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  • Forestation Rules Underway

    Forestation Rules Underway

    Image: patpitchaya

    Companies should avoid pushing back plans to ensure that they and their products comply with the EU Deforestation Regulation, warns the Crowell law firm.

    On Oct. 2, the European Commission published proposals to postpone some of the application deadlines to give companies more time to comply with core provisions of the legislation, which entered into force in June 2023.

    The legislation specifically targets products like cocoa, coffee, soy and palm oil, but the tobacco business, too, has faced criticism for its contribution to deforestation, especially in countries where farmers use wood as a fuel to cure their leaf.

    EU Institutions are currently in the process of deciding whether the new (delayed) deadlines will apply. The proposal must be approved by both the European Parliament and the Council of the EU, which represents the member states. If passed, larger companies will have until Dec. 30, 2025, to comply with the new rules, while small and medium-sized enterprises will have until June 30, 2026, according to Euro News.

    According to Crowell, the potential delay should not be taken as an excuse to postpone action. Ensuring that products and supply chains comply with the deforestation regulation is no easy feat and can take considerable time and effort. What’s more, failure to comply may attract significant penalties—including criminal liability—in the future.

    The law firms advises companies to assess the scope and application of the deforestation regulation as soon as possible, and ensure commodities and products they themselves supply – comply with the Deforestation Regulation. Moreover, companies should ensure that upstream commodities, products and raw materials are fully compliant to avoid supply-chain disruption.

    The EU has been criticized for its role in global deforestation. Estimates suggest the bloc is responsible for deforesting over 2480 square km annually—an area nearly the size of Luxembourg.

  • Brazil Leaf Exports Could Top $3 Billion: SindiTabaco

    Brazil Leaf Exports Could Top $3 Billion: SindiTabaco

    The value of Brazil’s tobacco exports could surpass $3 billion this season, according to the interstate tobacco industry union SindiTabaco.

    During an Oct. 30 meeting of the Sectoral Chamber of the Tobacco Production Chain, stakeholders shared information on the sector’s performance during the most recent growing season and their expectations for the upcoming crop year.

    According to the Ministry of Development, Industry, Commerce and Services, Brazil shipped 316 million kg of leaf tobacco between January and September, representing a 14 percent reduction compared to the same period in 2023.

    Production volumes were down 16.12 percent, to 508.04 million kg, in 2023–2022 due to excessive rainfall during the growing season. However, the depressed volume boosted the average price by almost 28 percent (see “The Great Scramble,” Tobacco Reporter, May 2024).

    In dollar terms, the value of the shipments to date are up 3.44 percent to $2.03 billion. The largest export destinations for Brazilian tobacco were Belgium, China, the United States, Indonesia and Egypt. In 2023, Brazil exported 512 million kg worth $2.73 billion to 107 countries, with the European Union acquiring the bulk (42 percent) of Brazilian leaf exports.

    SindiTabaco’s newly appointed president, Valmor Thesing, credited Brazil’s integrated system for the sector’s strong performance. “This is a demonstration that our integrated system is fully active, generating income, jobs and revenue,” he said in a statement.

    Some 133,000 families were involved in producing southern Brazil’s 2023–2024 crop—6.62 percent more than during the previous season, according to the Brazilian Tobacco Growers’ Association, Afubra. A similar increase was seen in the planted area, which grew 8.57 percent to 284,184 hectares. “In recent harvests, there has been a more satisfactory average return for producers, which ends up stimulating the expansion of area and producers adopting tobacco cultivation,” explained Afubra President Marcilio Drescher.

    This year’s firm prices may boost next year’s harvest. “We are wrapping up cultivation in almost all areas, and we have noticed an increase in area, encouraged by the recent return,” said Drescher. “By mid-November, we should have some forecast regarding the cultivated area and the number of producer families involved in the activity,” he added.

  • U.S. Urged to Bolster Post-Employment Rules

    U.S. Urged to Bolster Post-Employment Rules

    Image: bluraz

    Public policy experts are calling for stronger federal post-employment regulations as U.S. regulators, including those overseeing the tobacco business, are increasingly losing talent to the private sector.   

    A recent article in The Examination details how, over the past 15 years, nearly two dozen lawyers have left the U.S. Food and Drug Administration and its Center for Tobacco Products to advise, litigate for or work with the tobacco and vaping industry.

