Category: Business

USTC Plans Bankruptcy Exit

Photo: USTC
U.S. Tobacco Cooperative (USTC) has begun planning an exit from Chapter 11 bankruptcy later this summer. The cooperative originally filed for protection in July 2021 to meet contractual obligations to its member growers while the company faced uncertainty presented by an ongoing class-action lawsuit.
Oscar House
“On February 2, after 17 years of litigation, we were able to reach economic terms of a settlement with the Lewis Class,” said USTC CEO Oscar J. House. “As we await final approval from the court this summer, we are beginning to prepare our exit from bankruptcy and continue providing the exceptional service and quality products our organization is known for across the globe.”
USTC originally filed for protection in federal bankruptcy court to satisfy obligations to its 550-plus member-growers, 200-plus employees, suppliers and customers. The settlement and plan of reorganization will allow the cooperative to honor its commitments worldwide and emerge from bankruptcy well positioned to serve its member-growers. Details of the agreement will be provided in the ordinary course of obtaining formal court approval of the settlement and USTC’s plan of reorganization.
“USTC is healthy and set for a sustainable, successful future,” continued House. “Throughout the bankruptcy process we have fulfilled all obligations to all stakeholders: our customers, grower-members, vendors and employees. Going forward we will continue to do so, stronger than ever.”
February 17, 2022
Poda and Landewyck Explore Partnership

Photo: DragonImages
Poda Holdings and Landewyck Tobacco are exploring the potential of a partnership.
The companies intend to enter into a cooperation agreement based on both parties’ intellectual property, branding, manufacturing facilities and distribution channels to develop one or more products for commercialization.
Before further developing the cooperation project, the parties intend to assess the relevance of their cooperation by implementing a trial period for blend development, which could be used for the potential cooperation products.
By bringing together Landewyck’s tobacco manufacturing and distribution expertise and Poda’s patented heat-not-burn technology, the aim is to develop a consumer-centric product offering both convenience and optimal flavor in the reduced-risk sphere.
“We’re very excited to further strengthen our collaboration with Ryan and the Poda team,” said Georges Krombach, general manager of export and new-generation products for Landewyck, in a statement. “The technology and intellectual property behind Poda are disruptive and deliver a strong customer experience. By adding our tobacco and our European regulatory and distribution expertise, we expect to have great success in the European marketplace.
“We manufacture tobacco and cigarettes at our own facilities exclusively in Western Europe and attach great importance to maintaining the highest manufacturing, working and product standards that are socially acceptable to our consumers, partners and importers worldwide. Our master tobacco blenders travel to the farthest reaches of the globe to hand select the best leaves, hence ensuring the unique flavor of our tobacco products—and all so our customers can enjoy the ultimate in tobacco pleasure.
“From product and manufacturing standards to employees and retailers, we always ensure that our business decisions and the products we supply are in keeping with our family spirit and upholding our tradition of delivering 100 percent quality, flavor and customer satisfaction.”
“This marks another milestone in Poda’s commercialization efforts in Europe and abroad,” said Ryan Selby, Poda’s CEO. “Landewyck has been working in the tobacco space for over 170 years and brings a tremendous amount of manufacturing and distribution experience and expertise. We intend to get moving immediately on the blend development trial and hope to move quickly into large-scale commercialization of the cooperation products.”
January 12, 2022
Armenia Tobacco Firm Exampted from Duties

Photo: Tobacco Reporter archive
The Armenian government will exempt cigarette manufacturer DrimCompany from customs duty payments on raw materials imports to encourage investment, reports the Arka News Agency.
Founded in 2021, DrimCompany aims to sell its products internationally, with a large share of exports going to the Eurasian Economic Union countries.
DrimCompany has pledged to invest AMD11.9 billion ($24.67 million), including AMD2 billion in the purchase of a new production line. The rest will be spent on the construction and purchase of raw materials and equipment.
The company said it will create 100 new jobs with an average salary up to AMD450,000 by 2024.
The customs duty exemption benefit is estimated at AMD937.7 million.
January 6, 2022
Lil Now Available in 20 Countries

