Category: Business

  • Innokin Partners with Bahrain Duty Free

    Innokin Partners with Bahrain Duty Free

    Image: Tobacco Reporter archive

    Innokin is partnering with Bahrain Duty Free (BDF), a retailer in the Middle East.

    BDF will help introduce Innokin’s Innobar vaping products to Bahrain Duty Free’s premium stores, catering to the increasing demand for e-cigarettes in the region, according to a press release.

    The new partnership began with a pilot project launched in April 2023. Within two weeks, the entirety of the trial stock had sold out.

    “Building on this remarkable success, the collaboration has now expanded to provide customers with greater access to Innokin’s award-winning vaping solutions,” Innokin wrote in its announcement. “Innokin’s Innobar devices, in particular, have garnered significant interest for their exceptional performance and flavors, which are tailored to suit the preferences of the Bahrain market.”

    Currently, the Innobar 3500, 6000 and V7000 models are available at BDF locations. A key element of the partnership has been the knowledge-sharing and training provided by Innokin’s experts to the management of BDF.

    “We are thrilled about our partnership with Bahrain Duty Free. This collaboration signifies not only our dedication to the growing Middle East market but also our commitment to fostering responsible practices in the industry,” said George Xia, co-founder of Innokin. “With our decade-plus experience and the shared values of both organizations, we are confident that this partnership will set new standards of excellence for vaping.”

  • Juul to Restructure and Reduce Employees

    Juul to Restructure and Reduce Employees

    Image: Andrii Yalanskyi

    Juul Labs has announced a company restructuring aimed at reducing operating costs and positioning the company to continue to advance its mission during a period of regulatory and marketplace uncertainty.

    According to a press release, the principal aim of this restructuring is to enable the company to maximize profitability and cash-flow generation while continuing to invest in its core priorities, which include delivery of high-quality products to its commercial partners, ongoing development of next-generation products, engagement with the U.S. Food and Drug Administration regarding Juul’s pending and possible future market authorization applications, and commercial growth consistent with compliance with all applicable laws and regulations.

    With these operating cost reductions, Juul Labs says it is positioned to increase its adjusted EBITDA margins and generate meaningful free cash flow before litigation settlements. In doing so, the company will reduce its need to access capital pre-premarket tobacco product application, extend its time horizon to continue its pursuit of market orders from the FDA and generate positive equity value as the company pays down liabilities over time.

    Juul says it remains fundamentally optimistic about the prospects for Juul Labs Inc.—“a view rooted in our belief that our technology and our pipeline of new innovations represent the most valuable ever brought forward to transition adult smokers away from cigarettes while combating underage use,” the company wrote on its website.

  • Kaival Amends Philip Morris Deal

    Kaival Amends Philip Morris Deal

    Credit: More

    Kaival Brands International (KBI) has amended its agreement with Philip Morris Products, a wholly owned affiliate of Philip Morris International, for the development and distribution of electronic nicotine-delivery system products in markets outside of the U.S.

    Eric Mosser, CEO of Kaival Brands, the exclusive distributor of all products manufactured by Bidi Vapor, said in a press note that with more than a year of operational history for KBI and given the recent changes to regulations in international markets, it became clear that there were a number of opportunities to improve the terms of the original licensing agreement with PMI and reduce the burden of administering it.

    “We are extremely pleased to reach an agreement that shall enable us to achieve our objectives. The revised licensing agreement simplifies the payment structure resulting in cost savings of approximately $2.7 million for the company over the lifetime of the license agreement,” said Mosser. “It also enables better predictability and forecasting for KBI and streamlines data reporting. Finally, we anticipate that the acceleration of royalty payments will be a net positive to our financial performance over the duration of the agreement.”

    Under the terms of the amended agreement, the parties agreed to revise certain terms, which provide for, among other things, a fixed pricing structure with volume-driven increases and a recapture of nonrecurring engineering costs by KBI.

    Accordingly, Kaival Brands expects a reconciliation payment of approximately $135,000. It projects approximately $300,000 in additional royalties to be earned through the end of 2023.

  • 22nd Century Signs New Distribution Agreement

    22nd Century Signs New Distribution Agreement

    Image: Tobacco Reporter archive

    22nd Century Group has entered into a new distribution agreement with Hub, a key Midwest-based convenience store and multi-channel distributor with warehouses located in Missouri and Kansas.

    22nd Century’s VLN products are now available for purchase by eligible Hub customers as a part of 22nd Century Group’s state and regional rollout program.

    “Hub is a critical conduit to a growing list of regional, independent and tribal retail outlets in the Midwest and a highly regarded wholesale tobacco products distributor with more than 60 years in its served markets,” stated John Miller, president of tobacco products for 22nd Century Group, in a statement.

