Category: Featured

Altria Slashes Juul Value

Photo: steheap
Altria Group reduced the value of its investment in Juul Labs by about 70 percent, to $1.3 billion, following the Food and Drug Administration’s decision to order the e-cigarette company off the U.S. market.
The stake for which Altria paid $12.8 billion in 2018 is now valued at $450 million–below a level that allows Altria to exit a noncompete agreement and launch its own e-cigarettes. During a July 28 call with analysts and reporters, Altria said it had opted not to be released from that agreement because the arrangement was still beneficial to Altria.
On June 23, the FDA ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.”
A federal appeals court then granted Juul Labs a emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal. The e-cigarette company separately asked the FDA to stay its own order pending the appeal.
In court filings last month, Juul said the FDA overlooked more than 6,000 pages of data the company had submitted on the aerosols that users inhale.
On July 5, the FDA temporarily halted its ban on Juul Labs products, saying there were scientific issues unique to the Juul application that warrant additional review.
The agency stressed that the stay suspends but does not rescind it the marketing denial order while the e-cigarette maker appeals the agency’s decision.
Altria’s revenue fell 4.1 percent to $12.44 billion in the first half of 2022, as consumers facing high inflation bought fewer cigarettes or switched from premium to discount brands.
Despite the challenges, Altria CEO Billy Gifford, was pleased with the results.
“Our tobacco businesses performed well in a challenging macroeconomic environment for the first half of the year,” he said in a statement. “The smokeable products segment delivered solid operating companies income growth behind the resilience of Marlboro, and our moist smokeless tobacco brands continued to drive profitability.
“Our financial plans for the year remain on track, and we reaffirm our guidance to deliver 2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93.”

July 29, 2022
Tobacco Sued Over MSA Payments
Tom Miller
Iowa Attorney General Tom Miller accuses Philip Morris USA, R.J. Reynolds Tobacco Co., and 16 other tobacco companies of defrauding Iowa of more than $133 million, according to a lawsuit filed Thursday.
The lawsuit stems from the 1998 Master Settlement Agreement, which requires tobacco manufacturers to pay billions annually to participating states in exchange for the states agreeing not to sue for health-related damages to citizens. The motion, filed in Polk County District Court, alleges that the companies have withheld a portion of their annual payments to Iowa in bad faith and “through a scheme of false claims and feigned ignorance.”
The tobacco companies demand that Iowa must go to arbitration to recover each year’s withheld payment. According to Miller, it has taken years to litigate each dispute, creating a long backlog and a growing amount of withheld payments. Iowa has prevailed in every dispute, most recently in September 2021, but the companies still refused to pay the amount they withheld from Iowa.
“We have fought, and won, these legal battles for years, and there is no end to these disputes in sight,” Miller said in a statement. “We now must escalate the matter and force the tobacco companies to pay what they owe the state of Iowa.”
The lawsuit seeks to recover actual and punitive damages, plus attorneys’ fees and other costs. Under Iowa’s False Claims Act, the state seeks three times the amount of actual damages.
July 29, 2022
New Packaging for ‘1839’ Cigarettes

Photo: USTC
Premier Manufacturing, the consumer products division of U.S. Tobacco Cooperative (USTC), has redesigned the packaging for 1839 cigarettes.
“Premier developed a premium visual design that showcases updated brand colors, a cleaner overall look and the distinctive 1839 logo; all while maintaining some traditional elements to help make 1839 attractive on stores cigarette fixtures,” USTC wrote in a press note.
“The bold red and rich blues are just some of the colors used in the packaging design that is anchored by historic 1839 elements such as the silhouette of a farmer with the horse and plow on a field image that simulates a tobacco leaf. The 1839 quality seal refers to the heritage and premium blend of tobacco used in the product and the 1839 date is when the flue-cured tobacco process was discovered in North Carolina.”
Also incorporated is “A Product of US Farmers” that reflects the brands commitment to USTC’s southeast based tobacco farmers who own the cooperative.
“We believe our new packaging design better reflects the needs of today’s consumers, while reinforcing the brands strength and heritage across the full line of 1839 cigarettes,” said USTC Senior Vice President Russ Mancuso.
July 29, 2022
Vaping Advocate Greg Conley Joins the AVM
Greg Conley
Longtime vaping industry advocate Gregory Conley is joining the American Vapor Manufacturers Association (AVM) as director of legislative and external affairs.
Under the direction of AVM President Amanda Wheeler, Conley will focus on government and media relations, while helping advance public policy supporting the American vaping product industry in its fight for survival.
“Over the last decade-plus, myself and millions of American adults have given up cigarettes because of vaping,” said Conley. “During that time, I have been proud to advocate for vaping from the perspective of a consumer and harm reductionist. In this new role at AVM, I will continue to push for appropriate regulations to ensure that American businesses are not replaced with a multibillion-dollar illicit market.”
“Gregory is a critical voice for vaping and understands adult smokers and ex-smokers face dire circumstances because of the FDA,” said Wheeler. “One billionaire is pumping hundreds of millions of dollars into campaigns designed to end the vaping industry. The stakes have never been greater and I am thrilled to have him aboard to work towards a unified industry.”
Conley has a long history of advocacy for vaping products and tobacco harm reduction, dating back to 2010. While receiving a la and business degree from Rutgers University, Conley served as the pro bono legislative director for the Consumer Advocates for Smoke-Free Alternatives Association.
Conley then founded the American Vaping Association (AVA), and during his time there he testified before dozens of state legislative bodies, appeared on numerous news networks, and participated in a White House listening session with then-President Donald Trump.
Conley plans to continue working with AVA as it charts a new path forward focusing on voter education and outreach.
July 29, 2022
JT Reports ‘Robust’ Performance