Photo: KT&G
KT&G has launched its heat-not-burn product Lil in more than 20 markets within two years after signing a supply agreement with Philip Morris International for overseas sales of Lil in early 2020, the South Korean company announced on its website
Last year, KT&G and PMI launched Lil Solid 1.0 in Russia and Ukraine, and Lil Hybrid 2.0 in Japan. This year, the two companies expanded into other markets including Kazakhstan, Serbia and Armenia, with Lil Solid 2.0 as the flagship product. This August, an announcement was made that Lil was launched in a total 10 markets globally, Albania being the latest market at the time.
KT&G added additional markets in the fourth quarter this year. In November, Lil debuted in Guatemala, the first market in Central America, and the company expanded into the Asian market further, launching Lil in Malaysia after Japan. Additionally in the same month, Lil Solid 2.0 and its dedicated stick Fiit were launched in Italy.
Lil Solid 2.0 is a second-generation model of KT&G’s heat-not-burn products. It boasts improved battery performance and induction heating technology, and it comes in two colors, “stone grey” and “cosmic blue” outside Korea.
The dedicated sticks come in a total of eight variants including Fiit Regular and Fiit Crisp, and a new variant, Fiit Alpine, has been launched in the fourth quarter this year. Two to five variants have been launched in each country‒tailored towards consumer taste preference.
“Lil was able to quickly expand internationally thanks to Lil’s innovative technology in addition to PMI’s commercial resources and infrastructure,” said Wang Seop Lim, chief of KT&G’s next-generation products division. “We will continue to provide high quality products to consumers outside Korea through strategic collaboration with PMI going forward.”
December 20, 2021
Avail Vapor Closes Stores, Sells Assets

James Xu (Photo: Avail Vapor)
Avail Vapor has sold the majority of its retail locations and closed its remaining stores. The company has also sold or closed its ancillary businesses. James Xu, founder of Avail, said the decision was motivated by multiple factors over several years, including what he called unclear and convoluted federal regulatory processes.
At one time, Avail Vapor was the largest family-owned vapor retailer in the U.S. with more than 100 stores in a dozen states. In January 2020, the company split into regulatory compliance and consulting business, and a major wholesale distribution company. Those businesses have also been sold or closed.
Xu said the U.S. Food and Drug Administration’s premarket tobacco product application (PMTA) pathway was a major factor in the decision after the agency arbitrarily changed the requirements to get a PMTA approved. “It’s completely just a mess with FDA policy making and policy strategy. It just did not make any sense from day one,” Xu said. “Everything is really in this gray area. It was totally different from what our mission was and Covid is not helping any retailer.”
Xu said Avail spent more than $10 million in its bid to get regulatory approval since 2016, when the FDA set forth new compliance standards for vaping products. But the FDA rejected Avail’s applications in September and the company sued the government agency in federal appeals court. However, the FDA then stayed enforcement of its marketing denial order on Nov. 1, pending an administrative appeal.
The economic impacts of Covid-19 also created challenges for the company, which began downsizing in August when it sold an estimated 30 of its stores to North Carolina-based competitor AMV Holdings, parent to Kure and Madvapes. It then shuttered or sold its remaining 20 stores, including five in the same city as the company’s headquarters, Richmond, Virginia, Xu said in an interview with Richmond Biz Sense.
Avail was an early entry into the vapor market, opening its first stores in 2013. By 2015, the company was producing its own e-liquids in its 37,000-square-foot office and manufacturing facility. It soon began also producing e-liquids for several other major brands. Xu said that he is not leaving the vapor industry and that a new project would be announced soon.
December 20, 2021
KKR Acquires Stake in Körber Supply Chain Software Unit

Photo: Blue Planet Studio
Global investment firm KKR has acquired a significant minority stake in supply chain software business of the Körber Group, the parent company of tobacco machinery maker Hauni Maschinenbau.
This strategic partnership is expected to enable Körber’s supply chain software business to become a global leader with enhanced end-to-end solutions for customers worldwide. Financial terms of the transaction were not disclosed.
Körber’s supply chain software business is among the top three global warehouse management software providers, delivering customers with differentiated warehouse management solutions (WMS) for varying operational complexities through software, voice and robotics solutions. With more than 1,300 employees, the business has grown significantly over recent years, serving a diversified mix of more than 4,200 customers in different industries across over 70 countries.
KKR will work with Körber’s supply chain software business to pursue organic and inorganic growth strategies to expand the company’s geographic footprint, accelerate the transition to SaaS, automation and robotics, as well as to develop innovative digital solutions to support customers amid increasing warehouse automation and supply chain localization.
“I’m excited about this strategic partnership and the tremendous business opportunities evolving out of it,” said Stephan Seifert, CEO of the Körber Group, in a statement. “It is in Körber’s DNA to identify and develop attractive growth areas. With our supply chain software offerings, we strive to have a rich end-to-end application suite that provides enhanced software solutions to our customers all around the world. With KKR we have found a great business partner to accelerate our growth for supply chain software across additional products and regions. Always with one clear vision: market leadership through technology leadership for the benefit of our customers.”
The transaction is subject to customary closing conditions and regulatory approvals.
December 15, 2021
KT&G Suspends U.S. Operations
KT&G Corp. is suspending its tobacco business in the United States for an unspecified period, reports The Korea Herald, citing a regulatory filing by the firm.
“We need to conduct a review of our business in the U.S. amid intensifying regulations over tobacco and growing competition,” the company said.
Among other challenges, KT&G cited the Food and Drug Administration’s intention to mandate lower nicotine limits for cigarettes sold in the U.S.
Such a move would cost the company an estimated KRW205.8 billion ($174 million) in lost sales, amounting to around 3.9 percent of the company’s overall sales revenue for last year, according to KT&G.
KT&G also pointed to mandatory tobacco escrow accounts for smoking-related legal settlements as reason for its decision.
“We will reconsider our business strategy in the U.S. after reviewing the business environment and regulations,” a company official said.
December 14, 2021
Vector Approves Douglas Elliman Spinoff

