Category: Featured

  • Juul Secures Funding to Stay in Business

    Juul Secures Funding to Stay in Business

    Photo: H_Ko

    Juul Labs has secured a cash infusion that will keep the e-cigarette maker in business while it appeals the U.S. Food and Drug Administration’s marketing denial order (MDO) related to its vapor products, reports The Wall Street Journal.

    Juul Labs reportedly has stopped bankruptcy preparations. As part of a reorganization, the company plans to lay off 400 employees and reduce its operating budget by up to 40 percent.

    The financing is the first piece of a bailout package under discussion with two early Juul investors, Nick Pritzker and Riaz Valani, who were Juul’s largest shareholders before Altria Group bought its Juul stake for $12.8 billion.

    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 FDA 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 MDO appeal. In late September, Juul shareholder Altria Group exercised the option to be released from its noncompete deal with the e-cigarette maker.

  • Firms Urge Crackdown on Illicit Trade

    Firms Urge Crackdown on Illicit Trade

    Photo: Ivan Semenovych

    Tobacco companies have called on the government of Ukraine to crack down on the illegal cigarette trade, reports Interfax Ukraine.

    Speaking during a roundtable discussion organized by the American Chamber of Commerce in Ukraine, Philip Morris Ukraine General Manager Maksym Barabash noted that war, inflation and the associated drop in consumer incomes had accelerated the growth of the illegal tobacco market in Ukraine.

    In August 2022 alone, the share of illegal tobacco products grew by 5 percentage points to 21.9 percent from 16.9 percent in 2021. According to Barabash, the state misses out on UAH44 ($1.19) from each illegal pack of cigarettes. To date in fiscal year 2022, the state budget has already lost UAH20.6 billion in unpaid tobacco taxes.

    To facilitate the fight against illegal cigarettes, tobacco companies proposed the creation of a joint working group with a coordination center in the Office of the President.

    “Countering illegal turnover of tobacco products belongs to the competence of several regulatory and law enforcement agencies,” said Svitlana Sharamok, general manager of Japan Tobacco International Ukraine. “However, due to the unclear division of powers, these agencies do not always work in a coordinated manner and sometimes even compete with each other.”

    Sharamok added that the work of the new group should not be judged by the number of raids or confiscated cigarettes but by the decrease in illegal sales.

  • ‘Evidence on Heating Products Substandard’

    ‘Evidence on Heating Products Substandard’

    Photo: librakv

    The quality of evidence available about heated-tobacco products (HTPs) is substandard, and policymakers should be wary of claims made about their role in harm reduction, say the authors of a new study published in Tobacco Control.

    HTPs have gained popularity in recent years, with proponents insisting they are less harmful to health than conventional cigarettes. However, researchers at the University of Bath argue that the evidence underpinning these claims is largely unrepresentative of real-world use and at high risk of bias.

    In their analyses of 40 publicly available clinical trials for HTPs—29 of which were tobacco industry affiliated or funded—the researchers judged most of the available clinical trials “at high risk of bias” given their methodology and choice of study design.

    The most common reason for studies being at high risk of bias was performance bias, whereby the interventions allocated were known to participants and those conducting tests. There was also failure to report all results data for all trial measurements, a shortcoming known as selective reporting bias.

    The authors argue that presence of these biases compromises the validity of trials and can lead to overestimation of the effects of HTPs. They also identified further limitations within trials, including short durations, restrictive conditions unreflective of real-world circumstances and a lack of relevant comparators, like e-cigarettes.

    Bath’s Tobacco Control Research Group says much more detailed, independent research is needed to assess the short-term and long-term health effects of HTPs.

    In the meantime, they argue that consumers should be wary of harm reduction claims and that policymakers and regulators should carefully consider the usefulness of these trials when making decisions surrounding HTPs.

    “Over recent years, we have seen great expansion in the heated-tobacco market in the U.K. and around the world. This growth has been predicated on a marketing claim that these products are better for health in comparison with traditional cigarettes,” said lead researcher Sophie Braznell from Bath’s Department for Health.

