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  • Investor Welcomes Independent Directors

    Investor Welcomes Independent Directors

    Photo: KT&G

    Flashlight Capital Partners, a significant shareholder of KT&G Corp. welcomed the cigarette manufacturers’ appointment of an independent director, which the investor said would enhance governance and shareholder value.

    At its recent annual meeting, KT&G appointed Kyung-Man Bang as its new CEO. Shareholders also approved the appointment of Dong-hwan Shon and Sang-wook Kwak as outside directors

    “We view this appointment as a victory for all shareholders, irrespective of size or nationality,” said Sanghyun Lee, managing partner of Flashlight Capital, in a statement. “With the addition of a truly independent director committed to advancing shareholder interests, KT&G has taken a crucial step towards governance normalization.”

    In a letter addressed to KT&G’s new board of directors, Lee outlined asked the company to link the compensation of the board and CEO to performance; investigate the underperformance of KT&G’s Lil heat-not-burn product in Japan; and exit the asset management business, among other actions.

    “With the appointment of the new board of directors, especially Mr. Shon, we are optimistic that KT&G’s future will be characterized by increased transparency and improved governance standards,” said Lee.

  • Second Lawsuit for Menthol Inaction

    Second Lawsuit for Menthol Inaction

    U.S. health groups filed a second a second lawsuit against the Food and Drug Administration for the agency’s inaction on banning menthol cigarettes. The case comes more than seven months after the FDA’s initial date for finalizing the new rule.

    “The relentless and racist tobacco industry targeting has killed too many members of the Black community,” said Carol McGruder, co-chair of the African American Tobacco Control Leadership Council, which filed the suit along with Action on Smoking and Health and the National Medical Association. “If Black lives truly matter, then we must end the sale of menthol cigarettes and do it now.”

    The plaintiffs’ first lawsuit was filed on June 17, 2020. The initial complaint sought to compel the FDA to act on its earlier conclusions that removing menthol cigarettes from the marketplace would benefit public health. The lawsuit asked the court to compel the FDA’s determination on whether to add menthol to the list of prohibited characterizing flavors—a determination that the FDA delayed making for over 10 years. The joint lawsuit followed the 2013 Citizen Petition from the Public Health Law Center, which called on the FDA to prohibit the sale of menthol cigarettes.

    “We’re extremely disappointed to be forced to file this second lawsuit against the FDA in support of protecting Americans from menthol cigarettes,” said Laurent Huber, executive director of Action on Smoking and Health, in a statement. “The FDA’s own research confirms that a menthol ban would save lives; there is no scientific reason to delay finalizing this rule.”

    In 2011, the FDA’s scientific advisory committee concluded that the “Removal of menthol cigarettes from the marketplace would benefit public health in the United States.”

    As a result of the plaintiffs’ first lawsuit, the FDA made the landmark determination to add menthol to the list of banned characterizing flavors in cigarettes. To begin that rulemaking process, the FDA issued a Notice of Proposed Rulemaking to ban the sale of menthol cigarettes in the marketplace. In response, the plaintiffs voluntarily dismissed their initial lawsuit. 

    After setting an initial date of August 2023 to issue its menthol rule, the FDA has unreasonably and unlawfully delayed this life-saving rule, according to the plaintiffs.

    “As African American physicians, we are deeply disturbed at the continuing delays in FDA’s finalizing of the ban on menthol cigarettes,” said Yolanda Lawson, president of the National Medical Association. “Our patients, more than any other group, become disabled and die prematurely due to the continued use of these cigarettes,” she said.

    The plaintiffs accuse the Biden Administration of falling for “disinformation and fear-mongering” by the tobacco industry. “The industry is sowing doubt and confusion and taking advantage of real issues in our country and claiming that removing menthol will harm Black lives, when just the opposite is true,” the groups wrote in a statement. “We remain disheartened to be forced to call on the Biden Administration to prioritize human life.”

  • Tea Sticks Under Scrutiny

    Tea Sticks Under Scrutiny

    Photo: cirquedesprit

    European legislators are mulling restrictions on herbal heating products, which have been gaining popularity across the continent and elsewhere, reports Reuters.

    In the wake of an EU ban on flavored tobacco-heating products last year, tobacco companies have been developing tobacco-free alternatives made from nicotine-infused substances such as rooibos tea.

    The European Commission said it is currently evaluating EU tobacco laws, and any changes would be subject to the findings of that effort, public consultation and an impact assessment.

    Already, some member states are looking to tighten national legislation.

