Category: Featured

  • In Memoriam: Kay O’Neill

    In Memoriam: Kay O’Neill

    Kay O’Neill

    Tobacco Reporter will be celebrating its 150th anniversary next year, and, understandably, no one today was present for its beginning. However, for Tobacco Reporter’s “modern era”—that is, when its headquarters moved to Raleigh, North Carolina, USA, in 1982—the magazine has been fortunate to enjoy an extraordinarily consistent existence in terms of its personnel. In fact, though many people have contributed over the years, we can easily point to a small handful who have been fundamental and foundational to the evolution of what Tobacco Reporter has today become. Our Mount Rushmore, if you will.

    One of those people, without question, was Evelyn O’Neill. She was better known to the industry, her colleagues and friends simply as Kay. Kay joined Tobacco Reporter in 1991 and served numerous roles for the magazine and its family-like parent companies. On Jan. 17, 2023, after battling illness for far too long, Kay passed away surrounded by her loving family.

    In her professional life, Kay did everything you can imagine on the sales side, developing relationships and fostering partnerships around the globe. She eventually earned the title of associate publisher, but to those who worked with her, her most important role was always being the “sales coordinator.” To translate that term, Kay was the buffer between the editors and designers back at the office who cared way too much about when the magazine was scheduled to go to the printer and the salespeople out on the road who were unfamiliar with the concept of deadlines. Kay handled each side with a magical blend of charm, humor and force as only she could, kept the peace and helped everything move forward with the big picture in mind.

    As her former colleagues shared stories, it became apparent that Kay was the true definition of dichotomy. On one hand, she was a Carolina girl—that is to say, she came off as small-town country with the beautiful Southern twang in her voice—but she was as sharp and worldly as they came. She was equally comfortable networking with industry executives at five-course dinners as she was sharing a plate of Carolina barbecue with tobacco farmers at local extension meetings.

    She wasn’t shy about mincing words and wouldn’t hesitate to kick you in the butt when needed but would protect you like a mother lion in her next breath. Each September, she would travel to one of the world’s great cities as part of the Global Tobacco and Nicotine Forum, staying in lush accommodations, then just a few weeks later, she would be in a giant tent standing over a space heater trying to stay warm as she worked a booth at the fairgrounds for the North Carolina Farm Show. Each of those moments was pure Kay. She was a professional, and she was a friend.

    Those who knew her will not only miss her generous personality and infectious laughter but also her ability to disarm the moment and bring perspective. While Kay appreciated the value of hard work, she never lost sight of what truly matters: health, friends and family.

    Kay is survived by her husband Mike, her children Laura and Ryan and their spouses, her beloved grandchildren and a group of grateful friends from more than three decades at Tobacco Reporter. She deeply loved all her family and friends, and her legacy will live on through them.

  • FDA Denies Two Vuse Menthol Vapor Products

    FDA Denies Two Vuse Menthol Vapor Products

    Photo: rangizzz

    The U.S. Food and Drug Administration issued marketing denial orders (MDOs) for R.J. Reynolds Vapor Co.’s Vuse Vibe Tank Menthol 3.0 percent and the Vuse Ciro Cartridge Menthol 1.5 percent.

    “Consistent with the authorities granted by Congress, the FDA remains committed to evaluating new tobacco product applications based on a public health standard that considers the risks and benefits of the tobacco product to the population as a whole,” said Brian King, director of the FDA’s Center for Tobacco Products. “The applications for these products did not present sufficient scientific evidence to show that the potential benefit to adult smokers outweighs the risks of youth initiation and use.”

    “Existing evidence demonstrates that nontobacco-flavored e-cigarettes, including menthol-flavored e-cigarettes, have a known and substantial risk with regard to youth appeal, uptake and use; in contrast, data indicate tobacco-flavored e-cigarettes do not have the same appeal to youth and therefore do not pose the same degree of risk,” the FDA wrote in a statement.