    “Our analysis suggests that the picture is far less clear cut. The clinical trials available, which are used by the tobacco industry to substantiate these claims, were often substandard in terms of how studies were conducted and reported, and most were industry-affiliated in some way.

    “As more consumers move away from cigarettes toward these new-generation products, we need much better evidence to assess their health impacts now and into the future. In the meantime, the jury is very much still out on their benefits.”

    “These findings in relation to clinical trials for heated-tobacco products are significant and we need to be wary of health claims made,” added study co-author Gemma Taylor from the Addiction and Mental Health Group and Department of Psychology at the University of Bath.

    “At the same time, though, it is important to note the clear distinction between ‘heated-tobacco products’ and ‘e-cigarettes.’ Consumers and health policymakers must not equate the potential benefits of e-cigarettes in helping people to quit smoking with heated-tobacco products.”

  • STG: Stable Sales Despite Headwinds

    STG: Stable Sales Despite Headwinds

    Photo: STG

    Scandinavian Tobacco Group’s (STG’s) organic net sales declined by 1 percent in the third quarter of 2022, in line with the company’s performance expectations for the full year.

    Consumption in the company’s product categories has remained resilient in recent months, according to STG. When combined with strong price management, this has resulted in organic net sales remaining relatively stable as compared to last year, despite the third quarter being impacted by the return to the prepandemic market mix, the firm explained in a press note.

    STG said that increasing cost inflation across the entire value chain and continued promotional pressure in the online business is negatively impacting the group’s EBITDA margin. While the group has been working to improve productivity in its supply chain, STG expects these issues to persist into 2023 due in part to its complex portfolio.

    “In the current environment, I’m pleased with our performance for the third quarter, delivering solid cash flows and positive EPS growth.”

    “In the current environment, I’m pleased with our performance for the third quarter, delivering solid cash flows and positive EPS growth, which is in line with our financial expectations for the full year of 2022,” said STG CEO Niels Frederiksen. “We are driving productivity improvements in the supply chain, an issue we have faced in recent quarters, which continues to be our most important short-term priority.”

    “While the supply chain issue and the current economic backdrop continue to be challenging, we are encouraged by the progress we are making on our Rolling Toward 2025 Strategy. Our new superstore in San Antonio is off to a very strong start, and our Growth Incubator completed its second product launch in the third quarter, with early but encouraging results. As the unprecedented inflationary dynamics continue to play out, we will use the offsetting actions at our disposal to manage in the short term and are confident in our ability to deliver on our long-term strategy and value aspirations for our shareholders.”

  • Health Minister Open to Generational Ban

    Health Minister Open to Generational Ban

    Photo: Dmitry Rukhlenko

    Hong Kong Health Minister Lo Chung-mau confirmed that banning tobacco sales for future generations will be on the table as a tool to further reduce youth smoking, according to the South China Morning Post.

    Earlier news reports suggested authorities were considering a lifetime ban on anyone born in or after 2009 buying smoking products.

    With a smoking prevalence of 9.5 percent in 2021, Hong Kong already has one of the world’s lowest smoking rates, but health authorities are keen to bring it down further still.

    Lo said the government would look at the experience of other places in stopping young people from taking up the habit and move toward a “smoke-free Hong Kong.” New Zealand plans to phase out smoking through a generational tobacco ban, and Malaysia is pondering similar measures.

    Henry Tong Sau-chai, chairman of Hong Kong’s Council on Smoking and Health also suggested doubling the tobacco tax to encourage users to quit. This would mean a pack of cigarettes currently priced at HKD60 would rise to around HKD100.

    Lo on Tuesday also said the government had also been pushing toward raising the tobacco tax and tightening regulations on tobacco product advertisements.

