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  • Gold Leaf Assets Seized

    Gold Leaf Assets Seized

    Photo: Comugnero Silvana

    The South African Revenue Service (SARS) on Aug. 26 took charge of all assets belonging to the Gold Leaf Tobacco Co. and those of its directors following a probe into tax evasion.

    According to News24, SARS investigators believe they have evidence that GLTC was involved in in money laundering and may owe up to ZAR3 billion ($177.7 million) in undeclared taxes.

    Fearing that GLTC’s assets alone may not cover its possible fiscal debts, the SARS targeted the assets of the assets of GLTC directors Simon Rudland and Ebrahim Adamjee.

    Yusuf Abramjee, the founder Tax Justice SA, described the development as a “huge breakthrough in the battle against the illicit cigarette trade.”

    “For over a decade, GLTC have been the prime suspects as South Africa’s illegal cigarette trade has grown into a national menace of devastating proportions,” he said.

    Rudland and Adamjee told the tax inquiry they had done nothing wrong and declared all GLTC’s taxes to SARS.

    The South African press has described Rudland as an “oligarch” associated with Zimbabwean President Emmerson Mnangagwa. “The Rudlands consistently make the news as members of the powerful political and economic elite in Zimbabwe, propping up [Zimbabwe’s governing party] Zanu-PF,” wrote The Daily Maverick.

  • Court Upholds Public Housing Smoking Ban

    Court Upholds Public Housing Smoking Ban

    Photo: stockelements

    The U.S. Department of Housing and Urban Development (HUD) is entitled to ban smoking in federally subsidized public housing, an appeals court ruled on Aug. 25, reports Reuters.

    The D.C. Circuit Court of Appeals decided that the HUD properly enacted a 2016 rule requiring state and local public housing agencies to ban cigarettes, cigars and pipes inside housing units and indoor common spaces, and outside within 25 feet of those areas.

    Six tenants and a smokers’ rights group challenged the ban, saying it improperly invaded their privacy and violated due process by preventing them from engaging in lawful activity—using tobacco—inside the home.

    But Chief Judge Sri Srinivasan said HUD provided “considerable” evidence that the rule helped protect residents against the health risks of secondhand smoke, prevent fires and reduce property maintenance costs. The HUD, he said, did not act arbitrarily and capriciously in promulgating the rule.

    Srinivasan also rejected a claim that the ban improperly restricted how the government spends money, violating a provision of the U.S. Constitution governing federal spending.

    The plaintiffs plan an appeal, arguing that the case involves significant issues involving federalism and whether Congress actually empowered HUD to ban smoking.

    Srinivasan’s decision in NYC CLASH Inc et al v Fudge, D.C. Circuit Court of Appeals, No. 20-5126 upheld a March 2020 lower court ruling.

  • Zambia Expects $92 Million From Tobacco

    Zambia Expects $92 Million From Tobacco

    Photo: Taco Tuinstra

    Zambia expects to increase its tobacco harvest by a quarter and generate $92 million from leaf sales at the close of the marketing season in September, reports Farmers Review Africa.

    By Aug. 12, the country’s tobacco growers had sold 35 million kg of leaf through the approval sales floors against projected sales of 33 million kg. Flue-cured Virginia accounted for 27 million kg and burley represented 6 million kg of the leaf sales.

    Agriculture Minister Reuben Mtolo told the International Tobacco Growers Association’s Africa Congress in Lusaka on Aug. 24 that the sector had performed well during the season despite various headwinds coupled with low investment.

    He said the government is committed to creating an investment-friendly environment.

    “The government is now in the process of enacting a new legal framework for the industry that will bring about effective regulation and foresee improved private stakeholder participation across the tobacco value chain,” said Mtolo.

    Zambia’s eighth national development plan emphasizes crop diversification and increasing profitability among all actors within the value chain.

  • STG’s Quarterly Sales Down in ‘Difficult’ Year

    STG’s Quarterly Sales Down in ‘Difficult’ Year

    Photo: STG

    Scandinavian Tobacco Group’s (STG) net sales and EBITDA declined 2 percent and 15 percent, respectively, for the second quarter of 2022 against a strong second quarter last year. The company cited lower-than-expected productivity in its supply chain, resulting in lower production volumes and higher costs. While anticipating improvements in the second half of the year, STG expects the delay to impact its full-year net sales and costs negatively.

