Blog - Tobacco Reporter

Illegal Vapes Continue Flooding U.S. Ports

Thousands of unauthorized flavored vapes continue entering the U.S. from China, reports the Los Angeles Times, citing government and industry data.

More than 11,500 unique vaping products are being sold in U.S. stores, up 27 percent from 9,000 products in June, according to Circana data reviewed by the Associated Press. The products generated $3.2 billion in the first 11 months of 2023. Nearly all the new products are single-use e-cigarettes.

In December, federal agents seized more than 1.4 million illegal e-cigarettes, valued at $18 million, at Los Angeles International Airport. The illicit vapes were mislabeled as shoes, toys and other items.

While the number of confiscations has been growing, they represent only a fraction of the unauthorized products slipping through.

The FDA has authorized a handful of e-cigarettes for adult smokers and is still reviewing products from several major companies, including former market leader Juul. Regulators consider nearly all other e-cigarettes to be illegal.

The authorized tobacco-flavored products are not popular, however. Their combined sales were just $174 million, or 2.4 percent of the vaping marketplace, according to Circana.

“Nobody wants them,” a Michigan shop owner was quoted as saying. “If people wanted them, they’d be on the shelves, and they’re not.”

January 5, 2024

Altria Well-Placed for 2024: Zacks

Despite changing consumer preferences and macroeconomic uncertainties, Altria Group is well positioned to navigate the market’s complexities in 2024, according to Zacks Investment Research.

According to the financial firm, Altria Group owes its resilience in part to its strong pricing power, which allows the tobacco manufacturer to offset lower shipment volumes with higher earnings per pack.

Altria Group’s investments in reduced-risk products, such as e-cigarettes and nicotine pouches, meanwhile, are enabling the company to capitalize on new market trends.

What’s more, the acquisition of Njoy has given Altria Group access to some of the few vapor products that have been authorized for sale on the U.S. market by the Food and Drug Administration.

Altria Group expects U.S. smoke-free volumes to grow by at least 35 percent through 2028 from the 2022 level of 800 million units.

January 5, 2024

Cash to ‘Marginalized’ Philippine Growers

The Philippines’ National Tobacco Board (NTA) has allocated about PHP17 million ($306,077) to assist marginalized tobacco growers in Ilocos Norte, reports the Philippine New Agency.

At least 160 beneficiaries from the towns of Pinili, Batac and Badoc received their respective PHP6,000 grant on Thursday. The next distribution will continue until all the target recipients have received their cash assistance.

The grant targets growers who are tilling lots of 0.5 hectare and below to reduce their production cost. The assistance will cover the cost of fertilizers, crop protection agents, seedlings, suckercides, land preparation, gas and oil, fuelwood and labor.

Tobacco-growing provinces and municipalities in the Philippines collect their share from tobacco excise tax collections based on the volume of leaves produced by their local tobacco growers.

The NTA also provides assistance for rice production, improved tobacco seedlings production and beef cattle production.

January 5, 2024

Rain Sparks Planting Frenzy in Zimbabwe

Recent rains have raised hopes that farmers will be able to meet or surpass Zimbabwe’s target of planting148,500 hectares of tobacco for the 2023-2024 growing season, reports The Herald.

Statistics released by the Tobacco Industry and Marketing Board (TIMB) revealed that by Dec. 15, growers had planted 55,170 hectares of tobacco, 27 percent less than in the previous year. Zimbabwe has been suffered from drought at the start of the growing season.

The return of rains has sparked a planting frenzy, however, making it likely that the crop’s hectarages will increase significantly over the coming days.

Zimbabwe Tobacco Growers Association Chairman George Seremwe expressed confidence that the drop in planted area will be reversed.

Zimbabwe Tobacco Association CEO Rodney Ambrose said the recent rains have also boosted the already established crops that were starting to show signs of moisture stress.