    In Latvia, for example, a draft bill would classify the zero-tobacco sticks as tobacco substitutes and subject to related controls. Croatia, too, intends to regulate herbal heat sticks, according to that country’s health ministry.

    Regulation of such products is also being discussed internally in Lithuania.

    German authorities, meanwhile, are arguing with manufacturers over whether existing tobacco tax laws cover the new products, according to a spokesperson for the Federal Customs Authority.

    BAT said it supports the introduction of evidence-based regulation and appropriate excise taxes for its zero-tobacco sticks, adding that 15 EU member states have already introduced excise duties.

    Philip Morris International also believes any nicotine-containing cigarette alternative should be regulated and taxed appropriately, a spokesperson said. The multinational notes that flavors play an important role in encouraging adult smokers to switch away from smoking.

  • Malawi 2024 Volume Up 17 Percent

    Malawi 2024 Volume Up 17 Percent

    Photo: Taco Tuinstra

    Malawi will produce 17 percent more tobacco this year than it did in the 2023 growing season, reports Malawi24, citing a survey conducted by the Tobacco Commission (TC).  

    The TC projects production of 140 million kg this season. Last year, the country’s farmers sold 120 million kg.

    While the projections are up over those of last year, they are down from earlier estimates. The first crop survey conducted in January 2024 showed a 21 percent increase in 2024 tobacco production from that of 2023.

    TC Public Relations Officer Telephorus Chigwenembe attributed the decrease to prolonged dry spells in most parts of the country and the poor establishment and performance of some dark fire cured tobacco in the Malawi’s northern region

     The report of the first nationwide survey credited the good prices offered in 2023, increased number of growers, increased sponsorship and availability of inputs as reasons for the larger crop estimates.

    Tobacco estimate surveys in Malawi are conducted by players in the industry and are coordinated by the Tobacco Commission.

  • Celebrating Two Decades of Excellence

    Celebrating Two Decades of Excellence

    Odiri Erewa-Meggison

    Odiri Erewa-Meggison reflects on the significance of BAT’s Ibadan factory in Nigeria as it celebrates its 20th anniversary.

    Contributed

    This year, BAT celebrates the 20th anniversary of its Ibadan factory in Nigeria. To mark the occasion, Precise Platform, a PR agency, interviewed Odiri Erewa-Meggison, external affairs director of BAT West and Central Africa.

    Precise Platform: Please tell us about the significance of celebrating 20 years of manufacturing excellence for your organization.

    Odiri Erewa-Meggison: Celebrating 20 years of manufacturing excellence holds immense significance for BAT West and Central Africa on several fronts. Firstly, it marks a significant milestone in our journey, showcasing two decades of dedication, innovation and resilience in the manufacturing industry within the region. This achievement underscores our commitment to quality, responsible and sustainable business practices in all aspects of our operations.

    [We are] celebrating our two decades of quality output, impacts and milestones despite the economic challenges and regulatory changes that have made a lot of foreign companies quit their investments in the country. We are able to adapt to the market dynamics and impact on our operating environment with over 350,000 job opportunities and boost the economy of the nation through our export operation.

    From the excellent productions in our Ibadan factory, we export to 11 West and Central Africa countries and recently to the USA, with $110 million annual foreign exchange from export, among other socioeconomic impacts. These achievements, which are worth celebrating, speak volumes of our strong contributions and the vital roles British American Tobacco has played in driving economic growth with social progress in our operating environment and also provide an opportunity for us to express gratitude to our employees, partners and stakeholders, whose unwavering support and dedication have been instrumental in our success. Their commitment and passion have been integral to our journey toward manufacturing excellence.

    In essence, celebrating 20 years of manufacturing excellence is not just about looking back at past achievements but also about looking forward with optimism and determination toward a future of continued success and positive impact as BAT Nigeria is here for the long haul.

    How has BAT Nigeria’s Ibadan factory evolved and grown its manufacturing capabilities while achieving sustainability milestones over the past two decades?

    British American Tobacco Nigeria has undergone substantial evolution and growth in terms of its manufacturing capabilities, reflecting its commitment to meeting the dynamic needs of the market and its stakeholders. BAT Nigeria has continually invested in upgrading its manufacturing facilities with cutting-edge technologies. These advancements have enhanced production efficiency and quality control measures, enabling the company to stay competitive in the manufacturing industry.

    Also, BAT Nigeria places a strong emphasis on maintaining high-quality standards across its manufacturing operations. The company adheres to stringent quality control protocols and certifications to ensure that our operations meet or exceed both regulatory requirements and consumer expectations for safety.

