Blog - Tobacco Reporter

United Tobacco Starts Manufacturing in Egypt

The United Tobacco Co. (UTC) has started manufacturing cigarettes in the Egyptian market, ending the decades-old monopoly by the state-owned Eastern Co., reports Ahram Online.

UTC secured a government license to establish a cigarette factory in 2022. The company is jointly owned by PMI and Eastern Co., which acquired a 24 percent stake in the firm.

Eastern Co. Managing Director Hany Aman stressed his company had not been negatively affected by UTC’s presence.

“Our acquisition transaction in the UTC compensates for the absence of PMI proper in the Egyptian market. PMI products are available in the local market under the label ‘Made by UTC,’” he stressed.

Under the deal, UTC is obliged to lease the building and the current production lines previously allotted to the manufacturing of PMI products from Eastern Co. for a period of three years. Meanwhile, Eastern Co. is obliged to manufacture PMI products on the same production lines until June 2022.

PMI affirmed its full commitment to all existing contractual relationships with traders and suppliers in order to ensure the availability of its products in Egypt. The company added that it will continue to provide all of its products at the same prices with no changes to packaging.

Eastern Co.’s revenues grew by 6 percent to EGP67.9 billion in fiscal year 2021–2022. Eastern Co. and PMI have each raised their cigarette prices twice so far in 2022 due to increased production costs and the depreciation of the Egyptian pound against the U.S. dollar.

“Eastern Co. is trying to absorb the rise in production costs that were caused by recent increases in raw materials costs and also disruptions in supply chains amid the ongoing conflict in Europe,” Aman explained to Ahram Online.

In the first half of 2022, PMI shipped 9.9 billion cigarettes and 0.3 billion heated-tobacco units in Egypt, claiming 22.5 percent share of the local market.

Eastern Co. has license-manufactured PMI’s bestselling Marlboro brand in Egypt since the 1980s.

September 27, 2022

H.B. Fuller Appoints Celeste Mastin as President and CEO

Celeste Mastin will succeed Jim Owens as H.B. Fuller’s president and CEO, effective Dec. 4, 2022. Mastin will also join the company’s board of directors.

Mastin currently serves as executive vice president and chief operating officer of H.B. Fuller. Prior to joining H.B. Fuller, Mastin served as CEO of PetroChoice Lubrication Solutions, one of the largest distributors of petroleum lubrication solutions in the United States.

Prior to that, she held CEO roles at Distribution International and MMI Products, and she served in senior leadership roles at Ferro Corp. and Bostik Adhesives, now owned by Arkema. Mastin began her career at Shell Chemical Co. She currently serves on the board of directors of Granite Construction.

“It has been a privilege to serve as CEO of H.B. Fuller, and I am very proud of all that we have accomplished as a team over the last 12 years,” said Owens in a statement. “With a proven value-creation strategy, an experienced leadership team in place and positive momentum, this is the opportune time to transition the company’s leadership.

“Celeste is an outstanding leader and ideal fit with H.B. Fuller’s entrepreneurial, customer-focused, global culture. She brings strategic insights, continuity of leadership and a strong record of delivering exceptional results. I am confident the company will excel and reach new levels of financial and operational performance under her leadership.”

“I would like to thank Jim and the board for the opportunity to lead this fantastic company and the many exceptional team members who work for H.B. Fuller,” said Mastin. “H.B. Fuller has a rich history of innovating to create unique products to meet our customers’ most challenging needs and has become the world’s leading pure-play adhesives company.

“We have a winning strategy, tremendous talent and leadership, and the entrepreneurial culture that will continue this legacy. I believe strongly in our strategy and vision, and I will remain focused on expanding on these strengths to accelerate organic growth and enhance the company’s margin profile to achieve our strategic goals and reach our full potential.”

September 27, 2022

CTP Director: Nicotine Salts Show Potential

During an exclusive interview with the Associated Press, the director of the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP), Brian King, said the FDA is well on its way in setting a foundation for substantial reductions in combustible tobacco smoking with the product standards such as a menthol ban and flavor bans for e-cigarettes and cigars.

When asked about several surveys that have shown many adults think e-cigarettes are as dangerous as traditional cigarettes, King said he was fully aware of the misperceptions surrounding vaping products those misperceptions aren’t consistent with the known science.

