Category: Featured

  • DFA Signs Anti-Illicit Trade Declaration

    DFA Signs Anti-Illicit Trade Declaration

    Duty Free Americas has signed the Duty Free World Council (DFWC) and Tax Free World Association (TFWA) anti-illicit trade declaration.

    With over 200 stores in airports and border crossings throughout the Americas, the addition of Duty Free Americas to the declaration marks a major extension of the duty-free and tax-free industry’s public commitment to combat illicit trade, counterfeiting and intellectual property theft.

    The DFWC and the TFWA launched the anti-illicit trade declaration in July 2023. By signing the declaration, signatories commit to a zero-tolerance approach to illicit trade within their own organization.

    “The DFWC/TFWA anti-illicit trade declaration continues to grow in strength, and I am very pleased to welcome Duty Free Americas as the most recent signatory to this important initiative,” said DFWC President Sarah Branquinho.

    “Our industry boasts one of the most transparent, trusted and secure supply chains in the world, and this campaign sends a clear message to our millions of customers around the world that they can shop in duty[-free] and tax-free stores around, confident that the products they are purchasing are authentic and genuine.

    “Signatories to this declaration are making a firm public commitment to never permit any form of illicit trade, counterfeiting or intellectual property theft and to hold their commercial partners to that same standard. We welcome the support of any travel retail operator or supplier [who] wishes to be a part of the declaration, and we continue to encourage members of our industry to join us.”

  • 22nd Century Increases VLN Availability

    22nd Century Increases VLN Availability

    22nd Century Group’s VLN reduced-nicotine content cigarettes are now available at more than 1,200 drug store locations across Texas, Florida, Illinois, North Carolina and Georgia. With this most recent addition, VLN is available in more than 4,000 stores across 16 states compared with approximately 1,100 stores on July 1.

    “We are excited to launch the first drug store chain selling our FDA [Food and Drug Administration]-authorized VLN tobacco harm reduction products, adding 1,200 stores across five key state markets to our growing roster of convenience store points of sale,” said John Miller, interim CEO of 22nd Century Group, in a statement. “VLN offers a new, clinically researched solution helping adult smokers reduce their smoking rate and the associated harms of smoking over time.”

    “VLN users continue to report an overwhelmingly positive experience in our market research, and most say it has helped them reduce consumption of their regular cigarette brand,” said Miller. “Research with VLN users indicates that while most nonprescription methods of quitting or reducing smoking are strongly disliked, more than 75 percent of VLN users say they like their experience with the product. As a result of using VLN, 80 percent of adult consumers report a reduction in usage of their regular brand, and many want to share their positive experience with other adult smokers.”

    VLN is the first and only FDA-authorized combustible cigarette labeled as a tobacco harm reduction product.

  • USAID and Pyxus Partner in Malawi

    USAID and Pyxus Partner in Malawi

    Photo: PAM

    The U.S. Agency for International Development (USAID) will award Pyxus Agriculture Malawi (PAM) $14.6 million over the next five years, Pyxus announced on its website. The money will support the company in maximizing its operational effectiveness and minimizing its exposure to financial risk as it continues to drive sustainable agriculture developments in Malawi.

    The USAID award compliments PAM’s investment to date and offsets certain company expenditures going forward as both entities work to increase the availability of high-quality, climate-smart groundnut seed varieties, boost groundnut production and processing, support improved farmer livelihood and counteract the nation’s high rate of deforestation.

    “Our company has a 30-year history of operating in Malawi and has one of the largest networks of smallholder farmers—most operating on two hectares of land or less—in the country. We have worked diligently to help our contracted farmers successfully grow and market high-quality, sustainable crops, thus improving the livelihood of the farmer, their families, their communities and the country as a whole,” said Pyxus President and CEO Pieter Sikkel, during the partnership signing ceremony at PAM’s state-of-the-art groundnut processing facility in Lilongwe, Malawi.

    “Pyxus is honored to receive this $14.6 million award from USAID, which helps our company to further build capacity, expand impact throughout the legume and forestry value chains, and unlock value for Malawi and its farmers,” added Sikkel.

