Top News - Tobacco Reporter

SWM Reports Full-Year and Quarterly Results

Schweitzer-Mauduit International reported sales of $1.44 billion in 2021, up 4 percent on an organic basis. GAAP operating profit was $83.3 million, down $45.5 million, and included $38.9 million of transaction and integration costs and incremental purchase accounting expenses from the Scapa acquisition that closed on April 15, 2021. Adjusted operating profit was $158.8 million, down $12.8 million.

The company’s engineered papers business recorded sales of $509.3 million for the year, down 4 percent, driven by a 2 percent volume decline and unfavorable price/mix of 4 percent, which were partially offset by a 3 percent currency benefit related to the euro.

The volume decline was primarily attributable to lower tobacco paper volumes, particularly low-ignition propensity (LIP) papers, as customers adjusted inventories lower after building significant safety stocks in mid-2020. The lower LIP volume was also a significant contributor to the negative mix effect. Rapid growth throughout the year in heat-not-burn sales was a positive offset within the tobacco business, while nontobacco paper volumes also increased.

In the fourth quarter of 2021, the engineered papers segment business reported sales of $134.8 million, up 3 percent, driven by a 5 percent volume increase, unfavorable price/mix of 1 percent and 1 percent of negative currency related to the euro. Volumes benefited from gains in tobacco papers, continued rapid growth in heat-not-burn products, and an increase in nontobacco papers.

“We enter 2022 confident that we will deliver strong growth in sales and profitability, said SWM CEO Jeff Kramer in a statement. “2021 top line performance met our growth expectations, but profits were impacted by sharp input cost increases and supply chain challenges, which we expect to moderate as this year progresses.

“Early signs show more positive fundamentals on several fronts. We have successfully increased prices across the business and see moderation on some key input costs while we continue to progress against other supply chain hurdles.”

February 24, 2022

Celeste Mastin Joins HB Fuller as COO

Celeste Mastin will join H.B. Fuller as executive vice president and chief operating officer on March 7, 2022. Mastin will assume the executive leadership role most recently held by Ted Clark, who is moving into a strategic advisory role.

Mastin joins H.B. Fuller with more than 30 years’ experience in manufacturing and distribution with a successful track record of guiding companies’ growth through innovation, service improvement, global expansion, and acquisition.

Most recently, she served as CEO of PetroChoice Lubrication Solutions, the largest distributor of petroleum lubrication solutions in the United States. Prior to that, she held CEO roles at Distribution International and MMI Products, and she served in executive leadership roles at Ferro Corp. and Bostik Adhesives, now owned by Arkema.

Mastin began her career at Shell Chemical Co. She currently serves on the board of directors of Granite Construction.

“We are delighted to welcome Celeste to H.B. Fuller. She is an exceptional commercial leader with a proven track record of success in highly complex, international businesses,” said H.B. Fuller President and CEO Jim Owens in a statement.

“Celeste brings a wealth of global, executive leadership and an understanding of the adhesives industry that will provide accelerated growth and performance for H.B. Fuller. I am confident Celeste will successfully build upon Ted Clark’s success and, together with our executive committee, drive our company’s continued growth and profitability.”

February 24, 2022

EU Bill: Firms Liable for Supply Chain Violations

The European Commission has proposed a law that would hold large companies operating in the European Union for environmental violations or human rights abuses committed by businesses in their supply chains, reports The New York Times.

“This proposal is a real game-changer in the way companies operate their business activities throughout their global supply chain,” said Didier Reynders, Commissioner for Justice, in a statement. “With these rules, we want to stand up for human rights and lead the green transition. We can no longer turn a blind eye on what happens down our value chains.”

Under the legislation, businesses would need to establish mechanisms to detect, prevent and mitigate breaches of human rights, such as child labor, as well as environmental hazards in their supply chains. National governments would define the financial penalties for violators.

