Blog - Tobacco Reporter

PMI Holds Virtual Annual Meeting

Philip Morris International held its 2023 annual meeting of shareholders. Andre Calantzopoulos, executive chairman of the board, addressed shareholders and answered questions. Jacek Olczak, CEO, gave a business presentation, which included an overview of PMI’s strong performance in 2022 and encouraging start to 2023; robust business fundamentals and rapid progress on its smoke-free transformation; excellent momentum in the heat-not-burn and nicotine pouch categories; further progress on sustainability, with continued recognition by leading external stakeholders; and commitment to rewarding shareholders over time.

“Our smoke-free transformation continued apace in 2022, with the growth of smoke-free products to nearly one-third of total net revenues for the year and the achievement of two important milestones—the acquisition of Swedish Match and the agreement to gain the full rights to commercialize IQOS in the U.S. in April 2024,” said Olczak.

“As a global smoke-free champion with leading brands IQOS and Zyn, we are well positioned to further accelerate our transformation in the years to come to the benefit of the company, our shareholders, other stakeholders and public health,” he said.

Approximately 81 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 12 nominees for director; approved, on an advisory basis, the compensation of named executive officers; approved, on an advisory basis, a one-year interval for the vote on the compensation of named executive officers; ratified the selection of PricewaterhouseCoopers SA as independent auditors; and voted against the shareholder proposal. Final voting results will be included in a Form 8-K that PMI will file with the SEC in the coming days.

An archived copy of the webcast of the meeting will be available for approximately one year from the date of the meeting. The presentation slides and script will be available as well.

May 4, 2023

CVA Says Flavors Not Cause of Youth Vaping

Recent claims by health advocates blaming flavored e-cigarettes for the rise in youth vaping are unfounded and lack proper context, according to the Canadian Vaping Association (CVA). The real issue, according to the advocacy group, is the lack of enforcement of the illicit trade and individuals buying for minors.

“The CVA stands by its position that flavors are not the cause of youth vaping,” the CVA wrote in a statement. “The problem is the sale of vaping products to minors through the black market and straw sale. The industry has taken a proactive approach by implementing stringent age verification measures for our membership and [is] actively working with law enforcement to prevent such sales.”

“I will be reaching out to all the health advocacy groups to extend an invitation to form a working group. Our intention is to work together to address these complex issues and find practical and enforceable solutions. Canadians deserve to have all stakeholders working together for the betterment of public health,” said Darryl Tempest, government relations counsel to the CVA board.

The CVA believes that policies must be evidence based and consider the interests of all stakeholders. The CVA encourages health organizations to work with industry leaders and regulatory bodies to find common sense policies that will protect youth while supporting the health outcomes of adults battling addiction.

May 3, 2023

France Considers Ban on Disposables

The French government may ban disposable electronic cigarettes by the end of this year, Health Minister Francois Braun said on May 3, according to Barron’s.

“I’m in favor of a ban,” Braun told broadcaster France Inter, adding that the devices “lead some of our young people toward using tobacco.”

“Smoking is a scourge; it kills 75,000 people per year” in France, he said.

Although President Emmanuel Macron’s government has no majority in Parliament, ministers would “work with lawmakers” to reach a deal on a ban, Braun said.

It could be enacted “before the end of this year,” he added.

The ban may form part of a new anti-smoking plan the health ministry is working on for the coming five years.

Sweet-flavored and fruit-flavored one-use electronic cigarettes—known as “puffs” in France—are sold in brightly colored packaging costing an estimated €8 ($8.83) to €12 for 500 puffs.

May 3, 2023

Reynolds Warns Shops to Stop Selling Flavors

R.J. Reynolds has threatened to sue several small vape shops in New Jersey and Alabama if they continue selling favored vaping products.

Letters sent by Reynolds and obtained by STAT warn the retailers that failure to comply could result in “legal action and the costs, attorneys’ fees and adverse publicity.”