    Stepping up tobacco control was stipulated in Chief Executive John Lee Ka-chiu’s maiden policy address last month. He set a target to further reduce the smoking rate to 7.8 percent by 2025, and a public consultation will be launched next year on its steps.

    Last year, the legislature also passed amendments to prohibit the import, promotion, manufacture, sale or the possession of alternative smoking products, including e-cigarettes, herbal cigarettes or heated-tobacco products.

  • Illegal Cigarettes Seized in Germany

    Illegal Cigarettes Seized in Germany

    Photo: Alterfalter

    German authorities seized around 10.4 million undeclared cigarettes in Lubeck-Travemunde, reports Xinhua, citing a statement by the customs investigation office in Hamburg.

    The discovery was made when customs officers performed a routine check on a trailer arriving by ferry from Latvia. The truck had declared a consignment of peat, but instead, officers found cartons each containing 10,000 cigarettes.

    According to customs officials, the smuggled cigarettes represented a tax loss of €1.9 million ($1.9 million). Authorities are now investigating the origin of the cigarettes and the recipients, who are believed to be located in Western Europe.

    “Customs have once again uncovered a significant tax loss in Travemunde and are thus making a major contribution to tax justice in Germany and Europe,” Stephan Meyns, spokesperson for the Hamburg customs investigation office, was quoted as saying by Xinhua.

    Earlier this month, German authorities arrested four people for cigarette trafficking.

    Investigators had searched 46 residential and business premises throughout the country, confiscating cash, cigarettes and tobacco. German authorities estimate that the smugglers caused tax losses of around 11 million euros.

    As par the operation, authorities also uncovered illegal manufacturing plants in Romania and Slovakia, according to the Osnabrueck Public Prosecutor’s Office and the Prosecutor’s Office and Customs Investigation in Essen.

  • Mativ Sales Up 76 Percent

    Mativ Sales Up 76 Percent

    Photo: SWM

    Sales of Mativ Holdings increased 76 percent to $674.1 million in the third quarter of 2022, with 12 percent constant currency organic sales growth, or 7 percent organic growth including negative currency impacts, the company announced in a press note.

    Strong sales growth in release liners, protective solutions, filtration, and paper and specialty packaging led the portfolio, according to the company, which was created in July following the merger between Schweitzer Mauduit International and Neenah.

    Pricing actions drove top-line gains while offsetting raw material cost increases, with margin expansion across most categories. Macro trends such as negative currency changes, increasing global economic uncertainty and European energy inflation impacted results, as did a cybersecurity incident unrelated to the integration of the Neenah merger during the quarter

    Fiber-Based Solutions segment sales were $248 million, up 101 percent, and reflect the merged company results versus the prior year period, which reflected only legacy SWM results. Organic sales growth was 7 percent, or 12 percent excluding negative currency impacts, driven primarily by price increases, and comparable adjusted operating profit increased 6 percent. Double-digit sales growth in packaging and specialty papers led the portfolio. Price increases exceeded inflationary pressures for the segment.

    “Mativ delivered organic constant currency sales growth of 12 percent in the quarter, with most business areas delivering increased price, revenue and margin,” said Mativ CEO Julie Schertell. “On a comparable basis, adjusted operating profits were up nearly 25 percent. Our merger integration is progressing well, and we are executing on our $65 million cost synergy plan. Based on current performance, we now expect to exceed our previously communicated $20 million synergy run-rate exiting 2022.”

  • KT&G to Release New HnB Products in Korea 

    KT&G to Release New HnB Products in Korea 

    Photo: Tobacco Reporter archive

    KT&G Corp. will launch new heat-not-burn products in South Korea to strengthen its electronic nicotine devices lineup, reports the Yonhap News Agency.

    The South Korean cigarette manufacturer will release Lil Able and its premium version, Lil Able Premium, on Nov. 16.

    KT&G’s third-quarter net profit jumped 29 percent from a year earlier on increased exports and a strong U.S. dollar. Currently, the company earns 90 percent of its sales from the cigarette business division and 10 percent from the heat-not-burn division. 