    Pyxus is honored to receive this $14.6 million award from USAID, which helps our company to further build capacity, expand impact throughout the legume and forestry value chains, and unlock value for Malawi and its farmers.

    The agreement aligns with Pyxus’ global environmental, social and governance goals and identifies five focus areas to achieve success: improve Malawi’s legume seed production system through the acceleration of PAM’s current research, breeding and distribution of new high-yielding, climate-resilient, market-demanded and more nutritious legume seed varieties; increase farmer access to high-quality crop inputs and hands-on training of good agricultural practices while simultaneously working to diversify PAM’s contracted farmer base—these efforts enable farmers to increase yields, sales and incomes, driving the development of the country’s commercial agriculture sector; help address smallholder farmer financing roadblocks, which currently put a significant limitation on crop production and overall market success, through fair and affordable crop input financing—minimizing financial roadblocks can help farmers increase yields and improve their overall livelihood; enhance the quality and value of Malawi groundnuts through increased processing capacity of PAM’s groundnut facility, driving job growth, the country’s export opportunities and value addition, resulting in a more impactful private sector contribution to Malawi’s economic growth; and combat deforestation and forest and soil degradation by further developing PAM’s sustainable forestry operation and the introduction of new, innovative energy solutions and soil health amendments to the farmer.

    PAM Managing Director Ronald Ngwira (right) with employees at the company’s groundnut facility in Lilongwe (Photo: Taco Tuinstra)

    “The partnership we’ve launched today, with USAID and Pyxus, will invest in Malawians to accelerate opportunities for more sustainable, inclusive and resilient economic growth,” said USAID Deputy Administrator Isobel Coleman during the signing ceremony.

    Coleman added that the partnership contributes to soil health improvements, utilization of clean energy generated from recycled agricultural waste and increasing availability of nutritious food for the Malawian people. 

    The PAM operation was founded in 2019 under Pyxus’ Value-Added Agricultural Products division. Since its inception, PAM has opened one of the largest groundnut processing facilities in Africa, gained government approval to commercialize five new legume seed varieties, cultivated and maintained more than 7,000 hectares of forestry, and unlocked additional income potential for over 20,000 smallholder farmers.

    Tobacco Reporter visited Pyxus Groundnut factory in the first half of 2023 and reported on the operation in its June print edition (see “A Gamble on Goobers“).

  • Zimbabwe: Seedbeds 16 Percent Larger

    Zimbabwe: Seedbeds 16 Percent Larger

    Photo: Juan

    The size of the seedbed sown for Zimbabwe’s 2023-2024 tobacco crop is 15.5 percent larger than in the previous season, reports New Zimbabwe, citing the Tobacco Industry and Marketing Board (TIMB).

    “Preparations for the 2023-2024 tobacco season are progressing well. Currently, a total of 98,217 hectares of seedbed area has been sown; this is in comparison to 84,985 hectares sown during the same period last year. The first of September marked the earliest date for planting irrigated tobacco,” the TIMB stated.

    “Currently, growers are discing and preparing ridges for the transplanting of hardened seedlings.”

    The TIMB has added shisha tobacco to the list of tobaccos to be grown. For the 2023/2024 season, 4,390 grams of shisha tobacco seed covering 549 hectares has been disbursed to growers. (Also see “Great Expectations,” Tobacco Reporter, May 2022.)

    After a call encouraging registered growers to renew their grower numbers for the next season and a call for first-time growers to apply at the TIMB regional offices, 51,695 growers have registered for the 2023/2024 season.

    “We have new contractors coming on board for the 2023/2024 season. Six contractors have been licensed to increase the number of tobacco financiers for this season,” said the TIMB.

    Zimbabwe’s tobacco growers produced a record 291.1 million kg of tobacco worth $882.2 million this season. The country’s aim, formulated in the government’s Tobacco Value Chain Transformation Plan, is to reach 300 million kg of tobacco a season by 2025. 

    The regulator also announced measures to improve trade practices.

    “TIMB has put in place some key strategies to tackle the issues of mis-invoicing and transfer pricing that have been negatively impacting the tobacco industry. Among the strategies is the Compliance Administrative Framework that was implemented in 2021 and the setting up of a new Compliance Administration Department,” the regulator said.

