Category: Featured

Website Profiles RLX Founder Kate Wang

Photo: RLX Technology
The Celebrity Net Worth website recently published a profile of RLX Technology Founder Kate Wang, who the publication describes as one of the richest self-made women in the world.
Wang graduated from Jiatong University with a degree in finance in 2005 and took a management trainee job at Proctor & Gamble in Guangzhou. In 2011, she moved to New York City to get her Master of Business Administration degree at Columbia.
After grad school, Wang spent a year at the Beijing office of Bain & Co. She then moved to Uber China, followed by the Chinese ride-sharing service Didi Chuxing, which merged with Uber China in 2016.
In 2017, Wang tried e-cigarettes to help her quit smoking, but she found the Chinese offerings available at the time to be terrible. She saw an opportunity and decided to focus on older smokers who were trying to quit, like her father, who was suffering the health consequences from his two-packs-per-day habit.
Through crowdfunding on JD.com, Wang raised $6 million in seed capital in June 2018, positioning the RLX Technology as a tech startup.
After a little more than a year of operation, RLX had garnered almost half of the largely unregulated domestic vaping market in China.
In January, RLX went public on the New York Stock Exchange and raised $1.4 billion.
However, when Chinese regulators in October 2019 banned internet sales of e-cigarettes to discourage underage vaping, 20 percent of the company’s business evaporated overnight.
Undeterred, RLX started building a physical store presence. In January 2020, RLX opened a flagship store in Shanghai. Today, RLX has more than 5,000 stores in 250 cities in China. The company requires ID and put facial recognition in place to prevent minors from shopping for e-cigarettes in RLX stores. RLX still has more than 60 percent of China’s growing e-cigarette market.
Despite the challenges, RLX’s sales grew 147 percent to $585 million in 2020, up from $19 million in 2018.
In March, however, Chinese regulators revealed a draft of rules that would reclassify e-cigarettes as tobacco products and bring them under the control of the State Tobacco Monopoly Administration (STMA). Such a move would greatly diminish vapor companies’ potential earnings. All tobacco products in China are sold through government-owned stores. In response to the news, the share price of RLX dropped 54 percent—erasing $16 billion from the company’s market cap.
Meanwhile, the U.S. Securities and Exchange Commission announced it would begin enforcing a law that Chinese companies listed on the New York Stock Exchange would have to provide audits or be de-listed.
In the worst-case scenario, Wang would be forced to sell at a price set by China Tobacco (which would likely jeopardize most, if not all, of her profit) and be forced to de-list in the U.S.
May 19, 2021
Cronos Group Hires U.S. Regulatory Expert

Photo: tadamichi
Cronos Group, a Canadian cannabis producer partially owned by cigarette maker Altria Group, has hired Thomas Cohn as head of regulatory and product, reports Bloomberg Law.
Cohn is a U.S. Federal Trade Commission (FTC) expert who spent the past year as general counsel for privately held consumer products company Avon Co. in New York.
Cronos sought FTC and Food and Drug Administration expertise for “building disruptive intellectual property by advancing cannabis research, technology and product development,” according to an online job posting by the Toronto-based company for a head of regulatory affairs.
In 2018, Cronos became the first Canadian pot producer to be listed on the Nasdaq. Since then, the marijuana market has continued to grow, with Canadian cannabis companies looking to the United States and other cigarette giants like Philip Morris International and British American Tobacco evaluating their legal weed investments.
May 19, 2021
PMI Highlights IQOS Momentum at Forum

