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  • Shareholders Approve Hotels Demerger

    Shareholders Approve Hotels Demerger

    Timon Schneider/Wirestock

    Shareholders on May 6 approved ITC’s plan to demerge its hotels business, reports Reuters.

    The company, which has a substantial cigarette business, announced the demerger plan in July last year and later said that the new entity would be tentatively listed.

    In May, proxy advisory firms Stakeholders Empowerment Services and InGovern Research Services asked shareholders to support the proposal, while Institutional Investor Advisory Services opposed the move.

    The hotels business contributed 4 percent to ITC’s fiscal year 2024 revenue, while its mainstay consumer staples business made up 71 percent of the topline.

  • Leaf Sales Down

    Leaf Sales Down

    Photo: Taco Tuinstra

    Contracted and self-financing growers had earned more than US$600 million by Day 56 of Zimbabwe’s 2024 tobacco selling season, down from $722 million earned by the same day last year, reports The Herald.

    The most recent season was impacted by an El Nino-induced drought, which caused the season to start late and end early.

    Tobacco Industry and Marketing Board statistics revealed that farmers had cumulatively sold 173.76 million kilograms of tobacco worth $607.08 million by Day 56 under both the auction and contract systems. This represents a 16 percent decline in earnings from the comparable 2023 period.

     In volume terms, the leaf sold was 27 percent below the 239.56 million kg sold last season. The average auction price was $0.12 higher than that at the contract floors.

    Some stakeholders remained positive about the remainder of the season. “On the back of an El Niño-ravaged season, we need to celebrate the 174 million kilograms achieved to date,” said Paul Zakariya, secretary general of the Zimbabwe Farmers Union. “The marketing season is still underway and we expect more tobacco to come through. We may not necessarily reach the desired target, but we will not totally be out of range .”

    Others were less optimistic. Tobacco Farmers Union Trust Vice President Edward Dune said it was highly unlikely that the 240 million kilogram target would be reached in the wake of the drought.

    “Deliveries should definitely be declining now that the marketing season is almost coming to an end. Firewood cutting and nursery preparations are the major farmer activities currently taking place on farms,” he said.

  • Swedish Match MRTP Comments Due July 5

    Swedish Match MRTP Comments Due July 5

    The U.S. Food and Drug Administration posted the final set of application materials related to renewing existing modified-risk tobacco product (MRTP) orders for Swedish Match U.S.A.’s General Snus products.

    The agency announced a deadline for public comments. To ensure they receive consideration by FDA, the applications must be submitted to the docket by 11:59 p.m. EDT on July 5, 2024.

    The application materials, redacted in accordance with applicable laws, can be found on the FDA’s website. “Before making a final determination on an MRTP application, FDA considers all information available to the agency, including public comments and recommendations from the Tobacco Products Scientific Advisory Committee (TPSAC),” a release states.

    The FDA recently announced a TPSAC meeting to discuss these renewal applications, scheduled for June 26, 2024, which the public is able to attend in person at the FDA White Oak Campus or virtually. Interested persons may present data, information, or views, orally or in writing, on issues pending before the committee.

    Written submissions may be made to the contact person on or before June 20, 2024.

  • Tax Hike Diverted Cigarette Sales: LUMS

    Tax Hike Diverted Cigarette Sales: LUMS

    Image: alexlmx

    Pakistan’s 2023 federal excise duty (FED) hike on tobacco products has diverted rather than reduced cigarette consumption, reports The News International, citing recent research.

    In 2023, the government announced a significant cigarette tax hike, prompting tobacco companies to more than double their cigarette prices.

    The fiscal measure aimed to boost revenue and discourage smoking. However, a recent study conducted by the Lahore University of Management Sciences (LUMS), suggests it has achieved neither objective.

    Instead of lowering smoking rates, the increased prices have prompted consumers to source their cigarettes from informal sources, a development that will likely cause the government to miss PKR300 billion ($1.08 billion) in tax earnings this year, according to LUMS.

    The LUMS study found that the share of duty-paid cigarettes shrank to 42 percent over the past two years.

    “Government has implemented various initiatives to address the extent of illicit sector to bring more companies and illicit sector under tax net,” said LUMS Associate Professor of Economics Kashif Zaheer Malik. “These, however, have not been successful in reducing illicit trade in Pakistan.”