Photo: AliFuat
Vector Group’s board of directors has approved the spin-off of Douglas Elliman, which is expected to be completed in late December.
Upon completion of the spin-off, Vector Group will operate the tobacco segment of its business, which includes the manufacture and sale of cigarettes in the United States through Vector Group’s subsidiaries Liggett Group and Vector Tobacco, while also continuing to own interests in numerous properties and real estate projects across the United States.
Douglas Elliman will own and operate the real estate services and property technology investment business currently owned and operated by Vector Group through its subsidiary New Valley and will be capitalized with approximately $200 million in net cash and cash equivalents.
“The board’s approval of the spin-off paves the way for us to establish Douglas Elliman as an independent publicly traded company in the coming weeks,” said Howard M. Lorber, president and CEO of Vector Group and chairman, president and CEO of Douglas Elliman, in a statement. “We are confident this separation is in the best interests of Vector Group, Douglas Elliman, our stockholders and all our stakeholders.”
The distribution is expected to take place on Dec. 29, 2021, to holders of Vector Group common stock of record as of the close of business on Dec. 20, 2021, the record date for the distribution.
December 13, 2021
ReCreation Marketing Becomes Turning Point Brands Canada

ReCreation Marketing will be known and operate as Turning Point Brands Canada effective Dec. 6, 2021.
The name change follows a transaction that resulted in Turning Point Brands increasing its equity stake in ReCreation Marketing to a majority position. The transaction was completed on July 30, 2021.
“ReCreation Marketing changing its name to Turning Point Brands Canada reflects our commitment to our shared values with TPB and to expanding the exposure and reach of iconic core brands, such as Zig-Zag, in Canada,” said Mikail Fancy, chief operating officer of Turning Point Brands Canada, in a statement. “TPB Canada is laser-focused on creating value directly with, and for, our partners by offering a portfolio of recognized, differentiated, consumer-relevant brands and products.”
Turning Point Brands Canada continues to focus its resources on being a leader in the cannabis accessory category in Canada by fostering long-term, growth-oriented partnerships with manufacturers and retailers.
“The rebrand of ReCreation Marketing to TPB Canada is a testament to our confidence in the ReCreation management team and is a natural extension of our infrastructure and portfolio development that puts consumers and their evolving needs at the center of our strategy,” added Larry Wexler, CEO of Turning Point Brands. “This change further demonstrates our commitment to positioning TPB as a leader in branded consumer products.”
December 6, 2021
JT Amends Articles of Incorporation

Photo: Taco Tuinstra
Japan Tobacco has released a document outlining all of the company’s new executive appointments, including changes to the board as well as a new chief financial officer and senior vice president of people and culture, among others.
The document also details partial amendments to the articles of incorporation. It states that “the company will amend an article regarding the term of the board of directors to one year from the current stipulated two-year term in order to build a management foundation to address the changes in the business environment in a timely manner and to strengthen its corporate governance by clearly defining the responsibilities of the directors and enhance the trust with shareholders.”
In related news, JT has resolved to adopt the concept of skills necessary for the members of the board and developed a skills matrix that lists the areas in which the knowledge and experience of each director and member of the audit and supervisory board is expected to be particularly effective.

JT has also developed the skills matrix of the candidates for proposed directors and members of the audit and supervisory board who will assume new responsibilities from March 23, 2022.
November 29, 2021