Top News - Tobacco Reporter

Morgan Stanley: Antitrust Loss May be Win for Altria

The Federal Trade Commission (FTC) may issue its initial decision in the Altria Group/Juul Labs antitrust case by Feb. 17, according to Morgan Stanley. The investment bank expects the FTC to instruct Altria to divest its stake in the e-cigarette manufacturer.

While Morgan Stanley expects the market to react negatively if the FTC finds that Altria’s investment violates antitrust law, it sees little downside to Altria from an adverse ruling.

Altria would likely appeal the decision, which could result in a multiyear legal process, first with the full Commission and then at the U.S. Court of Appeals. Altria would be able to retain its stake in Juul during this process.

What’s more, Juul’s impaired valuation—the company was worth $1.7 billion in the fourth quarter of 2021, down from $12.8 billion—underscores Juul’s tempered growth prospects.

Also, continuing the legal process leaves open the possibility that the companies can reach a favorable settlement.

Alternatively, if Altria does not contest the FTC’s decision and sells its stake in Juul, it would benefit from crystallizing its loss on the original investment, according to Morgan Stanley, and could apply the tax shield to offset capital gains elsewhere

The case dates to April 2020, when the FTC filed an administrative complaint against the companies, alleging that Altria’s investment in Juul violates federal antitrust laws and seeking to unwind Altria’s investment.

The case has been before the administrative law judge since June 2021, with Altria and Juul defending their relationship and presenting extensive evidence and witnesses in support of maintaining Altria’s investment.

The administrative law judge’s initial deadline to decide was Dec. 22, 2021, but the judge filed an extension twice due to the complexity of the issues and extensive amount of materials in the case.

February 8, 2022

Pyxus Recognized for Climate Efforts

Pyxus International has been recognized by CDP for its coordinated action to address climate change, water security and deforestation. CDP is a global nonprofit that runs the world’s environmental disclosure system for investors, companies, cities, states and regions.

Based on the data reported by the company through CDP’s annual environmental disclosure and scoring process, Pyxus achieved a B score for its performance in the environmental focus areas of climate change and water security, and a B- score for its efforts to address deforestation. CDP’s scoring scale ranges from an A to a D-.

Pyxus’ scores reflect the data compiled from its family of companies and brands, was scored by CDP-accredited scoring partners and measured against nearly 12,000 entities as part of this year’s process.

“As a global agricultural company, Pyxus is uniquely positioned to create a positive impact on the environment in a number of regions across our supply chain,” said Pieter Sikkel, president and chief executive officer of Pyxus, in a statement. “CDP’s recognition of our environmental transparency and action reaffirms the importance of our business’ ESG strategy and the strides we are making to leave the world better than we found it.”

In December 2021, Pyxus unveiled the framework of its environmental, social and governance (ESG) strategy, building off the company’s legacy of sustainable agricultural production. Implementing sustainable solutions that further improve the company’s environmental performance and reduce its environmental footprint is one of three key pillars outlined in the framework.

“Pyxus’ 2021 CDP scores can be attributed to a series of successful company initiatives—from helping farmers transition to sustainable fuel sources to planting millions of trees worldwide—that are part of our overall strategy to reach net-zero value chain emissions by 2050 and zero net global deforestation by 2030,” said Sikkel.

“Our company has an important role to play in addressing climate change and we are committed to working with farmers to help them reduce their carbon footprints. We are proud to be recognized by CDP for our efforts and look forward to continuing to share more about our climate change initiatives in the future.”

Pyxus began reporting its greenhouse gas emissions to CDP in 2009, its water data in 2014 and its forestry data in 2020.

February 7, 2022

ITC Quarterly Revenue up 30 Percent

ITC reported an operating revenue of INR183.66 billion ($2.46 billion) in the October-December period, up 30 percent over the corresponding quarter in 2020, according to Business Today.

Growth was boosted by the company’s agricultural and cigarette businesses. ITC’s cigarettes segment posted remarkable growth following a long period of decline. At INR69.59 billion, revenue from cigarettes was 14.3 percent higher year-on-year and grew 12 percent sequentially. According to Edelweiss securities, it was way above its estimated growth rate of 8 percent.

ITC’s agri-business revenue jumped 90 percent in the third quarter of fiscal 2022 from the year-ago period, while it grew by 82.7 percent sequentially. Strong exports offset weak domestic demand for the company’s agricultural products, which include leaf tobacco, during the quarter.

“Robust recovery continued across markets aided by increase in mobility and agile supply chain and market servicing,” ITC wrote in a statement. Market standing reinforced leveraging portfolio vitality, product accessibility and execution excellence. Business continues to invest in augmenting assortment to strengthen its competitive position and counter illicit trade.”

