Category: Featured

Cigar Group Wants Better Justification for U.S. Flavor Rule

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The Premium Cigar Association (PCA) testified before the White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) as part of the administration’s review of the U.S. Food and Drug Administration’s draft Final Rule “Tobacco Product Standard for Characterizing Flavors in Cigars.”
PCA President Scott Regina provided several examples of the impact that the rule would have on specialty tobacco retail, emphasizing that the FDA had not conducted a proper small business impact analysis. The PCA also outlined how the rule would directly affect regulatory matters outside of the FDA’s jurisdiction, including law enforcement, international trade and foreign policy.
“It’s questionable whether FDA has the authority to issue standards that result in a product ban, especially when they are acknowledging that the regulation does not address a specific risk,” said Regina in a statement.
“Ultimately, we asked OIRA to consult with a host of affected federal agencies and to remit the draft Final Rule back to FDA for better justification of authority, cost-benefit analysis and small business impact,” said Scott Pearce, executive director of the PCA.
The OIRA has scheduled meetings with additional stakeholders throughout the month as well as proponents of the characterizing flavor product standard for cigars.
The PCA published a full list of recommendations on the draft Final Rule.
November 7, 2023
Ontario to Double Vaping Tax

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Ontario, in partnership with Canada’s national government, will double the tax on all vaping products sold in the province.
The federal/provincial tax partnership scheme that was announced in 2022 allows provinces to double the current federal vape tax and keep half the proceeds, according to Vaping360.
The Canadian Vaping Association (CVA) urged the federal government to reconsider its proposal to impose an additional provincial levy, as this would effectively double the already substantial tax burden. “The CVA suggests a more equitable approach where the federal government shares the revenue generated by the current levy with the provinces,” the industry group wrote in a statement.
“With the introduction of the excise tax, depending on product type, vape products are now almost as expensive as cigarettes despite the significant reduction in risk,” the statement says.
The CVA cautioned that the increased tax may lead to more illicit trade. “Legal businesses will find it nearly impossible to compete with the unregulated market that remains largely unchecked. The consequence of such punitive taxation will be widespread business closures, significant job losses and an increase in criminal activity.”
“The CVA encourages the province to leverage its negotiating influence with the federal government to establish a fair revenue-sharing framework for the existing tax revenue. Preserving the regulated market, rather than destroying it, will lead to higher tax revenues. The additional revenue generated can be used by the province to increase enforcement resources and support educational programs for youth,” said Darryl Tempest, government relations counsel to the CVA.
November 7, 2023
KT&G Joins Payment Integration Cooperative

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KT&G has joined the payment integration cooperative, an initiative to help reduce the burden of raw material costs on small-sized and medium-sized partner companies.
Before the system became legally established, KT&G already stipulated in purchase contracts that in the event of an increase in raw material prices compared to the contract period, it could proactively adjust the purchase contract amount to alleviate the burden on partner companies.
To further reduce the burden, KT&G pays for its supplies monthly in cash and provides early payments before holidays. The company is also helping its contracted farmers save money through the dissemination of the “draft reduction device,” a fuel-saving tool for tobacco dryers.
To promote the welfare of agricultural workers, the company has contributed KRW3.66 billion ($2.79 million) in health examination fees and scholarships since 2013.
“The payment integration cooperative will enhance the competitiveness of partner companies, ultimately laying the foundation for a sustainable industrial ecosystem,” a KT&G representative said. “We will continue to expand the scope of social responsibility across the entire value chain in the future.”
November 7, 2023
King’s Speech: Activists Decry Generational Ban

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Smokers’ rights group Forest condemned the U.K. government’s official announcement of legislation that will deny future generations of adults the right to purchase tobacco.
During the opening of the new session of Britain’s parliament today, King Charles presented the government’s plans for new legislation, which includes a generational tobacco bill, as reported by the BBC and other news outlets.
The proposed legislation would make it illegal for anyone born on or after Jan. 1, 2009, to ever legally buy cigarettes, effectively raising the legal age of purchase by one year, every year.
The government is also looking to bring in rules regulating the flavors and descriptions of vapes that critics say are targeted at children.
“This is the worst form of nanny state regulation because it treats consenting adults like children,” said Forest Director Simon Clark.
“If you’re old enough to vote, drive a car, join the army, and purchase alcohol, you’re old enough to buy cigarettes and other tobacco products.
Clark warned that the legislation would boost the black market.
“The biggest benefactor from prohibition won’t be public health but criminal gangs and other illicit traders,” he said.
“Given everything else that is going on in the world, at home and abroad, it’s staggering that a Conservative government would waste valuable parliamentary time banning the sale of tobacco to adults who are perfectly capable of making informed decisions for themselves.”
November 7, 2023
22nd Century Expands Nicotine-Reduction IP

