Category: Featured

  • Tobacco Stakeholders Debate Forestry in Brazil

    Tobacco Stakeholders Debate Forestry in Brazil

    Photo: Taco Tuinstra

    Stakeholders highlighted tobacco industry initiatives to preserve Brazil’s native forests and achieve energy self-sufficiency at the Expoagro Afubra 2024 fair in Rio Pardo, Rio Grande do Sul, Brazil, on March 22.

    SindiTabaco technical advisor Fernanda Viana Bender presented a number of projects designed to promote forest sustainability in tobacco farming in partnership with the Federal University of Santa Maria (UFSM).

    The program aims to cultivate trees to meet tobacco farmers’ fuel requirements while preserving native forests. At 22 demonstration units in Rio Grande do Sul, the UFSM research team, led by Jorge Antonio de Farias, is testing the management of fast-growing trees.

    While the programs provide stakeholders with valuable knowledge, Bender says there is still much to learn. “We need to develop a way of thinking that forest production is a tobacco farmer’s business,” she was quoted as saying on SindiTabaco’s website. “Without wood, there is no tobacco curing. However, beyond the demand by the sector, farmers could also get organized to diversify with forest production, thus earning extra income,” she argued.

    Farias identified a number of challenges to achieving those goals. “As the farmers possess small farms, land availability is one of the problems that make it difficult to plant trees, and the same holds true for the transport logistics of the production,” he observed.

    “At the same time, we witness a sector extremely concerned with the supply of wood of legal origin while the farmers strongly demand wood. The solution goes through the creation of cooperatives or associations capable of articulating this market, and the tobacco sector could be a protagonist in this process. The forest component should become an integral part, when it comes to establishing a rural property, as an alternative source of income,” said Farias.

  • Zimbabwe: Auction Prices Hit Record High

    Zimbabwe: Auction Prices Hit Record High

    Photo: Taco Tuinstra

    Tobacco prices on Zimbabwe’s auction floors hit a record high of $5.05 per kilogram, the highest price in 10 years. The previous high was $4.99 per kilogram.

    The increase comes primarily from “freed-funded” tobacco, which is grown by individual farmers and accounts for 7 percent of the total crop, according to The Herald.

    The remainder of the tobacco crop is funded under contract schemes that are mainly sponsored by foreign companies.

    Auction prices have increased 26 percent year-over-year while contract prices have increased 13 percent, according to the Tobacco Industry and Marketing Board. The auction floor price increase has reignited calls for an increase in local financing for tobacco growing.

    “The continued reliance on contract farming after two decades suggests there might be deeper issues with the model itself,” said Tobias Musara, a Harare-based development economist. “Ideally, a few seasons of participation should equip the farmers for self-sufficiency. This dependence on contract financing needs to be addressed to ensure long-term benefits for our local farmers.”

    Contract farming began around 2004, a few years after the government confiscated commercial farms and distributed the land among smallholder growers.

  • KT&G Appoints Bang as President and CEO

    KT&G Appoints Bang as President and CEO

    Kyung-man Bang (Photo: KT&G)

    KT&G Corp. appointed Kyung-man Bang as its president, CEO and representative director.

    Despite opposition from some shareholders, Bang was elected president with overwhelming support during KT&G’s annual meeting on March 28, according to the company. The election of CEO and outside director was conducted jointly through combined cumulative voting as per shareholder request, with the aim of protecting minority shareholder rights.

    “I am deeply grateful to the shareholders for entrusting me with the honorable opportunity to serve the company as CEO, and to the employees for their tireless work and dedication across both domestic and international business arenas,” said Bang.

    “We are committed to achieving our vision of becoming a global top-tier company by taking a leap forward and leveraging our three core business areas—overseas combustibles, next-generation products and health-functional food—as the cornerstone for growth. We will also put our best effort to enhance corporate value and to establish a strong foundation of trust with stakeholders by sharing our profits with various stakeholders.”

    Furthermore, Bang introduced his “T-O-P strategy,” a new business approach designed to help KT&G achieve its vision of becoming a top player. According to Bang, “T-O-P” stands for “trust,” “origin” and “professionalism.”

    It aims to demonstrate KT&G’s commitment to enhancing stakeholders’ trust with proactive engagement, establishing an undisputed “origin” with a first-mover approach and securing global expertise and professionalism through performance and growth.

    Bang encouraged employees to build upon KT&G’s legacy of persevering through numerous crises and to aspire to new heights of success by taking on new and daring challenges.

    Since joining Korea Tobacco and Ginseng (KT&G’s predecessor) in 1998, Kyung-man Bang has held various management positions at the company, including roles such as managing director of brand management, executive managing director of global headquarters, executive managing director of strategy and planning headquarters, and chief business officer.