February 7, 2022

UN to Raise Awareness of Microplastics Impact

The UN Environment Program (UNEP) and the Secretariat of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) will launch a social media campaign to raise awareness about the environmental and health impacts of microplastics in cigarette butts, the United Nations reports on its website.

Cigarettes are the most discarded waste item worldwide. Globally, more than 6 trillion cigarettes are produced annually, each containing filters, or butts, that are mainly composed of microplastics known as cellulose acetate fibers.

However, cigarette butts that are not properly disposed of get broken down by factors such as sunlight and moisture, thus releasing microplastics, heavy metals and many other chemicals, according to the UN.

Cigarette butts account for more than 766 million kilograms of toxic trash each year. They are also the most common plastic litter on beaches, making marine ecosystems more susceptible to microplastic leakages.

When ingested, the hazardous chemicals in microplastics cause long-term mortality in marine life, including birds, fish, mammals, plants and reptiles.

These microplastics also enter the food chain and are associated with serious human health impacts, which can include changes to genetics, brain development, respiration rates and more.

The social media campaign will aim to engage influencers, as well as UNEP’s Goodwill Ambassadors and Young Champions of the Earth.

It will also include a political advocacy angle by highlighting a recent European Union directive that requires all tobacco products with plastic filters to be labelled clearly. The goal is to encourage the public to advocate for similar changes globally.

“The Secretariat of the WHO FCTC has the technical expertise of the impact of tobacco products on not just human health but also on environment,” said Atif Butt, UNEP’s chief of public advocacy.

“By joining UNEP’s and the Secretariat of the WHO FCTC’s expertise together under the Clean Seas activation on microplastics, we aim to highlight how our health is intrinsically linked to that of our planet.”

February 7, 2022

FDA Nominee Faces Stiff Senate Opposition

U.S. President Joe Biden’s nominee to lead the Food and Drug Administration is facing stiff opposition in the Senate.

According to an article in The New York Times, abortion foes are urging Republican lawmakers to reject Robert Califf, who previously led the agency during the final year of the Obama administration. Meanwhile, key Democrats are withholding support over Califf’s opioid policies and industry ties.

At least five Democrats are publicly opposing his nomination, so Califf needs at least five Republicans to support him in the evenly divided Senate, where Vice President Kamala Harris has a tie-breaking vote.

The FDA commissioner role has been subject to Senate confirmation since 1988, unlike the director of the Centers for Disease Control and Prevention, who is a presidential appointee. The nominee tends to be subject to sharp questioning, but observers say the decision has never been so wrapped up in national politics unrelated to the nominee’s qualifications.

With no confirmed leader, Janet Woodcock, the interim commissioner, can serve while the nomination is pending. If Califf’s nomination is voted down, she could lead the agency for 210 more days, according to the Government Accountability Office.

February 7, 2022

Decentralized Marketing Continues in Zimbabwe

The decentralized auctioning of tobacco is now a permanent feature of Zimbabwe’s tobacco marketing system, reports The Herald, citing the Tobacco Industry and Marketing Board (TIMB).

Previously, tobacco sales were conducted exclusively in the capital, Harare, causing farmers to incur transportation cost and forcing them to spend days away from their fields. The centralized auction system dates from the time that Zimbabwe’s tobacco industry was dominated by commercial plantations with a limited number of large-scale growers.

Following the land reform program of the early 2000s, Zimbabwean tobacco production is now characterized by small-scale production, with hundreds of thousands of participants each selling relatively small amounts of tobacco.

Decentralized sales started in 2021, with floors opening in Marondera, Rusape and Karoi Mashonaland West, among other locations.

TIMB CEO Meanwell Gudu said decentralization of sales would continue in 2022 because it brought convenience and reduced transport cost to farmers who sold their golden leaf at the nearest town.

“The decentralization is very positive because it is in line with government policy on devolution,” he said.

During the 2021-2022 summer cropping season, Zimbabwean farmers put just over 105,000 ha of land under tobacco, down from 106,494 ha last year.

According to the TIMB, more than 121,000 farmers had registered to grow tobacco during the 2021-2022 season by Dec. 31, a decrease from the 144,462 growers who had signed up during the same period the previous year.

February 4, 2022

Crows Trained to Pick up Cigarette Butts

A Swedish company is deploying crows to pick up discarded cigarette butts from the streets and squares of a town near Stockholm as part of a cost-cutting drive, reports The Guardian.

The wild birds receive a little food for every butt that they deposit in a customized machine.

Christian Günther-Hanssen, the founder of Corvid Cleaning, the company behind the method, estimates that his method could save at least 75 percent of the costs associated with picking up cigarette butts in the city.

