Category: Featured

Illicit Tobacco Trade Up in Ireland

Photo: UbjsP
The illegal cigarette trade cost the Irish government approximately €384 million ($415.25 million) in lost excise duty and value-added tax during 2022, reports the Irish Examiner, citing estimates by the Revenue Commissioners.
A survey carried out by Ipsos MRBI on behalf of the Revenue Commissioners, shows that 17 percent of all cigarette packs held by smokers in 2022 were illegal. This is up from 13 percent in 2021.
An illicit rate of 17 percent equates to approximately 31.7 million illegal packs. Nearly nine in 10 of those illegal packs were classified as contraband—that is, normal commercial brands that were purchased abroad and brought into the country. A further 13 percent of cigarette packs were found to be legal but with no Irish duty paid—up 8 percent from 2021.
The survey also found 17 percent of pouches of roll-your-own tobacco held by smokers surveyed were illegal and 10 percent were legal but with no Irish duty paid.
In 2022, the Revenue Commissioners seized 51.6 million cigarettes valued at €39.5 million, and 11,803 kg of tobacco with an estimated value of €8.5 million.
The agency obtained 41 summary convictions relating to the sale of illicit tobacco, four of which were on indictment with fines of €76,250 imposed.
There were 24 convictions relating to tobacco smuggling in 2022, four of which were on indictment, with fines of €35,100 imposed.
May 22, 2023
Pakistan Tobacco Trims Output as Illicit Trade Booms After Tax Hike

Photo: Taco Tuinstra
Pakistan Tobacco Co. (PTC) is scaling back production as it struggles to compete with illicit tobacco sales, report Pakistan Today and The Express Tribune.
In a letter to the Federal Board of Revenue, the company stated its intention to re-export four cigarette making machines due to a decline in sales volume. The company has reportedly already shut down eight of 10 production lines at its Jhelum facility.
The move comes in the wake of a steep tobacco tax hike. In February, Pakistan increased the federal excise duty by more than 200 percent, driving smokers to cheaper untaxed locally manufactured tobacco products and smuggled cigarettes. In March, production of duty-paid tobacco products plunged 50 percent, according to the Pakistan Bureau of Statistics. The overall large-scale industry, by contrast, suffered only a decline of 25 percent in the production of duty-paid products.
According to PTC representatives, volumes of duty-not-paid cigarettes and smuggled cigarettes have shot up 32.5 percent and 67 percent, respectively since January. This has bumped the illicit sector’s share to more than 42.5 percent of Pakistan’s total tobacco market.
In 2022-2023, the share of legitimate tobacco sector was 41.4 billion sticks while the illicit sector sold 41.6 billion sticks. Observers expect the February tax hike to hand an additional 11.8 billion sticks to the black market in 2023-2024.
PTC Senior Business Development Manager Qasim Tariq said that, as a result of the tax hike, the government would for the first time in Pakistan’s history lose more tax income to the illicit sector than it earned in revenue from legitimate companies.
“If the current fiscal regime prevails, damage to the national exchequer as well as the legitimate industry will be immense and tough decisions will have to be taken,” he cautioned.
A track-and-trace system to help combat illegal tobacco sales has been delayed by legal challenges and other setbacks.
May 22, 2023
CTP Hires Health Equity Advisor
The U.S. Food and Drug Administration Center for Tobacco Products (CTP) has hired Charlene Le Fauve as its first senior advisor for health equity.
“Dr. Le Fauve is a behavioral scientist and addiction researcher with 25 years of federal work experience related to health equity and health disparities research,” the CTP wrote on its website. “She has dedicated her career to advancing health equity and the health of underserved and underrepresented populations through research and research workforce development.”
Most recently, Le Fauve served as the senior advisor to the chief officer for scientific workforce diversity at the National Institutes of Health (NIH). In this role, she educated national audiences about NIH’s role in scientific workforce diversity and health equity research.
Prior to her NIH role, Le Fauve held various leadership roles, such as the deputy director of disparities research and global mental health at the National Institutes of Mental Health and the senior policy coordinator and lead for the Center for Medicare and Medicaid Services Team at the Department of Health and Human Services.
“Diversity, Equity, Inclusion, and Accessibility are core values of CTP, and efforts are underway to ensure that the full scope of the Center’s work is reflective of these principles. In this new position, which is the first of its kind for any Center at FDA, Dr. Le Fauve will work with all of CTP’s Offices to ensure health equity is integrated into the Center’s programmatic plans and priorities,” the CTP said.
“She also will serve as CTP’s primary representative in a variety of activities that promote and facilitate the reduction of tobacco-related health disparities, including during external meetings, conferences, and presentations.”
May 22, 2023
PMI Mulls Reboot of Production in Ukraine
Massimo Andolina | Photo: PMI
Philip Morris International is exploring options to resume production in Ukraine. In an interview with Interfax Ukraine, PMI’s Europe Region President Massimo Andolina discussed the multinational’s operations in the country in the wake of Russia’s invasion of Ukraine.
Due to safety concerns caused by the ongoing war, PMI has halted production at its Kharkiv factory. Some of its brands in Ukraine are currently produced by Imperial Brands under a temporary arrangement.
However, PMI is committed to launching its own alternative production facility in Ukraine. Andolina highlighted two reasons for this: the desire to produce PMI’s own products within the country and to signal the company’s commitment to investing in Ukraine, even during the war. PMI, he said, is actively exploring various alternatives for establishing a new production facility and hopes to make an announcement in the near future.
The interview also addressed the decline of PMI sales in Ukraine. Andolina cited two factors: the loss of consumers as some left the country or were in occupied territories, and competition from illicit products.
PMI, he said, has engaged in discussions with the government to address this problem, acknowledging that resolving the issue will take time but expressing confidence in the government’s commitment to combat corruption and criminal activities. The company anticipates significant improvements in tackling illicit trade in the coming years.
Andolina commented also on the government’s decision to equalize taxes on cigarettes and heat-not-burn products. PMI, he said, believes that these products should be recognized as different and taxed accordingly. They noted the success of heated tobacco products in Ukraine and highlighted the need for differentiated tax treatment.
The interview also touched upon PMI’s position in Russia. Andolina emphasized that during the war, the company’s primary concern has been protecting the lives of its employees in Ukraine. As a result, it suspended investments and scaled down operations in Russia. While PMI had previously announced its intention to exit the Russian market, changes in the regulatory environment have made it difficult for companies with substantial presence and assets to leave.