    “Before contracting commences, all interested companies submit their commitment documents, which show their capacity to contract for the season, which includes proof of funding, unit cost of inputs to be given to farmers and the interest component to be charged.

    “Such commitment documents are then vetted by our Compliance and Licensing Committee that will inspect all such, and if any is found in violation of the board’s compliance standards, such will be rejected, and no approval for contracting farmers will be given,” said the TIMB.

  • KT&G to Build Second Factory in Indonesia

    KT&G to Build Second Factory in Indonesia

    Photo: xreflex

    KT&G Corp. plans to expand its production facilities in Indonesia, reports the Yonhap News Agency.

    The South Korean tobacco company currently operates a factory in Surabaya and plans to build a second one in the Southeast Asian country. The new plant will produce KT&G products for export to neighboring and other countries.

    Indonesia’s government is supporting the investment, according to KT&G.

    The expansion fits into KT&G’s ambition to earn half of its sales from overseas businesses in 2027. It aims to achieve sales of KRW10 trillion ($7.53 billion) in 2027, compared with KRW5.9 trillion in 2022.

    In addition to producing conventional cigarettes, KT&G said it will reinforce its heat-not-burn (HNB) and health functional food product businesses. 

    The company has exported its HNB products to more than 30 countries since 2020 through the distribution deal with Philip Morris International.

    Currently, KT&G earns 90 percent of its overall sales from the cigarette business division and the 10 percent from the HNB division.

    The company has four tobacco manufacturing plants, one each in South Korea, Russia, Turkey and Indonesia, whose combined capacity amounts to 13.6 billion cigarettes a year.

     

     

     

  • Study: Vape Litter Out of Control

    Study: Vape Litter Out of Control

    Photo: bennyrobo

    The majority of single-use vapes are disposed of improperly, with the number increasing, according to a Material Focus study.

    “Since we last published our research, the problem with single-use vapes has gotten further out of control,” said Scott Butler, executive director of Material Focus. “Single-use vapes are a strong contender for being the most environmentally wasteful, damaging and dangerous consumer product ever made. And still very few producers and retailers comply with environmental regulations and haven’t put recycling drop-off points and systems in place. This all means that too often local authorities are being burdened with the major operational and financial headaches associated with what is now the fastest growing and most dangerous waste stream in the U.K., single-use vapes.

    “Vapes, like any other electrical with a plug, battery or cable, should never be binned and always be recycled as a minimum. We need rapid growth in the number of accessible and visible vape recycling drop-off points. And we need proper financing of genuine recycling solutions to recover materials and manage fire risks. The solution is clear: immediate, significant and transparent vape industry voluntary action in advance of planned regulatory changes already earmarked by Defra. The U.K. needs more accessible recycling drop-off points in stores, in parks, in public spaces near offices, bars and pubs, and in schools, colleges and universities. With 75 percent of vapers thinking that producers and retailers should provide more information that states that vapes can be recycled, the word ‘disposable’ should no longer be used in any marketing and promotion.

    “Until single-use vape producers, importers and retailers act to genuinely comply with and finance their legal environmental responsibilities, then the calls for banning the sale of them will only strengthen.” 

    The U.K. Vaping Industry Association (UKVIA) acknowledged the environmental challenge posted by single-use vape and said it was committed to helping develop solutions to the problem.

    “We welcome the solutions put forward by Material Focus and are leading industry action in a number of these areas and more,” the UKVIA wrote in a statement. “Education of consumers about how to recycle single-use vapes; product innovations that enhance recycling rates; compliance with the current regulations; and investment in waste collection points at point of use and not just at point of sale are all critical in reducing the environmental impact of single-use vapes.

    “We must protect the environment while also recognizing the contribution disposable vapes have made in helping adult smokers start on their quit journeys, in turn helping to achieve the government’s 2030 smoke-free ambition. The devices are one of the main reasons why for a second year running, smoking rates have hit record low levels in Great Britain, according to Office of National Statistics data published this week. Cigarettes are also still the single most littered item on the planet. Over a billion smokers worldwide discard a combined 4.5 trillion cigarette butts every year.