    “Given these existing differences in youth risk, applicants need to provide robust evidence to demonstrate that using their menthol-flavored e-cigarette products are likely to promote a complete switch or are likely to significantly reduce combustible cigarette use in adult smokers beyond that facilitated by tobacco-flavored e-cigarette products. Data from the 2022 National Youth Tobacco Survey found that Vuse was the second most common brand youth e-cigarette users reported ‘usually’ using.”

    “Today’s decision pertains to the specific application submitted for review by FDA,” said King. “It is the responsibility of the applicant to provide sufficiently robust scientific evidence to demonstrate that the necessary public health standard has been met. In this case, the presented evidence did not meet that standard.”

    In assessing the implications of the most recent MDOs for RJRV’s parent company, BAT, Morgan Stanley noted that Vuse Vibe and Vuse Ciro represent only a small portion of BAT’s overall e-cigarette sales in the U.S.

    “Should it choose to appeal, we would expect its products to remain on the market as the appeal is ongoing, resulting in minimal/no operating impact,” the investment bank wrote in a note to investors.

    Morgan Stanley said the MDO provides another example of the FDA’s ongoing reluctance to approve menthol e-cigarette flavors. To date, the agency has approved only tobacco-flavored e-cigarettes.

    The financial institution also noted that the FDA has granted both a premarket tobacco product application and modified-risk tobacco product designation to IQOS’ menthol variant, which may make it one of the few menthol reduced-risk alternatives on the market.

    The FDA is targeting publishing a final rule to ban menthol cigarettes in August 2023, but considering expected industry litigation, final implementation could be five to six years away, according to Morgan Stanley.

  • 22nd Century Acquires RX Pharmatech

    22nd Century Acquires RX Pharmatech

    Image: mikefoto58 | Adobe Stock

    22nd Century Group acquired privately held RX Pharmatech (RXP), a leading United Kingdom distributor of cannabinoids with 1,276 novel food applications with the U.K. Food Standards Agency (FSA), according to a company press release. Terms of the agreement include an up-front payment of $650,000 in cash and stock and a three-year equity earn-out based on revenue milestones.

    “The acquisition of RXP establishes GVB as the leader in the U.K. Consumer Products isolate market, which is expected to reach an estimated $1.26 billion by 2025 and secures direct access to key European markets for CBD products,” stated James A. Mish, CEO of 22nd Century Group. “RXP has exclusively utilized GVB’s technical data and worked closely with the FSA on developing their highly effective application and compliance programs that secured 1,276 novel food applications, the second most CBD products to pass through the first round of approval. We look forward to leveraging their leadership team’s vast cannabis industry experience and strong relationships with U.K. and EU regulatory agencies as we move forward.”

    Mish continued, “We expect the addition of RXP will be immediately accretive to the company and facilitate significant operating efficiencies leading to additional revenue and gross margin improvement. In particular, the addition of RXP with our recently opened distribution facility in the Netherlands will allow us to scale our operations and capture more market share in the growing European Consumer Products market.”

    RXP’s products include CBD isolate and numerous variations of finished products like gummies, oils, drops, candies, tinctures, sprays, capsules and others.

  • Pyxus Makes Board Changes

    Pyxus Makes Board Changes

    Image: Tobacco Reporter archive

    Pyxus International announced the resignation of Patrick B. Fallon, managing principal of Monarch Alternative Capital, from its board of directors and the appointment of two new members of the board, John S. Alphin and Patrick J. Bartels Jr., effective Jan. 18, 2023, according to a press release. The changes to the board result in an increase in the total number of directors from six to seven individuals.

    “On behalf of the company’s board of directors, I thank Mr. Fallon for his guidance in redefining the company’s strategy, helping position the business for growth and long-term success,” said Pyxus President and CEO Pieter Sikkel. “I am pleased to welcome Mr. Alphin and Mr. Bartels to Pyxus’ board of directors and look forward to their strategic direction as we work to accelerate business growth, increase stakeholder value and together grow a better world.” 