    We have also integrated sustainability practices into our manufacturing processes, aiming to minimize environmental impact and promote social responsibility. In order to reduce our carbon footprint, in 2022, we transitioned from diesel[-powered] to gas-powered generation, and in 2023, we installed our 1.4-megawatt solar plant in our manufacturing facility, which was recently launched by the executive governor of Oyo State, Seyi Makinde, during our 20th anniversary celebration. We also installed a wastewater treatment plant with a 30,000-cubic-meter storage capacity to recycle and reuse all wastewater. This earned us the Alliance for Water Stewardship (AWS) certificate. These initiatives encompass our evolution and efforts to reduce energy consumption, minimize waste generation [and] support local communities, to promote responsible business practices within the manufacturing sector.

    The success of BAT Nigeria’s manufacturing operations, particularly at the Ibadan factory, can be attributed to several key strategies and initiatives that have been instrumental in achieving milestones, beginning with our investment in the state-of-the-art manufacturing facility and sustainable technologies that enable efficient resource utilization and minimize environmental impact. These strategies have led to 100 percent waste recycling and transitioning from diesel to gas operation at our Ibadan facility.

    BAT fosters a culture of continuous improvement, where employees are encouraged to identify opportunities for optimization and innovation across all aspects of manufacturing operations. We also work closely with our suppliers and partners to promote responsible sourcing practices and ensure the integrity of our supply chain. This proactive approach enables the implementation of cost-saving measures, quality enhancements and sustainability initiatives.

    Another factor that has contributed to the success we are celebrating is our large investments in human capital training and development programs to equip employees with the skills and knowledge necessary to excel in their roles and contribute to manufacturing excellence. This includes technical training on operating equipment, safety protocols and environmental stewardship practices.

    How does BAT Nigeria guarantee the highest quality standards in its manufacturing processes while simultaneously prioritizing sustainability and environmental considerations, as outlined by the AWS and the International Renewable Energy Certificates (IREC)?

    We implement rigorous quality control measures at every stage of the manufacturing process, from sourcing raw materials to packaging finished products. This includes comprehensive testing, inspections and audits to ensure that our products meet or exceed regulatory requirements and consumer expectations for safety, consistency and quality.

    By adhering to internationally recognized certifications and standards for quality management, environmental management, and occupational health and safety, we foster a culture of continuous improvement, where employees are empowered to identify opportunities for enhancing quality, efficiency and sustainability in manufacturing operations. This includes implementing lean manufacturing principles, conducting root cause analyses and investing in training and development to drive continuous improvement initiatives.

    By prioritizing quality, sustainability and environmental considerations in our manufacturing practices, we not only meet regulatory requirements and consumer expectations but also contribute to the long-term viability and resilience of our business and the well-being of the communities and environments in which we operate.

    BAT Nigeria prioritizes maintaining the highest quality standards in its manufacturing processes while adhering to sustainability and environmental principles outlined by the Alliance for Water Stewardship and the International Renewable Energy Certificates.

    Our dedication to sustainability extends beyond energy efficiency and waste reduction. We prioritize responsible water management practices, evident in our state-of-the-art wastewater treatment plant. This impressive facility boasts a 30,000-cubic-meter storage capacity, allowing us to capture and treat all effluent wastewater generated during production. This commitment to water stewardship ensures no untreated wastewater is released into the environment.

    More importantly, we don’t simply treat the wastewater; we reuse it. In 2023 alone, we successfully recycled a significant amount—17,388 cubic meters of treated wastewater. This recycled water is likely used for noncritical processes within the factory, reducing our dependence on freshwater resources.

    This approach exemplifies our commitment to minimizing our environmental impact and operating responsibly. By effectively managing our wastewater, we not only conserve precious freshwater resources but also demonstrate our alignment with the principles set forth by the AWS certification that we hold.

    The IREC compliance translates to our using energy-efficient machinery and exploring renewable energy sources in line with the recently commissioned 1.4 MW solar plant. This reduces the factory’s dependence on fossil fuels and lowers our carbon footprint.

    This multifaceted approach allows BAT Nigeria to be a leader in manufacturing excellence. We believe this commitment to quality, sustainability and responsibility sets us apart and contributes to a brighter future.

    As BAT Nigeria celebrates two decades of manufacturing excellence in a multi-category industry, how will you leverage your achievements to further enhance and sustain your competitive advantage? Additionally, how does your annual environmental, social and governance (ESG) forum contribute to this strategy, fostering collaboration and innovation for a sustainable future?