May 20, 2023
KT&G Authorized as “Economic Operator”

Kim Yong Beom, head of the KT&G Finance Office (left), and Jeong Seung Hwan, head of the Seoul headquarters of the Korea Customs Service, during the certification ceremony at the Customs’ service Seoul headquarters in Gangnam-gu on May 17. | Photo: KT&G
The Korea Customs Service has certified KT&G as an “Authorized Economic Operator” (AEO).
AEO is an international standard certification system in which the Korea Customs Service recognizes companies based on their performance in terms of export and import safety management, legal, internal control systems, financial soundness and safety management.
The AEO certification provides KT&G with benefits, such as speedy customs clearance and reduced inspections of imported and exported goods.
The certification will help the company accelerate its global expansion program as major export destinations such as the United Arab Emirates, Indonesia and Tunisia will receive similar customs clearance benefits under a mutual recognition arrangement between those countries and Korea.
“We expect to be able to deliver products to our domestic and foreign customers more quickly under challenging trade conditions, such as rising protectionism and non-tariff barriers,” KT&G said in a statement. “In the future, we will acquire additional local AEO certifications for our foreign subsidiaries to strengthen our import and export competitiveness and accelerate our leap to becoming a global top-tier company.”
May 20, 2023
Universal Announces Expansion at Shank’s
George Freeman
Universal Corp. has announced an approximately $30 million expansion project at its subsidiary Shank’s Extracts, a specialty ingredient, flavors and botanical extracts company, headquartered in Lancaster County, Pennsylvania.
As part of this multi-year project, Shank’s Extracts will expand its facilities to support anticipated requirements for additional liquid and dry manufacturing, packaging and refrigerated storage. The project also includes installation of other manufacturing capabilities.
“We are excited to announce this expansion in our facilities at Shank’s Extracts that will enable us to enhance and expand the product offerings of our plant-based ingredients platform,” said Universal Chairman, President and CEO George C. Freeman, III in a statement.
Universal expressed appreciation for the support of the Commonwealth of Pennsylvania’s Department of Community and Economic Development (DCED) and the City of Lancaster for their coordination and support of this project. “Shank’s Extracts has a long and impressive history in Lancaster County, and DCED is proud to have worked with the company to ensure they continue to grow right here in Pennsylvania,” said DCED Secretary Rick Siger. “The Commonwealth has a lot to offer to food manufacturers, from our strategic location to our dedicated and skilled workforce.”
May 20, 2023
Russian Tobacco Mogul Sanctioned