    “It seems like every time we get sued in the tobacco industry, a former FDA lawyer is leading the lawsuit,” Commissioner Robert Califf told an FDA oversight organization last year.

    After gaining  FDA experience, lawyers can significantly increase their salaries by moving to a major law firm or corporation. While a lawyer’s salary in the FDA’s chief counsel’s office, for example, starts at around $83,000, a first-year lawyer at a firm made on average $200,000 a year in 2023, according to the National Association for Law Placement.

    Daniel Aaron, a former FDA attorney, says lawyers who’ve left the agency to work on behalf of the tobacco industry not only increase their renumeration but can also have a powerful impact on what lands on store shelves.

    “It’s a huge advantage to getting your product to market.” said Aaron, now a University of Utah law professor. “Ex-FDA lawyers know what the agency is worried about, and how a client can maximize its options. They know not just what the law is, but they know how the FDA will enforce the law.”

    Federal post-employment rules also bar former employees from communicating with or lobbying a federal employee for two years on behalf of a client or employer under certain circumstances. That said, employees are allowed to work “behind the scenes” advising clients, according to the FDA’s post-employment guidelines. 

    Genevieve Kanter, a professor at the University of Southern California who co-published a study in 2023 on the revolving door in health care regulation, believes the rules should be strengthened if society is truly interested in preserving independent government.

    Kanter’s study focused specifically on conflicts of interest of employees at the highest level of the U.S. Department of Health and Human Services; It found that 38 percent percent of the political appointees from the FDA went into private industry, the fourth highest out of roughly two dozen offices and divisions.

    Eric Lindblom, director of the Center for Tobacco Products’ Office of Policy from 2011 to 2016, proposed blocking former staff from working for the tobacco industry for at least one or two years, in all cases, after leaving the policy office. “I thought it was really important that we had that independence,” said Lindblom, now a senior scholar at Georgetown University’s O’Neill Institute.

    The proposal went nowhere.

    The Examination is a publication supported by Bloomberg Philanthropies.

  • Japan Tobacco Reports Third-Quarter Results

    Japan Tobacco Reports Third-Quarter Results

    Masamichi Terabatake (Photo: JT Group)

    Japan Tobacco reported revenue of ¥2.21 trillion and adjusted operating profit of ¥681.7 billion at constant currency exchange rates for the third quarter of fiscal 2024, up 6.8 percent and 2.6 percent, respectively, from the comparable 2023 quarter. On a reported basis, core revenue increased 11 percent to ¥2.39 trillion and adjusted operating profit increased 1.2 percent to ¥672.5 billion. Operating profit increased 0.8 percent to ¥636.6 billion, and profit rose 0.1 percent to ¥442.4 billion.

    “The JT Group posted another set of strong results for the third quarter, mainly driven by solid pricing in the tobacco business,” said JT Group President and CEO Masamichi Terabatake in a statement.

    “Our solid market share momentum, combined with better-than-expected overall demand in a number of markets and the significant Ploom volume growth of 40 percent, resulted in total volume increasing by 2.2 percent year-on-year.

    “The geo-expansion of Ploom, our investment priority, has now reached 23 markets, and in Japan, the largest Ploom market, we continued to gain share in the HTS segment, reaching 11.8 percent quarter-to-date. Overall, RRP-related revenue increased by approximately 22 percent year-on-year.

    “Following the successful acquisition of Vector Group, I am very pleased to welcome the employees of VGR to the JT Group. I am confident that our expanded presence in the highly profitable U.S. market will improve the JT Group’s returns in combustibles and strengthen our mid[term] to long-term financial position through sustainable hard currency profit and cash flows.”

  • Altria Posts $6.26 Billion in Revenues

    Altria Posts $6.26 Billion in Revenues

    Photo: Maurice Norbert

    Altria Group reported net revenues of $6.26 billion for the third quarter of 2024, down 0.4 percent from the comparable 2023 quarter. Revenue net of excise taxes increased 1.3 percent to $5.34 billion.

    “Altria delivered outstanding results in the third quarter,” said Altria CEO Billy Gifford in a statement. “The smokeable products segment delivered solid operating companies income growth behind the resilience of Marlboro, and in the oral tobacco products segment, our MST brands continued to drive profitability while On! maintained momentum in the marketplace. We also continued to reward shareholders through a growing dividend and share repurchases while making investments in pursuit of our vision.”