“We do know that e-cigarettes — as a general class — have markedly less risk than a combustible cigarette product,” King said. “That said, I think it’s very critical that we inform any communication campaigns using science and evidence. It has to be very carefully thought out to ensure that we’re maximizing impact and avoiding unintended consequences.”

King also said he believes “there’s a lot of really important science and innovations” that have occurred in the vaping industry in recent years, adding that the most notable is nicotine salts in e-liquids.

“We know that when you smoke a tobacco product, it’s a very efficient way to deliver nicotine across the blood-brain barrier. So it’s been very difficult to rival that efficiency in another product,” said King. “But in the case of nicotine salts you have the potential to more efficiently deliver nicotine which could hold some public health promise in terms of giving smokers enough nicotine that they would transition completely.

“But you also have to consider the opposite side of the coin, which is the inherent risks of initiation among youth. So I do worry about that … there’s a lot happening and I think that it could be promise or peril. But I think it’s important that the science drives that.”

September 27, 2022

BAT Invests in Sanity Group

BAT, via one of its wholly owned group companies, has acquired a noncontrolling minority stake in Sanity Group, one of Germany’s leading cannabis companies.

This investment is complementary to other recent investments made by BAT companies, most notably the strategic R&D collaboration established with Canada’s Organigram Holdings announced in March last year.

Sanity Group, which is based in Berlin, produces CBD consumer brands and medical cannabis brands. It also has a proven track record in the research, development and marketing of cannabis products.

“Investing in Sanity Group is another example of BAT’s ongoing work to explore numerous areas beyond nicotine, positioning BAT for future portfolio growth across a range of categories and geographies,” said Kingsley Wheaton, chief growth officer at BAT, in a statement.

“We continue to transform our business through better understanding of our current and future consumers as part of our ‘A Better Tomorrow’ purpose.”

Sanity secured $37.6 million in the BAT-led Series B funding round, according to Sanity founder and CEO Finn Age Hansel. About half of the funding will go toward strengthening Sanity’s medical business. The rest of the funding will go toward preparing for the possible legalization of recreational marijuana in Germany.

Germany has not legalized recreational cannabis yet, but action is expected sooner rather than later. Germany’s coalition government is “working actively on it and really want[s] to come to a good draft of the law by the end of this year,” Hansel said. “This is really a priority topic for the government.”

“This funding is an important milestone for us and a strong signal toward the future of cannabis in Germany and Europe,” said Max Narr, chief investment officer at Sanity Group. “Against the backdrop of a challenging global economy, we are proud to have achieved a funding round of this magnitude.”

September 26, 2022

Comment Period on Dutch Flavor Ban Closing Soon

The Dutch government’s public consultation period for a potential ban of flavored vaping products will close Sept. 28, reports Vaping360.

The new rule would ban all e-liquid flavors except tobacco and is scheduled to take effect Jan. 1, 2023. However, products already on the market by Dec. 31 can be sold until July 1, 2023.

The Dutch National Institute for Public Health and the Environment and the Ministry of Health have proposed a list of just 16 ingredients that would be allowed in legal tobacco-flavored e-liquids.

Dutch vaping industry advocates claim the ingredient restrictions will essentially put all e-liquid manufacturers in the Netherlands out of business.

The comment period is open to the public, and Dutch e-cigarette advocates are asking consumers from the Netherlands and elsewhere to share their thoughts on the Dutch government’s e-cigarette consultation webpage.

Previous efforts to ban flavored vapes in the Netherlands have failed.

September 26, 2022

Maine Backs Out of Juul Settlement

Maine is backing out of a multi-state settlement with Juul Labs over the e-cigarette manufacturer’s marketing practices after objecting to certain conditions from the company.

Maine was set to receive an estimated $11.6 million over the next six years to 10 years as part of a nearly $440 million settlement between the manufacturer and 33 states and territories. The investigation found that Juul had marketed its products to youth.

However, as part of the agreement, Juul wanted states to waive the rights of school districts to pursue their own lawsuits, according to the Maine attorney general’s office. Maine is unwilling to agree to that.

“We are disappointed in the outcome of these negotiations, but ultimately, we were unwilling to waive the rights of other entities who are also trying to hold Juul accountable for its deception,” Attorney General Aaron Frey said in a statement to The Maine Monitor.

