The Fair-Trade Independent Tobacco Association (FITA) has filed a criminal complaint with the South African Police Service against British American Tobacco South Africa (BATSA) for violating the Tobacco Products Control Act 83 of 1993 and the Customs and Excise Act 91 of 1964.
“On or about May 28, 2021, we received information that BATSA and certain retail stores in and around the greater Johannesburg area were contravening provisions of inter alia the Tobacco Products Control Act and the Customs and Excise Act by selling loose cigarettes and giving and/or gifting to the consumer ZAR5 [$0.36] worth of mobile telephone airtime vouchers together with a small rectangular metallic box, which holds up to three loose cigarettes, branded with one of the many BATSA brands,” the organization wrote on its website.
FITA “conducted test purchases” to confirm the alleged sales and states that it has “photographs and video footage depicting the promotional material and packaging for the sale of loose cigarettes.”
Selling loose cigarettes and gifting promotional material like the boxes and phone cards is prohibited in South Africa.
The Italian Competition Authority has launched an inquiry into BAT’s social media activities, reports Market Watch.
According to the regulator, three Italian influencers who had a commercial agreement with BAT Italia posted content related to BAT’s Glo Hyper tobacco-heating device without disclaiming the promotional nature of the posts.
The antitrust section of Italy’s financial crime investigation unit reportedly carried out an inspection at BAT’s offices on May 27.
BAT has published a comprehensive review of the scientific evidence for vaping products, their potential health effects and their role in tobacco harm reduction.
The review shows that, over the past decade, the number of people who incorrectly believe vaping is as harmful or more harmful than smoking conventional cigarettes has risen in the U.K., Europe and the U.S. This is despite several scientific reviews published in the same period showing that vaping products manufactured in accordance with quality standards present less risk to health than combustible cigarettes.
According to population modelling studies cited in the review, a significant reduction in premature deaths could be achieved if current smokers switched exclusively to vaping rather than continuing to smoke. These modelling studies use population data and simulations to project the health-related outcomes associated with the long-term risks of smoking versus vapor use over time.
David O’Reilly, director of scientific research at BAT, said the paper is a comprehensive summary of more than 300 peer-reviewed scientific papers and other evidence published by an estimated 50 institutions over the past decade.
The scientific evidence is clear—but consumer misperceptions remain.
“The scientific evidence is clear—but consumer misperceptions remain. In England and the United States, only one in three adults is aware that there is scientific evidence available, including from leading public health authorities, that supports the conclusion that vaping is less harmful than smoking,” O’Reilly said.
“The reality is that many leading public health authorities have reported that vaping is less harmful than smoking and that this harm reduction potential can be maximized if those smokers who would otherwise continue to smoke switch exclusively to using vapor products.”
The review highlights that vaping products can effectively compete with combustible cigarettes by providing nicotine and the sensorial enjoyment sought by smokers, according to a BAT press note.
Vuse has become the first global carbon neutral vape brand, according to BAT.
Vuse’s carbon neutrality has been delivered through carbon offset through reforestation projects. This includes a project in Uruguay to plant trees across 21,298 ha, where intensive cattle grazing has eroded soil and degraded land. As well as removing carbon dioxide and delivering better soil quality and biodiversity, the project will also result in increased availability and quality of employment opportunities, BAT noted.
The carbon neutrality of Vuse has been independently validated by Vertis based on product life cycle assessment data provided by an independent third party.
“Vuse becoming the first global carbon neutral vaping brand is a significant milestone,” said Kingsley Wheaton, chief marketing officer at BAT, in a statement. “It is testimony to BAT’s deep and long-standing commitment to being a responsible business and reducing our impact on the environment.”
Vuse becoming the first global carbon neutral vaping brand is testimony to BAT’s deep and long-standing commitment to being a responsible business and reducing our impact on the environment.”
According to BAT, Vuse’s carbon neutrality status is part of a bigger ambition to become an environmentally sustainable vape brand with initiatives including:
Implementing a global device and pod collection scheme, with approximately 200,000 pods collected since the start of the pilot in 2020
Cutting single use plastics from packaging, which has saved 100 tons of plastic or the equivalent of 4 million plastic bottles in 2020
Transitioning from air to sea freight through changes to the distribution chain; Vuse aims to have 80 percent of international shipments transported by sea by the end of 2022
BAT says it is also reducing its carbon footprint by improving the energy efficiency of factories by upgrading to more efficient and lower impact equipment and by increasing the use of renewable energy through renewable energy purchases and on-site energy generation.