Jacek Olczak
Presenting at the Goldman Sachs Global Staples Forum on May 18, Philip Morris International CEO Jacek Olczak highlighted the next steps in the company’s strategy to becoming a majority smoke-free company in terms of net revenue by 2025.
Olczak highlighted IQOS’ strong and accelerating topline momentum and potentially lucrative opportunities to expand beyond nicotine into broader lifestyle/wellness markets, such as high-margin botanicals and respiratory drug delivery.
IQOS added more than 1.5 million users in the first quarter of 2021, according to Olczak—well above its historical average of 1 million new users per quarter. Robust conversions at 70 percent to 80 percent continue to dwarf the average conversion rates of many vapor products, which are in the mid-teens.
The heat-not-burn device is now available in 66 markets, with a user base of 19.1 million, of which 14 million have stopped smoking and fully converted to IQOS.
Olczak was particularly excited about the launch, scheduled for the second half of 2021, of PMI’s ILUMA IQOS product, which he believes could drive even higher conversion rates and margins as PMI continues to leverage its fixed cost base on IQOS while streamlining its customer acquisition and retention.
Olczak also reviewed management’s ongoing efforts to digitalize and simplify business processes, including PMI’s commercialization strategies around IQOS. According to him, these efforts have already yielded $60 million of gross savings in selling, general and administrative expenses toward management’s target of $1 billion in 2021–2023.
Olczak believes that PMI’s digitalization efforts will not only further reduce the cost of acquiring and retaining new users and ultimately drive more profitable growth but also accelerate conversion and customer acquisition, especially with the eventual global rollout of PMI’s digital customer experience.
Olczak also touched on PMI’s longer term opportunities beyond heat-not-burn and vaping, including nicotine pouches and next-generation devices.
Management is also looking into adjacencies, such as broader lifestyle/wellness markets, such as high-margin botanicals (including pure CBD) and respiratory drug delivery. The company aspires to achieve at least $1 billion in incremental net revenue from its beyond nicotine efforts by 2025.
Olczak expressed optimism about PMI’s competitive advantages in terms of its capabilities around product safety and efficacy and validating/substantiating scientific claims.
May 19, 2021
Foreign Firms Dominate Iranian Cigarette Market

Photo: Emanuele Mazzoni
Despite recent gains by Iranian Tobacco Co. (ITC), multinationals continue to dominate the Iranian cigarette market, according to a report by PressTV, citing ITC CEO Siavash Afzali.
Speaking at a press briefing on May 17, Afzali said that Japan Tobacco International (JTI) and British American Tobacco (BAT) control more than 61 percent of sales and some 70 percent of the value of the cigarette market in Iran. Afzali estimated that JTI and BAT supplied 46 billion cigarettes to Iranian consumers in the calendar year to late March.
Afzali said ITC’s share of the market was around 9 billion over the same period against an estimated supply of 20 billion cigarettes that entered the market by traffickers.
In the year to March, ITC increased its cigarettes sales in Iran by 50 percent. Its output and market share increased by 23 percent and 70 percent, respectively, over the same period.
However, the company is responsible for only 5 percent of the value of the cigarettes sold in Iran, a market that is believed to be worth around IRR400 trillion ($1.74 billion).
Afzali said that ITC could triple its output to 25 billion cigarettes per year, although he insisted that existing laws favor local manufacturing by foreign brands.
“Foreign companies easily import raw material and control the market,” he said. But ITC generates more local employment than the multinationals, Afzali insisted. Including farmers, ITC employs 12,000 people—far more than JTI and BAT, according to the CEO.
May 18, 2021
Forestry Officials Sound Alarm in Zimbabwe

Photo: Taco Tuinstra
Zimbabwean forestry officials have raised alarms about the rate at which trees are being cut for tobacco curing, charcoal production and other purposes, reports The Herald. The country loses more than 262,000 hectares per year due to farming activities and fires, among other reasons.
“Within the next 10 years, we are likely to see a huge decrease in tobacco farming if alternatives are not found,” said Forestry Commission Director-General Abednigo Marufu. “We want to encourage chiefs to encourage sustainable tobacco farming.”
Because Zimbabwe’s native trees take many years to replenish, Marufu called on tobacco farmers to plant gum trees, which grow quickly and require little water.
“Farmers should embrace the species of gum trees that we have introduced in other parts of the country, except for Manicaland,” he said. “These have been under test since 1966, and they don’t require a lot of water.”
Marufu also urged growers to consider alternative energy sources, such as biogas.
The Forestry Commission encourages the use of trees that enrich the soil while lamenting the involvement of political figures in the illegal charcoal trade.
Every year, the Ministry of Finance and Economic Development releases funds to the Forestry Commission for tree planting. The money is deducted from each farmer’s total sale of tobacco for the Afforestation Fund, which is taken through the Tobacco Industry and Marketing Board.
Nurseries of trees have been set up in provinces and have produced over 6.8 million trees that are availed to tobacco farmers for free.

