Category: Business

Altria to Sell Ste. Michelle Wine Estates

Photo: InsideCreativeHouse
Altria Group has agreed to sell its Ste. Michelle Wine Estates business to Sycamore Partners Management for approximately $1.2 billion and the assumption of certain Ste. Michelle liabilities. Altria’s net cash proceeds will be subject to customary net working capital and other adjustments at closing.
Altria expects the transaction to close during the second half of 2021, subject to Sycamore Partners obtaining the necessary financing and the satisfaction of customary closing conditions, including antitrust regulatory clearance.
“We believe the transaction is an important step in Altria’s value creation for shareholders and allows our management team greater focus on the pursuit of our vision to responsibly transition adult smokers to a noncombustible future,” said Altria CEO Billy Gifford in a statement. “Ste. Michelle and its talented employees have built an outstanding portfolio of premium wine brands, and we wish them future success.”
“The Ste. Michelle leadership team and I look forward to working with the team at Sycamore Partners and believe we are well positioned to drive the next phase of our growth,” said David Dearie, Ste. Michelle’s president and CEO.
July 9, 2021
Philip Morris to Acquire Fertin Pharma
Photo: peshkov
Philip Morris International has entered into an agreement to acquire Fertin Pharma, a leading developer and manufacturer of innovative pharmaceutical and well-being products based on oral and intra-oral delivery systems, for an enterprise value of DKK5.1 billion ($820 million).
“The acquisition of Fertin Pharma will be a significant step forward on our journey toward delivering a smoke-free future—enhancing our smoke-free portfolio, notably in modern oral, and accelerating our progress in beyond nicotine,” stated Jacek Olczak, chief executive officer of PMI, in a statement.
“Both PMI and Fertin share a commitment to science and consumer-centric innovations for better living, and I am delighted we have reached this agreement. Fertin’s diverse portfolio of technologies, evolving business mix and world-class expertise will enrich our innovation pipeline and capabilities, providing speed and scale in oral delivery to support our 2025 goals of generating more than 50 percent of our net revenues from smoke-free products and at least $1 billion from products beyond nicotine.”
Fertin Pharma is a privately held company with more than 850 employees and operations in Denmark, Canada and India. It is a contract development and manufacturing organization (CDMO) specializing in the research, development and production of gums, pouches, liquefiable tablets and other solid oral systems for the delivery of active ingredients, including nicotine, where it is a leading producer of nicotine replacement therapy (NRT) solutions.
According to PMI, the company and its employees bring significant scientific experience and know-how to the development of innovative solutions, driving above-category growth across new and existing business areas. In 2020, Fertin Pharma generated net revenues of DKK1.1 billion. The transaction value represents a multiple of around 15 times Fertin Pharma’s 2020 EBITDA.

Fertin’s diverse portfolio of technologies, evolving business mix and world-class expertise will enrich our innovation pipeline and capabilities.
Jacek Olczak, CEO, PMI
Fertin Pharma is currently owned by the global investment organization EQT and Bagger-Sorensen & Co. Upon the completion of the acquisition, Fertin Pharma will become a wholly owned subsidiary of PMI. PMI will fund the transaction with existing cash and expects it to close in the fourth quarter of 2021, subject to approval by the appropriate regulatory authorities. PMI expects the impact of the acquisition on its full-year 2021 adjusted diluted EPS to be immaterial.
“Fertin Pharma has been on a fantastic journey with EQT and the Bagger-Sorensen family as owners,” said Peter Halling, CEO of Fertin Pharma, in a press note. “With the new ownership in place, Fertin Pharma will be in a great position to continue delivering on our vision and mission, including our work as a CDMO for our customers.
“PMI is going through an inspiring transformation as a company with an ambition to deliver a smoke-free future and building a beyond nicotine product portfolio. An ambition that perfectly matches that of Fertin Pharma, namely to enable people to live healthier lives. In PMI, we have found a new owner and partner who shares our vision, who is committed to science and who will enable Fertin Pharma to further accelerate and grow as a company.”
With the acquisition of Fertin Pharma, PMI will:
Gain substantial know-how for the development, formulation and commercialization of current and additional smoke-free platforms—including the ability to accelerate its presence in the fast-growing modern oral category, providing superior consumer experience through a broad range of smoke-free products such as nicotine pouches and lozenges.
Leverage on Fertin’s oral delivery platforms to access a range of promising technologies—complementary to PMI’s inhalation expertise—for scientifically substantiated botanicals and other self-care wellness products, including over-the-counter solutions and supplements that improve people’s lives in areas such as sleep, energy, calm and focus.
Further build its overall platform of R&D and manufacturing expertise in nicotine and beyond nicotine product areas through the addition of Fertin’s strong capabilities and skilled workforce, including 80 scientists.
Accelerate progress on key sustainability priorities, notably in broadening the reach and access of its smoke-free alternatives to adult smokers around the world to accelerate the end of smoking and building a strong beyond nicotine business.
Earlier this year, PMI announced its goal to generate more than 50 percent of its total net revenues from smoke-free products by 2025. In addition to its continued commitment to achieve a smoke-free future, PMI says it aims to leverage capabilities in life sciences, product innovation and clinical expertise to expand its portfolio beyond tobacco and nicotine with scientifically substantiated products and solutions that improve people’s lives and generate a net positive impact on society.
July 1, 2021
Egypt Amends Invitation for Tobacco Bid