    “Over 250 people die every day in the U.K. from smoking, and cigarettes cost the NHS [National Health Service] around £2.6 billion [$3.25 billion] every year; this is a huge price to pay, and disposable vapes offer a highly effective, proven and considerably less harmful alternative than conventional cigarettes because of their accessibility, ease of use and price points.”

    The UKVIA added that they will be launching a “Sustainable Vaping Week” to help educate e-cigarette users about proper disposal of single-use, and other, devices.

    Secondhand Smoke Can Increase Lead Levels: Study

    Secondhand smoke may be a source of chronic lead exposure in children and adolescents, according to a recent BMC Public Health study.  

    The study analyzed national data on blood lead levels and secondhand smoke exposure in children and teenagers ages 6 to 19 from 2015 to 2018. Levels of lead and cotinine were assessed, and it was found that average blood lead levels in what was considered the intermediate and high tobacco smoke exposure groups were 18 percent and 29 percent higher, respectively, than levels in the lowest tobacco smoke exposure group. The study also showed that a larger number of boys had detectable lead levels as well as a larger number of Black children and adolescents compared to other ethnic groups studied.

    Children aged 6 to 10 were more likely to have elevated lead levels than older subjects, and children in low-income households had a 27 percent higher lead level than children from high-income households.

    This lead exposure creates a dangerous situation for youth; lead does not dilute when exposure decreases and the body does not naturally excrete the metal. Lead accumulates in the bones and leaches into blood, and exposure can lead to numerous neurological problems like nerve damage, cognitive problems, loss of IQ points and potentially Alzheimer’s disease and schizophrenia. The only way to remove lead from the body is through an oral medical treatment, according to the Conversation.

     

     

  • Premier to Distribute NIC-S Pouches

    Premier to Distribute NIC-S Pouches

    Photo: Premier Manufacturing/Enorama Pharma

    Premier Manufacturing, a subsidiary of U.S. Tobacco Cooperative, and Enorama Pharma have entered into an exclusive distribution agreement regarding the sale of NIC-S, tobacco-free white snus, for the U.S. market.

    “The growth and sales potential in tobacco free nicotine pouch market is growing exponentially”, said Premier Manufacturing Sales Director Steve Lucas. “We wanted to offer our customers and their consumers a broader range of products and NIC-S is a great partner to achieve this”, said Lucas.

    “We at Enorama are very pleased to have entered into this distribution agreement with Premier Manufacturing and we look forward to a long and close collaboration. We are convinced that Premier Manufacturing, its extensive sales organization and a wide contact network, will be a valuable partner for Enorama’s expansion in the American market.” said CEO Annette Agerskov.

    NIC-S is available in a wide range of options allowing the consumer to tailor their nicotine intake. “With three different nicotine strengths—3 mg, 6 mg and 9 mg—and several flavors such as wintergreen, mint, orange, berry, cinnamon and flavor free; consumers will be sure to find a favorite style—or two,” said Lucas.

    “Everyone at Premier Manufacturing is excited about the opportunity to partner with Enorama Pharma to supply our customers with a superior quality premium tobacco-free white pouch that will satisfy the growing number of consumers entering this exciting category,” said U.S. Tobacco Cooperative Senior Vice President Russ Mancuso.

    Premier Manufacturing will be doing a full marketing campaign promoting NIC-S that will include point-of-sale materials, print and digital ad campaigns, display fixtures and various websites. Product will be available via Premier’s distribution network throughout the U.S. in the coming months.

  • BAT Sells Russian Business

    BAT Sells Russian Business

    Image: Tobacco Reporter archive

    BAT has formally entered into an agreement to sell its Russian and Belarusian businesses.

    The buyer is a consortium led by members of BAT Russia’s management team, which, upon completion, will wholly own both businesses. Post completion, these businesses will be known as the ITMS Group.

    “Throughout the transfer process, one of BAT’s key priorities has been the interests of its colleagues in Russia and Belarus,” BAT wrote in a statement. “As part of the agreement, their employment terms will remain comparable to their existing BAT terms for at least two years post-completion.”