    As we celebrate 20 years of manufacturing excellence, we are committed to further enhancing and sustaining our organization’s competitive advantage in the industry through strategic initiatives and forward-thinking plans. Here are some of our key plans:

    We will continue to invest in cutting-edge technologies beyond what we have achieved so far and innovation to optimize our manufacturing processes, improve efficiency and enhance product quality.

    We will reinforce our commitment to sustainability and environmental stewardship by implementing additional initiatives to minimize our environmental footprint, reduce waste generation and promote responsible sourcing practices. With a steadfast commitment to sustainability, we will sustain our recycling cigarette butts initiative and annually hold our private sector ESG forum to continually drive our advocacy for a sustainable environment in alignment with the sustainable development goals.

    By implementing these plans and initiatives, we aim to further enhance and sustain our organization’s competitive advantage in the industry, ensuring continued success and growth for the next 20 years and beyond.

    Our annual ESG forum plays a critical role in these strategies by fostering collaboration and innovation for a sustainable future. The forum brings together industry stakeholders, experts and thought leaders. This allows BAT Nigeria to share its own sustainability journey and learnings while also gaining valuable insights from others.

    Added to this, by facilitating open discussions on key ESG challenges and solutions, the forum fosters collaboration across the industry. This can lead to the development of innovative approaches to tackling environmental and social issues.

    The ESG forum allows BAT Nigeria to stay abreast of emerging trends and best practices in sustainability. This ensures we can continuously adapt and improve our strategies to maintain a competitive edge in a future increasingly focused on ESG performance.

    Is there any message or reflection you would like to share with the employees, stakeholders and customers who have been a part of this 20-year journey of manufacturing excellence?

    I would like to extend my appreciation to all our employees and stakeholders, who have been integral to our 20-year journey of manufacturing excellence. The BAT Nigeria team’s unwavering support, dedication and commitment have been instrumental to our success and achievements over the years.

    As we reflect on this milestone, we are reminded of the collective efforts, resilience and passion that have propelled us forward, even in the face of challenges and uncertainties. Together, we have overcome obstacles, embraced opportunities, and [we] continuously strive for excellence in everything we do.

    As we embark on the next phase of our journey, we remain committed to upholding the highest standards of excellence and sustainability in all aspects of our operations. Together, we will continue to innovate, collaborate and lead the way toward a future of continued success and positive impact.

    Thank you for being a part of our 20-year journey of manufacturing excellence. Here’s to many more years of partnership, growth and shared achievements ahead.

  • Half Measures

    Half Measures

    Photo: Be Free

    Though a generational tobacco ban is not without merit, the U.K. will not allow it to work in the way that it could—and thus the measure should be shelved.

    If I have this correctly, the U.K.’s proposed generational tobacco sales (GTS) ban has been attacked by libertarians as being contrary to the principles that people should be allowed to make their own choices about the risks they are prepared to take in life and to take responsibility for the consequences of those choices, providing they act within the law and their actions do not harm others.

    These are powerful arguments, but are they enough to defeat the proposal, which, as currently envisaged, would mean that from Jan. 1, 2027, anyone born on or after Jan. 1, 2009, could never be sold tobacco products legally in the U.K.? I suspect not.

    One problem arises because the first duty of the government is to protect U.K. citizens, and while, by not allowing smoking in public places, the U.K. government might be seen mostly to have discharged that responsibility in the case of smoking, it is not difficult to imagine how some might argue otherwise. Smokers may still smoke at home, affecting family members, and because, we are told, smoking has a negative economic impact on society, it must be seen as causing harm to nonsmokers by robbing society of the funds to help those in need.

    These are powerful arguments, but are they enough to support the radical idea of a GTS ban? I suspect not.

    A major problem to my way of thinking is that the GTS ban is based, as is much else to do with tobacco and vaping, on faulty statistics and information and on ideological rather than rational ideas. Regulatory skyscrapers have been and are being built on dodgy foundations.

    Here is an example. The first words of a GTS ban blog post from the U.K. Department of Health on Jan. 30, titled “Creating a smoke-free generation and tackling youth vaping: What you need to know,” had it that “The prime minister has set out plans to build a better and brighter future for children.”

    I find it intolerable that I am being told by a government department that I need to know something that is misleading. A Feb. 20 story by social policy editor Patrick Butler published in The Guardian newspaper and quoting the Association of Directors of Children’s Services had this to say: “In a withering assessment of the government’s record over the past few years, they said ministers had presided over deepening child poverty, crumbling schools and an exploding health and well-being crisis in young people, with low-income families worst affected. The government’s failure to prioritize the post-pandemic needs of children in England was a ‘massive missed opportunity’ that would leave many thousands of youngsters ‘left behind.’”