    Alphin has 24 years of tobacco industry experience, including serving as a corporate director and head of global leaf sourcing for BAT. His areas of expertise include strategy and business development, generation of sales and operational efficiencies, navigation of complex, global supply chains and implementation of robust sustainability and corporate governance programs. Alphin will serve as a member of the Environmental, Social, Governance and Nominating Committee of Pyxus’ board of directors.

    Bartels brings more than 20 years of experience in the financial sector and currently serves as a managing member of Redan Advisors. He previously held positions with Monarch Alternative Capital, Invesco and PricewaterhouseCoopers. Additionally, Bartels has served as a director on numerous public and private boards and has experience in corporate governance, finance, capital markets and mergers and acquisitions. Bartels will serve as a member of the Audit Committee and chair of the Compensation Committee of the company’s board of directors.

  • Pouch Trade Secrets Dispute Settled

    Pouch Trade Secrets Dispute Settled

    Photo: Andrii

    Kretek International, Modoral and Swedish Match have settled a legal dispute relating to nicotine pouch trade secrets, reports Law360.

    In 2020, Swedish Match alleged that Kretek and its subsidiary Dryft Sciences, as well as Modoral, misappropriated six trade secrets concerning the manufacturing and formulation of nicotine pouches.

    The defendants all denied Swedish Match’s claims and said they don’t owe the company any damages.

    Swedish Match sells nicotine pouch products under the name Zyn based on U.S. Patent No. 9,161,908 and trade secrets that it bought from Swedish nicotine company TillCe. According to Swedish Match, one of TillCe’s affiliates in 2016 breached its agreements with Swedish Match by selling the trade secrets to Kretek, which formed Dryft Sciences to sell products in competition with Swedish Match.

    Kretek then formed Dryft Sciences to sell products that misappropriated Swedish Match’s trade secrets, the complaint states.

    In November 2020, BAT—which owns Modoral’s parent company Reynolds American—bought Dryft Sciences’ nicotine pouch business and its product line.

    After Swedish Match informed BAT that it owned the U.S. patent and other trade secret information, Modoral filed a declaratory judgment action for noninfringement and also sought invalidity of the patent as well as for no misappropriation of Swedish Match’s trade secrets, the complaint states.

    On Jan. 19, U.S. District Judge Stanley Blumenfeld Jr. entered partial judgment in favor of Modoral, finding that Swedish Match couldn’t establish that Modoral’s accused product infringed any of the asserted claims of the patent.

    In their trial briefs filed earlier this month, Modoral and Kretek both argued that Swedish Match can’t sustain its trade secret misappropriation claims because its alleged trade secrets aren’t actually secret.

  • 22nd Century Submits CBD Drug Master File

    22nd Century Submits CBD Drug Master File

    Image: Tobacco Reporter archive

    22nd Century Group filed a U.S. drug master file (DMF) to the U.S. Food and Drug Administration for cannabidiol (CBD) API from GVB Biopharma, a 22nd Century Group company, according to a company press release.

    “GVB Biopharma is widely recognized for the quality and consistency of its Cannabinoid extracts and ingredients,” said James A. Mish, CEO of 22nd Century. “We are now leveraging these capabilities with our DMF filing to meet the increasing regulatory demands of the supplements markets.”

    Additionally, 22nd Century and GVB Biopharma have entered into an agreement with Cannabinoid API Solutions (CAS) and Transo-Pharm for global sales, marketing and distribution of GVB’s Cannabinoid APIs. Transo-Pharm is a well-established supplier and distributor of pharmaceutical APIs to a broad portfolio of branded and generic finished drug product manufacturers, including more than 75 current active, ongoing development programs.

    “The partnership with Transo-Pharm will accelerate opportunities to supply our APIs to the largest and most innovative pharmaceutical and consumer goods manufacturers in the world,” said Mish.

  • Trade Group: Germans Smoking Less

    Trade Group: Germans Smoking Less

    Photo: Rene Van Den Berg | Dreamstime.com

    Contrary to what the recently conducted German Survey on Smoking Behavior (DEBRA) suggests, Germans are smoking less, writes the German Association of the Tobacco Industry and New Products (BVTE) on its website, citing figures from the Federal Statistical Office (FSE).