Photo: マサコアーント from Pixabay
Authorities in Egypt have issued an amended invitation for tobacco companies to bid for a license to manufacture cigarettes, according to Reuters. The amended invitation follows complaints that the terms of the license previously offered were too narrow.
The state-controlled Eastern Co. currently holds a 70 percent market share, and this new bid for license could end the company’s monopoly.
Under the amended terms, the winning bidder would produce 1 billion cigarettes per year as opposed to 15 billion cigarettes per year. The updated terms also removed a rule stating any other licenses would not be offered after the tender for a decade.
The deadline for the amended bid is Aug. 1.
June 3, 2021
Poda and Eson Pursue Partnership

Photo: Poda Lifestyle and Wellness
Poda Lifestyle and Wellness and Shenzhen Eson Technology Co. have signed a binding letter of intent to facilitate a joint development agreement, whereby Poda will join Eson’s existing distribution network in Europe and Asia where Eson is currently selling over 50 million units per month.
Poda has developed and patented a heat-not-burn (HnB) platform while Eson has developed a patented proprietary blend of tobacco-free products that it currently sells through the brand Neafs.
“We are incredibly excited to partner with Eson, who is recognized as one of the leading manufacturers of electronic cigarette devices and more recently as one of the global leaders in tobacco-free heat-not-burn products,” said Ryan Selby, CEO of Poda, in a statement.
“Daniel Chen and his team at Eson are currently filling and distributing millions of Neafs products per month into the Chinese market, providing us with tremendous opportunities to scale. There are over 400 million adult smokers in China, and we believe that this partnership with Eson will provide us with a fast-track opportunity to rapidly develop our market share in the Chinese market,” said Selby.
Eson has designed numerous electronic nicotine-delivery systems and has licensed its IP to some of the biggest tobacco companies in the world. In addition, Eson has served as an original equipment manufacturer for some of the biggest tobacco companies globally, including Japan Tobacco International, Imperial, British American Tobacco, Godfrey Philips India, Philip Morris International and China National Tobacco.
“Poda has developed an incredible HnB platform, and their zero cleaning pods offer consumers a hassle-free HnB product that delivers consistently great results, day after day” said Daniel Chen, CEO of Eson. “Additionally, the vapor is flavorful and robust, offering cigarette-like satisfaction to discerning adult smokers.”
This partnership will provide us with a fast-track opportunity to rapidly develop our market share in the Chinese market.
Ryan Selby, CEO, Poda
“We are already selling over 50 million Neafs sticks per month and are currently expanding our production facilities to produce over 250 million Neafs sticks per month, which should be completed within the next 60 days. Since we launched the Neafs products in October 2020, the demand for Neafs products has been overwhelming. We are extremely excited to offer the Neafs by Poda products to our existing distribution channels, and we anticipate tremendous success with the Neafs by Poda products.”
June 2, 2021
KT&G Volume Surges by Nearly One-Third

Photo: KT&G
KT&G’s sales surged 30.1 percent to 9.5 billion cigarettes in 2020, reports The Korea Times, citing recently released regulatory filings. In terms of value, the company’s sales rose 15.8 percent year-on-year to KRW193.7 billion ($171.68 million).
KT&G attributed the performance to its expansion into new markets as well as customized strategies for different regions.
Last year alone, KT&G launched its products in 23 new markets with the total number of export countries exceeding 100.
In South Korea, KT&G sales rose by 60 million cigarettes from the previous year. Boosted by product launches such as “88 Returns,” the company’s domestic market share rose 0.6 percent to 64.5 percent—a remarkable accomplishment at a time when the Korean cigarette market shrunk by 0.1 percent.
In the vapor segment, KT&G posted growth too. The company’s Lil tobacco-heating product accounted for more than a 60 percent market share at convenience stores in October.
Starting this year, the company intends to enter new markets. In the first quarter of 2020, KT&G signed a strategic partnership with PMI to cooperate in exporting Lil while introducing the product in Russia, Ukraine and Japan, where it gained positive feedback.
May 19, 2021
PMI Highlights IQOS Momentum at Forum