    In light of Pakistani smokers’ profound price sensitivity, the LUMS report urged the government to reconsider its excise tiers. It also said the success of Pakistan’s track-and-trace system would depend on an all-encompassing rollout and consistent enforcement.

    Only a handful of Pakistan’s cigarette manufacturers have implemented the new system.

    In related news, the government of Pakistan’s Khyber Pakhtunkhwa (KP) province announced a 400 percent tobacco tax increase.

    Civil society groups welcomed the measure. “This substantial increase is projected to generate over PKR2 billion annually, which will be dedicated to enhancing health facilities across KP,” Blue Veins and the Provincial Alliance for Sustainable Tobacco Control wrote in joint statement.

    Tobacco growers warned the tax hike would destroy the sector. “The farmers can’t afford this and will stop growing tobacco,” Pakistan Tobacco Board member Rustam Khan was quoted as saying by The News International.

    “Tobacco crop is the only cash crop of the province. And around 1.2 million people in the province depended on it,” said Khan, adding that more than 75,000 farmers were involved in tobacco cultivation.

    Tobacco taxation has been a contentious topic in Pakistan recently. In May, market leader Pakistan Tobacco Co. threatened to cease operations in the country if the government further increases cigarette taxes.

  • Vietnam Trade Ministry Supports Vapes Ban

    Vietnam Trade Ministry Supports Vapes Ban

    Photo: Holger

    Vietnam’s Ministry of Industry and Trade supports a ban on e-cigarettes, reports The VN Express

    The ministry has requested the government to halt the review of its proposed bill on regulating e-cigarettes after the health ministry officially published a report highlighting their negative effects.

    “The Ministry of Industry and Trade supports making changes in the law to ban e-cigarettes as the Ministry of Health has affirmed that they are harmful,” Trader Minister Nguyen Hong Dien told lawmakers on June 5.

    No business have been licensed to trade e-cigarettes in Vietnam.

    The share of Vietnamese aged 13-15 using e-cigarettes has increased from 3.5 percent in 2022 to 8 percent in 2023, official data shows.

  • BAT Expects Lower First-Half Profit

    BAT Expects Lower First-Half Profit

    Photo: BAT

    Declining sales of cigarettes and growing competition from illegal vapes in the U.S. will likely dent British American Tobacco’s 2024 earnings, the tobacco manufacturer said in a pre-close trading update on June 4.

    Analysts estimate BAT will make £27.60 billion ($35.35 billion) in total organic revenue and adjusted operating profit of £12.48 billion for the year, according to The Wall Street Journal.

    BAT noted that while the U.S. was showing some early signs of recovery, traditional cigarette volumes were down around 9 percent so far this year across the industry.

    Chris Beckett, head of equity research at Quilter Cheviot, told Reuters BAT’s anticipated decline in first-half revenue and profit was “more pronounced” than expected.

    The company expects half-year revenue and adjusted profit from operations to fall by low single digits, but says it is on track to deliver its guidance for the full year.

    “We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our U.S. commercial actions, as well as the phasing of new launches,” said BAT CEO Tadeu Marroco.

    “Our guidance also reflects ongoing macro-economic pressures, particularly in the U.S. market and continued lack of effective enforcement against the growing illicit vapor segment. As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.”

  • Cote D’Ivoire to Require Plain Packaging

    Cote D’Ivoire to Require Plain Packaging

    Photo: alexlmx

    Cote D’Ivoire will start requiring cigarette manufacturers to sell their products in plain packaging in November.

    According to the Campaign for Tobacco-Free Kids (CTFK), Cote D’Ivoire is the second nation in Africa to introduce following Mauritius.

    “The Campaign for Tobacco-Free Kids applauds Cote D’Ivoire for joining Mauritius in bringing plain packaging to Africa,” said CTFK President and CEO Yolanda Richardson. “These new measures should serve as a reminder that countries around the world can and must take swift action to curb tobacco use, protect public health and stop Big Tobacco companies from targeting youth.”

  • Investor Plans Nicotine Extraction in Zimbabwe

    Investor Plans Nicotine Extraction in Zimbabwe

    Photo: Tobacco Reporter archive

    A Chinese investor plans to build a multi-billion dollar nicotine-extraction factory in Zimbabwe, reports The Herald. The plans are at an advanced stage, according to the country’s former ambassador to China, Christopher Mutsvangwa.