    The prime minister referred to in the blog is Rishi Sunak, who has been either prime minister or chancellor of the exchequer during almost the entire time frame referred to in The Guardian piece. Does it really sound like he has been building a better and brighter future for children?

    Of course not. So the question arises as to why anybody should believe anything else in the blog or any of the other so-called information put out by the government in relation to the GTS ban. And the answer is that there is no reason to believe and every reason to suspect one is being conned. You have only to gaze briefly at the graphic “warnings” on tobacco packages to realize how misleading they are and, I would contend, are meant to be. And the statistics linking diseases and death directly to smoking and to no other causes (drinking, eating highly processed food and taking nonprescription drugs, etc.) are clearly misleading.

    But as they say, we are where we are, and whether you accept the necessity of the GTS ban will probably depend largely on whether you believe the information put out by the government. So let’s for the moment accept the government’s position and say that because of the tragic consequences of smoking, and smoking alone, it is necessary to put an end to the habit.

    At this point, we need to ask whether the GTS ban is the best approach, and I think you have to say that probably it is. Nearly everyone dismisses the idea of outright prohibition because they say it would not work, and once you say that, you know it won’t be allowed to work—you have set yourself up to fail. Another idea would be to employ tobacco harm reduction (THR), but this will take forever because there are so many people opposed to it, and even those who believe in it can be made to jump and think again simply by saying, “Boo! Children!”

    So a GTS ban is the best game in town? Possibly, but that is not to say that even it would work. Let’s take a look. Despite what I wrote in the second paragraph, the blog actually says that from Jan. 1, 2027, anyone born on or after Jan. 1, 2009, “will never be able to legally sold tobacco.” That does not make sense, of course, and it makes you wonder how much effort has gone into the GTS proposal, which is being hurried along in an election year. But, no matter, the idea is not without merit. It has the advantage that, in theory, nobody who has taken up smoking after being sold tobacco products legally will ever be forced to quit.

    It has the advantage, too, that it is not really a ban. Smokers, we are told, smoke for the nicotine, and, as things stand and in theory, those who are born after Jan. 1, 2009, will still be able to buy nicotine in inhalable and possibly other forms once they have turned 18. I write that with a feeling of trepidation, however, because a U.K. representative at the February meeting of the Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control said that no nonsmoker should use a vape. Whether this was meant to be simply a moral judgement whose basis was not spelled out or whether it heralded a regulatory extension of the GTS to cover vapes was not clear. If the latter is the case, GTS is probably dead in the water.

    If, on the other hand, the former is the case, it looks like GTS is set to roll, right? Not so fast. One of the major objections made against the ban is that it would create a two-tier society where some people are allowed to buy tobacco products and some are not. I am not sure that this should be seen as a huge problem because we already have age-determined dividing lines in our society in respect of many products and activities; it would just be the case that the dividing line would be on a sliding scale in respect of one product, which is not something that should send us into an intellectual death spiral. After all, the pension age has also been moved on to such a scale.

    A connected and more concerning issue to my mind is that the ban would put retailers in an invidious position because they would be required to tell the difference between two adults, one of whom was one year older than the other. There is age estimation technology available that can reliably tell if somebody is under 25 and therefore trigger a request for that person to prove they are over 18, but it seems unlikely that it could split, say, a 40-year-old from a 41-year-old.

    There are ways around this problem using some form of identity documents but none that I can think of that would be foolproof in a society where not everybody has such documentation and where not everybody who does carries it with them. And it would be a brave politician who raised the specter of a universal system of identity cards in the U.K. simply to help smokers.

    The only answer to this problem as I can see it is to make it illegal for anyone born after Jan. 1, 2009, to buy tobacco products, putting the onus on the buyer rather than the seller, who would nevertheless still be required not to sell to those under the age of 18.

    The objection here would be that people would ignore the rules and buy tobacco products illegally. But would this really matter? The law would be in place in large part to protect the individual so that if an individual decided to sidestep the law, it would be their fault if they fell ill from smoking, were fined, not an unlikely outcome at some time given that they would need to buy a pack every day or two, or if somewhere down the line they were forced to quit because the last licit smoker had died or if manufacturers withdrew cigarettes on the grounds that there were too few people left who could buy tobacco legally.