Today’s announcement by BAT coincides with the opening of the 100th Vuse Inspiration Store. Vuse Inspiration Stores are now operating in the U.K., Canada, Poland, Germany, South Africa and the U.S.
British American Tobacco (BAT) and Imperial Brands will ask the high court in London on Wednesday to throw out a case against them alleging the exploitation of Malawian farmers and their children, reports The Guardian.
Denying the allegations, the companies are asking that the case be dismissed on the grounds that lawyers for the farming families cannot prove the tobacco they grew ended up in their cigarettes and other products.
“BAT believes that there is no legal or factual basis to bring these claims, therefore BAT has made an application for the claims to be struck out or stayed,” a BAT spokesperson told The Guardian.
The case was brought after investigations by The Guardian suggested the companies employed child labor and subjected farmers to poor working conditions.
Leigh Day lawyers argue that the farmers’ conditions of work breach the definition of forced labor, unlawful compulsory labor and exploitation under Malawian law.
They also say that they breach the U.K. Modern Slavery Act, article 14 of the European convention on human rights and the International Labor Organization definition of forced labor.
The heart of the claim is that two of the largest tobacco companies cynically exploited impoverished tobacco farmers from Malawi and their children.
“The heart of the claim is that two of the largest tobacco companies in the world cynically exploited impoverished tobacco farmers from Malawi and their children,” said Martyn Day, senior partner at Leigh Day.
“Fortunately, the two defendant companies are based here in Britain, giving our courts jurisdiction to adjudicate these claims.” He said he was optimistic the judge would allow the claims to progress toward a full trial.
Several thousand of Malawi’s poorest tobacco tenant farmers have joined the claim. They sell their crop to a leaf-buying company in Malawi, which they say supplies BAT and Imperial.
BAT has been named as a 2021 Climate Leader by the Financial Times in an inaugural European ranking.
FT Europe Climate Leaders 2021 recognizes the top 300 of more than 4,000 companies across Europe that achieved the highest reduction in core greenhouse gas emissions in relation to revenues for the period between 2014 and 2019.
BAT’s climate targets include being carbon neutral in its own operations by 2030. In 2020, BAT achieved a 30.9 percent reduction in emissions from its operations, contributing to a 37.4 percent reduction against a 2017 baseline. In March this year, BAT announced a further ambition to be carbon neutral across its value chain by 2050, representing around 90 percent of its total carbon footprint.
This recognition by the Financial Times is a positive signal that we’re heading in the right direction.
“We are very pleased to be named by the Financial Times as one of the companies leading the charge against climate impact,” said Kingsley Wheaton, BAT’s chief marketing officer, in a statement. “BAT is deeply committed to being a responsible business and reducing our impact on the environment.
“Last year, we said we’d achieve carbon neutrality for our own emissions by 2030, and we’re making good progress toward this target. In addition, considering the urgent global challenge of climate change, earlier this year, we committed to carbon neutrality across our value chain by 2050. This recognition by the Financial Times is a positive signal that we’re heading in the right direction.”
British American Tobacco (BAT) will invest HRK200 million ($32.07 million) to produce heated-tobacco products (HTPs) at its factory in Kanfanar, Croatia, reports Total Croatia News.
The multinational revealed its plans during a May 12 visit to its facility by Prime Minister Andrej Plenkovic.
“By expanding production in Kanfanar and opening a hub in Rijeka, we are continuing with BAT’s significant investments in Croatia,” said BAT Adria director Zvonko Kolobara.
“With the introduction of production lines for new product categories, Croatia is additionally strengthening its position on the global map of production sites in the tobacco industry. We are continuing to expand our selection for consumers in Croatia.”
The increased capacity in Kanfanar will help BAT meet growing demand for HTPs in Europe and northern Africa.
Plenkovic expressed satisfaction at BAT’s continued investments in Kanfanar.
“The new HRK200 million investment in new products means a new impetus, enthusiasm and a new generator of business and with that, a contribution to Croatia’s economy,” he said.
“The company employs 1,600 people, and another 800 cooperate closely with BAT and make a living that way. The investment plans have been coordinated with their headquarters in London, and all the employees at the factory will be satisfied while the entire economy of Istria County will benefit from BAT’s operations.”