    The company has been stepping up efforts to increase sales in the noncigarette business division. 

    From January to September, net income climbed 21 percent to KRW1.06 trillion from KRW878.58 billion in the same period of last year. 

    On Nov. 4, the company announced a KRW350 billion share buyback to boost shareholder returns.

  • Illicit Trade Persists After Lockdown

    Illicit Trade Persists After Lockdown

    Photo: Tobacco Reporter archive

    The illicit cigarette trade continues to thrive in South Africa despite recent enforcement actions, according to a new Ipsos study.

    According to Ipsos’ latest study, shops nationwide are still flooded with illegal tobacco products more than two years after the unconstitutional tobacco sales ban was imposed by the government as part of their response to the Covid-19 pandemic.

    The study found that almost four out of five stores in the Western Cape (77.9 percent) sell cigarettes below the minimum collectible tax (MCT) rate of ZAR22.79 ($1.28) per pack. Almost three in four shops in Free State (72.3 percent) sell cigarettes below the MCT as do 66.2 percent of outlets in Gauteng, a significant increase compared to research conducted a year ago.

    “The latest Ipsos study is irrefutable proof that the unconstitutional lockdown tobacco sales ban created a monster with an insatiable appetite.”

    A single pack of 20 cigarettes can be bought for as little as ZAR7, down from ZAR8, which was the lowest price found in the October 2021 study, according to Ipsos.

    “The latest Ipsos study is irrefutable proof that the unconstitutional lockdown tobacco sales ban created a monster with an insatiable appetite,” said Johnny Moloto, general manager of BAT South Africa.

    “Criminal manufacturers of tax-evading cigarettes are refusing to give up their control of the South African tobacco market and are pocketing billions in illicit profits that deprive the state of vital revenue and destroy honest jobs.”

  • Californians Uphold Flavored Tobacco Ban

    Californians Uphold Flavored Tobacco Ban

    Photo: PX Media

    Californians voted to uphold a state law ending the sale of most flavored tobacco products, including flavored e-cigarettes, menthol cigarettes and flavored cigars.

    Proposition 31, the ballot referendum to uphold the law, was ahead by a margin of 65 percent to 35 percent on Nov. 9. The Associated Press called the race, though official results will take longer to finalize. The state mailed ballots to all active voters. Ballots postmarked by election day have a week to arrive.

    In 2020, California lawmakers passed a ban on all flavored nicotine products except hookah, loose leaf tobacco (for pipes) and premium cigars. Menthol products are also covered by the legislation.

    Opponents of the ban collected more than 1 million signatures and forced the state to hold a referendum on the ban. Originally scheduled to take effect Jan. 1, 2021, the legislation was then suspended until the Nov. 8 vote.

    Advocates for Proposition 31 argued the restrictions would deter tobacco use among kids by eliminating youth-friendly flavors, such as bubblegum, cotton candy and cherry.

    Opponents said the ban would remove flavored electronic nicotine-delivery systems as an effective tool to quit traditional cigarettes and that some communities were unfairly targeted by the law. Black smokers, for example, are more likely to use menthol cigarettes.

    Supporters of the ban outspent opponents by a significant margin in the runup to the ballot. By mid-October, the billionaire anti-smoking and anti-vaping activist Michael Bloomberg had provided $15.3 million of the $17.3 million raised by the committee in favor of the ban, according to the San Francisco Chronicle. By contrast, the opposition had raised just over $2 million, almost entirely comprised of donations from Philip Morris USA ($1.2 million) and R.J. Reynolds ($743,000).

    California joins Massachusetts and the District of Columbia in ending the sale of flavored tobacco products, including flavored e-cigarettes, menthol cigarettes and flavored cigars. Three other states—New Jersey, New York and Rhode Island—prohibit the sale of flavored e-cigarettes. With local laws included, 25 percent of the U.S. population will now be covered by laws ending the sale of flavored e-cigarettes.