More than 1 billion cigarette butts are left on Sweden’s streets each year, representing 62 percent of all litter, according to The Keep Sweden Tidy Foundation says that. Södertälje spends SEK 20 million ($2.19 million) on street cleaning.

Södertälje is carrying out a pilot project before potentially rolling out the operation across the city, with the health of the birds being the key consideration given the type of waste involved.

New Caledonian crows, a member of the corvid family of birds, are as good at reasoning as a human seven-year-old, research has suggested, making them the smartest birds for the job.

“They are easier to teach and there is also a higher chance of them learning from each other,” said Günther-Hanssen. “At the same time, there’s a lower risk of them mistakenly eating any rubbish.

Tomas Thernström, a waste strategist at Södertälje municipality, said the potential of the pilot depended on financing.

“It would be interesting to see if this could work in other environments as well. Also from the perspective that we can teach crows to pick up cigarette butts, but we can’t teach people not to throw them on the ground. That’s an interesting thought,” he said.

February 4, 2022

California Pushes to Ban Single-Use Filters

California lawmakers want to ban single-use cigarette filters, e-cigarettes and vape products in the state with the aim of benefiting the environment and public health, according to a story in The Los Angeles Times.

Assembly Bill 1690 would authorize local prosecutors to levy a fine of $500 per violation, defined as the sale of one to 20 items.

Supporters of the bill say cigarette filters offer no health benefits but cost the state millions of dollars to clean up and release toxic microplastics into the environment.

Roughly 12 billion cigarettes are sold in California each year, 90 percent of which are filtered, according to San Diego State epidemiology and biostatistics professor Thomas Novotny.

Nicholas Mallos, senior director of the Trash Free Seas Program at the Ocean Conservancy, said that in 2020 cigarette butts made up nearly 30 percent of the trash collected by volunteers on Coastal Cleanup Day. The city of Los Angeles alone incurs an estimated $19 million a year in cigarette filter clean-up costs. Public agencies statewide spend about $41 million a year.

The bill also targets vape products, which contain batteries and fluids that damage the environment. Reusable and rechargeable vape products would still be available under AB 1690.

Similar bills previously proposed have been unsuccessful due to “tobacco money,” according to proponents of the legislation. Assemblymember Mark Stone believes this time will be different due to a “growing awareness” of the issues and a “stronger coalition” of supporters.

The bill does not include a target date for when the ban would take effect.

February 4, 2022

Flavor Ban Pushes Sales Next Door

Massachusetts’ ban of flavored tobacco products is not the success its proponents make it out to be, according to Ulrik Boesen of the Tax Foundation.

While a study published in JAMA Internal Medicine found that the sale of flavored tobacco in Massachusetts decreased more than in 27 control states in the wake of the state ban, the authors failed to consider the impact of cross-border trade.

According to Boesen, increased sales in neighboring New Hampshire and Rhode Island almost completely made up for the decrease in Massachusetts.

“The end result of the ban, in fact, is that Massachusetts is stuck with the societal costs associated with consumption, while the revenue from taxing flavored tobacco products is being raised in neighboring states,” Boesen wrote on the Tax Foundation’s website.

Looking at the New England region as a whole confirms that the flavor ban did not work as intended, according to Boesen. “Sales moved around rather than disappeared, and the ban evidently did not impact consumption,” he wrote. “Total sales for the region decreased by slightly more than 1 percent comparing the 12 months preceding the ban to the 12 months following the ban—largely comparable to the national sales trends.”

As the U.S. Food and Drug Administration and other states consider Massachusetts’ example, Boesen urges lawmakers to think twice before banning flavored tobacco products. “The experience out of Massachusetts has not been a success story and other states should be wary of conducting their own expensive experiments,” he wrote.

February 4, 2022

Ulster Bans Smoking in Cars with Children

Northern Ireland has banned smoking in a car with children, bringing its laws in line with other regions of the United Kingdom, reports the BBC.

Violators face fines of up to £2,500 ($3,391), but police will be taking an educational, advisory and non-confrontational approach when enforcing the new legislation until the end of February 2022.

It is already illegal to smoke on public transport or to smoke in work vehicles used by more than one person in Northern Ireland.

Chief Inspector Graham Dodds said people caught smoking in cars with children would initially be given warnings rather than fines, giving time for public awareness of the offences to build.

Health advocates welcomed the new laws as a “significant move to a tobacco-free Northern Ireland.” Naomi Thompson, from Cancer Focus NI, said the laws would protect children’s health and reduce the perception for children that smoking is normal behavior.

A ban on smoking in vehicles carrying children has been in force in England and Wales since October 2015. In Scotland and the Republic of Ireland, a ban took effect in 2016.

Northern Ireland also banned the sale of e-cigarettes and other nicotine inhaling products to anyone aged under 18.

February 4, 2022

Category: Top News