Victims could sue for compensation in domestic courts of EU member nations, even if the harm occurred outside the bloc.

According to the European Commission, the new rules will bring legal certainty and a level playing field. “For consumers and investors they will provide more transparency,” the Commission wrote on its website. “The new EU rules will advance the green transition and protect human rights in Europe and beyond.”

The proposal would initially apply to companies with more than 500 employees and annual revenue over €150 million ($170 million). Around 2,000 companies based outside the bloc but doing business in the European Union, amounting to an annual revenue of more than €150 million, would also be covered.

After two years, the range would be expanded to include smaller businesses in so-called high-impact sectors, such as textiles, food products and mining.

The legislation will now be discussed by the European Parliament and the 27 national governments, with all parties able to modify the language. The final draft will require passage by the EU lawmakers and member nations. The whole process could take a year or more.

February 23, 2022

Cannabis Research Breakthrough

22nd Century Group and KeyGene say they have made a breakthrough in hemp/cannabis plant research leading to the successful transformation of the hemp/cannabis plant genome using a proprietary plant transformation and regeneration technology and clear protein expression by the introduced genes.

“I cannot emphasize enough what an enormous achievement it is for our company to have cracked the code to show proof of genome transformation in the hemp/cannabis plant. This is the holy grail in plant science and places us in a commanding leadership position in the race to secure patents and other valuable intellectual property in the emerging hemp/cannabis genetics field,” said James A. Mish, CEO of 22nd Century Group, in a statement.

“These newest plant transformation discoveries unlock additional revenue opportunities for the company and accelerate our efforts to create new hemp/cannabis plant lines with much higher commercial value at accelerated rates, lower cost and lower risk to our customers.”

The plant transformation breakthrough unlocked by 22nd Century and KeyGene enables the desired DNA sequences to be inserted directly into or created from a plant’s existing genetic material, creating a more expedient and focused methodology to achieve the desired outcome.

In addition to its transformation capability, 22nd Century Group has exclusive access to a battery of gene-editing capabilities, based on meganuclease technology, directed to seven of the key enzymes for the biosynthesis of cannabinoids plus four patent families that cover vital enzymes. Unlike other more widely available gene-editing technologies like CRISPR-CAS-9, this technology is allowed for use in cannabis.

The breakthrough gene-editing and transformation technology will allow 22nd Century Group to target specific hemp/cannabis biosynthesis pathways and expand the ability to engineer the modification of cannabinoids in plants.

February 23, 2022

First FDA Warning for Vapor Hardware

The U.S. Food and Drug Administration posted its first warning letter for vaping hardware products on Tuesday. The letter was issued on Feb. 14.

“Our review of the website http://sigelei.com revealed that you manufacture and offer for sale or distribution to customers in the United States ENDS [electronic nicotine-delivery system] products without a marketing authorization order including: Sigelei Humvee 80 and Sigelei 213 Fog Coil,” the agency wrote in its letter.

On Feb. 5, 2021, the FDA sent Sigelei a “refuse to accept” letter regarding its premarket tobacco product application (PMTA) for six products. “New tobacco products that do not have the required FDA marketing authorization order in effect, including your ENDS products covered by PMTA STN PM0001221 that resulted in a refuse to accept determination, are adulterated and misbranded,” the agency warned.

The move signals a shift in the FDA’s typical regulatory action against companies selling illegal vaping products. Thus far, the agency has issued letters for e-liquids, but now hardware manufacturers have been put on notice. One manufacturer, who asked to remain anonymous to avoid FDA scrutiny, said the recent action is worrisome.

“The hardware segment has been operating almost at a near-normal, the same as before PMTAs were due,” the manufacturer said. “It hasn’t really hit home yet that FDA has the full intention to start enforcing hardware regulations too. This is going to hurt several companies, and we are going to start to see smaller businesses end their marketing in the U.S.”