January 5, 2024

Cytisine More Effective than NRT: Study

Cytisine, a low-cost, generic stop-smoking aid that has been used in eastern Europe since the 1960s, increases the chances of successful smoking cessation by more than two-fold compared with placebo and may be more effective than nicotine replacement therapy, according to a new study published in Addiction. The cessation tool reportedly has a benign safety profile, with no evidence of serious safety concerns.

Cytisine is a plant-based compound that eases smoking withdrawal symptoms. It was first synthesized in Bulgaria in 1964 as Tabex and later spread to other countries in eastern Europe and Asia, where it is still marketed. In 2017, the Polish pharmaceutical company Aflofarm began selling it as Desmoxan, a prescription-only medicine, and Canada approved it as an over-the-counter natural health product, Cravv.

This study pooled the results of eight randomized controlled trials comparing cytisine with placebo, with nearly 6,000 patients. The combined results showed that cytisine increases the chances of successful smoking cessation by more than twofold compared with placebo.

The study also looked at two randomized controlled trials comparing cytisine with nicotine replacement therapy, with modest results in favor of cytisine, and three trials comparing cytisine with varenicline, without a clear benefit for cytisine.

“Our study adds to the evidence that cytisine is an effective and inexpensive stop-smoking aid,” said lead author Omar De Santi in a statement. “It could be very useful in reducing smoking in low- and middle-income countries where cost-effective smoking cessation drugs are urgently needed.”

Cytisine is currently not licensed or marketed in most countries outside of central and eastern Europe, making it unavailable in most of the world. At the end of January, cytisine pills are due to become available in the U.K., according to National World.

January 5, 2024

Research Board Warns for Crop Disease

Zimbabwe’s Tobacco Research Board (TRB) has advised tobacco growers to watch for crop diseases in the wake of heavy rains, reports The Herald.

When not properly managed, pests and diseases can drastically reduce yield and quality of tobacco. There are three key foliar diseases that are of major concern—angular leaf spot, frogeye leaf spot and Alternaria leaf spot. However, the TRB has established that a group of fungicides collectively known as strobilurins can be effective against both frogeye and Alternaria leaf spot diseases.

In addition to the risk of crop disease, the heavy rains are presenting extra challenges, such as weed control and ridge maintenance.

“One of the major challenges is leaching, a condition where elements such as nitrogen and potassium are washed beyond the root zone, making it impossible for the crop to access them, and deficiency symptoms may develop,” said George Seremwe, chairperson of the Zimbabwe Tobacco Growers Association.

“Incessant rainfall patterns tend to lead to excessive soil moisture content, which promotes unlimited nutrient loss due to leaching, resulting in poor quality leaf,” said Victor Mariranyika, president of the Tobacco Farmers Union Trust. “It also disturbs other farm operations, thereby compromising profitability, with human resources and machinery possibly failing to cope.”

Over 19,000 hectares have been put under irrigated tobacco crop in Zimbabwe for the 2023–2024 summer crop season, according to The Sunday Mail. This represents a 22 percent decline from the previous year.

Statistics from the Tobacco Industry and Marketing Board (TIMB) showed that 19,202 ha have been planted compared to the previous year’s 18,901 ha.

Currently, 112,906 growers have registered with the TIMB.

Tobacco is Zimbabwe’s largest agricultural export and second-largest single commodity export after gold.

January 4, 2024

ISO for Ispire Malaysia

Ispire Technology received ISO9001: 2015 Quality Management System, ISO14001: 2015 Environmental Management System and ISO13485: 2016 Quality Management System Medical Device certifications for its 31,000-square-foot manufacturing facility in Malaysia.

Ispire offers a complete line of vape cartridges, pod systems, disposables and batteries.

“Earning three ISO certifications at our Malaysian manufacturing facility is a testament to our team’s ability to quickly bring the facility up to some of the highest standards in the industry, allowing us to expand our gross margins, geopolitically de-risk our production and service other businesses who need manufacturing for their vape hardware,” said Ispire Technology Co-CEO Michael Wang in a statement.

“Currently, our Malaysian manufacturing facility has already received initial orders and is quickly moving into production readiness. As the facility ramps up production, our gross margin is expected to increase due to the lack of a tariff when assembling products in Malaysia and then shipping them to the U.S.