    According to the FSE, sales of taxed cigarettes will decline in 2022 for the fourth year in a row, falling well below the 70 billion unit threshold for the first time.

    “People are smoking less and less in Germany. That is a fact that cannot be disputed,” says Jan Muecke, chief executive of the BVTE. “If more smoked, we would have to see that in the sales statistics. The opposite is the case.”

    Conducted at the University of Duesseldorf, the DEBRA found that the proportion of smokers in the total population increased from 25.4 percent in 2020 to 37.6 percent in July 2022. Among underage tobacco users, the prevalence had even almost doubled within one year, showing an increase from 8.7 percent in 2020 to 15.9 percent in 2022. According to the DEBRA, several million adults and around 200,000 minors have (re)started smoking.

    The BVTE noted that such a significant increase in smoking prevalence should have been reflected in government sales statistics, even if the new smokers were only occasional users.

    However, fewer cigarettes have been sold in Germany every year since 2019. From 2019 to 2021, cigarette sales fell by 3.6 percent to 71.7 billion units. This trend continued in 2022. The FSE reported tax stamp purchases for 60.7 billion units from January 2022 to November 2022. This means that 8 percent fewer cigarettes were produced for the German market than in the same period of the previous year.

    For 2022 as a whole, the agency expects sales of around 67 billion units.

    “People are smoking less and less in Germany. If more smoked, we would have to see that in the sales statistics. The opposite is the case.”

    Jan Muecke, chief executive, BVTE

    According to the BVTE, the discrepancy between official sales statistics and the DEBRA data points to methodological weaknesses in the survey. For example, the alleged increase in the proportion of underage consumers is based on a sample of only about 50 young people—apparently including eight people who reported smoking. Based on this data, says the BVTE, any estimate of smoking prevalence is highly uncertain.

    Muecke lamented the fact that the dubious DEBRA results were used to justify misguided demands for regulation. “Tobacco is fully regulated,” he said. “Adult smokers in Germany already feel unduly patronized and are not reached even with ever new bans and restrictions.”

    At the same time, German policy fails to expand the range of new alternative products for smokers and to create more opportunities and greater acceptance for potentially risk-reduced nicotine consumption, according to the BVTE.

    For example, the Federal Ministry of Agriculture is delaying the regulation of tobacco-free nicotine pouches, which are still not available to smokers in German shops despite the fact that the Federal Institute for Risk Assessment has acknowledged that switching from cigarettes to nicotine pouches could represent a reduction in the health risk for a person who smokes.”

  • Pyxus Appoints New Chief HR Officer

    Pyxus Appoints New Chief HR Officer

    Fernanda Goncalves (Photo: Pyxus International)

    Pyxus International has appointed Fernanda Goncalves as its new senior vice president and chief human resources officer.

    Goncalves joins Pyxus with more than 20 years of global human resources and business experience, most recently serving as global HR head at Red Hat, an IBM subsidiary headquartered in Raleigh, North Carolina, USA. She has also held positions with multinational companies including BASF, Hamburg Sued and Ernst & Young.

    Goncalves has a Master of Business Administration degree from Duke University in Durham, North Carolina; a master’s degree in supply chain management from Universidade Mackenzie in Sao Paulo, Brazil, and a bachelor’s degree in business management from the University of Salvador in Salvador, Brazil. In addition to her professional experience, Goncalves serves as a board member of the National Hispanic Corporate Council, working to promote diversity, equity and inclusion (DEI) strategies, talent acquisition goals and employer branding and talent strategies.

    “On behalf of Pyxus and the board of directors, I am pleased to welcome Fernanda to the company,” said Pyxus president and CEO Pieter Sikkel in a statement. “During the extensive search to fill this position, we were impressed by Fernanda’s perspective on talent management and experience with HR strategy, DEI programs and organizational transformation. She has a clear passion for making the greatest impact through shaping the employee experience, coaching and developing leaders, and driving overall business success, which aligns with Pyxus’ purpose and business strategy.”

