Top News - Tobacco Reporter

U.S.: Record Premium Cigars Imports

The United States imported a record-setting 456.3 million premium cigars in 2021, according to the Cigar Association of America (CAA).

The CAA estimates that 364.4 million premium cigars were imported in 2020, showing a 25.2 percent increase in 2021.

December, however, showed a 23.7 percent drop in imports, marking the only month that did not exceed 2020 figures. The fourth quarter as a whole represented a 6.8 percent decrease compared to 2020.

According to Halfwheel, the CAA calculates its numbers based on the import numbers provided by the U.S. Census Bureau, U.S. Customs Services and information from cigar companies. The trade group’s numbers are not exact because of reporting differences; it estimates how many “large cigars” were actually “premium cigars.” There are some machine-made cigars that meet the U.S. definition of a “large cigar,” though those cigars would not be considered premium cigars by most people.

March 22, 2022

Zimbabwe Trade Gears up for Selling Season

Zimbabwe’s tobacco auctions are set to open on March 30, with all three auction floors prepared to follow Covid-19 protocols, reports All Africa.

Majority of sales will take place through contract floors while auction floors will cover 5 percent of sales.

Prices are expected to be firm. Due to the rainfall, output of the crop is expected to be down 15 percent, according to New Zimbabwe.

Tobacco leaf has a capacity of earning $15 billion per year for Zimbabwe, according to Bulawayo 24 News, but the country is currently only bringing in $900 million.

Tobacco Industry and Marketing Board CEO Meanwell Gudu stated that there’s a need to invest in value addition for the industry and country to fully benefit from the crop and that sustainability issues could affect the markets if not adhered to.

March 22, 2022

BAT in Talks to Transfer Russian Business

BAT is in advanced talks to transfer its Russian business to Russia’s SNS Group of Companies after Moscow suggested it could nationalize assets of foreign firms that left the country, reports Reuters.

BAT controls just under 25 percent of the Russian tobacco market.

“The process of transferring the management of BAT business in Russia to SNS GC is well underway at remarkable speed,” said an SNS spokesperson.

BAT declined to comment but said last week that it was looking for parties interested in the transfer of the Russian business. Kingsley Wheaton, BAT’s chief marketing officer, stated that BAT’s distributor could be interested in a transfer, adding that exiting the business or stopping sales or manufacturing would be seen as a criminal bankruptcy by Russia and BAT would face legal consequences.

The level of production and the supply and distribution chain will be maintained with a transfer, according to the SNS spokesperson. Whether BAT will pull out completely or continue to supply SNS with raw materials or manufacturing support is unclear.

March 21, 2022

Bat Appoints New Digital and Information Director

Marina Bellini, director of digital and information, will step down from the management board on March 31, 2022, and will leave BAT on July 31, 2022, to pursue new opportunities.

Javed Iqbal, currently area director of Middle East South Asia, will succeed Bellini as director of digital and information and will be appointed to the management board effective April 1, 2022.

“I would like to thank Marina for the significant contribution she has made to our digital and information function,” said BAT CEO Jack Bowles in a statement. “She has been key in supporting the group’s transformation by unlocking commercial value across the global organization and connecting information and data to create a digitally agile business.

“Marina has also successfully established a strong pipeline of digital expertise through talent development and embedding digital as a key enabler for our ‘A Better Tomorrow’ strategy.

“I am delighted to welcome Javed to the management board. As BAT enters a phase of accelerated delivery, he is very well positioned to lead the digital and information function. He has extensive experience in leading strategic change across multiple geographies, including systems and process transformation.

“His finance and technology background and extensive commercial knowledge, supported by his appetite for change and capacity to build high-performing teams, will ensure the next chapter of our digital journey is in safe hands. I would like to wish him the very best in his new role.”

March 21, 2022

FTC: Jump in U.S. E-Cigarette Sales

The Federal Trade Commission’s (FTC) first-ever report on e-cigarette products reveals surging e-cigarette sales and advertising.

The report, which is based on industry data provided for the years 2015 to 2018, shows that total e-cigarette sales, including both disposable units and those using changeable cartridges, increased more than sixfold from $304.2 million to $2.06 billion in those three years alone. The sales of fruit and other flavored e-cigarette cartridges preferred by youth increased sevenfold over that time, and nicotine concentrations in disposable e-cigarette products also increased.

“The commission’s inaugural e-cigarette report paints a disturbing picture, especially with e-cigarettes driving an unprecedented increase in youth use of tobacco products,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “The data show that this increase coincided with dramatic spikes in the market share of flavored products, higher concentrations of nicotine and an industry attempt to evade a ban on free sampling.”

March 21, 2022

Iceland Mulls New Restrictions on Nicotine

Iceland’s Office of Health Promotion and Science launched a consultation on a draft law on nicotine products, which, if passed, would introduce age limits for nicotine consumption, ban e-cigarette flavors perceived to appeal to children and stipulate a permissible maximum nicotine concentration.

Currently, the minimum purchase age for vapes in Iceland is 18, and the proposed bill would implement the same age limit for other nicotine products.

Iceland currently has an adult smoking rate of 7 percent, the lowest in Europe apart from Sweden.

According to Filter, the misinterpretation that nicotine consumption and smoking go hand-in-hand has distorted perceptions. “Nicotine is not the cause of death from smoking,” according to Yorkshire Cancer Research in England. “Nicotine is not a carcinogen; there is no evidence that sustained use of nicotine alone increases cancer risk. Of the three main causes of death from smoking (lung cancer, chronic obstructive pulmonary disease and cardiovascular disease), none are caused by nicotine. The harm from smoking comes from the thousands of other chemicals in tobacco smoke.”