The letters also warn that the shops are violating local laws regulating the sale of flavored tobacco.

The New Jersey letter copied the county prosecutor where the vape shop is located in an apparent attempt to notify the local authorities of the violation.

The letters are the latest step in Reynolds’ campaign to force a crackdown on illegal vaping products.

In the article, Clive Bates, a tobacco harm reduction advocate, criticized Reynolds.

“I do not think Reynolds should be hounding vape shops for selling lifesaving products to their regular customers,” Bates wrote in an email to STAT. “It should not be picking on little guys but pressing federal bureaucracies to do their job and do it better.”

In February, Reynolds affiliate RAI Services Co. submitted a citizen petition asking the U.S. Food and Drug Administration to adopt a new enforcement policy directed at flavored “illegally marketed disposable electronic nicotine-delivery system” products.

The petition was filed on Feb. 6 and posted by the FDA to Regulations.gov for public comment on Feb. 8.

May 3, 2023

Turning Point Releases First-Quarter Results

Turning Point Brands announced financial results for the first quarter ended March 31, 2023.

Total consolidated net sales increased 0.1 percent to $101 million from the first quarter of 2022. Zig-Zag product net sales decreased by 8.3 percent from the previous year due to anticipated reduction of trade inventory during the quarter. Stoker’s product net sales increased by 6.2 percent. Creative Distribution Solutions net sales increased by 8 percent.

Gross profit decreased 6.1 percent to $48.6 million, and net income decreased 30.9 percent to $7.6 million. Adjusted net income decreased 18.1 percent to $11.9 million, and adjusted EBITDA decreased 17.7 percent to $20.8 million.

“We are encouraged by our first-quarter operating results, which fell within our expectations,” said Turning Point Brands President and CEO Graham Purdy in a statement. “The Zig-Zag segment had an anticipated inventory reduction with certain wholesale customers but saw strong performance from the alternative channel and the rollout of Clipper lighters. With the adjustment in trade inventory, Zig-Zag is now well positioned to demonstrate growth for the balance of the year.

“Stoker’s had a solid quarter of performance as the value proposition of Stoker’s MST and looseleaf led to another quarter of market share gains. We opportunistically purchased another $13.9 million in aggregate principal amount of our convertible notes during the first quarter while maintaining a strong cash balance. We are currently maintaining our annual guidance as we focus on executing against our plan for the balance of the year.”

May 3, 2023

FDA to Finish Reviewing PMTAs by End of Year

The U.S. Food and Drug Administration says it is on track to finish reviewing premarket tobacco product applications (PMTAs) for the most prevalent e-cigarettes by the end of the year, reports CSP.

The FDA has reviewed 52 percent of covered applications as of March 31. Covered applications are for new tobacco products on the market as of Aug. 8, 2016, with a PMTA filed by Sept. 9, 2020, and sold under the brands Juul, Vuse, Njoy, Logic, Blu, Smok, Suorin or Puff Bar and reach 2 percent or more of total retail sales volume per NielsenIQ reports, according to CSP.

Based on the latest status report, the FDA plans to have 53 percent of covered applications acted on by June 30, 55 percent of covered applications acted on by Sept. 30 and 100 percent of covered applications acted on by Dec. 31.

The court-ordered deadline for FDA review of PMTAs was Sept. 9, 2021, but the agency did not meet that deadline and now has to file regular status reports on progress. The next status report is due by July 24.

May 3, 2023

Philippines: Seized Cigarettes Destroyed

Seized fake cigarettes, raw materials and cigarette manufacturing machines were destroyed in a fire that affected three warehouses in Porac, Pampanga, Philippines, reports The Philippine Star. The items were worth about PHP4.8 billion ($86.8 million). The fire burned for 15 hours despite efforts from firefighters.

The Bureau of Customs and the Bureau of Internal Revenue had seized the destroyed items in raids across the country over the past several years. The warehouses were used as storage for what would later be used as evidence against suspects charged in court.