    “We also announce today a new Optimize and Accelerate initiative designed to modernize our processes, which we believe will accelerate progress toward our vision, and we reaffirm our guidance to deliver 2024 full-year adjusted diluted EPS in a range of $5.07 to $5.15. This range represents an adjusted diluted EPS growth rate of 2.5 percent to 4 percent from a base of $4.95 in 2023.”

  • U.K. Announces Cigarette and Vape Tax Hikes

    U.K. Announces Cigarette and Vape Tax Hikes

    Image: John Gomez

    The U.K. government will increase tobacco duties by 2 percent above inflation for the remainder of the current parliamentary session and increase duty by a further 10 percent on roll-your-own tobacco this year, Finance Minister Rachel Reeves announced during the presentation of her budget plans on Oct. 30. From October 2026, the U.K. will also introduce a flat-rate duty on all vaping liquid alongside an additional one-off increase in tobacco duty to maintain the incentive to give up smoking, reports Reuters.

    Smokers’ rights activists warned that the plans would backfire.

    “Increasing the tax on tobacco above inflation will drive even more smokers to the black market, fueling illicit trade and hurting legitimate retailers,” said Simon Clark, director of FOREST, in a statement.

    “It discriminates against consumers from poorer backgrounds for whom smoking may be one of the few pleasures available to them.

    “Instead of punishing the low-paid, the government should focus on improving the environmental conditions that drive many people to smoke in the first place.”

    The U.K. Vaping Industry Association (UKVIA) described the planned duty on e-liquid as a penalty for smokers seeking to transition to less harmful nicotine products.

    “Whilst a flat-rate tax versus one graded on different nicotine strengths is favored so as not to deter smokers who rely on higher concentrations of nicotine when they start transitioning over to vapes, the additional cost of £2.64 (including VAT) per 10 ml of e-liquid is a kick in the teeth for former adult smokers who have switched to vaping to quit their habits. It will also be the highest rate in Europe,” said UKVIA Director General John Dunne in a statement.

    “Some 3 million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS [National Health Service] millions of pounds in treating patients with smoking-related conditions. This announcement today deters adult smokers from considering vapes as a method to give up their habits and hits the lowest-paid who go for more price-sensitive e-liquid options, which currently start at 99 pence and will rise to £3.83, representing a shocking rise of 267 percent.

    “For a government that places a great focus on the NHS, it is a nonsensical move to put a severe punitive tax level on vaping when the category has done so much to reduce the number of adult smokers requiring medical attention by being a driving force in the decline of smoking rates to record-low levels in recent years.”

  • Tobacco Firms Object to New Tobacco Rules

    Tobacco Firms Object to New Tobacco Rules

    Image: Bilal Ulker

    Tobacco companies have objected to reforms to Bangladesh’s tobacco law proposed by the Ministry of Health and Family Welfare, reports BDNews24.

    In a letter addressed to the law and finance ministries, BAT and Japan Tobacco outlined their reservations and stressed the possibility of loss of government revenue due to the proposed revisions.

    However, according to the National Board of Revenue, tobacco revenues rose by 17.97 percent in fiscal 2005–2006 and 37.52 percent in fiscal 2006–2007 after the Smoking and Using of Tobacco Products (Control) Act passed in 2005.

    Following a 2013 amendment, tobacco revenues rose by 25.51 percent in the following fiscal years.

    A.B.M. Zubair, executive director of the anti-smoking group PROGGA, urged officials to ignore the tobacco companies’ objections. “The health ministry’s initiative to strengthen the existing tobacco control law aims at protecting the nonsmokers from secondhand smoke and shielding the youth from tobacco’s harmful effects,” he was quoted as saying.

    “Therefore, the draft amendment must be passed immediately, undeterred by the ill tactics of the tobacco companies.”

  • France to Ban Nicotine Pouches 

    France to Ban Nicotine Pouches 

    Credit: Alexander

    The French government plans to ban nicotine pouches, citing concerns about underage use.

    In an interview with Le Parisien published on Oct. 30, Health Minister Genevieve Darrieussecq said that pouches “are dangerous products because they contain high doses of nicotine.”