    BAT anticipates that the transaction will complete within the next month once certain conditions have been satisfied. Upon completion, BAT will no longer have a presence in Russia or Belarus and will receive no financial gain from ongoing sales in these markets.

    BAT remains confident of delivering its full-year guidance as set out at its half-year results on July 26, 2023.

    BAT’s operations in Russia include a head office in Moscow, 75 regional offices and a manufacturing facility in St. Petersburg. BAT also has an office in Belarus.

    On June 30, 2023, on a constant currency basis, Russia and Belarus accounted for approximately 2.7 percent of group revenue and approximately 2.5 percent of group adjusted profit from operations.

    BAT’s decision to sell its Russian business is a response to Moscow’s military invasion of Ukraine.

  • Korea: Vape Firms Evading Taxes

    Korea: Vape Firms Evading Taxes

    Image: Andrii Yalanskyi

    E-cigarette companies have been evading taxes by declaring false nicotine content when importing liquid nicotine base into South Korea, according to one of the country’s lawmakers, reports The Pulse.

    The accumulated tax evasion is estimated at several trillion won.

    Between January 2020 and July 2023, 20,197 kg of liquid nicotine base was imported, according to documents from the Korea Electronic Liquid Association obtained by Lim Lee-ja of the ruling People Power Party. Approximately 3,300 bottles of e-liquid can be produced with 1 kg of liquid nicotine. Each bottle is levied at KRW53,970 ($40.60).

    Many e-cigarette companies have been mis-declaring tobacco leaf nicotine as tobacco stem and root nicotine to evade taxes since 2016, according to the association. Under Korea’s tobacco laws, nicotine extracted from tobacco stems and roots is not classified as tobacco.

    Data shows that e-cigarette companies changed their declarations from tobacco leaf nicotine to synthetic nicotine when Korea’s Individual Consumption Tax Act was amended in 2021 to impose taxes on all tobacco-derived nicotine. Synthetic nicotine is classified as a simple commodity and not subject to taxes.

    The association stated that annual distribution volume of Korean e-cigarette liquid is 30 million 30 mL bottles, with an estimated annual tax evasion of KRW1.6 trillion.

    In 2019, the Board of Audit and Inspection audited the Korea Customs Service, the Ministry of Environment and the Ministry of Health and Welfare, showing that all the inspected imported nicotine was tobacco leaf nicotine. Falsified declarations have continued since then, according to the association.

    Lim has called on the government to crack down on companies falsely declaring their products.

    Liquid nicotine base is considered a hazardous substance under the Chemical Substance Control Act, regulated by the Ministry of Environment. Imports must be reported to the minister of environment, and companies must obtain an import declaration certificate for hazardous substances.

    Those caught failing to report or falsely reporting the import of hazardous substances are subject to up to one year of imprisonment and up to KRW30 million in fines. None of the companies shown to have falsely declared nicotine products in past audits have been punished to date.

  • Miami Cigar Joins Cigar Association of America

    Miami Cigar Joins Cigar Association of America

    Cigar Association of America logo
    Photo courtesy of the CAA

    Miami Cigar and Co. has joined the Cigar Association of America (CAA), making it the third new member in the past six months.

    “Miami Cigar and Company is an exceptional family-owned, mid-sized cigar company, and we are proud to represent them and its portfolio of fine brands,” said David Ozgo, CAA president. “We certainly look forward to working with them to advance public policy issues affecting cigars.”

    Miami Cigar and Co. was founded in 1989 and now distributes brands such as Tatiana, Nestor Miranda and Don Lino.

    “Miami Cigar and Company is thrilled to join the CAA,” said Jason Wood, vice president of sales and marketing for Miami Cigar and Company. “The association provides a valuable service to the cigar industry with its unparalleled network of state and federal government relations experts. The CAA does exceptional work in protecting the rights of cigar enthusiasts nationwide and all segments of the cigar industry, and we want to be part of that.”

    The CAA is a national trade association representing manufacturers, distributors, importers, suppliers and all channels of retailers in the cigar industry.