Jacek Olczak
Presenting at the Goldman Sachs Global Staples Forum on May 18, Philip Morris International CEO Jacek Olczak highlighted the next steps in the company’s strategy to becoming a majority smoke-free company in terms of net revenue by 2025.
Olczak highlighted IQOS’ strong and accelerating topline momentum and potentially lucrative opportunities to expand beyond nicotine into broader lifestyle/wellness markets, such as high-margin botanicals and respiratory drug delivery.
IQOS added more than 1.5 million users in the first quarter of 2021, according to Olczak—well above its historical average of 1 million new users per quarter. Robust conversions at 70 percent to 80 percent continue to dwarf the average conversion rates of many vapor products, which are in the mid-teens.
The heat-not-burn device is now available in 66 markets, with a user base of 19.1 million, of which 14 million have stopped smoking and fully converted to IQOS.
Olczak was particularly excited about the launch, scheduled for the second half of 2021, of PMI’s ILUMA IQOS product, which he believes could drive even higher conversion rates and margins as PMI continues to leverage its fixed cost base on IQOS while streamlining its customer acquisition and retention.
Olczak also reviewed management’s ongoing efforts to digitalize and simplify business processes, including PMI’s commercialization strategies around IQOS. According to him, these efforts have already yielded $60 million of gross savings in selling, general and administrative expenses toward management’s target of $1 billion in 2021–2023.
Olczak believes that PMI’s digitalization efforts will not only further reduce the cost of acquiring and retaining new users and ultimately drive more profitable growth but also accelerate conversion and customer acquisition, especially with the eventual global rollout of PMI’s digital customer experience.
Olczak also touched on PMI’s longer term opportunities beyond heat-not-burn and vaping, including nicotine pouches and next-generation devices.
Management is also looking into adjacencies, such as broader lifestyle/wellness markets, such as high-margin botanicals (including pure CBD) and respiratory drug delivery. The company aspires to achieve at least $1 billion in incremental net revenue from its beyond nicotine efforts by 2025.
Olczak expressed optimism about PMI’s competitive advantages in terms of its capabilities around product safety and efficacy and validating/substantiating scientific claims.
May 19, 2021
Graphic Packaging Acquires AR Packaging

Photo: Alexas Fotos | Pixabay
Graphic Packaging Holding Co. will acquire AR Packaging Group, Europe’s second largest producer of fiber-based consumer packaging, for approximately $1.45 billion in cash.
The combination enhances Graphic Packaging’s global scale, innovation capabilities and value proposition for customers throughout Europe and bordering regions. With a broad set of industry-leading packaging solutions, design expertise and expanded geographic reach, the combined company will be uniquely positioned to capture continued organic growth opportunities across existing and new global customers and markets.
The proposed acquisition of AR Packaging is expected to add $1.1 billion in annual sales and $160 million in annual adjusted EBITDA. In addition, the combination is expected to drive total synergies of $40 million over 36 months following close. The deal is expected to be immediately accretive to the company’s earnings per share and cash flow.
“AR Packaging is a leader in the attractive and growing market for sustainable packaging in Europe,” said Michael Doss, Graphic Packaging’s president and CEO, in a statement.
“Acquiring AR Packaging will result in significant value creation opportunities for our customers, our employees and our stockholders as we bring together two leading providers of fiber-based consumer packaging solutions with long histories of innovation and creative packaging design.
We are pleased to welcome the AR Packaging team as we work together to advance our commitment to sustainable packaging solutions in support of the move to a more circular economy.
Michael Doss, president and CEO, Graphic Packaging
“The large, distributed footprint of AR Packaging’s 25 converting facilities across Eastern and Western Europe provides significant scale and cost efficiency benefits strengthening our combined presence and ability to service customers throughout Europe and globally. We are pleased to welcome the AR Packaging team as we work together to further advance our commitment to sustainable packaging solutions for global consumers in support of the move to a more circular economy.”
“I am proud of the progress we have made in establishing a clear strategy and building AR Packaging into a respected provider of packaging solutions,” said AR Packaging President and CEO Harald Schulz. “Graphic Packaging’s shared approach to customer service and deep focus on providing innovative, sustainable solutions closely aligns with how we operate our own business, making them an ideal partner.
“The ability to leverage beneficial value chain integration, from paperboard manufacturing to carton converting, provides increased possibilities to offer sustainably optimized solutions to our customers. Our team looks forward to joining with the Graphic Packaging team to become the premier global provider of sustainable fiber-based packaging solutions.”
May 14, 2021
BAT to Produce HNB Products in Croatia

