Blog - Tobacco Reporter

Illicit Trade Surges in South Africa

A new study by Ipsos shows that illegal cigarette trade has surged in the past year in South Africa.

Illicit trade exploded during a five-month ban on tobacco sales that was implemented to prevent the spread of Covid-19 during 2020. While the ban was lifted in August 2020, illicit trade continues to be significantly higher than it was before the measure.

The Ipsos study showed: four out of five stores in the Western Cape (80 percent) now sell cigarettes below the minimum collectible tax (MCT) rate of ZAR22.79 per pack, as do almost 70 percent of outlets in Gauteng, a significant increase compared to previous research; the number of garage forecourts across the country selling illicit cigarettes has quadrupled in the last year—despite the 2020 sales ban having been lifted; a single pack of 20 cigarettes is now on sale for as little as ZAR7 in many retail outlets nationwide.

The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade.

Johnny Moloto, general manager, BAT South Africa

“This is less than a third of the MCT and down even further from ZAR8, which was the lowest price found in the October 2021 study; and products bearing trademarks licensed to or owned by Zimbabwe-based Gold Leaf Tobacco Corporation and CarniLinx, a member of South Africa’s Fair-Trade Independent Tobacco Association, continue to win this illegal price war,” BAT South Africa (BATSA) wrote in a statement.

“The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade,” said BATSA General Manager Johnny Moloto. “These criminals are hiding in plain sight, robbing the fiscus of vital revenue when it is needed most. They are destroying legitimate businesses and jobs while national unemployment rates hit record highs.”

Tobacco Reporter covered South Africa’s struggle with illicit trade in-depth in its March 2022 issue (see “Damage Done“).

April 6, 2022

Vape Group to Raise Awareness With ‘VApril’

VApril 2022, the annual awareness campaign from the U.K. Vaping Industry Association (UKVIA) that educates smokers on vaping, opened with a vaping masterclass session with experts from the vaping industry, stop-smoking services and healthcare.

For the first time, this year, the UKVIA is running a promotional campaign on social media, including an animated five-step guide to transitioning successfully from smoking to vaping; a video featuring the life-changing experience of a former smoker turned vaper; and a video of Anita Sharma addressing common concerns of smokers who are considering switching to vaping to help them quit their smoking habits.

The month will also see publication of research on the level and quality of advice that is being provided to adult smokers when considering a switch to vaping.

“We know from Public Health England that vaping is at least 95 percent less harmful than smoking, and the last 18 months has seen a massive groundswell of support from the medical and political worlds underlining how vital vaping is toward helping people to quit smoking and the overall health of the nation,” said John Dunne, director general of the UKVIA, in a statement.

“We are steadfast and determined in our mission and resolve to give smokers a real choice, underpinned by VApril 2022 and the huge support we receive from vape retail stores and other businesses across the U.K. as well as vape associations across the world.”

April 6, 2022

Altria Signs Power Purchase Agreement

Altria Group has signed a virtual power purchase agreement (VPPA) for energy produced by a new wind farm project in Haskell and Throckmorton Counties, Texas, USA. Altria’s contracted portion of the Inertia Wind Energy Center is intended to address the emissions from 100 percent of Altria’s annual purchased electricity demand across all U.S. facilities.

“This is our first-ever VPPA and marks significant progress toward our science-based environmental targets—achieving 100 percent renewable electricity and reducing operational greenhouse gases emissions by 55 percent by 2030,” said Sal Mancuso, executive vice president and chief financial officer in a statement.

“When the project is operational, we expect we will hit both those targets—ahead of schedule. We’re proud to support a project that will bring additional renewable energy to the electricity grid, contributing to positive climate action.”

The Inertia Wind Energy Center will be developed, owned and operated by a subsidiary of NextEra Energy Resources, and is expected to be operational by the end of 2022 with a total generation capacity of 301 megawatts. In addition to bringing clean energy to the grid, the project is expected to create jobs and provide long-lasting economic benefits to the local community.

Altria’s agreement equates to around 400,000 MWh of renewable electricity per year—the equivalent of over 51,000 homes’ annual electricity use—and is expected to reduce greenhouse gas emissions by approximately 283,000 metric tons, or equivalent to the emissions from more than 61,000 passenger vehicles being driven each year.