The warehouses are owned by Digama Waste Management Services and Greenleaf 88 Nonhazardous Waste Disposal.

May 3, 2023

Pakistan Expects Tax Hike to Boost Revenue

Pakistan’s government expects to collect PKR60 billion ($211.42 million) in additional revenue after increasing the federal excise duty on tobacco products, reports the Pakistan Observer.

The government dismissed concerns about black market sales.

The multinational tobacco industry has incorrectly claimed that illicit cigarettes make up 40 percent of the market, according to the government, which cited independent studies showing that illicit products only account for 18 percent of the market.

According to the Pakistan Observer, the industry is overstating the volume of illegal sales to put pressure on the government following the tax increase.

The implementation of a track-and-trace system has helped decrease illicit products, according to Malik Imran, country head of the Campaign for Tobacco-Free Kids. “Tentatively, we can say the volume is now negligible,” he said.

May 2, 2023

Zimbabwe Tobacco Sales Bring in Millions

Zimbabwe’s tobacco revenue has reached $258 million, 19 percent more than in the comparable 2022 period, reports NewsDay.

“Income/revenue to farmers increased by 19 percent from $216 million to $258 million this year owing to the tobacco value chain transformation strategy, which is currently in motion, and this is likely to increase the country’s chances of achieving the objectives of V30,” said John Basera, permanent secretary of Lands, Agriculture, Fisheries, Water and Rural Resettlement, referring to the government’s strategy to reduce poverty. “Tobacco output grew marginally by 1 percent from 211,100,219 kg produced during the 2020/2021 production season to 212,711,370 kg in the 2021/2022 season.”

Tobacco production is expected to increase by 9 percent from 212,703 tons.

Total deliveries were up by 18 percent to 86.14 million kg compared to 72.21 million kg in the same period last year while the average price firmed by 1 percent from $2.97 per kilogram in 2022 to $3 per kilogram in the same period this year.

May 2, 2023

Ban on Nonprescription Vape Imports

The Australian government announced that it will ban the importation of all nonprescription vaping products—including those that do not contain nicotine. The new legislation is billed as containing the most significant tobacco and vaping control measures in the country in a decade.

The announcement today clarifies last week’s announcement of a crackdown on illegal vaping. This time, the government said it would now include a total ban on nonprescription vaping products.

To tackle youth vaping, minimum quality standards for vapes will be introduced, including restricting flavors, colors and other ingredients. Vape products will require pharmaceutical-like packaging, and the allowed nicotine concentrations and volumes will be reduced.

All single-use, disposable vapes will be banned, according to The Guardian.

Speaking on ABC’s Q&A on Monday night, Australia’s health minister, Mark Butler, said that the tobacco industry was trying to create a “new generation of nicotine addicts” through vaping and that he was “determined to stamp out this public health menace.”

The move follows an inquiry into vaping reforms led by the drugs regulator, the Therapeutic Goods Administration, with submissions from health professional bodies, public health associations, individual health professionals and university researchers that overwhelmingly support tightening border controls.

Many public health experts and bodies suggested to the inquiry that border controls should also be placed on non-nicotine vaping products to prevent mislabeling and exploitation of import loopholes. It follows manufacturers falsely labeling products containing nicotine as “nicotine-free” to get around import restrictions, leaving children easily able to buy vapes, often unknowingly inhaling nicotine and becoming addicted.

The government will also work with states and territories to end vape sales in convenience stores and other retailers. Prescriptions for nicotine vaping products for smokers trying to quit tobacco will be made easier to obtain, with stronger standards around the vaping products that can be bought in pharmacies so people can be assured of the content of the products.

Butler said he will expand on the reforms in a speech to the National Press Club on Tuesday, where he is expected to say vaping has become “the biggest loophole in Australian history” and announce that the following Tuesday’s federal budget will include AUD234 million ($156.22 million) in funding for tobacco and vaping reforms, the biggest since plain packaging of tobacco products was introduced.

May 2, 2023