Masamichi Terabatake (Photo: JT Group)
The JT Group reported net revenue of ¥1.27 trillion ($9.55 billion) for the second quarter of 2022, up 10.7 percent over that reported in the comparable 2021 quarter. Core revenue at constant exchange rates increased by 3.7 percent to ¥1. 14 trillion. Adjusted operating profit at constant currency increased by 8 percent to ¥386.7 billion.
On a reported basis, adjusted operating profit increased by 15.8 percent to ¥414.9 billion. Operating profit increased by 18.9 percent to ¥383 billion. Profit increased by 17.3 percent to ¥264.1 billion.
“In the first half, the JT Group delivered a robust performance, mainly driven by strong pricing,” said JT Group President and CEO Masamichi Terabatake in a statement. “We are also encouraged by the Ploom X volume and share performance in Japan. In the second half of the year, we will be leveraging learnings from Japan for international Ploom X launches.
“We have revised our 2022 full year reported adjusted operating profit and profit guidance upwards, driven by favorable currency movements against the Japanese yen. However, the adjusted operating profit at constant FX is revised downwards considering higher input costs impacting our supply chain operations. Dividend per share guidance for full year remains unchanged at 150 yen per share. The interim dividend is 75 yen per share.
“Regarding Russia, while we continue to manufacture and distribute our products in full compliance with national and international sanctions, the operating environment is becoming increasingly complex. Under these circumstances, the JT Group continues to evaluate various options for its Russia business, including potentially transferring its ownership, and taking necessary decisions to address the changing situation in accordance with the group’s management principle.”
July 29, 2022
Push To End ‘Essential Commodity’ Status

Photo: sezerozger
The Bangladesh Ministry of Health and Family Welfare has asked the Ministry of Commerce to remove cigarettes from the essential commodities list, reports The Business Standard. The removal is necessary to help the government achieve its “tobacco-free Bangladesh” objectives, according to the health ministry.
Any product covered by the Essential Commodities Act enacted 66 years ago can be freely promoted for wholesale and retail, and no restrictions can be imposed on the marketing of these products, even under emergency circumstances.
Workers in the essential commodities sector cannot strike, and no essential commodities can be hoarded. The essential commodities list was created when Bangladesh was still part of Pakistan. Over the years, new products, including palm oils, turmeric and cumin, have been added, but none have been taken off. Other products on the list include typewriters, 35 mm (cine) raw films and sewing machines.
The law permitted tobacco companies to continue operating through the Covid-19 pandemic, even as other factories, including in Bangladesh’s garment industry—the country’s main export sector—were shut down.
In 2016, Prime Minister Sheikh Hasina set a goal to make Bangladesh tobacco-free by 2040.
Because cigarettes are listed as an essential product, however, it is impossible for the government to fully implement the Smoking and Using of Tobacco Products (Control) Act.
Further complicating matters, cigarettes are the largest source of government revenue. The National Board of Revenue collected BDT278.3 billion ($2.95 billion) in value-added tax and excise duty from cigarettes in fiscal year 2021–2022.
According to the Bangladesh Cancer Society, the government spent BDT305.7 billion in fiscal year 2017–2018 to treat patients with tobacco-related illnesses.
July 28, 2022
Firms Shun Track-And-Trace System

Photo: Maksym
More tobacco companies must install Pakistan’s new track-and-trace system to tackle the country’s massive tax evasion problem, according to Project Director Tariq Hussain Shaikh.
Out of the 40-plus companies registered with the Pakistan Tobacco Board, only three—Philip Morris Pakistan, Pakistan Tobacco Co. and Khyber Tobacco—have installed the track-and-trace system that became operational on July 1, reports the Business Recorder.
According to Shaikh, the system has significantly boosted government tax collections in other sectors. In the sugar industry, for example, sales tax collections increased by 34 percent after its implementation at the end of 2021.
Success, however, depends on across-the-board implementation, Shaikh cautioned. Unless more tobacco companies adopt it, the track-and-trace system will not reduce tax evasion, which in Pakistan amounts to PKR80 billion ($335.74 million) per year.
In a letter dated June 30, 2022, Pakistan’s Federal Board of Revenue directed all cigarette manufacturers to apply tax stamps to their products from July 1, 2022. Nine tobacco companies have challenged the directive on technical grounds.
July 28, 2022
Turning Point Brands’ Sales And Profits Down