    “By adding distribution to Hub’s extensive customer list, 22nd Century can expand retail points of sale in both existing and new served markets for its innovative VLN reduced-nicotine content cigarettes, the first and only combustible cigarette to secure a modified-risk tobacco product authorization from the U.S. Food and Drug Administration. Our VLN brand contains 95 percent less nicotine than contained in U.S. conventional cigarettes. As demonstrated by leading independent scientists, reducing the nicotine level in cigarettes has the potential to substantially reduce the enormous burden of smoking-related death and disease.”

    Hub runs warehouse operations in St. Louis, Missouri; Kansas City, Missouri; and Galena, Kansas, serving as a multi-channel industry-leading cigarette, tobacco and comprehensive distributor of tobacco-related products. Hub is a leading distributor of cigarettes in the Midwest, providing a comprehensive catalog of tobacco and tobacco-related products to more than 2,500 customer locations in Illinois, Kentucky, Iowa, Missouri, Kansas, Oklahoma and Arkansas. Hub customers include regional, independent and tribal accounts across its served market that sell tobacco products.

  • Supreme Shares Soar After Elf Bar Agreement

    Supreme Shares Soar After Elf Bar Agreement

    Image: Tobacco Reporter archive

    Shares in the U.K. vaping company Supreme rose 5 percent after the company announced it is now the “master distributor” for two leading U.K. vaping brands—Elf Bar and Lost Mary, reports City AM.

    The London-listed company expects the partnership to generate revenues of £25 million ($36.06 million) to £30 million over the next fiscal year ending March 2024.

    The news comes amid a political crackdown on vape products—especially for those underage.

    Sandy Chadha, CEO of Supreme, said the agreement will allow the group to “fully leverage its unique technical, regulatory, compliance and quality assurance capabilities within the vaping sector.”

    “We have seen a hugely positive response from both established and new retailers who view Supreme as an ideal partner to supply these products across the U.K.,” Chadha added.

    Supreme says its strong market presence, distribution network and compliance capabilities provide Elf Bar and Lost Mary with a “ready-made blueprint” distribution strategy.

    The company will report sales of the newly added brands separately from its existing vaping category, which includes Supreme’s proprietary 88Vape brand.

    Supreme nearly doubled revenues to £76.1 million this year, while posting an £8.6 million increase in gross profit.

  • KT&G Receives AAA Credit Rating

    KT&G Receives AAA Credit Rating

    Image: Tobacco Reporter archive

    KT&G has obtained the highest grade of AAA in all three major domestic corporate credit ratings: Korea Ratings, Korea Credit Rating and NICE Credit Rating.

    Among domestic private companies excluding financial and telecommunications companies, KT&G is the only company to achieve a corporate credit rating of AAA.

    The corporate credit rating agencies have assessed KT&G’s business stability as extremely excellent based on its high market position in key business sectors. The agencies have given high evaluations to the company’s solid domestic market dominance, built on its long history, high brand recognition as well as its strong presence in the global tobacco and e-cigarette industries.

    Furthermore, with plans for dividend payments, share buybacks and investments aimed at shareholder returns and expanding domestic and international production facilities, it is expected that KT&G will maintain excellent financial stability by ensuring smooth cash generation to meet funding requirements in the future.

    A KT&G representative stated, “Amid increased uncertainties in both domestic and international markets, such as recent interest rate hikes, many companies have faced challenging business environments. In this context, we believe that KT&G’s achievement of the highest AAA rating from the three credit rating agencies is a recognition of our company’s stability and profitability by external entities.” They further added, “We will continue to strive to maintain a stable financial structure based on our excellent creditworthiness and make every effort to ensure financial stability in the future.”

  • BAT Opens Innovation Hub in Italy

    BAT Opens Innovation Hub in Italy

    Image: BAT

    BAT opened a new innovation hub in Trieste, Italy. The innovation hub cost €500 million ($548 million) over five years.

    The Hub incorporates laboratories, production offices, technical rooms and 12 production lines for new category products, making BAT the first company in the tobacco industry to distribute a full range of new category products in Italy.

    The site also contains a digital boutique and innovation lab, focusing on digital transformation, sustainability and open innovation through external collaborations and partnerships.

    The new complex was completed in 21 months and has been designed according to the most advanced sustainability criteria. It uses 100 percent energy from renewable sources and aims to achieve carbon neutrality certification by the beginning of 2024.

    A photovoltaic array and biomass plant will produce much of the complex’s energy needs, with the remaining energy purchased from certified sustainable providers.