    As managing director of brand management, Bang helped KT&G solidify its leadership position in the domestic market by launching ESSE Change, which has become a leading brand. Moreover, during his tenure as executive managing director of global headquarters, Bang expanded KT&G’s overseas market presence to more than 100 countries and delivered an unprecedented KRW1 trillion in overseas sales by developing tailored brand portfolios for each market and accelerating market expansion efforts.

    As chief operating officer, Bang has played a pivotal role in executing the company’s mid-term to long-term growth strategy that focuses on three core business areas. He has made significant contributions to expanding the direct business model for the company’s overseas combustibles business, driving rapid growth in the next-generation product business, and establishing localized value chains for overseas health-functional food business.

    During the annual meeting, shareholders also approved the appointment of Dong-hwan Shon and Sang-wook Kwak as outside directors, with Kwak also serving as an audit committee member. “We are fully dedicated to driving the company’s growth and enhancing shareholder value, with the newly formed board of directors leading the change at the forefront,” the company wrote in a press release.

  • 22nd Century Reports Quarterly Results

    22nd Century Reports Quarterly Results

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    22nd Century Group reported net revenues of $7.4 million for the quarter that ended Dec. 21, 2023, down from net revenues of $10 million in the comparable 2022 quarter. Gross loss for the fourth quarter was $7.8 million compared with a gross loss of $100,000 in the prior-year period. The loss included a one-time charge of $7.9 million for certain inventory write-down adjustments.

    During the quarter, 22nd Century exited its hemp/cannabis operations to fully focus on tobacco harm reduction and contract manufacturing activities. The company substantially reduced operating costs through efficiency initiatives and the hemp/cannabis business sale. It also began new initiatives to increase sales, improve gross margin and increase operating profit in 2024. Moreover, the company started developing new customer engagement strategies to drive additional sales growth for its VLN low-nicotine cigarettes, which have been authorized by the U.S. Food and Drug Administration.

    “Our turnaround is progressing rapidly after restructuring a significant portion of the business over the last 120 days as part of our mandate to produce stronger future financial results,” said 22nd Century chairman and CEO Larry Firestone in a statement. “Most importantly, cash use has declined rapidly, from a peak run rate of approximately $15 million a quarter last year to less than $4 million projected in the first quarter of 2024, with continued sequential improvement expected in each quarter throughout 2024 as we move further from prior-period cash obligations.”

    Firestone said the company now has two primary areas of focus that both directly pertain to its tobacco market assets. “In the short-term, we will evaluate and profitably grow our contract manufacturing business to cover our operating expenses and mission-critical initiatives around 22nd Century’s very low-nicotine content cigarette technology,” he said. “We will also invest in and grow the VLN brand through sales, customer awareness and capitalizing on a positive regulatory and social environment. With success in these efforts, we believe that 22nd Century can break even by the first quarter 2025.”

  • Knesset Approves Graphic Warnings

    Knesset Approves Graphic Warnings

    Photo: LevT

    Lawmakers voted to require graphic health warnings on tobacco packs in Israel, reports The Times of Israel.

    The new requirement is an amendment to the existing law outlawing advertising and limiting the marketing of tobacco products.

    Failure to print the warnings will be considered a criminal offense under the legislation.

  • Singapore Vaping up Despite Ban

    Singapore Vaping up Despite Ban

    Photo: Kalyakan

    Singaporeans are smoking less but vaping more, reports The Straits Times, citing research by Milieu Insight.

    The average number of cigarettes smoked per week fell from 72 sticks in the third quarter of 2021 to 56 in the fourth quarter of 2023.

    Over the same period, consumption of alternative products like e-cigarettes and vaporizers increased from 3.9 percent to 5.2 percent of the population.

    Milieu Insight attributes the gradual decline in cigarettes smoked per week observed since the second quarter of 2022 in part to an increase in proportion of occasional smokers as compared to regular smokers over this period.

    Conducted from Dec. 16 to Dec. 29, 2023, the survey found that the proportion of occasional smokers had increased by 1.2 percentage points to 3.2 percent, from the third quarter of 2021 to the last quarter of 2023. There was also an increase in the number of former smokers over the same period.

    Vaporizers and e-cigarettes have been outlawed in Singapore. Among the reasons cited for their vaping, respondents said they wanted to reduce secondhand smoke and lessen their consumption of traditional cigarettes. The World Health Organization, however, has rejected the products as a cessation aid.

    In December 2023, Singapore’s Ministry of Health and the Health Sciences Authority announced that they were stepping up enforcement and education efforts against vaping to prevent it from gaining a foothold in Singapore.