September 26, 2022

FDA Seeks TPSAC Nominations

The U.S. Food and Drug Administration’s Center for Tobacco Products is requesting nominations for two individuals to serve as voting members on the Tobacco Products Scientific Advisory Committee (TPSAC). According the FDA website, individuals may self-nominate or be nominated by any interested person or organization.

Nominations received on or before Nov. 25, 2022, will be given first consideration. Nominations received after Nov. 25, 2022, will be considered as later vacancies occur.

TPSAC advises the CTP in its responsibilities related to the regulation of tobacco products. The committee reviews and evaluates safety, dependence and health issues concerning tobacco products and provides appropriate advice, information and recommendations to the FDA commissioner.

The notice has been published in the Federal Register.

September 26, 2022

South Africa: Treasury Stands by Tax Proposal

The National Treasury and South African Revenue Service (SARS) is standing by its e-cigarette tax proposals despite protests from businesses, reports Businesstech.

Speaking to the parliamentary standing committee on finance this week, the National Treasury and SARS responded to comments by businesses regarding changes proposed under both the Draft Tax Administration Amendment Bill and the Taxation Laws Amendment Bill.

The National Treasury wants to apply an average excise rate for e-cigarettes of ZAR2.91 ($0.16) per milliliter and apportioned in a ratio of 70:30 between nicotine and non-nicotine elements.

Vapor companies said that considering South African consumers’ purchasing power, a ZAR0.70 duty per milliliter is more than appropriate.

The industry also cautioned that excise duty on vaping products would affect the trade of legitimate tax-paying vendors, drive job losses in the sector and drive consumers to more harmful combustible cigarettes.

The National Treasury countered that the tax is necessary and legitimate and would assist in closing regulatory loopholes that leave South Africans in vulnerable positions.

It added that the long-term health effect of e-cigarettes are unknown, and therefore the government is taking cautionary steps, even if vaping is marketed as a less harmful alternative to smoking.

The current proposed rate is an introductory rate that may be adjusted in the short term to medium term, the treasury said.

September 26, 2022

Malaysia to Table ‘Endgame’ Bill

The government of Malaysia plans to table its ‘generational endgame’ (GEG) bill during the next parliamentary session in October after making amendments to address concerns by some lawmakers, reports Bloomberg.

Announced in February, the GEG would make it illegal for people born after 2007 to buy, possess or use tobacco-related products, including e-cigarettes. The bill was referred to a parliamentary select committee in August for further scrutiny amid criticism that some of its features would infringe on personal freedom.

Health Minister Khairy Jamaluddin believes the amendments have addressed critics’ concerns.

“The enforcement powers really are focused and restricted only against distribution, manufacturing and supply,” Khairy said on Sept. 23. “We’ve clarified that in the latest amendments, so if you contravene the law in terms of GEG smoking offense, then the enforcement officer cannot frisk you; they cannot take away your computer or your phone or things like that.”

Malaysian lawmakers delayed a vote last month on the bill and referred it to the select committee to examine and make recommendations for improvement.

September 26, 2022

Hong Kong: Record Seizures of Cigarettes

Hong Kong authorities confiscated HKD1.23 billion ($157 million) worth of illicit cigarettes to date this year—the largest haul of the contraband in 20 years, reports the South China Morning Post, citing figures from the Customs and Excise Department.

As of Sept. 22 this year, customs officials had seized about 440 million untaxed cigarettes, well above the 427 million cigarettes worth HKD1.19 billion found in the whole of 2021.

If legally imported, this year’s contraband would have generated HKD839 million in tax, according to a law enforcement source.

The source attributed the rise in contraband seizures to the resumption of seaborn logistics after Covid-19 disruptions and a possible rise in the price of tobacco products in Europe.

“As the resumption of seaborne logistics business in May, syndicates have started to accumulate their storage of illicit cigarettes in the city while trying to find buyers in Hong Kong and overseas,” the source told the South China Morning Post.

He said some of the gangs also stockpiled a huge volume of illicit cigarettes in the city as they anticipated a possible rise in the price of tobacco products in Europe amid high inflation.

This year’s seizures reached 440 million cigarettes after authorities discovered 21.6 million untaxed cigarettes worth HKD59 million hidden in two shipping containers in Tsing Yi and Yuen Long in their latest operation on Sept. 19.

September 23, 2022