    According to STG, the level of the production backlog was almost DKK150 million ($20.12 million) by the end of July. “However, as the improvements kick in combined with pricing initiatives across the product categories and easier year-on-year comparisons, we expect to return to EBITDA growth in the second half of the year,” the company wrote in a statement.

    Niels Frederiksen

    “2022 has turned out to be a difficult year for Scandinavian Tobacco Group, and we have had to adjust our full-year expectation for organic EBITDA growth,” said STG CEO Niels Frederiksen. “This development is disappointing and is primarily driven by temporary challenges in our supply chain and to a lesser extent by more cautious consumer behavior especially in the important U.S. handmade cigar market.

    “Still, we maintain our financial expectations of delivering strong cash flows and positive EPS growth for 2022, and we continue to implement our Rolling Toward 2025 strategy. The acquisition of Room101 as well as the continued expansion of our retail footprint in the U.S. are good examples of this. Overall, we remain confident in the strength of our underlying business and our cash flow.”

  • Vuse Extends Lead Over Juul

    Vuse Extends Lead Over Juul

    Photo: BAT

    The prospect of a potential on sales of Juul Labs e-cigarettes in the U.S. has helped accelerate the market share gains of R.J. Reynolds Vapor Co.’s Vuse brand, reports the Winston-Salem Journal.

    According to the latest Nielsen analysis of convenience store data, which covers the four-week period ending Aug. 13, Vuse’s market share rose from 37.4 percent in the previous report to 39 percent compared with Juul declining from 30.7 percent to 29.4 percent.

    Meanwhile, No. 3 Njoy dropped 3 percent to 2.9 percent while Fontem Ventures’ blu e-cigarettes slipped from 1.7 percent to 1.6 percent.

    In June, the Food and Drug Administration rejected Juul Labs’ premarket tobacco product applications, saying that the company has submitted insufficient evidence that its products were appropriate for the protection of public health. 

    While the agency subsequently suspended its marketing denial order (MDO), citing scientific issues in the application that warrant additional review, the agency stressed that the stay does not rescind the MDO, leaving Juul in limbo.

    Vuse, by contrast, has received FDA marketing approval for several product varieties, including Vuse Vibe and Vuse Ciro and Vuse Solo products.

    In a note to investors, Goldman Sachs analyst Bonnie Herzog said that Juul’s market share decline occurred in part “following confusion around the FDA’s marketing denial order against Juul.”

    As recently as May 2019—before the company started withdrawing flavored products in response to regulatory pressures—Juul accounted for 74.6 percent of the U.S. e-cigarette market.

  • VLN Recognized as ‘Best New Product’

    VLN Recognized as ‘Best New Product’

    Photo: 22nd Century Group

    22nd Century Group’s VLN King and VLN Menthol King reduced-nicotine content cigarettes have been awarded Best New Product in the cigarette category by Convenience Store News.

    Now in its 26th year, the Best New Products Awards recognize the most innovative, high-quality products introduced into the convenience channel to meet consumers’ evolving needs and fit a convenience store’s value proposition. This is the first Convenience Store News award in the cigarette category.

    “We are honored and excited that VLN was recognized with the Best New Product award in the cigarette category by Convenience Store News,” said John J. Miller, president of 22nd Century’s Tobacco Business, in a statement.

    “VLN is truly a game-changer, and this award confirms the market’s interest in VLN and their interest in new tools to help adult smokers smoke less. Our VLN pilot has exceeded expectations in Chicago, and we are now expanding our VLN launch statewide in Colorado as we work to broaden availability of this important new product.”

    The Best New Products Awards are judged by a panel of consumers on value, convenience, appearance and packaging along with attributes such as taste and ingredients. Judging was supervised and tallied by Past Times Marketing, a New York-based consumer research and product testing firm.

  • Dunne: Illicit Vapes a Big Problem in U.K.

    Dunne: Illicit Vapes a Big Problem in U.K.

    John Dunne (Photo: UKVIA)

    Up to 60 percent of disposable vapor products sold in the U.K. are illicit, according to the U.K. Vaping Industry Association (UKVIA).

    Speaking to the U.K. trade publication Convenience Store, UKVIA Director General John Dunne estimated that between 40 percent and 60 percent of disposable vapes currently on sale in the country were either noncompliant with domestic laws or counterfeit.

    “Based on the amount of [illicit] products I see in the marketplace, the number of reports of illicit sales and what’s being reported to trading standards, I believe it’s that big and a huge concern,” he explained. “I probably receive between 200 [reports] and 400 reports of illegal sellers in the U.K. every month.”