    “The marketing of these products is directly targeted at young people, and I hope that we can protect our young people,” Darrieussecq was quoted as saying. She added that the ban will be announced in the coming weeks.

    Nicotine companies have been marketing “modern oral” products as safer alternatives to smoking cigarettes. But according to Darrieussecq, they can be just as dangerous, “especially when they are used not by former smokers but by young people,” she said.

    She argued that the pouches risk inducing nicotine addiction and serve as an entry into smoking.

    Tobacco harm reduction advocates criticized the move.

    “By banning nicotine pouches, Minister Darrieussecq is closing off an effective, far less harmful path for millions who struggle to quit smoking,” said Michael Landl, director of the World Vapers’ Alliance.

    “Pouches have proven to help smokers transition away from cigarettes in other countries and are considerably safer. Rather than offering options, France risks pushing people toward smoking or the black market.”

    Others questioned whether a ban would be effective. In Germany, where tobacco-free nicotine pouches are officially banned, they remain accessible and popular among young people, according to experts from the Tobacco Outpatient Clinic at Ludwig Maximilian University in Munich.

  • FDA Warns Companies For Selling ‘Smart’ Vapes

    FDA Warns Companies For Selling ‘Smart’ Vapes

    The U.S. Food and Drug Administration issued warning letters to nine online retailers and one manufacturer for selling or distributing unauthorized disposable e-cigarettes designed to resemble smart technology, including smartphones and gaming devices.

    The products mentioned in the warning letters are promoted as having various designs and functions that might attract young people, according to an agency press release. These include features like playing games, connecting to smartphones, receiving text or call notifications, playing music, and customizing products with personalized wallpaper.

    “These products may resemble smart devices, but there’s nothing smart about them,” said Brian King, director of the FDA’s Center for Tobacco Products (CTP). “They’re illegal to sell and a flagrant attempt to target kids.”

    The agency states that the designs of the unauthorized products cited in the warning letters are likely to appeal to youth because they help conceal the nature of the products as tobacco products from parents, teachers or other adults. Example images of unauthorized products cited in the warning letters compared to electronic devices on the consumer market, such as smartphones and gaming devices.

    “The firms receiving these warning letters sold and/or distributed e-cigarettes in the United States that lack authorization from FDA to legally market a new product, which is in violation of the Federal Food, Drug and Cosmetic Act,” the release states.

    In addition to the violations mentioned in the warning letters, the retailers and manufacturer were warned to address any violations that are the same as, or similar to, those stated in the warning letter and promptly take any necessary actions to comply with the law. Failure to promptly correct the violations can result in additional FDA actions such as an injunction, seizure and/or civil money penalty.

    “FDA is steadfast in our commitment to enforce the law,” said John Verbeten, director of the CTP’s Office of Compliance and Enforcement. “We will continue to take appropriate measures, working hand in hand with our federal enforcement partners, to address unauthorized tobacco products, especially those most appealing to youth.”

  • Philip Morris to Close German Factories

    Philip Morris to Close German Factories

    Image: Evgenia Parajanian

    Philip Morris International is closing two tobacco factories in Germany due to weak demand across Europe, reports Bloomberg.

    The multinational said on Oct. 29 that demand for cigarettes had fallen significantly in recent years and that the trend is likely to continue. Demand for rolling tobacco, made at the company’s Dresden plant, is also in decline.

    PMI employs 372 workers at its factories in Berlin and Dresden, which will close in the first half of next year. Philip Morris said it would begin consultations with employees and work councils, and seek “socially acceptable solutions” for its workforce.

    According to Jan Otten, PMI’s managing director of operations in Germany, the company is constantly reviewing its business processes to ensure operational efficiency. “We are aware that difficult but necessary decisions have to be made in order to adapt to current market developments,” he was quoted as saying in a press note.

    PMI has been working to transition its customers to alternative products such as vapes, heated tobacco and oral nicotine pouches. It has set a target of reaching two-thirds of sales from cigarette alternatives by 2030.

    The announcement comes as Germany’s manufacturing sector is experiencing a prolonged period of weakness, bogged down by high energy costs, weak demand at home and abroad and increased foreign competition.

    The downturn has fueled concern about Germany’s attractiveness as an industrial location.