March 21, 2022

Patricia Nez Henderson to Lead SRNT

The Society for Research on Nicotine and Tobacco elected Patricia Nez Henderson as president, marking the first time that a Navajo American will serve as the leader of the organization, reports Law360.

Henderson, an enrolled member of the Navajo Nation from Arizona and a graduate of the University of Arizona and Yale University School of Medicine, was recently elected to the head of the international association dedicated to supporting research and publications in the field of nicotine and tobacco. She is also the first Indigenous woman to graduate from Yale’s medical school with a Doctor of Medicine degree.

March 21, 2022

Chinese Vapers Stocking up Ahead of Flavor Ban

Vapers in China have reportedly been stocking up on flavored liquids in anticipation of a ban. A staff member at a RELX store in Shanghai told Sixth Tone that his shop had seen an increased demand for flavored pods since the government announcement, with grape and cola-flavored varieties selling out almost instantly.

On March 11, the State Tobacco Monopoly Administration published the final “Management Rules for E-cigarettes,” which includes a ban on domestic sales of nontobacco-flavored e-cigarettes. The rules are scheduled to take effect May 1.

The move was welcomed by anti-vaping groups such as the Campaign for Tobacco-Free Kids, which said the rule would help prevent children from becoming smokers. “Children who use e-cigarettes are more than twice as likely to use cigarettes in the future, according to the World Health Organization,” said Yolonda Richardson, executive vice president for the Campaign for Tobacco-Free Kids, in a statement. “China’s new policy is the right move to protect Chinese kids from these addictive products.”

The flavor ban is part of a long list of new requirements for the vaping business. China’s new rules also ban refillable products and synthetic nicotine while limiting the strength of e-liquid to 20 mg/mL.

Manufacturers, wholesalers and Chinese retailers will be required to conduct all business on a “unified national electronic cigarette transaction management platform,” and exports will be restricted to vapor products allowed in the destination countries.

The new rules will force e-cigarette sellers like RELX to sell competitors’ brands in their Chinese stores—something they don’t do currently.

With more than 300 smokers, China remains the world’s largest cigarette market, representing considerable potential for vapor companies. The country’s domestic e-cigarette market has grown at a rate of 70 percent a year since 2013, according to the Global Times, and is valued at about $1.3 billion.

China exports $15.6 billion of vaping products annually, according to the Shanghai Daily.

March 21, 2022

Morningstar: Stocks Hit Too Hard By Ukraine War

Tobacco companies’ retreat from Russia will materially impact their cash flows, at least in the short term, according to Morningstar. Nonetheless, the financial services company believes investors have overstated the valuation impact as the tobacco companies will be able to recoup some their losses after hostilities end.

Following Russia’s invasion of Ukraine and the imposition of sanctions by Western countries, the leading multinational tobacco companies have all reevaluated their operations in Russia.

Philip Morris International ceased investment in Russia and plans to scale down its business there. BAT will exit Russia and transfer its Russian assets to a third party. Imperial Brands has begun negotiations with a local third party about a transfer of its Russian assets and operations. Japan Tobacco has ceased planned investment in Russia.

Russia is the world’s fourth-largest cigarette market, with market volume of almost 206 billion sticks in 2020, according to Euromonitor. Japan Tobacco is the most exposed with a volume share of 38 percent, representing almost 16 percent of group tobacco volume in 2021. Philip Morris International and BAT are the next largest with shares of 26 percent and 25 percent, respectively, representing 9 percent and 8 percent of group volume. Although Imperial Brands is smaller, with only 8 percent share, Russia represents 7 percent of group volume, according to Morningstar.

The Russian cigarette market has been declining at a 6 percent compound annual rate over the past 10 years and almost 7 percent over the past five years, according to Euromonitor. However, it has been a promising market for tobacco-heating products. Morningstar estimates that heated-tobacco units accounted for 11 percent of the total market in 2021, making Russia one of the largest markets for heated-tobacco outside Asia.

Exiting Russia would be especially painful for PMI because it would jeopardize its medium-term targets for IQOS HeatStick sales, according to Morningstar

Meanwhile, the collapse in the ruble will create translational foreign exchange pressure for all manufacturers and is likely to make an already low-margin market even lower. Regional margins are also likely to contract materially in the near term. Some manufacturers have pledged to continue paying the salaries of employees in Russia and Ukraine even as revenue will probably be decimated.

March 21, 2022

Denmark to Consider Sales Ban for Those Born After 2010

Denmark is considering a tobacco sales ban for anyone born after 2010, reports The Guardian and Geo News.

“Our hope is that all people born in 2010 and later will never start smoking or using nicotine-based products,” Health Minister Magnus Heunicke said. “If necessary, we are ready to ban the sale (of these products) to this generation by progressively raising the age limit.”

The current age of purchase is 18 years old. The health ministry stated that about 31 percent of 15-year-olds to 29-year-olds smoke.

A Danish Cancer Society poll showed that 64 percent of those surveyed were in favor of the proposed ban, with 67 percent being between the ages of 18 and 34.

Denmark’s proposed ban would be similar to that recently enacted in New Zealand, which will progressively raise the purchase age limit.

March 18, 2022

Category: Top News