    So, we are back on track? A GTS ban it is? No, sorry, there are still a few things we need to clear up. For a GTS ban to work, in my view, it is necessary to have a long-term THR policy in force that provides a range of attractive, reasonably priced, less risky alternative products to help those who want to quit smoking and, importantly, so as not to discriminate against people based on age—one year of age. And despite the U.K.’s reputation of having embraced THR, we are nowhere near having a comprehensive policy that people can rely on to still be in force next month. Snus is banned, and the government continues to dither over heat-not-burn products. Even vapes are subject to winds of change. The government is going to ban disposable products, it is set as I write this piece to further tax these products, and, because the middle classes said, “Boo! Children!,” it is going to ban various flavors.

    And worse is to come. Because, despite what it says, the government will not adequately fund the organizations charged with controlling the retail sale of products to those underaged, the general media will soon be crawling with stories about how little Johnny, the light of his mother’s life, was sold vaping products laced with crack, drawn into a den of vice and reduced to a life that was solitary, poor, nasty, brutish and short.

    Let’s face it: Though GTS is not without merit, it is not going to be allowed to work in the way that it could, and it needs to be shelved. It is true that it is simply too risky to design policy initiatives when politicians are trawling for votes, as they currently are in the U.K.

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • Zimbabwe Aims for $60 Billion Tobacco Industry

    Zimbabwe Aims for $60 Billion Tobacco Industry

    Zimbabwe plans to create a $60 billion tobacco industry by 2028, according to The Herald.

    The government is currently working to increase processing and value addition of tobacco from 2 percent to more than 30 percent to boost earnings.

    Zimbabwe currently earns about $1 billion from its annual tobacco exports, which is 6 percent of the global market.

    “In terms of the value transformation strategy, we must tap into the value of our tobacco,” said Obert Jiri, permanent secretary for Lands, Agriculture, Fisheries, Water and Rural Development, noting that the tobacco produced is worth over $60 billion when fully processed across the value chain.

    “We understand that most of our tobacco is exported, and the strategy is to tap into that value chain. We are happy that some are doing cigars, some little value addition in terms of cigarette production. The strategy we have as a government is really to ensure that we encourage investments in proper value addition so that we don’t export our raw materials.”

    According to Kutsaga CEO Frank Magama, the board is breeding tobacco seeds for international markets. “We have trials that are happening in Italy, Brazil, China, and our varieties are also grown in China. The direction that we take from the government, in terms of breeding, is that we must make sure that we have quality products. We excel in tobacco, so our products are now found in the region where we are able to earn foreign currency for the country,” he said.

    The Kutsaga Tobacco Research Board recently introduced climate-smart tobacco varieties, enabling farmers to continuously have good harvests despite climate change and new pathogens.

    Zimbabwe’s plans are part of the government’s ambitious Tobacco Value Chain Transformation plan.

  • Kaival Revenues and Profits Up

    Kaival Revenues and Profits Up

    Photo: David

    Kaival Brands Innovations Group reported revenues of $3.2 million for the first quarter of fiscal year 2024 compared with $2.5 million in the same period of the prior fiscal year. Gross profit was approximately $1.2 million in the quarter, up from $500,000 gross profit for the first quarter of fiscal year 2023. The increases in revenues and gross profit was due primarily to a decrease in credits being issued to customers, according to the company.

    Nirajkumar Patel, who was recently appointed CEO at Kaival, assured investors that despite recent challenges, the company remains focused on preserving and improving shareholder value.

    “We have experienced a number of stalled starts related to the FDA’s [U.S. Food and Drug Administration] denial of Bidi Vapor’s premarket tobacco product application for Bidi Vapor’s ‘Classic’ tobacco-flavored Bidi Stick ENDS [electronic nicotine-delivery system] device, and we are navigating a number of transitions,” Patel said in a statement.

    Patel also noted the company is appealing the FDA decision on Bidi Stick.

    “However, we continue to believe there is tremendous value related to our international business as well as new, potential opportunities to monetize the extensive and valuable inhalation patent portfolio that we acquired from GoFire in May of last year.”

    According to Patel, the purchase of the portfolio marks the beginning of Kaival’s diversification efforts and move away from reliance on revenues from Bidi Sticks. “Our efforts to explore profitability of this portfolio are underway, and we are incredibly energized by the interest and revenue opportunities we believe could be available to us through this portfolio,” said Patel.