The new HRK200 million investment in new products means a new impetus, enthusiasm and a new generator of business and with that, a contribution to Croatia’s economy.
In June 2020, BAT suggested it might relocate its Kanfanar factory to another country due to unfavorable business conditions. The government then embarked on a campaign to keep the multinational in Croatia.
Plenkovic stressed that the new investment reflected Croatia’s good business climate, not government pressure.
BAT is keen to build “a better tomorrow.” Chief Marketing Officer Kingsley Wheaton explains what that entails.
By George Gay
I believe that Oscar Wilde, a man of fashion, once described fashion as “a form of ugliness so absolutely unbearable that we have to alter it every six months.” So I wonder whether he, as a fashionable smoker, would have supported altering the cigarette every six months, given he had known it posed an absolutely unbearable risk.
I think he would have done so. He was a risk-taker, but he was also highly intelligent, and there comes a time when intelligent people, even risk takers, have to yield to reality. Time caught up with the tobacco industry years ago, and, during the past decade or so, it has been changing in the light of what to most people is smoking’s unacceptable risk. These changes have included offering consumers a burgeoning range of increasingly viable lower risk alternatives to combustible cigarettes, which, rather than appearing every six months, have been launched as a steady stream of innovative products that, yes, up to a point, are dictated by consumer-led fashion.
Appropriately, Wilde talked of altering fashion while the tobacco industry talks usually of change. But there is a new word on the block: “transformation,” which seems to describe a more muscular form of change—one that is not just about the market but about the companies supplying the market and the consumers buying from the market. BAT is one company involved in transformation and, in April, Tobacco Reporter asked it what form this transformation was taking.
“BAT has a clear purpose—to build ‘A Better Tomorrow’—by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products,*” said Kingsley Wheaton, chief marketing officer, in an emailed reply. “We aim to generate an increasingly greater proportion of our revenues from products other than combustibles, and we are targeting £5 billion [$6.97 billion] New Category revenue by 2025. We aim to have 50 million consumers of our noncombustible products by 2030, and today, already 13.5 million consumers choose these products …
“We have the broadest New Categories portfolio in the industry, comprising vaping devices, tobacco-heating [products] and modern oral nicotine products. Our multicategory portfolio offers innovative consumer products that have been developed using cutting-edge technology and science. We are building the brands of the future.
“From launching our first vaping device in the U.K. in 2013, our vaping products are now available in 27 countries. In total, our New Category brands are available in more than 50 countries around the world.
“We have come a long way, and our transformation continues to accelerate. We are building new capabilities around the world focused on science, innovation and digital technologies. Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs, the creation of innovation super centers and further development of our world-class R&D laboratories. We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative BTomorrowVentures.
“In December 2020, we also announced we had progressed our Covid-19 and seasonal flu vaccine candidates into human trials—a significant milestone that further demonstrates our commitment to innovation and science.”
Endpoints
It would be easy to dismiss the above reply from BAT as the sort of polished promotional prose you would expect from a multinational, and I’m certain some people will do so. But if this is your reaction, it is worth reading it again because the breadth of the transformation cannot be denied, even if you don’t like the direction of travel. As BAT pointed out, it started life in 1902 and, for more than 100 years, had a product portfolio comprising more or less only cigarettes, which themselves comprised mainly a processed plant. Now it is describing how it is harnessing science, digital technologies and innovation super centers to produce a range of new category products that will change the market and consumer habits significantly within a targeted time. And let’s not forget the vaccine trials, which are impressive in themselves, but which hint at scientific developments that might provide important cross-fertilizations.
One interesting question that arises when considering the transformation of a company has to do with whether there comes a point at which the transformation is complete, or whether it is a continuing process without any readily identifiable endpoint.
“From the start of our portfolio transformation journey, we have always been clear that no consumer is the same,” said Wheaton. “In order to meet differing needs in multiple marketplaces, a portfolio of suitable alternatives is required—that is the hallmark of a modern consumer products business. It’s about understanding consumer preferences and how the marketplace is evolving.
“We are transforming from a company that defines itself by the product that we sell to the consumer needs that we meet. We are committed to driving a step change in our New Category business while also innovating new product areas that go ‘beyond nicotine.’
