Category: Featured

  • PMI Extends Period for Swedish Match Offer

    PMI Extends Period for Swedish Match Offer

    Photo: SergeVo

    Philip Morris Holland Holdings has extended the acceptance period for its offer to Swedish Match shareholders until Oct. 21, 2022, as the bid awaits approval in Europe.

    On May 11, Philip Morris International, through its Dutch subsidiary, offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer commenced on June 29, 2022, and was initially set to expire on Sept. 30, 2022.

    In a statement, PMI said it has obtained all international approvals required for the transaction other than merger control approval from the European Commission, which is still pending.

    Based on customary pre-notification discussions with the European Commission, the company believes the European Commission will not complete its review of the transaction before the Sept. 30 expiry date of the initial acceptance period.

    Other than the extension of the acceptance period, the terms and conditions of the offer remain unchanged.

    The Swedish Match board of directors has recommended shareholders accept PMI’s offer, but some shareholders have raised objections.

    Earlier this year, Swedish Match shareholder Bronte Capital opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.

    Another shareholder has also said it was not clear whether the long-term value of Swedish Match was reflected in PMI’s offer price.

    Meanwhile, Elliot Investment Management has reportedly been building a stake in Swedish Match and plans to oppose the pending takeover of the Scandinavian tobacco company by PMI under its current terms.

    However, according to Danske Bank analyst Mads Rosendal, it is unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own

                                   

  • Delnevo to Chair TPSAC

    Delnevo to Chair TPSAC

    Photo: Rutgers

    Cristine Delnevo has been appointed chairperson of U.S. Food and Drug Administration’s Tobacco Products Scientific Advisory Committee (TPSAC).

    Delnevo is the director of the Rutgers Center for Tobacco Studies and a professor of health behavior, society and policy at the Rutgers School of Public Health. She was appointed to serve on the TPSAC in March 2021. Her appointment as chair will run through Jan. 31, 2025.

    Established in 2009, TPSAC reviews and evaluates safety, dependence and health issues related to tobacco products and provides advice, information and recommendations to the FDA’s commissioner. The FDA commissioner selects the committee members from among people with expertise in medicine, medical ethics, science or technology involving the manufacture, evaluation or use of tobacco products.

    “I have valued the importance of this FDA advisory committee since the signing of the Family Smoking Prevention and Tobacco Control Act in 2009,” said Delnevo in a press note published by Rutgers. “This advisory committee plays an important role in several ways, perhaps most notably on the review of modified risk tobacco product applications, as required under the Tobacco Control Act.

    “I value the service of Dr. Jonathan Samet and Dr. Robin Mermelstein who served admirably before me as chair, and I look forward to working with an esteemed group of colleagues to help the FDA make regulatory decisions to protect public health and reduce tobacco-related morbidity and mortality.”

    Delnevo’s expertise spans population-level tobacco behavior trends—particularly non-cigarette tobacco products like cigars and e-cigarettes—tobacco control policy and regulation, and survey methods research.

    In 2022, she received the John Slade Award from the international Society for Research on Nicotine and Tobacco for outstanding contributions to public health and tobacco control through science-based public policy and public advocacy. Her work has been extensively cited in two FDA proposed rules that would ban menthol in cigarettes and characterizing flavors in cigars and she recently served as an external peer reviewer on the FDA’s Scientific Assessment of Impact of Menthol in Cigarettes.

    In addition, she served as a committee member on the National Academies of Sciences, Engineering and Medicine report on the Health Effects and Patterns of Use of Premium Cigars.

    Delnevo co-leads one of nine Tobacco Centers of Regulatory Science and has published extensively on tobacco-use behavior patterns. She has authored more than 250 scientific articles, reports and book chapters and serves on the Editorial Advisory Board for the journal Tobacco Control.

    “We are excited that an RBHS faculty member was selected to be a member, and indeed the leader, of an important committee like TPSAC,” said Brian Strom, chancellor of Rutgers Biomedical and Health Sciences. “I am confident that Dr. Delnevo will bring to this role her passion, commitment, and leadership skills, which she has already exhibited at the Rutgers Center for Tobacco Studies, and will help FDA make decisions for the country that will help save lives.”