April 6, 2022

Women in Tobacco to Meet in Paris

The next Women in Tobacco (WIT) event will take place May 5-6 at Hotel Villa Modigliani in Paris. The event is sponsored by SWM.

The event will kick off with a snack lunch on May 5, followed by the GTNF In Focus: Sustainability virtual conference in the presence of Patricia Kovacevic, who will moderate the event.

The evening program features a Quayside dinner and a one-hour cruise on the river Seine.

The GTNF In Focus conference continues May 6 and is followed by a team activity.

Participants qualify for a special rate for the night of May 5 of €166 ($180.98) per room at Hotel Villa Modigliani with the code SWMWIT2022 .

For hotel reservations please contact: llegal@vacancesbleues.fr or cpasquet@vacancesbleues.fr. Reservations may be cancelled free of charge up to April 14, 2022.

To register for the WIT event, please contact Elise Rasmussen at witforwomen@gmail.com or +44 777 564 5048.

WIT Agenda

Thursday, May 5

12:30 pm
Welcome & snack lunch at the Hotel Villa Modigliani, 13 Rue Delambre, 75014 Paris, France

02:00 pm
GTNF inFocus Sustainability virtual conference in presence of Patricia Kovacevic who will moderate the event.
Stay tuned and Check the program here or on the website: sustainability.infocusseries.org.

08:00 pm
Quayside dinner followed by a one-hour River Seine cruise.

Friday, May 6

08:45 am
Welcome at the Hotel Villa Modigliani, 13 Rue Delambre, 75014 Paris, France

09:00 am
GTNF inFocus Conference Debriefing
& Specific Presentations

10:15 am
Team Activity:
Embark for a “Responsible World Tour!”

12:30 pm
Event closure

April 5, 2022

Survey: Smokers Happy to Buy Illicit Tobacco

Nearly three-quarters (71 percent) of participants in a poll among U.K. smokers bought illicit tobacco in the past year, according to a recent survey reported in Talking Retail.

The figure is down from 2019, when the same survey found that 78 percent of respondents said that they had bought illicit tobacco.

One challenge for the industry is that few consumers have moral reservations about purchasing illicit products. Sixty-eight percent of survey participants said they had no issue with buying tobacco this way.

Carried out by the Tobacco Manufacturers’ Association (TMA), the survey of 12,000 smokers also found that nearly one-fifth (19 percent) of respondents bought their illicit tobacco from social media sites.

“There is positive news in this year’s survey findings, with more people reporting illicit tobacco when they were aware of it—a major uplift to 32 percent compared with 17 percent in 2017—and a decline in people purchasing illegal tobacco in every region across the U.K., with the exception of London,” said Rupert Lewis, director of the TMA.

“However, the 2021 findings still highlight the continued widespread availability of illicit tobacco as well as the entrenched perception among many consumers that it is ‘acceptable’ to trade or buy illicit

April 5, 2022

U.S. House votes to decriminalize marijuana

The U.S. House of Representatives voted on April 1 to decriminalize marijuana at the federal level, reports The New York Times.

While the Marijuana Opportunity Reinvestment and Expungement Act is unlikely to get the required majority in the Senate, supporters said the vote was a necessary step toward building consensus on something that can become law.

The bill would remove marijuana from the federal government’s list of controlled substances, impose an 8 percent tax on cannabis products, allow some convictions on cannabis charges to be expunged and press for sentencing reviews at the federal and state levels. It would also make Small Business Administration loans and services available to cannabis businesses while setting standards for them.

By lowering law enforcement and incarceration costs and imposing new taxation, the bill would save the government hundreds of millions of dollars. The Congressional Budget Office estimated that the act would reduce the federal deficit by nearly $3 billion over the next decade.

Thirty-seven states have legalized cannabis for medical use, and 15 have granted adults legal access for purely recreational purposes. Because cannabis remains a federally controlled substance, however, banks insured by the federal government have been loath to make their services available to the burgeoning marijuana industry.

Faced with declining demand for cigarettes, some tobacco companies have been eying marijuana as a new business area.