“This is in contrast to the 25 percent tariff incurred when shipping finished products from China. Additionally, by owning the factory, we also expect to be able to realize a profit on product assembly, which was formerly outsourced to a third party. We anticipate that these efficiency improvements will help drive gross-margin growth across the company’s full array of high-quality vaping products.”

January 4, 2024

Liquid Makers Get Another Shot at PTMA

Two e-liquid companies will be able to resubmit their marketing applications to the U.S. Food and Drug Administration following a court ruling, reports Bloomberg Law.

On Jan. 3, the U.S. Court of Appeals for the Fifth Circuit ruled that the FDA acted “arbitrarily and capriciously” in rejecting the premarket tobacco product applications (PMTA) of Wages and White Lion Investments, doing business as Triton Distribution, and Vapetasia for approval to sell their products in the United States.

The agency “sent manufacturers of flavored e-cigarette products on a wild goose chase,” telling them what would be needed to approve their products, and then denying all applications, the court said in an opinion by Judge Andrew S. Oldham. The FDA “never gave petitioners fair notice that they needed to conduct long-term studies on their specific flavored products,” Oldham said.

In a dissenting opinion, Judge Catharina Haynes said the agency “properly fulfilled its statutory mandate by considering the relevant portions of Petitioners’ PMTAs and coming to a reasonable conclusion that marketing Petitioners’ products is not appropriate for public health.”

January 3, 2024

RAI Names VP Strategy and Transformation

Reynolds American Inc. appointed Wade Huckabee to the role of senior vice president of strategy and transformation, the company announced on its website. In this role, Huckabee will be responsible for the development and realization of the U.S. strategy and serve on the Reynolds American Leadership Team, effective Jan. 1, 2024.

Huckabee joined the Reynolds organization in April 2016 as vice president of strategy and planning, where he oversaw development of the function, including building stronger analytical capabilities and retail insights. He was named senior vice president of combustibles in December 2018 and in 2019 assumed the role of general manager of the Reynolds organization’s traditional categories.

Huckabee was appointed global head of revenue growth in 2022, where he was responsible for accelerating the BAT Group’s sales and category objectives in priority markets around the world. In 2023, he became group head of customer and commercial, adding the development of global trade marketing to his accountabilities.

Prior to joining the Reynolds organization, his extensive experience in other consumer goods categories included roles in strategy and investor relations at Hanesbrands and progressive leadership roles in finance, revenue and margin management, and strategic accounts at Keurig Dr Pepper.

In his new role, Huckabee will lead and oversee Reynolds’ strategy, encompassing key pillars related to commercial, organizational and regulatory strategies. A native Texan, Huckabee has Bachelor of Arts degrees in history and English from the University of Texas at Austin and a Master of Business Administration degree in finance from Pepperdine University in Malibu, California.

January 3, 2024

Difficult Dynamics

The oriental leaf business struggles with adverse weather conditions and farmer attrition.

By Stefanie Rossel

“Complex” is probably the word that best describes the prevailing situation for classical oriental tobacco. In 2023, the sector again struggled with adverse weather conditions and farmer retention.

“A shared challenge faced by all countries in the current season is the impact of adverse weather conditions,” comments Stelios Grigoriadis, regional director of Europe at Alliance One International (AOI).

“The crop encountered difficulties early on with an extended rainy season, reducing transplanted acreage. Subsequently, an exceptionally dry and hot summer exacerbated the situation, resulting in volume losses for the industry ranging from 10 percent to 30 percent in specific countries. These weather-related challenges have been a common denominator in the diminished crop volumes across the region.”

The current crop volumes in the four principal cultivating countries for classical oriental tobacco, comprised of Turkiye, Greece, Bulgaria and North Macedonia, will likely to be down, says Grigoriadis, marking a departure from the trends observed in the preceding two years to three years. “This decline is attributed to different factors influencing each country’s production landscape.”