  • Vector Reports Strong Tobacco Revenue

    Vector Reports Strong Tobacco Revenue

    Photo: tadamichi

    Vector Group reported revenues of $387.2 million for the second quarter of 2022, up 14.7 percent over that for the comparable 2021 quarter. Operating income was $90.71 million and net income was $39.15 million compared with operating income of $93.89 million and net income of $93.3 million in the second quarter of 2021. Tobacco contributed $374.31 million of the 2022 second-quarter revenues, with the balance coming from Vector Group’s real estate business.

    “Vector Group delivered strong tobacco revenue performance in the second quarter as we capitalized on favorable market opportunities to substantially increase value and market share,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “Our price-fighting Montego brand is now our largest brand and the third-largest discount brand in the United States. This strong performance demonstrates our commitment to optimizing long-term profit through the effective management of volume, pricing and market share growth.”

    According to data from Management Science Associates, the retail market share of Vector Group’s Liggett Group subsidiary increased to 5.5 percent for the second quarter of 2022 from 4.1 percent for the second quarter of 2021. For the six months ended June 30, 2022, Liggett’s retail market share increased to 5.3 percent compared to 4.1 percent for the six months ended June 30, 2021.

  • Ukraine Redefines ‘Tobacco Product’

    Ukraine Redefines ‘Tobacco Product’

    Photo: Dmytro

    The government of Ukraine has changed the definition of “tobacco product” to include heated-tobacco products (HTPs), making HTPs subject to the same restrictions as combustible cigarettes, according to the Framework Convention on Tobacco Control.

    As a result, it is now illegal to smoke HTPs in public places. Moreover, the new rules prohibit smoking rooms on company premises and empower local authorities to establish additional smoke-free places.

    Smoking of tobacco products, hookahs and e-cigarettes has been prohibited in Ukrainian workplaces since 2012, but until recently, smoking areas were still permitted.

    The new law holds both smokers and businesses responsible for compliance.

    Earlier this year, Ukraine started requiring manufacturers of e-cigarettes and e-liquids to print health warnings covering 30 percent of the packaging.

    Starting on July 11, 2023, it will also become illegal to promote e-cigarettes, e-liquids and HTPs or to sell such products with flavors.

    From Jan. 11, 2024, traditional, combustible cigarettes will be required to carry pictorial health warnings covering 65 percent of both sides of their packaging.

    According to the World Health Organization, up to 85,000 Ukrainians die from smoking-related diseases each year. Experts estimate smoking to result in annual economic losses equivalent to 3.2 percent of Ukraine’s GDP, in part due to the cost of treating smoking-related illnesses.

  • Florida: Drop in Smoking Hits MSA Revenues

    Florida: Drop in Smoking Hits MSA Revenues

    Photo: JF19

    Florida will likely collect lower-than-expected revenues from a landmark settlement with the tobacco industry because fewer people are smoking, and the remaining smokers are smoking less, reports The Free Press.

    In 1998, America’s largest tobacco companies settled litigation brought by state attorneys general over the cost of treating sick smokers. The tobacco industry agreed to pay billions of dollars over more than two decades, with the level of payments depending on the number of cigarettes sold.

    In a report released on Aug. 5, economists anticipated Florida to receive $412.1 million in settlement payments by the end of year, down from the earlier anticipated $413.8 million.

    The report pointed to a forecast last month that cigarette sales would decline by 2.5 percent annually over the next decade.

    The decline had earlier been projected between 1.44 percent and 1.75 percent. The report also said that tobacco manufacturer payments were $1.7 million less than anticipated for the recently completed 2021–2022 fiscal year.

    Meeting at the state Revenue Estimating Conference, the economists also revised anticipated payments for the coming years.

    After earlier projecting $442.5 million in revenue for the 2023–2024 fiscal year, the state is now forecast to receive $417.9 million through the settlement during that period.