Sales in that industry totaled $20 billion in 2020 and are projected to more than double by 2025.

April 4, 2022

BAT invests in Bangladesh

British American Tobacco will invest BDT5.74 billion ($66.55 million) in its Savar, Bangladesh, operations to cater to export opportunities and create contingency capacity, reports The Daily Star.

The announcement follows a BDT5.14 billion investment in 2021 to increase the facility’s production capacity.

“With an eye on future exports, the board has approved an investment of about Tk 574 crore to further expand the Savar factory’s production capacity,” said Sheikh Shabab Ahmed, head of external affairs at BATBC.

“We believe with the improved capacity we will be equipped for any future demand,” he added.

In 2021, the company’s net turnover rose 24 percent to BDT74.87 billion, up from BDT60.29 billion the previous year, according to its annual report. In the same period, BAT Bangladesh logged profits of BDT14.96 billion, up 37.5 percent over that posted in 2020.

BATBC has cigarette factories in Dhaka and Savar, a green leaf threshing plant in Kushtia, a green leaf re-drying plant in Manikganj, and a number of leaf and sales offices throughout the country.

April 4, 2022

Vectura Directors Step Down

Vectura CEO Will Downie and Chief Financial Officer Paul Fry have stepped down from their roles with the company following the £1 billion ($1.31 billion) takeover by Philip Morris International, reports The Times.

PMI acquired Vectura last year as part of the company’s “beyond nicotine” strategy. This move caused controversy in the healthcare industry as Vectura is a producer of inhalers and medicines for smoking-related conditions. Critics said the takeover represented a conflict of interest.

Following the takeover, Vectura was banned from many pharmaceutical industry conferences due to the company’s new ties to the tobacco industry.

The tobacco industry’s involvement in pharmaceutical businesses is facing increasing scrutiny. In March, the World Health Organization said it would deny an emergency use listing to Medicago’s Convifenz Covid-19 vaccine, because of the company’s tobacco ties.

PMI owns a minority stake in Medicago, which now faces pressure to seek a different shareholder.

April 1, 2022

Mixed Sentiments as Markets Open in Africa

Farmers earned more than $243,500 from the sale of 94,453 kg of flue-cured tobacco on the first day of Zimbabwe’s 2022 marketing season, reports The Herald. This reflects a 40.54 percent increase over previous year when growers earned $173,256 from 92,106 kg on the first day of sales.

On the first day of the 2022 marketing season the average price was $2.58 per kg, compared with $1.88 on the first day of 2021, according to the Tobacco Industry and Marketing Board (TIMB).

TIMB Chief Execute Meanwell Gudu said prices are expected to be firm this year due to reduced volumes.

“Brazil is likely to be 80 million kg short of their usual production level because of drought. This creates less competition for us. India has fixed its 2021-2022 production of flue-cured Virginia up to 270 million kg, against 236 million kg in the previous year,” he said.

“Due to anticipated reduced volumes in Zimbabwe this season, there will be more pressure on the demand side to take the crop, which should naturally increase prices upwards. This is likely to be experienced in the medium to filler grades.”

Farmers in Malawi, meanwhile, were dissapointed with their earnings, with some asking President Lazarus Chakwera to intervene, according to The Nyasa Times.

On April 1, the highest price offered on the auction floor was $1.75 per kg and the highest offer on the contract market was $2.30.

Chakwera assured the farmers that the government would intervene. However, he also advised them to grade their tobacco properly to satisfy buyers’ requirement.

According to the Tobacco Control Commission there were more than 1,000 bales on the Lilongwe Auction Floors on the first day of the 2022 tobacco marketing season.

April 1, 2022

Thailand: New Graphic Health Warnings

Retailers and wholesalers in Thailand will have to sell cigarette packs with newly designed warning labels beginning April 11, reports The Bangkok Post.

The new packs must have text warnings and newly designed pictorial warnings showing graphic details of the consequences of smoking, according to Khachornsak Kaewcharas, deputy director-general of the Department of Disease Control.

“Violators who still sell cigarette packets with the old pictorial warnings are liable to a fine of no more than THB40,000 [$1,197],” he said.

April 1, 2022