina. ASC’s Traditional Oral operations in Memphis, Tennessee, will move to Clarksville, Tennessee.
More than half of employees across the closing facilities will have the opportunity to transfer sites. These changes will reduce the company’s full-time employee workforce by approximately 350 roles by 2025.
“After our review, it became clear that we had to align our manufacturing footprint with our growth strategies,” said Bernd Meyer, executive vice president of operations at Reynolds. “Many of our employees will be given the opportunity to transfer sites. Our employees displaced through this process will receive a comprehensive severance and benefits package, including outplacement support to help as they transition to the next phase of their careers.”
March 25, 2022
PMI Scaling Down Russian Operations

Photo: Matvey Salivanchuk
Philip Morris International today announced the concrete steps it has taken to suspend planned investments and scale down its manufacturing operations in Russia, following that country’s military invasion of Ukraine.
PMI said it has discontinued a number of its cigarette products offered in the market and is reducing its manufacturing activities accordingly. It has also suspended marketing activities in the country and canceled all product launches planned for 2022 in Russia, including the launch of its flagship heated tobacco product IQOS Iluma, originally planned for March 2022. In addition, PMI has canceled its plans to manufacture more than 20 billion Terea sticks (for IQOS Iluma) in Russia and the related ongoing investment of $150 million.
PMI’s board of directors and senior executives are working on options to exit the Russian market in an orderly manner, in the context of an increasingly complex and rapidly changing regulatory and operating environment.
“Our focus and all our efforts over the last four weeks have been to ensure the safety and security of our Ukrainian colleagues. We stand in solidarity with the innocent men, women and children who are suffering,” said PMI CEO Jacek Olczak in a statement. “We employ more than 3,200 people in Russia. We continue to support them, including paying their salaries, and we will continue to fulfil our legal obligations. We will continue to make decisions with their safety and security as a priority.”
Russia accounted for almost 10 percent PMI’s total shipment volumes and around 6 percent of PMI’s net revenues in 2021.
March 25, 2022