  • KT&G Profit up Slightly

    KT&G Profit up Slightly

    Photo: KT&G

    KT&G reported a consolidated operating profit of KRW327.6 billion ($249.7 million) for the second quarter of 2022, up by 1 percent from a year earlier, the company said in an earnings release.

    Revenue for the April-June period amounted to KRW1.42 trillion, up 10.9 percent from a year ago, with net profit gaining 34 percent to KRW330.1 billion.

    Sales increased thanks to brisk overseas sales and real estate margins, the company said.

    International sales from the company’s traditional cigarette business surged 47.1 percent, driven by the growth of Latin America and other emerging markets and improved sales in Indonesia.

    KT&G’s share of the domestic market for heat-not-burn (HnB) products increased to 47 percent in 2022, up from 40.4 percent in 2021. HnB products now account for 16.7 percent of all tobacco sales in South Korea, according to KT&G.

    Despite rising interest rates and soaring commodity prices, KT&G’s traditional and HnB business will continue strong growth in the months ahead, a company official said.

  • Universal Reports First-Quarter Results

    Universal Reports First-Quarter Results

    Photo: Taco Tuinstra

    Universal Corp. reported sales and other operating revenue of $429.8 million for the three months ended June 30, up 23 percent over the comparable 2021 quarter. Tobacco operations sales and other operating revenues increased 18 percent to $348.1 million, but tobacco operations income declined 9 percent to $8.1 million.

    George C. Freeman, III, chairman, president and CEO of Universal Corp. expressed satisfaction with the start of the company’s 2023 fiscal year.

    “In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco and shipping constraints,” Freeman said in a statement. “We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.

    “Results for our Tobacco Operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar.

    “Demand for leaf tobacco remains strong, and flue-cured, burley, oriental and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there.

    “While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets.”

  • Industry Group Opposes Flavored Cigar Ban

    Industry Group Opposes Flavored Cigar Ban

    Photo: Andrii

    The Cigar Association of America (CAA) has filed comments opposing the Food and Drug Administration’s (FDA) proposed flavored cigar ban, saying FDA’s own data show that underage usage of flavored cigars—the main rationale for the proposal—is at historic lows, after years of continued decline.

    “This clearly shows that FDA is proposing a solution in search of a problem. The underage usage of flavored cigars is minuscule,” said CAA President David M. Ozgo in a statement. “It is a blatant example of targeting an industry that is clearly marketing its products to legal age adults.”

    The comments note that one of the key purposes of the Tobacco Control Act—the law giving FDA authority to regulate tobacco—is to continue to permit the sale of tobacco products to adults, in conjunction with measures to ensure tobacco products are not sold or accessible to underage purchasers. The current historically low youth usage rates show the success of existing measures.

    According to the CAA, government evidence shows that youth usage of cigars is so low as to be almost immeasurable. When the FDA first sought to exercise regulatory authority over certain tobacco products in 1996, the only survey that tracked youth usage of cigars in 1997, the National Survey on Drug Use and Health (NSDUH), showed last 30-day youth usage at 5 percent in 1997. In 2020 NSDUH tracked last 30-day youth usage of cigars at 0.8 percent.

    The CAA comments highlight the most recent data from the government’s Population Assessment of Tobacco and Health Survey (PATH) showing that youth last 30-day usage of cigars overall was down to 0.75 percent and that youth usage of flavored cigars is around just 0.29 percent.

    “In short, youth usage of flavored cigars continues to decline to almost unmeasurable levels,” Ozgo stated in the filed comment. “FDA asserts that flavored cigars attract youth. If that were true, we would expect flavored cigars to account for a majority of youth cigar use,” the comment added.

    “But the government data clearly show that youth usage of flavored cigars is tiny and declining further,” Ozgo noted.

    The comments also state there is no scientific basis for the proposed ban, but there would be devastating economic consequences. Many small businesses, often minority owned, would be negatively impacted as well as an assortment of cigar manufacturers, suppliers and producing countries such as the Dominican Republic and Honduras.