“We recently entered a strategic R&D collaboration with Organigram, a leading Canadian cannabis licensed producer. This agreement augments our activities to expand our portfolio ‘beyond nicotine’ and follows the pilot launch of our first CBD vaping product, Vuse CBD Zone, in Manchester, U.K., earlier this year.”
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The Shifting Regulatory Landscape
Given the stated individuality of consumers and their inevitable turnover, it would seem that transformation will be a continuing business, especially since there is another significant variable in the equation: shifting regulatory landscapes. And at this point, the question arises as to how a multinational company can navigate regulations in a world where countries operate with different—sometimes vastly different—regulations in respect of tobacco and new-generation products.
“The regulatory environment around tobacco harm reduction is evolving,” said Wheaton. “Science increasingly points to the reduced-risk* nature of our New Category tobacco and nicotine products as an alternative to smoking. This means we are seeing policy and regulatory shifts in several markets. Some countries have greater restrictions in place. Others, like the U.K., view tobacco harm reduction within a regulated framework, encouraging smokers to use potentially reduced-risk tobacco and nicotine products.
“We believe a stakeholder-inclusive, whole-of-society dialogue, which includes regulators, policy makers, consumers and the industry, is key to developing effective policies that can accelerate tobacco harm reduction as fast as possible.
“We also believe that accelerating progress toward more effective tobacco harm reduction policies needs an evidence-based approach; proportionate regulation; freedom to innovate; engagement, dialogue and communication; and responsible marketing freedoms.
“Underpinning all of this is our ethos: It is about being bold, fast, empowered, responsible and diverse to create a future-fit culture at BAT.”
Dropping the Pods
Although change is always put forward as a positive by those bringing it in, it doesn’t take more than a second’s thought to realize this is not necessarily the case. And the same could be said about transformation, so Tobacco Reporter asked whether BAT was concerned the tobacco industry’s transformation to some new-generation products could be viewed as having negative consequences for the environment.
As part of his reply, Wheaton said BAT’s group-wide circular economy strategy for all its product categories—including its New Categories portfolio—was guided by three strategic priorities:
Simplifying the design of products to improve recyclability and reduce the use of virgin materials and resources;
Maximizing the longevity of products to improve the experience for consumers; and
Minimizing waste through increased product recovery and recycling.
“Responsible disposal of our New Category products is key to our approach,” he added.
“We have implemented ‘drop the pod’ pilot schemes in France, Mexico and the U.K. for consumers to return their e-liquid pods. In Japan, we have a scheme that allows consumers to return tobacco-heating devices. We aim to implement takeback schemes for our New Category devices, in all markets where they are sold, by [the] end of 2021.”
So it would seem that, as far as BAT is concerned, building a better tomorrow goes beyond addressing individual and societal health improvements. In answer to another question, Wheaton pointed out that the expectations of the broader society were that businesses should play a more active role in addressing and finding solutions to crucial social, economic and environmental issues. “At BAT, we welcome this shift, which is aligned to our company’s purpose and our ESG [environmental, social and corporate governance] agenda,” he said.
“Reducing the health impact of our business by encouraging those smokers who would otherwise continue to smoke to switch completely to scientifically substantiated reduced-risk alternatives* is the greatest contribution we can make to society. This means growing our New Category business and increasing the proportion of our revenue coming from New Category products as fast as possible.
“Our work to reduce the environmental impact of the business will also drive growth and create shared value, delivering results that simultaneously benefit shareholders and wider society.
“In support of our ‘A Better Tomorrow’ purpose, in 2020, we set three ambitious ESG targets: First, to increase the consumer base of our noncombustible products to 50 million by 2030; second, to become carbon neutral for emissions resulting from our own business by 2030 and accelerating our existing environmental targets to 2025; third, to eliminate unnecessary single-use plastic and make all plastic reusable, recyclable or compostable by 2025.”
There is a saying that you can lead a horse to water, but you cannot make it drink, so what, Tobacco Reporter asked, could BAT do if a hard core of smokers decided they did not share the company’s vision of a better tomorrow? Would it keep manufacturing traditional cigarettes for them, or would it stop supplying such cigarettes when a country’s smoking population dropped below 5 percent or some such figure?
“We are clear that cigarettes pose serious health risks,” said Wheaton. “The only way to avoid these risks is not to start or to quit. We encourage those who would otherwise continue to smoke to switch completely to scientifically substantiated reduced risk alternates.* Driving value from our combustible cigarette business is how we fuel our investment in, and transition revenue to, New Categories, so it will be an important part of our business for many years to come.