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22nd Century Group has signed a reduced nicotine content technology license with North Carolina State University. The latest license provides additional modes of efficiently producing reduced nicotine content tobacco plants, extending 22nd Century’s IP portfolio. The license will provide 22nd Century Group exclusive rights to the technology until 2042.
“Our reduced nicotine content technologies support the first and only FDA MRTP [modified-risk tobacco product] authorized combustible smoking harm reduction products that meet adult smokers where they are today, providing a new solution to help them smoke less and achieve their health goals,” said 22^nd Century Group interim CEO John Miller in a statement.
“This latest license further enhances and expands on our capabilities to produce reduced nicotine content tobacco plants as we work to bring these innovative products to market for the betterment of public health, including by enhancing our capability to produce reduced nicotine content tobacco plants suitable for international markets that are opposed to genetically modified plants.”

This latest license further enhances and expands on our capabilities to produce reduced nicotine content tobacco plants.
John Miller, interim CEO, 22nd Century Group
Under terms of the exclusive license, 22nd Century will have full use of the patent rights and plant materials to develop and commercialize reduced nicotine content tobacco using this latest non-GMO technology, which further enables worldwide marketability of the company’s VLN reduced nicotine content products.
“22nd Century is pioneering a new pathway in the global fight to end the health and economic harms of smoking, offering both GMO and non-GMO solutions suitable worldwide,” said Miller. “Extensive clinical research, much of it funded by national government health agencies, has consistently documented the benefit of reduced nicotine content tobacco products in helping adult smokers to break the bonds of nicotine addiction and smoke less over time. Reduced nicotine content solutions, such as our VLN products, provide a new solution to adult smokers who want to quit, but have not found success with traditional cessation products.”
November 7, 2023
WSJ: Tobacco Firms Losing Pricing Power

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A combination of inflation and shifting smoking habits is making it more difficult for tobacco companies to offset declining cigarette volumes with higher prices, according to an article in The Wall Street Journal.
According to the paper, one of the attractions of investing in tobacco stocks has been cigarette manufacturers seemingly unlimited ability continuously grow their profits through price hikes even as overall cigarette sales are in long-term decline.
The recent higher-than-expected U.S. volume declines are increasingly testing that strategy, however. Over the three months through September, U.S. cigarette sales fell 8 percent year-on—almost double the long-term average.
Altria Group suspects many smokers have been migrating to illegal disposable vapes, the market for which has grown by one fifth recently. In October, the cigarette manufacturer announced “sweeping litigation” against 34 manufacturers, distributors and online retailers of illicit disposable e-vapor products that are unlawfully marketed and sold in California and other U.S. states.
Stronger against illicit vapes by the Food and Drug Administration could potentially stabilize cigarette volumes.
In addition to competition from illicit vapes, premium brands such as Marlboro face additional pressures as inflation makes consumers more price sensitive. Smaller brands offering discounts have been gaining market share, with a 15 percent increase in sales of the cheapest cigarettes over the past year.
At a national average of $8.77-a-pack including taxes, Marlboro is now 43 percent more expensive than cheaper rivals, according to Altria data, compared with 31 percent five years ago.
One of the beneficiaries of downtrading has been Vector group, whose Montego brand is now the biggest discount cigarette in America.
Despite the pressures, The Wall Street Journal believes it is unlikely that Altria will take dramatic actions. Thirty years ago, the company cut the cost of Marlboros by 20 percent to close a gap that had opened between it and cheaper brands.
Traumatized investors sold their shares in the company en masse in an event that became known as “Marlboro Friday.”
November 6, 2023
BAT Designer Urges Responsible Creations