  • Harare to Hosts First WT Africa Conference

    Harare to Hosts First WT Africa Conference

    Zimbabwe will host Africa’s first World Tobacco Africa Conference and Expo May 15–16, reports The Sunday Mail. The conference is set to host over 2,000 senior tobacco professionals from across Africa.

    The conference is organized by Quartz Business Events and held in partnership with the Tobacco Industry and Marketing Board (TIMB).

    The event’s theme is “From Seed to Success: A New Era for African Leaf Tobacco.” The conference will serve as a platform for industry leaders to share knowledge, address challenges and discover innovative solutions to ensure the continued prosperity of the African tobacco industry, according to The Sunday Mail.

    “Zimbabwe has been afforded the opportunity to host the first-ever World Tobacco Africa Expo, and this will be an opportune time for the country to showcase a new business platform for the African leaf tobacco industry,” said Tapiwa Chimedza, TIMB head of business development. “As the host country, we will create a platform for discussion on a new era for African leaf tobacco.”

    “At least 2,000 senior and key professionals will take part in the program, which is a huge resource to tap from,” he said.

    “Hosting such a global event here in Harare brings with it more opportunities for our country,” he added.

    “The enthusiasm and the wealth of ideas shared with associations, merchants and growing groups alike have solidified our conviction that the inaugural World Tobacco Africa Conference is poised for great success,” said Tony Crinion, Quartz Business Events managing director, after a tour of local manufacturers and industry stakeholders in Harare.

    Zimbabwe is Africa’s largest tobacco producer, followed by Zambia, Tanzania, Malawi and Mozambique.

    For more information about the WT Africa conference, click here.

  • Plxsur Revenues Surpass $1 Billion

    Plxsur Revenues Surpass $1 Billion

    By Timothy S. Donahue

    That didn’t take very long. The global vaping company Plxsur reached its goal of reaching $1 billion in consolidated revenues from its partners in just two years. The company has now successfully partnered with 12 of the world’s leading vaping companies to form what may be the largest and fastest-growing group of independent vaping companies in the world. According to Nigel Hardy, CEO and founder of Plxsur, the company accomplished this with a focus on compliance, governance and reporting, with responsibility at its core.

    “We believe having a portfolio of multiple brands is crucial for building a successful reduced-risk product (RRP) business at scale. Our retail sales across the group reflect the impact of Plxsur, which supports adult smokers who have switched to vaping,” explains Hardy. “We have sold products to about 4 million consumers, with retail sales by value of units sold at $1.835 billion. Additionally, our three North Star owned brands, Salt, Allo, and Flavour Beast, are expected to generate retail sales of more than $400 million in 2024.”

    Plxsur also has 10 e-liquid manufacturing facilities in six different markets. With that comes the quality management systems to ensure the quality of the raw materials that are coming in and what’s going out. It’s not only about quality control (QC), but also about quality assurance. All e-liquids are manufactured in a minimum ISO 9001-certified facility. Plxsur’s QC program ensures that all products manufactured and distributed meet or exceed all regulatory and legislative requirements in the markets where the products are produced.

    ISO 9001 is an international standard specifying quality management system requirements. Organizations use it to demonstrate their ability to consistently provide products and services that meet customer and regulatory requirements. Plxsur only produces its brands of e-liquids. The company does not do third-party manufacturing because the company’s focus is on its products.

    Plxsur leadership says its partners have a combined market share representing an estimated 10 percent of the global $19.34 billion vaping market. Hardy said the company is targeting a 20 percent market share in the next five years. The companies include Hale Vaping (Ireland), UEG Holland (Netherlands), DampShop (Belgium), Pro Vape (Latvia), Puff Store (Italy), Nobacco (Greece), Ritchy Group (Czech Republic), Vape Empire (Malaysia), Pacific Smoke (Canada) and CK Complex (Poland).

    “The past two years have seen a huge amount of financial and operational progress for Plxsur, and we have grown to become the world’s largest and fastest-growing group of independent vaping companies with consolidated revenues of over $1 billion,” said Hardy.

    In 2021, Plxsur was founded by David Newns, Charlie Yates, and Nigel Hardy. The three entrepreneurs shared a vision for the vaping industry and discussed how they could work together to achieve their goals. They believed the key to success was respecting and supporting entrepreneurship while empowering local management teams. They planned to create a global network of independent vaping companies that were both the largest and the most responsible in the industry.

    Plxsur, under Hardy’s leadership, believes in improving the businesses it brings on board by focusing on three key aspects of business strategy: governance, compliance, and reporting. Compliance involves adhering to various rules and regulations in the countries and communities where Plxsur businesses operate. This includes regulatory, communication, and marketing compliance, as well as legal compliance related to finance and jurisdiction.