    Reporting to Sikkel, Goncalves will serve as a key member of Pyxus’ executive management team. She will provide leadership to the company across several core functions and support its strategic priorities, including upholding its commitment to environmental, social and governance targets. Goncalves succeeds Laura Jones, whose last day with the company was Dec. 31, 2022.

    “The board and I would like to thank Laura for nearly 24 years of leadership and dedication to the company,” said Sikkel. “She was integral in shaping the company’s culture and driving organizational growth and performance. It was a privilege to work with her, and we wish her success in her future endeavors.”

  • Preliminary Approval for Juul Settlement

    Preliminary Approval for Juul Settlement

    Photo: Juul Labs

    Juul Labs secured preliminary court approval on Jan. 20 of a $255 million settlement resolving claims by consumers that it deceptively marketed e-cigarettes, reports Reuters.

    U.S. District Judge William Orrick in San Francisco said the proposed class action settlement was “fair, reasonable and adequate.”

    The settlement is part of a larger, global agreement by Juul to resolve thousands of lawsuits by school districts, local governments and individuals accusing it of contributing to a youth vaping epidemic.

    In December, Juul Labs settled more than 5,000 lawsuits covering more than 10,000 individual plaintiffs. The deal is valued at $1.7 billion, according to The Wall Street Journal.

    The recent class action settlement resolves claims by people who say they would have paid less, or not bought the e-cigarettes at all, if Juul had not downplayed the products’ addictiveness and appealed to teenagers through social media campaigns and other means.

    A pioneer in the vaping business, Juul Labs has gone from dominating the U.S. e-cigarette market to fighting for its survival in a relatively short time.

    Following its initial success, the company quickly came under regulatory scrutiny over its marketing practices. Critics blame Juul Labs for contributing to an “epidemic” of underage vaping.

    Thousands of lawsuits have been filed against Juul over the past several years, alleging that the company marketed its e-cigarettes to children. Juul has said it never marketed to underage users.

    In September, Juul Labs agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products.

    Juul’s e-cigarettes were briefly banned in the U.S. in late June after the Food and Drug Administration concluded that the company had failed to show that the sale of its products would be appropriate for public health. But following an appeal, the health regulator put the ban on hold and agreed to an additional review of Juul’s marketing application.

    In October, Juul published the details of its marketing denial order appeal. In late September, Juul shareholder Altria Group exercised the option to be released from its noncompete deal with the e-cigarette maker.

  • Court to Rehear Triton’s MDO Appeal

    Court to Rehear Triton’s MDO Appeal

    Photo: fotofabrika

    The U.S. Fifth Circuit Court of Appeals has granted Triton Distribution’s petition for a rehearing of its appeal of the Food and Drug Administration’s marketing denial orders (MDOs) for the company’s flavored e-liquids, reports Vaping360. The original Fifth Circuit panel denied Triton’s appeal in July 2022.

    The decision to rehear the case means the original decision against Triton and its sister company, Vapetasia, is vacated, and the case will be decided by a panel of all active Fifth Circuit judges.

    The court will set a schedule for supplemental briefs to be filed and eventually could set a date for oral arguments.

    In contesting its MDO, Triton argued that the FDA retroactively changed the requirements for premarket tobacco product applications.

    “By imposing a new, across-the-board requirement that flavored ENDS [electronic nicotine-delivery systems] products be demonstrably more effective at promoting smoking cessation than otherwise identical tobacco-flavored products, FDA acted contrary to its authority under Section 910 of the Food, Drug and Cosmetic Act (FDCA), 21 U.S.C. § 387j, and not in accordance with law,” Triton wrote at the time.

    In October 2021, another Fifth Circuit panel stayed Triton’s MDO, calling the FDA’s imposition of new evidentiary standards for vape industry applicants a “surprise switcheroo” and ruling that the Triton appeal was likely to succeed on the merits of its case.

    Texas-based Triton Distribution manufactures e-liquid under its own brand names and under contract for other manufacturers. Among the brands included in Triton’s MDO were Suicide Bunny, Boiler Maker, Vape Hooligan, Chewy Clouds and Teleos.