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Product designs should not center only on providing attractive appearance but also encompass meaning, value and responsibility, according to Ken Kim, head of design at the BAT Group.
“The role of designers is changing, from simply designing products to assuming social and environmental responsibilities,” Kim said at the Design Korea conference, which took place Nov. 1-5, 2023, in Seoul. “This [new role] is not a choice for individual designers to make, but a common goal the industry and society must undertake together in order to move forward.”
Kim is the first Korean to head BAT’s product design division. His portfolio includes tobacco heating products such as Vuse Epod 2, Glo Pro Slim and Glo Hyper X2.
During the conference, which was reported in The Korea Herald, Kim reviewed measures on how designs could address social issues such as carbon neutrality amid heightened regulations, emphasizing that designs could function as an important key to the tobacco industry’s sustainable future.
He stressed the importance of designing products in ways that do not appeal to underage consumers. “We need a balanced design strategy that does not stimulate the curiosity of minors, through conducting analysis of design preferences by age groups,” he was quoted as saying.
November 6, 2023
Documentary Celebrates ‘Swedish Miracle’
We Are Innovation (WAI), an activist group, will pre-screen the documentary How Sweden Quit Smoking to a select audience on Nov. 15, 2023, at RSA House in London.
Directed by award-winning Polish filmmaker Tomasz Agencki, the documentary explores how Sweden managed to reduce smoking to levels unrivaled in the European Union and elsewhere.
According to its makers, How Sweden Quit Smoking highlights the determination, innovation and creativity that drove the Swedes toward a milestone unparalleled in contemporary times. The documentary features the perspectives of scholars, doctors, innovators and activists while demonstrating the interplay of science, politics, history and personal responsibility at the center of this journey.
“We are incredibly thrilled to bring this important documentary to the broad audience,” said WAI CEO Federico Fernandez in a statement. “How Sweden Quit Smoking will inspire stakeholders, decision-makers, activists and the general public to pursue innovation and creativity toward a better future for all. This event is a must-attend for anyone looking to stay ahead of the curve in leveraging effective innovation methodologies to help transform the world’s most pressing problems.”
“The goal of this documentary is to generate a positive impact on society,” said Agencki. “Through the journey of Sweden toward becoming a smoke-free nation, I hope to inspire people worldwide to embrace innovation, personal responsibility and to work toward a better society.”
Registration is available through Eventbrite.
November 6, 2023
Imperial’s Performance ‘in Line With Guidance’

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Imperial Brands is on track to deliver in line with its previous full-year guidance, the company announced in a trading update. On a constant currency basis and including Russia in the comparable prior-year period, the company expects tobacco and NGP net revenue growth in the low single digits and group adjusted operating profit growth to accelerate to the lower end of its mid-single-digit range. (Imperial Brands transferred its Russian business to local investors in April 2022.)
At current rates, the company anticipates foreign exchange rates to provide a boost of approximately 2 percent to its full-year net revenue and adjusted operating profit.
“Focused investment in our priority combustible markets is expected to deliver a further modest gain in the aggregate share for our top 5 markets at the full year,” the company wrote in its update. “This will complete three consecutive years of improved market share performance following several years of decline.
Imperial expects market share growth in the U.S., Spain and Australia to offset declines in Germany and the U.K. “This positive aggregate share performance has been achieved while delivering strong pricing across all five markets and reflects the strengthened equity of our brands and our improved resilience as a result of our recent targeted investments,” Imperial wrote.
“As anticipated, at constant currency, our tobacco net revenue growth improved in the second half of the year as continued strong pricing helped to offset the relatively higher volume declines against historic averages.
“Tobacco net revenue growth has remained strong in Europe and the AAACE region, more than offsetting declines in the U.S. Our U.S. cigarette business has outperformed with continued growth in cigarette net revenue, although, as expected, this has been more than offset by a decline in mass market cigar net revenue against a strong comparator period.”
Imperial Brands’ full-year NGP revenue growth accelerated in the second half of the year, driven by strong growth in Europe.
In its trading update, Imperial also announced a further £1.1 billion ($1.36 billion) share buyback for fiscal 2024, a 10 percent increase on the £1.0 billion buyback in fiscal year 2023.
Imperial will announce its full-year results on Nov. 14.
November 6, 2023
BAT Strengthens Organigram Partnership

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BAT is investing some £74 million ($91.68 million) in its partnership with Organigram and increasing its equity position from 19 percent to 45 percent.
This investment is intended to deepen the strategic relationship between Organigram Holdings and BAT, which has strengthened since BAT’s initial investment and the establishment of the Product Development Collaboration (PDC) in March 2021. The PDC was set up to leverage the expertise of both companies in order to develop the next generation of noncombustible cannabis products.
In a statement, BAT said it has been pleased with Organigram’s performance and continues to be impressed by the careful financial governance of the company. “BAT also remains supportive of the category stewardship displayed by Organigram’s management team, particularly in response to tough market conditions,” BAT wrote. “These factors give BAT confidence that the new investment can position Organigram to capitalize on market opportunities and deliver incremental value for both companies.”
The majority of the investment will be allocated for Organigram to establish a strategic investment pool, intended to be applied for emerging opportunities within the cannabis space to accelerate Organigram’s growth and to support geographic, technological and product expansion. According to BAT, the investment remains subject to customary conditions, including necessary approvals by the shareholders of Organigram.
“This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company. In addition, this deepens the strategic partnership between Organigram and BAT, and we look forward to continuing to leverage BAT’s global capabilities and scientific expertise,” said Organigram CEO Beena Goldenberg in a statement.
November 6, 2023