Photo: burnel11
British American Tobacco (BAT) will invest HRK200 million ($32.07 million) to produce heated-tobacco products (HTPs) at its factory in Kanfanar, Croatia, reports Total Croatia News.
The multinational revealed its plans during a May 12 visit to its facility by Prime Minister Andrej Plenkovic.
“By expanding production in Kanfanar and opening a hub in Rijeka, we are continuing with BAT’s significant investments in Croatia,” said BAT Adria director Zvonko Kolobara.
“With the introduction of production lines for new product categories, Croatia is additionally strengthening its position on the global map of production sites in the tobacco industry. We are continuing to expand our selection for consumers in Croatia.”
The increased capacity in Kanfanar will help BAT meet growing demand for HTPs in Europe and northern Africa.
Plenkovic expressed satisfaction at BAT’s continued investments in Kanfanar.
“The new HRK200 million investment in new products means a new impetus, enthusiasm and a new generator of business and with that, a contribution to Croatia’s economy,” he said.
“The company employs 1,600 people, and another 800 cooperate closely with BAT and make a living that way. The investment plans have been coordinated with their headquarters in London, and all the employees at the factory will be satisfied while the entire economy of Istria County will benefit from BAT’s operations.”
The new HRK200 million investment in new products means a new impetus, enthusiasm and a new generator of business and with that, a contribution to Croatia’s economy.
Andrej Plenkovic, prime minister, Croatia
In June 2020, BAT suggested it might relocate its Kanfanar factory to another country due to unfavorable business conditions. The government then embarked on a campaign to keep the multinational in Croatia.
Plenkovic stressed that the new investment reflected Croatia’s good business climate, not government pressure.
May 13, 2021
22nd Century Extends KeyGene Partnership

Photo: stokkete
22nd Century Group will extend and expand its plant research partnership agreement with KeyGene, a global leader in plant research involving high-value genetic traits and increased crop yields. The new partnership agreement extends the length of the collaboration to develop new, disruptive hemp/cannabis plants and intellectual property for the life science, medicinal and pharmaceutical end-use markets.
It also expands the partnership to include research and development activity for noncombustible, alternative tobacco plant applications, such as protein production, and 22nd Century’s third plant franchise, plus it establishes a new governance structure and working model to accelerate development timelines across all three crop/trait programs.
“We have a highly successful relationship with KeyGene, and we are excited to announce this expansion of our partnership that we have been referring to recently,” said James A. Mish, CEO of 22nd Century Group, in a statement.
“Our KeyGene partnership has proven to be crucial for 22nd Century’s growth and success in the hemp/cannabis space. Since launching our collaboration in 2019, we have achieved much together, including a breakthrough in molecular breeding that will significantly reduce the time needed to develop new hemp/cannabis plant lines with commercially valuable traits.”
We have worked together to make game-changing discoveries in hemp/cannabis genetic research.
Walter Nelson, CEO, KeyGene
“Our partnership with 22nd Century Group has been mutually beneficial, as we have worked together to make game-changing discoveries in hemp/cannabis genetic research,” said Walter Nelson, CEO of KeyGene USA.
“This expanded partnership fits well into KeyGene’s push into integrating metabolomics and proteomics with our capabilities in genomics using innovative informatics tools. I am excited to build on this successful relationship and look forward to what we will be able to accomplish in other crops using our technology innovation platforms.”
May 4, 2021
Bahrain Mulls Request for Tobacco Factories

Photo: Preju
Bahrain’s Shura Council will vote on whether to allow plans to open tobacco manufacturing factories in Bahrain, reports the Gulf Daily News.
However, the council has stated that products produced at the factories should not be sold in Bahrain; they should only be manufactured for export.
The committee also overturned a ban on the import, production and distribution of juices for e-cigarettes and e-shisha.
“In the past, Bahrain was known to be the regional hub for tobacco productions of numerous types with moasil—a shisha tobacco—being the most famous,” said Zayed Alzayani, industry, commerce and tourism minister. “Nowadays, our Bahraini-flavored moasil is being imported from numerous countries like the [United Arab Emirates], Egypt and Jordan. It is being sold using our traditional nametag across the world.”
“We have gotten a request from some investors, from Bahrain and abroad, to open tobacco manufacturing factories in Bahrain with their investments being more than $300 million and offering 400 jobs for Bahrainis, which would be 98 percent of the total workforce,” Alzayani said. “This move would also help provide beneficiary assistance to our logistics, shipping and cargo sectors.”
This move would help provide beneficiary assistance to our logistics, shipping and cargo sectors.
Zayed Alzayani, industry, commerce and tourism minister
Adding tobacco manufacturing would help generate revenue for the government and build necessary infrastructure, according to Alzayani.
Health Ministry officials told the committee that juices are not considered tobacco under the WHO Framework Convention on Tobacco Control. “We don’t have control over juices since it is not considered tobacco, but that doesn’t mean we cannot monitor the content,” officials added.
Anti-smoking advocates worry that allowing manufacturing would increase the number of smokers in Bahrain.
May 4, 2021