    “We’re at a very important and exciting stage in our journey. The companies in that group are not only the best at what they do in their respective markets, but importantly, they share our values.

    “They put the consumers first, think big, and take responsibility seriously. All our companies want to make a real difference in the lives of adult smokers by contributing to a smokeless society. We now have a presence in Europe, Asia, and North America, covering the full vaping value chain from manufacturing, wholesale, distribution, and direct-to-consumer, both online and through our global network of over 800 specialist vaping stores.”

    In 2023, group revenues increased 40 percent on the previous year to more than $1 billion, with an adjusted EBITDA of over $200 million. The outlook for the global vaping market is strong, and last year, Plxsur commissioned an independent research report that Hardy said is the “most comprehensive consumer study conducted on vaping to date”, using data from an online panel of over 30,000 consumers in six of Plxsur’s markets.

    “The opportunity available for RRP across our 12 markets is significant, and I am pleased that our Global Vaping Market Snapshot vindicates the belief that not only will this sector continue to grow at pace, but that vaping is quickly becoming the most popular form of RRP in the market, with adult smokers who switch to vaping likely to remain loyal by navigating the regulatory framework,” he explained. “Our team has established a center of excellence leading a program of capability development to ensure management teams at a local level of the skills to deliver sustained value growth.”

    Plxsur and its partners continue raising the bar as a responsible vaping group. All its companies have now committed to the six Plxsur standards (product compliance, manufacturing safety, responsible marketing, youth access, child protection and third-party product compliance) that address the biggest issues the vaping industry faces today. The company has also supported local teams across the group and guided companies in engaging with governments on policy development, particularly around preventing youth access.

    “We’re focused on migrating consumers from disposable vapes to rechargeable pod and open systems. This is a key priority for Plxsur and our companies are already delivering huge results. In Q3 of 2023, I’m delighted that our Italian business, Puff, successfully migrated many of their consumers to pod and open devices through its launch as an exclusive distributor of new-to-market pods and e-liquids,” said Hardy.  “To keep the momentum going, our portfolio companies have exciting plans to expand their range of pod systems in the first half of this year.”

    Unlike traditional business acquisitions, Hardy explained that the company’s partners are not selected based on their financial worth. Plxsur is highly selective in its choice of partners, and financial size is not the only factor determining whether a company is suitable to join the Plxsur team. Hardy cited the example of Pro Vape, a company headquartered in Riga, Latvia, which started its business in late 2016 and met all the necessary criteria to become a Plxsur partner.

    “The Baltic market is not particularly a huge market for vaping. What Pro Vape has is a significant presence in Europe,” said Hardy. “Only 40 percent of their business is domestic, and 60 percent is across the rest of Europe.”

    Plxsur has specific criteria that businesses must meet before partnering with them. Firstly, the company must be a leader in its channel, whether it is business-to-business or business-to-consumer, or a leading player in its market. Currently, all of Plxsur’s partners meet this benchmark. Secondly, having a healthy balance of company-owned brands within the portfolio is essential, with Plxsur aiming for at least 50 percent of its revenues to be driven by such brands. Thirdly, the most crucial criterion is people.

    “Our ability to retain our unique entrepreneurial spirit while growing at a rapid pace has been pivotal to our success over the past two years,” said Hardy. “We remain committed to achieving long-term value for all stakeholders, with responsibility at the core of everything we do. Supported by several tailwinds, including evolving market dynamics and customer preferences, we remain confident in Plxsur’s medium-term prospects and our ability to continue our trajectory to promote responsibility in the sector, achieve our target of over $15 billion in revenues by 2033.”

    To achieve the lofty goal, Hardy said Plxsur is well placed to capitalize on the growing trend of vaping across the globe, unlock future value, and play a leading role in shaping the sector’s future on a platform of responsibility. He said Plxsur excels at creating a distinctive, innovative business leadership environment while growing at a pace pivotal to the company’s success over the past two years.

    “We continue to see increasing regulation around vaping, particularly disposables, flavors, and marketing,” said Hardy. “At Plxsur, we see regulation as a force for good and encourage appropriate regulation and enforcement to tackle illicit and irresponsible trading behaviors. Last year, we submitted Plxsur’s response to the UK government’s open consultation on creating a smoke-free generation, and we continue to engage with regulators worldwide.

    “This engagement with responsibility at the core of everything we do places Plxsur in a prime position to continue to grow, lead the industry, and shape the future of vaping.”