Zimbabwe’s Sustainable Afforestation Association aims to create sustainable wood sources, conserve indigenous forests and research alternative fuels. (Also see “Back in Business,” TR June 2018.)
May 18, 2021
ITC: IQOS Infringes on Vuse Patents

Photo: JHVEPhoto
Philip Morris International’s IQOS device infringes two patents owned by British American Tobacco subsidiary Reynolds American Inc., reports Bloomberg, citing a note posted by Judge Clark Cheney on the U.S. International Trade Commission’s website.
The next step is a likely review by the full commission, which has the power to halt products at the U.S. border and is scheduled to complete the investigation by Sept. 15.
IQOS is the only heat-not-burn product authorized for sale in the U.S., where it’s sold by Altria. Last year, the U.S. Food and Drug Administration allowed the company to market IQOS as reducing consumers’ exposure to harmful chemicals found in cigarettes.
Reynolds claims PMI and Altria copied patented technology that it had developed for its Vuse Vibe and Vuse Solo vaping products, for which it’s filed for FDA approval. The company complained to the ITC in April 2020.
Altria responded with its own patent infringement claims and a separate suit against Reynolds in May. Altria also lodged petitions with the U.S. Patent and Trademark Office challenging the validity of a half-dozen Reynolds’ patents.

The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers.
Andre Calantzopoulos, executive chairman, PMI
Reynolds said it expects the judge will recommend an import ban, adding that the unauthorized use of its inventions “undermines our ability to invest and innovate and thereby reduce the health impact of our business.”
Philip Morris called the judge’s findings “one step in a long process that does not have an immediate effect” and it will present its position to the commission.
“BAT’s litigation in the U.S. is part of a worldwide attempt—which has been entirely unsuccessful to date—that is meant to undermine the heated-tobacco segment, where they lag far behind,” the company said.
PMI has also argued that, even if a patent violation is found, it’s not in the public’s interest to keep IQOS out of the U.S.
“The judge has to make a determination on whether even temporarily removing such products is appropriate for public health and what alternatives there are for consumers,” said PMI Executive Chairman Andre Calantzopoulos. “If we remove a product that exists, and the only alternative that people have are cigarettes, it’s a consideration of public health interest, and that has to be taken into account.”
May 18, 2021
Imperial Brands Delivers ‘Solid’ First-Half Results

Photo: Imperial Brands
Imperial Brands reported net revenue of £15.57 billion ($22.1 billion) in the six months ended March 31, 2021, up 6.1 percent over the net revenue it reported in the first half of 2020. Operating profit increased 77 percent to £1.64 billion. On an organic adjusted basis, Imperial Brands reported net revenue of £3.57 billion, up 2.4 percent from 2020. Adjusted operating profit was £1.59 billion compared with £1.46 billion in the first six months of 2020.
“We have made a good start in implementing our new strategy to transform Imperial and remain on track to meet full-year expectations,” said Imperial Brands CEO Stefan Bomhard in a statement.
“In tobacco, we have put in place a clear market prioritization to increase focus on our best opportunities for sustainable profit delivery. We have begun to stabilize the aggregate market share performance across our top five priority markets, reflecting the changes we have made to tighten performance management and the good underlying momentum established over the past year. This is an encouraging start and one that I look forward to building on over time as we begin to step up investment in new strategic initiatives.