    Dunne warned that noncompliance among retailers could destroy a category with huge potential. “This is a market that has huge growth potential for retailers, if it’s allowed [to] grow in a responsible manner, but having a short-term view and ignoring compliance is going to have a detrimental effect. And potentially lead to things like the category being banned, flavor bans or plain packaging.”

    He also called for more action on retailers found to be selling vaping products to those under the age of 18.

  • ‘FDA Failed to Consider Marketing Plans’

    ‘FDA Failed to Consider Marketing Plans’

    Photo: tanasin

    The U.S. Food and Drug Administration must reevaluate the premarket tobacco product applications (PTMAs) of six e-cigarette manufacturers after an appeals court ruled that the agency failed to adequately consider the companies’ marketing plans, reports Bloomberg Law.

    On Aug. 23, the U.S. Court of Appeals for the 11th Circuit granted petitions for review filed by Bidi Vapor, Diamond Vapor and four other companies challenging the FDA’s rejection of their e-cigarette applications. According to Chief Judge William Pryor, the agency didn’t assess “the companies’ marketing and sales-access-restriction plans designed to minimize youth exposure and access.”

    The court explicitly labeled the FDA’s decision-making as “arbitrary and capricious.” Prior legal decisions have determined that FDA action must consider all relevant factors in order to be legally justifiable. In the case of these vape manufacturers, the court ruled that the FDA had not performed such consideration.

    Vapor industry advocates welcomed the decision. Gregory Conley, director of legislative and external affairs at the American Vapor Manufacturers Association said that while court ruling does not order the FDA to grant PMTAs—and that the agency is likely to deny the applications in the future—the companies involved could end up in the queue for review in 2025, which keeps them in business.

    “Additionally, this leaves the door open for further litigation on these and other PMTAs,” Conley wrote on Twitter. “The FDA’s vague and undefined ‘appropriate for the protection of public health’ standard has long been open for attack. This is just the start.”

    The 11th Circuit decision follows revelations that forced the FDA to admit to not considering all evidence when issuing marketing denial orders (MDOs) to vape products made by Juul and Turning Point Brands. In the interests of public health, future FDA decision-making must engage with all available evidence, not just evidence that leads to their preferred outcomes.

  • 22nd Century to Ring Nasdaq Closing Bell

    22nd Century to Ring Nasdaq Closing Bell

    Photo: Mat Szymański

    Representatives of 22nd Century Group will ring the Nasdaq Closing Bell on Aug. 26, 2022, celebrating the launch of VLN reduced-nicotine cigarettes.

    In December 2021, the U.S. Food and Drug Administration gave 22nd Century Group permission to market VLN cigarettes as modified-risk tobacco products, making them the first combusted cigarettes to be authorized as such and the second tobacco products overall to receive “exposure modification” orders.

    Since that time, the company has launched VLN cigarettes in various pilot markets, including in the Chicago area.

    According to 22nd Century Group, the Chicago pilot has exceeded expectations, leading the company to accelerate and expand its launch plans to the state of Colorado.

    “Our VLN pilot program in Chicago has confirmed the market’s interest in VLN as adult smokers look for new tools to help them smoke less, an important step to improving overall public health,” said John J. Miller, president of 22nd Century’s tobacco business, in a statement.

    “Based on the better-than-expected results of our pilot, we are accelerating our launch plans and commencing sales in the state of Colorado through multiple partners committed to helping us offer adult smokers a real choice, a product that can help them smoke less.”

  • CTP: ‘Grandfathered’ Becomes ‘Pre-existing’

    CTP: ‘Grandfathered’ Becomes ‘Pre-existing’

    Photo: Olivier Le Moal

    The U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) has updated the term “grandfathered tobacco product” to “pre-existing tobacco product” to describe these products more appropriately.

    Additionally, the term “grandfathered,” when used to describe someone or something exempt from a new law or regulation has its roots in 19th century racist voting laws, according to the FDA.

    Like the grandfathered products before it, a pre-existing tobacco product is any tobacco product (including those products in test markets) that was commercially marketed in the United States as of Feb. 15, 2007.

    As was the case with submitting a grandfathered determination request, submitting a request to determine the pre-existing status of a tobacco product is voluntary and not required under the Federal Food, Drug and Cosmetic Act.

    According to the CTP, the terminology update requires no additional action by companies with pending grandfathered determination request.