“Providing smokers with factual information, about, for example, vaping, is essential to enable them to make informed choices. We are committed to providing this information and have launched www.vapeexplained.com, a digital information hub providing adult smokers and vapers with science-informed answers to the vaping questions most commonly searched for online. VapeExplained.com is built on the company’s vast technical expertise of over 1,500 R&D specialists and the experiences of offering vaping products in over 26 countries around the world.”
That, of course, didn’t answer the question of how long BAT was willing to continue making combustible cigarettes for a diminishing consumer base, but an answer was hinted at in answers to the next questions, when Tobacco Reporter asked how the company would take with it on its transformation its commercial stakeholders, or, in the case of some stakeholders, such as tobacco growers, how it would help them transition to new, perhaps unrelated, activities.
“Also on this journey to a better tomorrow, we expect tobacco growers to remain central to our supply chain for many years to come, and farmer livelihoods is one of the priority areas of our sustainability agenda,” said Wheaton. “We are committed to helping our contracted farmers and their communities to grow and flourish. Farm diversification is just one example of this.
“Over 93 percent of our contracted farmers in our supply chain grow other crops alongside or in rotation with tobacco, ensuring they don’t rely on one crop. This has helped to increase their resilience as well as enhancing food security and preserving soil health. If there is a future impact on the overall demand for tobacco leaf, we have an established approach for working with impacted farmers to support a smooth transition into alternative agricultural livelihoods.”
*Based on the weight of evidence and assuming a complete switch from cigarette smoking. According to BAT, these products are not risk free and are addictive. “Our products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to FDA regulation, and no reduced-risk claims will be made as to these products without agency clearance,” the company points out.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
Luc Jobin succeeds Richard Burrows as chairman of BAT today. Jobin joined the BAT board in 2017 as an independent nonexecutive director. His previous positions include president and CEO of Canadian National Railway Co., executive vice president of Power Corp. of Canada and CEO of Imperial Tobacco Canada.
Speaking at BAT’s annual general meeting, Burrows said his successor would inherit “a strong business that is transforming, has excellent momentum and is well placed to deliver sustainable growth for many years.”
BAT delivered constant currency revenue growth of 3.3 percent, above its revised 1 percent to 3 percent guidance range. On a constant currency adjusted basis, profit from operations grew by 4.8 percent. Operating margin grew by 100 basis points to 44.1 percent including the impact of currencies.
BAT is well positioned for future success with Luc as chairman and Jack Bowles as chief executive.
Reduced-risk “new category” products delivered £1.4 billion ($1.94 billion) in revenues in 2020, representing 15 percent growth at constant rates compared with 2019. The company is on track to meet its £5 billion new category revenue ambition by 2025.
Burrows expressed strong confidence in BAT’s future under Jobin’s leadership.
“Luc brings a wealth of experience, including significant financial, regulatory and consumer business acumen. Having worked closely with him in his role as a nonexecutive director over the last three years, I know that BAT is well positioned for future success with Luc as chairman and Jack Bowles as chief executive,” he said in a statement.
“I retire as chairman with many fond memories and the last year, in particular, has demonstrated the unwavering resolve of the people in BAT. From every level in the business, right through to our management board, ambition, talent, passion and enthusiasm are what drives BAT’s delivery. I look forward to the company’s continued success.”
Organigram Holdings has acquired The Edibles & Infusions Corp. (EIC) in a CAD35 million ($27.88 million) stock deal, reports Reuters.
EIC specializes in pot edibles, like gummy bears, brownies and drinks, and have been the biggest beneficiaries of increased demand for cannabis products during coronavirus lockdowns.
Edible products remain an important product category to Organigram, and EIC represents an ideal partner with which to expand our market presence in this category as well as other derivative cannabis categories.
“Edible products remain an important product category to Organigram, and EIC represents an ideal partner with which to expand our market presence in this category as well as other derivative cannabis categories,” Organigram Chief Executive Greg Engel said.
Although change is always put forward as a positive by those bringing it in, it doesn’t take more than a second’s thought to realize this is not necessarily the case. And the same could be said about transformation, so Tobacco Reporter asked whether BAT was concerned the tobacco industry’s transformation to some new-generation products could be viewed as having negative consequences for the environment.