AOI emphasizes that its production estimates provide only a snapshot of the current expectations, adding that external variables may play a significant role in shaping the results. The company expects market leader Turkiye to produce 50,400 tons this season compared with 51,320 tons in 2022 and more than 55,000 tons under typical weather conditions.

AOI anticipates 37,500 tons of the Izmir variety, basically flat from the 37,450 tons recorded in the previous year. It projects the Samsun crop to decline from 3,575 tons in 2022 to 3,000 tons in 2023.

Basma dropped from 1,645 tons in the 2022 crop to 1,400 tons in the current season while Turkish Prilep increased from 850 tons in 2022 to 2,250 tons in 2023. East Izmir declined from 7,800 tons in 2022 to 6,250 tons in the current season.

Weather conditions played a crucial role in determining the quality of the different varieties. Izmir experienced a negative impact on quality compared to previous years, primarily due to the hot and dry summer conditions. “This reflects a deviation from the standards observed in earlier crops,” says Grigoriadis.

By contrast, the quality of Samsun and Basma was positively impacted. “The warm and favorable weather conditions during the curing period have contributed to an improvement in the quality of these varieties,” observes Grigoriadis. “This positive influence underscores the importance of climate factors during critical stages of cultivation.”

The East Izmir variety remained stable in terms of quality, according to Grigoriadis.

Lack of Labor

Projections for the 2023 classical oriental crop in Greece vary. Dora Gleoudis, managing director of Greek leaf tobacco exporter Nikos Gleoudis Kavex, expects it to amount to 6,500 tons, comprising 4,300 tons of Basma and 2,200 tons of Katerini. This compares to a total crop of 8,000 tons in the 2022 season. “The quantity reduction is due to labor shortages,” says Gleoudis. “However, the crop quality in all areas is higher compared to last year’s, favored by weather conditions.”

Nikos Tzoumas, managing director of Missirian, anticipates a crop of 5,700 tons divided between 3,700 tons of Basma and 2,000 tons of Katerini. “The Greek oriental crop decreased overall by almost 30 percent,” he says. “The reasons for this decrease, in sequence of importance, are abandonment of cultivation, absence of external workforce and low field yields due to dry weather.”

The Katerini crop volume dropped by 35 percent, according to Tzoumas. “Eighty percent of this decrease was due to less cultivated land—that is, farmers who abandoned cultivation and farmers who decreased their cultivated land due to absence of workers—and 20 percent due [to] lower leaf yield following dry weather conditions,” he says. “Basma production decreased by 25 percent, caused mainly by farmers who abandoned cultivation.”

Tzoumas agrees that the quality of this year’s crop is very good. “Transplanting was accomplished under rainy conditions,” he says. “Later in the season, the extreme heat wave during July and the total absence of rainfall for four months stressed the plants and resulted in small, ripe and bodied leaves.”

Bulgaria also experienced a significant reduction in volume. According to AOI, the country is expected to harvest approximately 3,200 tons of classical oriental tobacco in 2023. Like Greece, Bulgaria has struggled with farmer attrition and unfavorable weather conditions. “The attrition of farmers raises concerns about the sustainability and resilience of the tobacco industry in these countries,” says Grigoriadis.

Up and Coming

North Macedonia appears to be a rising star among oriental-producing countries. Although its volume is projected to reach 16,000 tons in 2023, down from 21,000 tons in 2022, its farmer base remains committed. The number of growers cultivating Prilep has remained relatively stable in recent years. Yaka volumes, meanwhile, have declined to 150 tons this season from 248 tons in 2022.

Hot and arid conditions during summer in Prilep, the center of North Macedonian tobacco growing, significantly reduced the crop quantity. However, the abundant sunshine also positively impacted the quality of the Prilep crop, according to Grigoriadis. “Particularly in the middle and upper harvests, the overall quality of this crop can be characterized as above average.”