    It is estimated that the innovation hub will create 2,700 future jobs—600 jobs directly and a further 2,100 jobs in the local and national economy and supply chain. BAT Italy already works with around 400 companies in its agricultural supply chain, employing more than 6,000 people.

    “The completion of the Trieste innovation hub marks a milestone in BAT’s global strategy for innovation and sustainability. I am proud that BAT is the first company in the industry to distribute its full range of new category products. The hub represents a significant contribution to the country’s employment and economic growth,” said Fabio de Petris, CEO of BAT Italy.

  • BAT Changes Management Board

    BAT Changes Management Board

    Image: Tobacco Reporter archive

    Following the appointment of Tadeu Marroco as CEO on May 15, 2023, BAT has announced changes to its management board. According to BAT, the new structure, roles and composition of the management board will support Tadeu’s commitment to a sharpened focus on improved execution and operational excellence; enhanced capabilities critical to BAT’s strategic development and transformation; and a progressive and agile organization with a collaborative and inclusive culture.

    This refreshed management board structure is critical to my commitment to build a progressive and agile organization with a collaborative and inclusive culture, enabling simultaneous performance and transformation.

    Tadeu Marroco, CEO, BAT

    Johan Vandermeulen will be appointed to the new role of chief operating officer, reporting to the CEO, effective July 1, 2023. This role will be accountable for driving business performance, operational excellence and best-in-class execution, with a focus on both short-term and sustainable delivery. Reporting to Vandermeulen will be David Waterfield, promoted to the management board as president and CEO of Reynolds American Inc. effective July 1, 2023; Fred Monteiro (director of Americas and Europe) and Michael Dijanosic (director of Asia-Pacific, the Middle East and Africa); Zafar Khan (director of operations) and Javed Iqbal (director of digital and information). Iqbal also currently serves as interim finance director.

    Kingsley Wheaton will be appointed to the new role of chief strategy and growth officer, reporting to the CEO, effective Sept. 1, 2023. This role will be accountable for continued strategic development and delivery of sharper consumer focus through an integrated approach to brands together with shaping enablers for long-term sustainable growth and driving the company’s robust ESG agenda. Reporting to Wheaton will be Luciano Comin, appointed to the new role of marketing director of combustibles and new categories effective July 1, 2023—this role will be accountable for a more integrated approach to insights, innovation, brand-building, consumer experience and activation and revenue growth management across the combustibles and new categories portfolios; Paul McCrory, promoted to the management board to the new role of director of corporate and regulatory affairs effective Sept. 1, 2023—this role will be accountable for shaping regulatory strategy and leading regulatory engagement to secure sustainable access to markets and categories; and James Barrett, promoted to the management board to the new role of director of business development effective Sept. 1, 2023—this role will be accountable for strategy development, M&A, the Wellbeing and Stimulation portfolio and BAT’s venturing unit, Btomorrow Ventures; James Murphy, director of research and science, and Jerome Abelman, director of legal affairs and general counsel, continue in their roles reporting directly to the CEO.

    Guy Meldrum, currently president and CEO of Reynolds American Inc., and Paul Lageweg, currently director of new categories, will step down from their roles and from the management board effective June 30, 2023, and will facilitate a transition with their successors.

    Hae In Kim will step down from the management board effective June 30, 2023, to take up the role of strategic talent director, reporting to the CEO. As an integral part of her responsibilities in this leadership role working alongside the board and the management board, Kim will oversee the execution of several key projects as part of BAT’s talent agenda.

    The existing roles of chief transformation officer, chief growth officer, director of new categories and director of combustibles will be removed from the management board as their accountabilities transfer within the new structure.

    A comprehensive process is underway to identify and appoint the successors for the roles of finance director and director of talent, culture and inclusion, reporting to the CEO.

    “This refreshed management board structure is critical to my commitment to build a progressive and agile organization with a collaborative and inclusive culture, enabling simultaneous performance and transformation,” said Marroco in a statement. “To that end, I am delighted to be welcoming David, Paul and James to the management board. They are all highly collaborative leaders who have the depth of experience to enable the continued strategic and cultural transformation of BAT.

    “I would like to thank Guy for his significant contribution across many markets and geographies over the last two decades and Paul for his role in helping to create a new category business that continues to drive BAT’s transformation. I also look forward to working with Hae In as strategic talent director.”

  • Kingsway in Talks Over AIR Stake Sale

    Kingsway in Talks Over AIR Stake Sale

    Image: Tobacco Reporter archive

    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. 

  • BAT Malaysia First-Quarter Profits Down

    BAT Malaysia First-Quarter Profits Down

    Image: SewcreamStudio | Adobe Stock

    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.