We have made a good start in implementing our new strategy to transform Imperial and remain on track to meet full year expectations.
Stefan Bombard, CEO, Imperial Brands
“Our NGP [next-generation products] performance has improved, albeit against a weak comparator period. We have focused investment more tightly behind our NGP market strongholds and are on track to activate market trials in vapor and heated-tobacco later this year. Our aim is to create a successful NGP business that meets consumer needs and, over time, can make a meaningful contribution to harm reduction.
“We have started to change our culture and ways of working, including developing a new market cluster structure to simplify the organization and allocating resources more effectively. I have now assembled my new Executive Team with key external hires who have the necessary skills and expertise to complement Imperial’s existing tobacco experience. This has significantly strengthened the capabilities we need to support the successful delivery of the new strategy.
“All of this has been achieved against the background of the ongoing global pandemic, and I would like to thank employees throughout the business for their hard work and willingness to embrace change.”
May 18, 2021
Academic Journal Criticized for ‘Juul Issue’

Photo: Tada Images
Academics and anti-smoking charities have criticized The American Journal of Health Behavior for publishing its “Special Issue on Juul,” reports BMJ.
The papers in the special issue focus on the implications of switching to Juul products from combustible cigarettes as well as dual use of combustible cigarettes and Juul products.
The special issue was sponsored by Juul Labs. Altria, the parent company of Philip Morris USA, has a minority stake in Juul. The issue was coordinated and edited by Saul Shiffman, a Pinney Associates consultant. Pinney Associates has provided consulting services to British American Tobacco and Reynolds American.
May 18, 2021
Tobacco Auctions Suspended Due to Covid

Photo: Taco Tuinstra
The Tobacco Board of India has suspended auction sales for a week due to the rapid spread of Covid-19 cases, reports The Times of India.
“With the situation going from bad to worse, we have decided to put off the auctions in view of the welfare of all those involved in the process, including growers, traders and officials,” said Tobacco Board Executive Director Addanki Sridhar Babu.
Sixty-eight employees of the Tobacco Board have reportedly tested positive for Covid-19, and one died due to the coronavirus during the auction season.
To date, Indian farmers have sold about 27 million kg against the expected total production of 110 million kg during the current season. Although the board authorized growers to produce about 115 million kg, production fell short due to weather conditions. Nonetheless, board officials noted that farmers produced “fine” quality leaf.
Growers fetched an average price of INR161.80 ($2.21) per kg compared with INR142 per kg last season.
The board will decide on May 24 whether to resume auction sales.
May 18, 2021
BAT Recognized as a Climate Leader

Photo: BAT
BAT has been named as a 2021 Climate Leader by the Financial Times in an inaugural European ranking.
FT Europe Climate Leaders 2021 recognizes the top 300 of more than 4,000 companies across Europe that achieved the highest reduction in core greenhouse gas emissions in relation to revenues for the period between 2014 and 2019.
BAT’s climate targets include being carbon neutral in its own operations by 2030. In 2020, BAT achieved a 30.9 percent reduction in emissions from its operations, contributing to a 37.4 percent reduction against a 2017 baseline. In March this year, BAT announced a further ambition to be carbon neutral across its value chain by 2050, representing around 90 percent of its total carbon footprint.

This recognition by the Financial Times is a positive signal that we’re heading in the right direction.
Kingsley Wheaton, CMO, BAT
“We are very pleased to be named by the Financial Times as one of the companies leading the charge against climate impact,” said Kingsley Wheaton, BAT’s chief marketing officer, in a statement. “BAT is deeply committed to being a responsible business and reducing our impact on the environment.
“Last year, we said we’d achieve carbon neutrality for our own emissions by 2030, and we’re making good progress toward this target. In addition, considering the urgent global challenge of climate change, earlier this year, we committed to carbon neutrality across our value chain by 2050. This recognition by the Financial Times is a positive signal that we’re heading in the right direction.”
May 18, 2021