Rising Production Costs

In addition to the already mentioned challenges, oriental tobacco growers have had to cope with the still-simmering Covid-19 pandemic, the Russia-Ukraine conflict and the escalation of hostilities in the Middle East. According to Gleoudis, the war in Ukraine has dramatically increased the prices of growers’ inputs as well as labor costs. On top of that, rising prices for other crops, such as corn or cotton, have prompted some growers to abandon the golden leaf. Tzoumas notes that the war in Ukraine and the subsequent economic sanctions against Russia have affected exports to Russian manufacturers.

Tobacco farmers in North Macedonia, meanwhile, have been struggling with continuously rising labor expenses, according to Grigoriadis. “This is a result of both the government-mandated annual increase in the minimum wage and a labor shortage stemming from increased population migration,” he explains.

Turkiye, too, copes with the fallout from these crises. High inflation coupled with uncertainties in the pricing of crop inputs such as fuel, fertilizer and chemicals has created an environment of uncertainty. “The uncertain pricing of other crops has led some farmers to switch crops in the short term, disrupting planning and creating inefficiencies in the production of alternative crops,” says Grigoriadis.

“This, in turn, results in fluctuations in farmer income, further increasing the challenges faced by those in the oriental sector. The uncertain and volatile conditions in the wake of these crises not only impact the financial aspects for farmers but also disrupt long-term planning. The uncertainty in input pricing and the unpredictability of crop prices create challenges in decision-making, affecting the overall efficiency of tobacco production.”

Still in Undersupply

While there have been shortages in all tobacco varieties, buyers of classical oriental tobacco, in particular, have been suffering from undersupply over the past two years. A return to balance in supply and demand is possible but depends on several factors, according to Grigoriadis.

The challenges posed by weather-related uncertainties may require growers to adjust their agricultural practices and embrace new technologies along with risk mitigation strategies. “Collaborative efforts among stakeholders, including farmers, state institutions and industry players may also contribute to a more resilient and sustainable supply chain for classical oriental varieties,” says Grigoriadis.

“Supply and demand for oriental tobaccos are and will remain unbalanced,” predicts Gleoudis. “Regretfully, options of mechanizing the oriental tobacco crop have not proven successful.” She is referring to the HMO oriental tobacco harvesting machine developed by VIT and Philip Morris International that was trialed in Greece in the summer of 2020 to reduce farmers’ reliance on manual labor.

“The opportunity to make the oriental tobacco cultivation a sustainable and mechanized crop was lost five years ago when the buyers did not embrace the HMO and the tobacco which was produced as such,” says Tzoumas. “Ten years of hard work by many individuals, five versions of improved HMO models, a new pure Basma seed with increased field yields registered in Greece and many young farmers with enthusiasm were all gone! At that time, even the farmers were ready to invest as they had understood sustainability as a tool for security and balance for their product and their life.”

His forecast for the Greek oriental crop in 2024 is therefore pessimistic. “A further decrease in production is projected to happen in the 2024 crop,” says Tzoumas. “Farmers will keep on shifting from manual to mechanized crops, missing the work force needed for oriental tobacco, and to food crops, with the latter being in higher demand.” Aggravating the situation, the European Union’s Common Agricultural Policy 2023–2027 significantly reduced the funds allocated to tobacco growers by adopting a flat rate per hectare, which is not in the favor of small holdings common in oriental tobacco farming.

Gleoudis expects Greek and Bulgarian oriental production to remain stable in 2024. “Depending on weather conditions, North Macedonia could increase its production back to 22,000 tons.”

Grigoriadis shares this prognosis for North Macedonia. “This optimistic estimate emphasizes the significance of weather conditions in determining the success of the crop,” he says. “It also indicates a potential for North Macedonia to maximize its production capacity, provided that external factors align favorably. However, it is essential to remain attentive to potential challenges and fluctuations in supply/demand dynamics that may influence the actual outcome.”

Given favorable weather conditions, Turkiye’s 2024 oriental crop could increase by between 5 percent and 10 percent, according to Grigoriadis. “The competitiveness of oriental tobacco against other rival crops and the careful management of production costs are key considerations in shaping the final outcome.”

Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 2, 2024