Photo: Natalia Merzlyakova
The United States has sanctioned Igor Kesaev, co-owner of the Mercury group, which manages Megapolis, a major Russian tobacco distributor, reports Interfax.
Listed by Forbes as Russia’s 35th-richest person last year, Kesaev’s holdings have included a major stake in the V.A. Degtyarev factory, which makes machine guns, anti-tank and anti-aircraft weapons, some of which have been used in Ukraine, according to Metro.
Until April 2022, Kesaev was also chairman Megapolis.
Kesaev’s involvement in tobacco dates to the early 1990s. As the Soviet Union broke up into its constituent republics, he started an importing business that worked with international tobacco companies eager to get their products into the Russian market, according to a 2014 profile of the magnate published on Forbes’ Russian website.
Over time, Kesaev built the largest tobacco distributor in Russia through acquisitions of regional competitors, according to Forbes’ Russian website. By 2022, Megapolis delivers to 160,000 retailers across the country, according to the firm’s website.
Kesaev has also been involved with the tobacco business in Ukraine. Following the toppling of Ukraine’s pro-Russian president, Viktor Yanukovych, in 2014 and Russia’s subsequent annexation of Crimea, Ukrainian officials began scrutinizing the role of Russian companies in various sectors of its economy.
At the time, Trading Company Megapolis-Ukraine controlled 99 percent of Ukraine’s tobacco distribution market, according to research from the Anti-Monopoly Committee of Ukraine.
Kyiv sanctioned Kesaev in 2016 for unspecified actions that it said threatened Ukraine’s national security. A top Ukrainian prosecutor later accused Kesaev of supporting “terrorist organizations” by supplying arms to Russian-backed separatist groups that have been fighting for nearly a decade to carve out two independent states—Donetsk and Luhansk—in eastern Ukraine.
Kesaev has also been sanctioned by the EU and the U.K. for aiding Russia’s invasion of Ukraine.
May 20, 2023
ITC Quarterly Profit up by a Fifth

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ITC of India reported profits of INR50.87 billion ($622 million) in its most recent fourth quarter, up 21.4 percent from the same period in 2022, reports Reuters.
In a press release, the cigarettes-to-hotels conglomerate credited solid demand for cigarettes and other consumer goods.
ITC’s revenue from operations rose about 6.6 percent to INR175.06 billion, boosted by a 14 percent jump in its cigarettes business, which includes the Classic and Gold Flake brands.
During the quarter, ITC’s cigarette sales climbed as the broader tobacco industry stayed away from price increases due to a lower-than-expected tax increase on cigarettes in the central government’s budget.
Sales of its nontobacco consumer goods have also improved as consumers in rural India are buying more amid easing inflation. ITC’s other consumer goods unit, which includes its foods and stationery businesses, rose 19.4 percent
Revenue from the hotels business, meanwhile, nearly doubled as leisure and business travel picked up during the quarter.
May 19, 2023
Juul and Altria to Pay $60.5 Million in Minnesota Deal

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Juul Labs and Altria Group will pay more than $60 million to settle Minnesota litigation relating to Juul’s marketing practices, according to Law360.
Minnesota Attorney General Keith Ellison sued Juul in 2019, alleging its marketing was deliberately targeted to minors and that the company failed to adequately verify customers’ ages, as required by law.
In April, the parties announced a settlement without disclosing the terms pending public filing of the papers.
Under the terms of the consent judgment filed with the Hennepin County District Court, Juul and Altria—a one-time Juul investor—will jointly pay $60.5 million to the state over an eight-year period. Altria will foot $5 million of the bill, according to the agreement.
The deal is front-loaded and will require the companies to pay nearly 60 percent of the settlement in less than one year, according to the Attorney General’s office.
The agreement also prohibits Juul from marketing or selling to children and young adults, restricts the company’s ability to sponsor certain events and use outdoor advertising in the state, prevents it from distributing product samples and requires that it accurately disclose the nicotine content of its products, according to the judgment.
The deal with Minnesota follows a $438.5 million settlement with more than 30 states and territories in September, a $255 million deal in December to end economic loss claims in multidistrict litigation and a $23.8 million deal in March to resolve the city of Chicago’s suit, among others.
And Juul last month agreed to pay $462 million to settle claims with California, Colorado, Illinois, Massachusetts, New Mexico, New York and Washington, D.C., over youth marketing claims.
May 19, 2023
FDA Denies Marketing of 250+ E-liquids

The U.S. Food and Drug Administration on May 18 issued marketing denial orders to Mothers Milk WTA for more than 250 flavored and tobacco-flavored e-liquids.
After completing initial acceptance review and subsequently proceeding to and completing a substantive scientific review of the company’s premarket tobacco product applications (PMTAs), the FDA determined that the applications lacked sufficient evidence to show the products are appropriate for the protection of public health.
For example, the applications did not provide sufficient evidence to show comparative health risk data relative to other tobacco products on the U.S. market, information assessing the abuse liability of the new products, or that the new products could be manufactured consistently.
“One of our most important responsibilities is to ensure new tobacco products undergo scientifically rigorous premarket review,” said Matthew Farrelly, director of the Office of Science within the FDA’s Center for Tobacco Products, in a statement. “We remain committed to evaluating these applications based on a public health standard that considers the risks and benefits of the tobacco product to the population as a whole.”
To date, the agency has received premarket tobacco applications for more than 26 million deemed products, the majority of which are e-cigarettes. The agency says it has made determinations on 99 percent of these applications. This includes more than 1 million applications for non-tobacco nicotine products, including those containing synthetic nicotine, after Congress clarified FDA’s authority to regulate these products in April 2022.
Further, FDA has authorized 23 tobacco-flavored e-cigarette products and devices, which are the only e-cigarettes that currently may be lawfully sold or distributed in the U.S. FDA has also denied marketing applications for millions of products that did not meet the requirements in the law.
May 18, 2023