The letter also suggests that the warning is for all Sigelei products and not just the rejected PMTA products. “The violations discussed in this letter do not necessarily constitute an exhaustive list,” the letter states.

February 23, 2022

Zimbabwe Marketing Dates Announced

The Zimbabwe Tobacco Industry and Marketing Board (TIMB) has announced the opening dates for auction and contract floors for the 2022 season, according to ZBC News.

“The TIMB wishes to inform all stakeholders that the 2022 tobacco marketing season kicks off on the 30th of March 2022 for auction floors and Thursday, the 31st of March for contract floors,” said Chelisani Moyo, spokesperson for the TIMB.

“We registered 122,000 farmers for this season compared to 145,000 last season, mainly due to the fact that TIMB has come up with a framework to bring sanity in the industry to ensure that proper farmers are the ones who are registered,” he added.

The number of registered Class A buyers has increased to 33 from 28 in 2021.

Over the past two years, sales have been conducted under strict Covid-19 protocols, and the TIMB is currently conducting crop assessment with the parastatal set to issue the sales guidelines before the marketing season starts.

February 22, 2022

Cigarette Smuggling up Dramatically in Australia

The Australian Border Force (ABF) has detected a significant increase in attempted illicit tobacco imports at the Australian border, according to the Border Security Report.

The ABF discovered 878.8 tons of undeclared loose-leaf tobacco and 712.7 million undeclared cigarette sticks between Jan. 1, 2021, and Dec. 31, 2021. This is a 45 percent increase compared to 2020.

The majority of the illicit tobacco is coming from the Middle East and Asian regions. Illicit imports are either held for further investigation or incinerated.

“Our detection numbers show we are very alert to the different methods and patterns of concealment used in illicit tobacco importations at our borders,” said Susan Drennan, commander of the agency’s Trade and Travel Operations East division. “Our message to those who think they can import such large amounts of illicit tobacco and get away with it is to think again.”

Illicit tobacco imports that are linked to serious and organized crime syndicates are referred to the Illicit Tobacco Taskforce (ITTF). The ITTF combines the operational, investigative and intelligence capabilities of the ABF, the Australian Taxation Office, the Department of Home Affairs, the Australian Criminal Intelligence Commission, AUSTRAC and the Commonwealth Director of Public Prosecutions.

“Organized crime groups capitalize on unwitting smokers looking for cheap cigarettes to enrich themselves and to fund other types of criminal activities that harm our community,” said Greg Linsdell, commander of the ABF Special Investigations division. “The ABF is working tirelessly to stop this activity both at our border and within Australia through comprehensive and powerful ITTF investigative actions.”

February 22, 2022

Turning Point Brands Reflects on Strong 2021

Turning Point Brands (TPB) announced financial results for the fourth quarter and full year ended Dec. 31, 2021.

Net sales were comparable with the fourth quarter of 2020 at $105.3 million despite a 22 percent decline in sales of new-generation (“NewGen”) products.

Gross profit decreased 3.8 percent to $50.3 million compared to the fourth quarter of 2020. Net income decreased 20.3 percent to $11.5 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 7.6 percent to $23.8 million.

Full-year 2021 net sales increased 10 percent to $445.5 million. Gross profit increased 14.7 percent to $217.8 million. Net income increased 36.3 percent to $52.1 million. Adjusted EBITDA increased 19.8 percent to $108.1 million.

“Our fourth-quarter results capped off another strong year of performance for Turning Point Brands, with EBITDA growing 20 percent for the fiscal year. Sales for the fourth quarter finished above our previous guidance and in line with the previous year despite a 22 percent decline in NewGen sales, which fell within our previous guidance,” said TPB President and CEO Yavor Efremov, in a statement.

“Zig-Zag delivered another quarter of double-digit growth against a tough comparable period while Stoker’s reaccelerated to high single-digit growth driven by mid-teens growth in the moist snuff tobacco business. Additionally, NewGen managed through a challenging quarter clouded by the evolving regulatory landscape while maintaining long-term upside potential in a post-PMTA [premarket tobacco product application] environment.