    The facility will extract nicotine from tobacco stalks, leaves and flowers for the cigarette alternatives, such as e-cigarettes. Once established the factory is expected to also process tobacco from neighboring countries including Malawi, Mozambique and Zambia.

    “There is going to be a very big industry to extract nicotine from the by-products after selecting the premium tobacco leaves,” Mutsvangwa told participants in meeting of the ruling  Zanu PF’s party’s Mashonaland West provincial coordinating committee in Chinhoyi.

    “The Chinese firms have an interest in setting up the factories here in Zimbabwe because of our production levels,” he said.

    The investor’s board of directors reportedly met on May 31, 2024, to finalize the modalities of setting up the factory, which will likely be built in Karoi, in one of Zimbabwe’s largest tobacco producing districts.

    Zimbabwe is also expected to be a major producer of cannabis seeds following plans to establish a US$400 million factory. “We now have capacity to produce cannabis seed in the country. After an initial investment of $30 million, the company now wants to set up a seed production factory,” said Mutsvangwa.

    The investments in nicotine extraction and cannabis production will boost Zimbabwe’s attempts to extract more value from its tobacco industry, as detailed in the government’s Tobacco Value Chain Transformation Plan.  

  • FDA Updates Vaping Products ‘Red List’

    FDA Updates Vaping Products ‘Red List’

    Photo: xy

    The U.S. Food and Drug Administration has updated its import alert, which includes a “red list” of vapor products that may be detained “without physical examination,” the agency announced.

    The alert authorizes U.S. Customs and Border Protection to detain new tobacco products that do not have the required marketing authorization under the Federal Food, Drug and Cosmetic Act, which gives the FDA the authority to regulate all tobacco products.

    The list of products now includes Chinese manufacturers and distributors as well as U.S. importers and distributors.

    The FDA announced last week that it is taking stronger enforcement actions against unauthorized e-cigarettes. The agency is seeking civil money penalties (CMP) against nine brick-and-mortar retailers and one online retailer for selling unauthorized Elf Bar brand vaping products. The FDA is seeking a penalty of more than $20,000 from each retailer.

    “In order to remove a firm’s product from the red list, information should be provided to the agency to adequately demonstrate that the firm has resolved the conditions that gave rise to the appearance of the violation,” the FDA wrote. “The purpose of this is so that the agency will have confidence that future shipments/entries will be in compliance with the Federal Food, Drug and Cosmetic Act.”

  • Smoking Decline Traced to Noncombustibles

    Smoking Decline Traced to Noncombustibles

    Photo: Natalia

    Sweden’s smoking rate is poised to dip below 5 percent, a share that is widely considered the hallmark of a “smoke-free” society, reports The Business Mirror.

    Only 5.6 percent of Swedish adults smoked cigarettes in 2022, down from 49 percent of men in 1960, according Sweden’s public health agency. As a result, Sweden has 52 percent fewer tobacco-related male deaths than Poland and 57 percent fewer than Romania. For male lung cancer, Sweden has significantly fewer deaths than France, Germany, Italy and Poland.

    A report titled “No Smoke Less Harm” by the advocacy group Smoke Free Sweden attributes this achievement to Sweden’s openness to alternative nicotine products, such as snus.

    The report points out that smoking-related diseases are caused primarily by the byproducts of tobacco combustion rather than nicotine, as many mistakenly assume.

    The Swedish experience demonstrates the importance of understanding public misperceptions about nicotine to develop health policies that better protect and inform consumers.

    Karl Fagerström, co-author, ‘No Smoke Less Harm’

    While nearly one in four Swedish adults still use nicotine daily, in line with European averages, Sweden boasts far lower rates of tobacco-related deaths (44 percent), cancer rates (41 percent) and cancer deaths (38 percent) than the rest of the European Union.

    Smoke Free Sweden’s report appeals for the World Health Organization and global public health communities to acknowledge that combustible products, not nicotine, cause harm to smokers.

    “While nicotine is addictive, it does not cause the serious diseases associated with smoking,” Fagerström said. “Our findings support a shift in focus from cessation to substitution with less harmful alternatives for those unable to quit completely.”