  • Retailers Warned Over Unauthorized Vapes

    Retailers Warned Over Unauthorized Vapes

    Photo: Ljupco Smokovski

    The U.S. Food and Drug Administration has warned 61 brick-and-mortar retailers for selling unauthorized e-cigarette products. The offending businesses received warning letters citing the sale of disposable vapes marketed under the Elf Bar/EB Design and Lava brand names.

    Findings from the 2023 National Youth Tobacco Survey found that more than 50 percent of youth who use e-cigarettes reported using the brand Elf Bar; in 2023, the manufacturer of Elf Bar began marketing the product under the name “EB Design.” In addition, the brand Lava was identified as popular or youth-appealing by the agency following review of retail sales data and emerging internal data from a survey among youth. 

    The retailers have 15 working days to respond with the steps they will take to correct the violation and to prevent future violations. Failure to promptly correct the violations, the FDA warned, can result in additional actions such as an injunction, seizure and/or civil money penalties.

  • Europe OKs Aid to Bulgarian Growers

    Europe OKs Aid to Bulgarian Growers

    Photo: Tobacco Reporter archive

    The European Commission has approved a BGN170 million ($94.1 million) Bulgarian package to aid tobacco farmers and other agricultural producers impacted by the war in Ukraine, reports SeeNews.

    The aid, disbursed as direct grants capped at €280,000 ($302.923) per beneficiary, will cover part of the losses of not only tobacco growers but also of fruit producers, vegetable growers and beekeepers, among others.

    Developed under the Temporary Crisis and Transition Framework, the grants apply for the framework’s entire duration, from March 2022 to the end of June 2024, taking into account the total aid received by each agricultural producer during this term.

  • Ukraine: Activists Decry PMI’s tax privileges

    Ukraine: Activists Decry PMI’s tax privileges

    Photo: Tania

    Activists are urging the Ukrainian government to crack down on international companies still operating in Russia following reports on Philip Morris International’s preferential tax treatment, according to Eureporter.

    Despite being labeled as an “international sponsor of the war,” PMI continues to enjoy a discounted tax rate in Ukraine.  

    After Russia invaded Ukraine in February 2022, many international tobacco companies, including PMI, announced they would retreat from Russia or substantially scale down their operations. In early 2023, however, PMI CEO Jacek Olczak told the Financial Times that negotiations had stalled as the company does not want to sell the business on unfavorable terms for its shareholders.

    Since the start of the war, Russia has made it exceedingly difficult for foreign investors to exit the market without taking a significant financial hit. Among other provisions, the government reserves the right to dictate the valuation of foreign companies’ Russian assets as well as the new owners’ dividend and access to cash flow.

    PMI’s revenue in Russia increased to RUR399.9 billion ($4.33 billion) in 2023 from RUR359.53 billion in 2021, the last fiscal year before the war. The company is among the five largest foreign taxpayers in Russia.

    PMI’s continued presence in Russia prompted Ukraine to designate the company as a war sponsor.

    Despite such considerations, Ukraine levies an ad valorem tax rate of only 12 percent on PMI products—a level that critics say has caused its cash-strapped government to miss out on some UAH100 billion ($2.55 billion) in tax revenues over the decade that the discount has been in place.

    Activists have called on Ukraine to introduce restrictions on tobacco companies that have not left Russia and increase the ad valorem tax rate for the products that these companies sell in Ukraine. They cite the example of Estonia, which in March prohibited the trade of products from international companies still operating in Russia.

  • Airscream to Invest in Malaysia

    Airscream to Invest in Malaysia

    Photo: Airscream

    Airscream UK plans to invest MYR100 million ($21.12 million) in its operations over the next five years and move its headquarters to Malaysia, reports the Business Times.

    The company has already set up administrative, sales and marketing operations as well as a showroom in Shah Alam, with close to 40 employees locally and 100 globally.

    Airscream founder and CEO Sam Ong cited a robust market and vaping industry ecosystem as reasons for the company’s decision.

    Over the past decade, Malaysia’s vaping industry has grown into a MYR3 billion business, providing employment to more than 30,000 Malaysians, according to the Malaysian Vape Chamber of Commerce.

    Ong believes the market is poised for further growth, potentially driving more foreign direct investments into the country and bolstering job creation.

    “We are also encouraged by the passing of the Control of Smoking Products for Public Health Bill 2023, which brings Malaysia on par to other countries around the world, including the U.K., Australia, Thailand and Singapore, which have standalone legislation on tobacco and vape,” Ong was quoted as saying.

    Airscream was established in 2018 as a manufacturer and retailer of the AirsPop vape product.