Turning Point Brands (TPB) reported net sales of $102.9 million in the second quarter ended June 30, 2022, down 16.1 percent from the comparable 2021 quarter. Net sales of new-generation products declined by 45.1 percent while gross profit decreased 14.2 percent to $51.5 million. Combined net sales for Zig-Zag and Stoker’s products demonstrated comparative resilience and decreased by 0.9 percent for the quarter.
“We are pleased with the stable performance of both the Zig-Zag and Stoker’s segments during the quarter in light of a heightened inflationary environment for our customers, with rising prices at the pump impacting consumer traffic in convenience stores,” said TPB President and CEO Yavor Efremov in a statement.
“While overall sales decreased 16 percent from the previous year, Zig-Zag and Stoker’s sales were steady despite weakness in the wraps and loose leaf subsegments. Zig-Zag maintained its leading positions in both the roll-your-own paper and cigar wraps markets while Stoker’s MST experienced accelerated share gains driven by consumer trade-down to the value category.
“Despite NewGen revenue decreasing 45 percent from last year, the segment remained relatively stable from the previous quarter and profitable as we continue to monitor FDA regulatory developments. We continued to deploy a substantial amount of our free cash flow toward share repurchases during the quarter while maintaining a strong balance sheet, providing us with optionality on further capital deployment.”
“Going forward, we maintain a favorable outlook on our underlying business and our competitive positioning. However, given the market environment during the second quarter, along with continued inflationary pressures and resulting uncertainty of consumer confidence, we feel it is prudent to adjust our outlook for the year.”
July 28, 2022
Philippines Vaping Bill Lapses Into Law

Photo: Dang
A bill seeking to lower the purchase age for e-cigarettes and heated-tobacco products has lapsed into law in the Philippines, reports ABS-CBN, citing a tweet sent by Presidential Press Secretary Trixie Cruz-Angeles.
The measure moves the regulation of vapes to the Department of Trade and Industry from the Food and Drug Administration. It also lowers the age of sale from 21 to 18.
The proposal was reportedly submitted to the Presidential Palace on June 24, days before then President Rodrigo Duterte stepped down from office.
A bill will lapse into law if the chief executive fails to act on it 30 days after receipt from Congress, according to the Official Gazette.
The vape regulation bill was approved by both the Senate and the House of Representatives of the 18th Congress in January but remained on the Speaker’s table until the final days of the Duterte administration. As a consequence of its delayed transmission to the presidential office, the bill was inherited by President Ferdinand “Bongbong” Marcos Jr.
In addition to lowering the purchase age for e-cigarettes and heated-tobacco products, the bill removes a two-flavor limit on the products’ flavors or juices, allows sponsorships beyond industry associations and trade events and allows tobacco companies to conduct corporate social responsibility-related activities.
Anti-vape advocates vowed to contest the new legislation in court.
July 27, 2022
Russia Exit Hits BAT Profits

Photo: BAT
BAT took a £957 million ($1.15 billion) impairment charge related to the transfer of its Russian business, lowering its half-year earnings by a quarter.
The London-based firm, which controlled almost a fourth of the Russian market, said earlier this year that it was in advanced talks with its distributor in the country to sell the business in the wake of Russia’s invasion of Ukraine.
BAT reported a 25 percent drop in profit from operations on a reported basis to £3.68 billion for the six months to June 30 as a result of the charge. The company expects global tobacco industry volume to be down about 3 percent, partly because of the Russia-Ukraine crisis.

In a press release announcing the half-year results, BAT emphasized the growth of its New Categories products and the performance of its combustible business, which continues to grow value share enabled by robust pricing.
“I am very proud that our continued New Categories growth momentum is driving faster transformation, with revenue growth of 45 percent in the first half of 2022, on top of 51 percent growth in fiscal year 2021,” said BAT CEO Jack Bowles. “I am especially proud that the number of consumers using our noncombustible brands has passed the milestone of 20 million in the first half.”
Noncombustible products now represent 14.6 percent of BAT’s revenue.
While acknowledging the geopolitical and macroeconomic challenges, Bowles was upbeat about the outlook for BAT.
“We are not immune, of course, to the increasing macroeconomic pressures, exacerbated by the conflict in Ukraine,” he said. “However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”
July 27, 2022