“Turning to capital deployment, we increased our share repurchase activity during the quarter and continue to maintain a strong balance sheet. Going forward, I am eager about the opportunity to work with a great organization, continue our momentum and invest further to deliver future organic and inorganic growth.”

In related news, TPB entered into an agreement with Flamagas, a lighter manufacturer, for exclusive distribution of Clipper lighters in the United States and Canada.

“Given Flamagas’ global reach and renowned product portfolio, this partnership represents a tremendous opportunity to expand Clipper’s reach in the United States and Canada,” said TPB Senior Vice President ff Sales And Marketing Frank Vignone in a statement.

February 22, 2022

Dalli: ‘No Evidence for Snus Bribery Allegation’

Former European Commissioner John Dalli, who stands accused of trading in influence and attempted bribery to help lift the EU ban on snus, said that no evidence was brought against him in two recent sittings, according to a report by the Malta Independent.

Dalli’s statement was in reaction to the decision on Friday by Magistrate Caroline Farrugia Frendo that enough evidence has been brought forward for him to stand trial.

Dalli has pleaded not guilty to the charges.

“Some media in Malta must have had a schadenfreude pleasure in reporting the decision of the court that there is a prima facie case against me and therefore the compilation is to continue,” Dalli said.

“Anyone following the case objectively would know that in two sittings, not one shred of evidence has been brought against me. It must be said that it was my choice not to move for the prima facie dismissal of the case. I want this hearing to go through the full process and have the opportunity to expose the machinations of the Commission and OLAF officials about this case. This should start during the next sitting. I hope that there will be no attempt to stop this through claims of immunity.”

The case dates from 2012, when Dalli’s aide Silvio Zammit allegedly tried to obtain a €60 million ($71.17 million) bribe from Swedish Match to reverse the EU ban on snus. The company rejected the offer as improper and reported it to the European Commission.

Zammit who was charged in December 2012 for trading influence and complicity in the request, passed away earlier this year.

February 22, 2022

‘Relapse Study Asks Wrong Question’

A recent study suggesting that vaping doesn’t prevent smokers from relapsing to cigarettes is flawed because it asks the wrong question, according to Cameron English of the American Council on Science and Health.

For the study, “Effectiveness of E-Cigarettes as Aids for Smoking Cessation,” researchers analyzed data on 3,578 previous-year smokers who had recently attempted to quit and 1,323 recent former smokers from the Population Assessment of Tobacco and Health (PATH) Study between 2017–2019. Participants self-reported their use of e-cigarettes or other products to quit cigarettes. The researchers then investigated who among the study participants had abstained from smoking or any tobacco products in 2019. They concluded that sales increases in high-nicotine cigarettes in 2017 did not improve successful quitting or prevent relapse.

English contends that the significance of the study is limited because of the way it defines “relapse.” To determine how many smokers returned to cigarettes, the authors asked study participants whether they had smoked a cigarette in the past 12 months, “even one or two puffs/times.”

“Using this metric, an individual who has almost entirely quit smoking, save for ‘even one or two puffs’ of a cigarette, and someone who has gone back to smoking a pack a day would be counted as having relapsed,” English writes.

“This definition ignores the fact that many smokers gradually switch from combustible cigarettes to their electronic counterparts. This is known as ‘dual use,’ and properly designed epidemiological studies (even those based on PATH data) and clinical trials try to account for this behavioral shift, correctly noting that replacing even some cigarette smoking with vaping is desirable because vaping is the far safer option.”

Additional high-quality research would be helpful, but “preventing relapse” is an all but useless outcome, according to English. “Unless the researchers evaluate how e-cigarettes are used in the real world, the only thing their next paper will confirm is that asking the wrong question inevitably leads to the wrong answer, he writes.

February 22, 2022

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