    Additionally, the CAA comments go on to demonstrate how the FDA does not show any differentiated health effects posed by flavored cigars and that banning flavored cigars would only lead to the development of an unregulated illegal market for flavored cigars. Illegally produced and sold product can often have dangerous additives.

  • PMI Halts Cash-for-Vapes Program

    PMI Halts Cash-for-Vapes Program

    Photo: PMI

    Philip Morris International has paused a program that would have paid Australian pharmacists AUD275 ($190.24) when ordering Veev vapes, according to The Guardian.

    The scheme, first reported by News Corp., would have seen pharmacists receive AUD5 every time they dispense a new VEEV script, AUD10 for educating a new patient about the device, and AUD5 for referring patients to a doctor to obtain a prescription. Pharmacists would also receive a AUD275 payment for placing an initial stock order.

    Nicotine-containing vapor products are available only with a doctor’s prescription in Australia.

    The cash-for-vapes program caused an uproar among public health advocates.

    Emily Banks, a professor at Australian National University National Centre for Epidemiology and Population Health, said the tobacco industry wanted to piggyback off the trust Australians place in the healthcare system.

    “Big tobacco wants a piece of that—they want some of the trust to rub off. It’s beyond appalling.”

    “Big tobacco’s attempt at financial kickbacks shows absolute contempt for pharmacists,” said a spokesman for the Pharmaceutical Society of Australia. “Multinational tobacco companies have no place in health care.”

    In a statement, PMI defended the program, saying since 2021 nicotine vaping products had been available in Australian pharmacies as a prescription-only medicine for smoking cessation.

    “Several manufacturers, including PMI, have been providing nicotine vaping products to Australian pharmacies via the stringent regulatory regime. Industry data indicates that across multiple manufacturers products are now available in over 2,000 pharmacies nationwide,” the statement said.

  • BYD Gets Chinese E-Cigarette License

    BYD Gets Chinese E-Cigarette License

    There has been speculation for a few years now that the BYD, one of the largest companies in China, had plans to enter the e-cigarette market with its own brand. Better known as a car manufacturer and battery producer, BYD Electronic shares surged on the Stock Exchange of Hong Kong by as much as 12.5 percent Thursday after the company announced a subsidiary has been granted a license to produce vaping devices.

    “The unit has been granted a tobacco production business license by the State Tobacco Monopoly Administration [STMA],” BYD Electronic said on its WeChat account, according to YiCai Global. Such permits only started to be issued this year in accordance with new regulations. As of Aug. 4, more than 130 firms had been licensed, according to the STMA website.

    “The BYD subsidiary already has a full range of electronic atomization products ready to be patented and is investing in automated production lines, said BYD Electronic, which is the sister company of electric car and battery giant BYD Automobile,” the company stated in a release. “At present, BYD Electronics has completed the patent layout of a full range of electronic atomization products and the construction of automated production lines, fully integrating its own comprehensive capabilities such as new material research and development, precision molds, product design and development, and intelligent manufacturing, and is committed to becoming a Practitioners and leaders in the field of health harm reduction, providing users with excellent products of quality and peace of mind.”

    In 2021, BYD said its e-cigarette business was mainly based on brand OEMs, and “there is no independent listing plan.” BYD Electronics has operated in the e-cigarettes field since 2018. It launched the brand “Beem Core” for ceramic atomizing core technology in 2021.

    Once it starts full production, BYD will go head to head with industry leader Smoore International, which held 22.8 percent of global market share last year, according to Frost & Sullivan research.

    BYD Electronic was spun off from Shenzhen-based conglomerate BYD in 2007 to make cell phone components and printed circuit boards. Its business remit has since expanded to include smartphones, laptops, masks and now, e-cigarettes.

    BYD joins industry late-comer Luxshare Precision, a global designer and manufacturer of cable assembly and connector system solutions, and several other China-based manufacturing enterprises as new vaping industry players.