Tag: British American Tobacco

Reynolds to Appeal Menthol MDOs

Photo: BAT
BAT will appeal the U.S. Food and Drug Administration’s marketing denial orders for its Vuse Vibe Tank Menthol 3.0 percent and Vuse Ciro Cartridge Menthol 1.5 percent, the company announced in a statement.
On Jan. 24, the FDA denied marketing applications for two menthol refills used in Vuse Vibe and Vuse Ciro vaporizers, which are sold in the U.S. by BAT subsidiary R.J. Reynolds. According to the agency, Reynolds’ applications presented insufficient evidence to show that the potential benefit to adult smokers outweighs the risks of youth initiation and use.
“Reynolds intends to seek a stay of enforcement immediately and will pursue other appropriate avenues to allow Vuse to continue offering its innovative products to adult nicotine consumers age 21-plus without interruption,” the company said.
“We believe that menthol vapor products are critical to helping adult smokers migrate away from combustible cigarettes. FDA’s decision, if allowed to go into effect, will harm, not benefit, public health.
“We remain confident in the quality of all of Reynolds’ applications, and we believe that there is ample evidence for FDA to determine that the marketing of these products is appropriate for the protection of public health.”
Anti-tobacco campaigners countered that menthol e-cigarettes appeal to underage consumers. “Existing evidence demonstrates that nontobacco-flavored e-cigarettes, including menthol flavored e-cigarettes, have a known and substantial risk with regard to youth appeal, uptake and use; in contrast, data indicate tobacco-flavored e-cigarettes do not have the same appeal to youth and therefore do not pose the same degree of risk,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, in a statement.
Morgan Stanley said it expected the rejected products to remain on the U.S. market for the duration of BAT’s appeal, with minimal impact on the company’s operations. “Longer term, should today’s denial order reflect a broader effort by the FDA to ban menthol e-cigarettes, BAT’s U.S. cigarette business could benefit given its menthol mix as it might discourage some smokers from quitting or switching to reduced-risk products,” the bank wrote in a note to investors. Reynolds’ Newport brand represents about 40 percent of BAT’s U.S. cigarette dollar sales, according to Morgan Stanley.
The Jan. 24 rejection of the Vuse refills underscores the FDA’s ongoing reluctance to approve menthol e-cigarette flavors. To date, the agency has approved only tobacco-flavored e-cigarettes.
However, the FDA has granted both a premarket tobacco product application and modified-risk tobacco product designation to IQOS’ menthol variant, which may eventually leave Philip Morris International’s heat-not-burn product as one of the few menthol reduced-risk alternatives on the market.
The FDA is targeting publishing a final rule to ban menthol cigarettes in August 2023, but considering expected industry litigation, final implementation could be five to six years away, according to Morgan Stanley.
January 25, 2023
BAT South Africa to Restructure Operations

Photo: Tobacco Reporter archive
BAT is looking to restructure its South African business following a drop in legal cigarette sales. The process may affect 200 jobs.
The cigarette maker attributed its predicament in part to the five-month cigarette sales ban that South Africa implemented in 2020. Intended to help prevent the spread of Covid-19, the measure was later declared unconstitutional by country’s Supreme Court.
By then, however, the damage had been done, according to BAT.
“The 2020 tobacco sales ban resulted in an explosion of growth for the illicit market. This has continued even after the ban on tobacco sales was lifted,” the company said in a statement.
In 2019, BAT South Africa permanently employed around 1,800 staff across its South African operations. Since 2020, it has been forced to retrench more than 30 percent of its workforce, the company said.
Over the same period, the company’s cigarette sales dropped by around 40 percent as the illicit market accelerated, it said.
Based on independent studies, BAT South Africa estimates that the illicit cigarette trade accounts for up to 70 percent of South Africa’s total cigarette market. This illegal trade has severely impacted the sustainability of the legal tobacco industry and is a source of funds for criminal organizations in South Africa,” BAT wrote.
The company urged for stronger enforcement and new policies to combat the illicit trade.
“While BAT South Africa applauds recent efforts by the South African Revenue Service (SARS) and law enforcement agencies to clamp down on the illicit cigarette market, it also calls for even stronger action, given that the current approach has not stopped the growth of illicit cigarettes.
“SARS has issued important new policies, but now it is time to audit manufacturer policy compliance. To support law enforcement agencies and increase their effectiveness, as well as help consumers differentiate between illicit and legal market offers, a minimum retail price policy is required.
“The illicit trade robs South Africa of billions of rands in much-needed tax revenue, and the impact of this is now clearly being seen on legitimate businesses, their operations, and, unfortunately, the livelihoods of those in their value chains. Legitimate businesses cannot operate competitively if the country’s laws are not enforced.”
BAT did not give details of how it would restructure its business or which jobs might be cut.
January 16, 2023
Committed to Science

David O’Reilly (Photo: BAT)
David O’Reilly, director of scientific research at BAT, shares his views on the roles of science and nicotine in tobacco harm reduction.
TR Staff Report
Science is instrumental as the tobacco industry transitions from combustible products to less risky smoking alternatives. Tobacco Reporter spoke with BAT’s director of scientific research, David O’Reilly, about the roles of science and nicotine in tobacco harm reduction.
Tobacco Reporter: You have been with BAT since 1991. Could you please compare the role of BAT’s science department at the time when there were only combustible cigarettes to the role it plays today?
David O’Reilly: BAT has a long history of conducting scientific research and has had an R&D facility in the U.K. for over 60 years. Throughout this period, we have seen the science significantly change.
Originally, the majority of R&D we conducted was focused on cigarettes and tobacco plant science, but the more we learned about combustion and the harm that burning tobacco causes, the more we shifted our efforts to exploring new ways to provide consumers with less risky alternative products.
Initially, our focus was on reduced-toxicant cigarettes, but, utilizing the growing body of evidence and the Institute of Medicine report that highlighted the negative impact of combustion, we shifted our activities to the development of noncombustible products.
This is now where the majority of our R&D efforts are focused: generating new evidence to support our new category products but also developing new or improved products.
To ensure that we are using the latest scientific thinking and cutting-edge techniques, we have increased our investment in science and expanded the number of scientists within BAT. We have recruited people from a broad range of backgrounds, such as genetics, neuroscience and data sciences.
With so much focus on the development of reduced-risk products (RRPs), does BAT still conduct research on combustible cigarettes?
Our primary focus within R&D is our new category products, as we know that consumer preferences continuously evolve, but also that science and innovation continue to change at pace. However, we do undertake some R&D on our combustible products. This is essential to ensure that they are produced to high quality and manufacturing standards.
What are your thoughts on very low-nicotine cigarettes with regard to their role in tobacco harm reduction?
Our belief is that tobacco harm reduction is the best way forward to reduce the health impacts of smoking. The evidence shows that most of the harm from cigarettes is caused by combustion and the burning of tobacco, not by the nicotine.
In fact, nicotine plays an important role in tobacco harm reduction. Since it is one of the reasons why people smoke, nicotine’s presence in products that, though not risk-free and addictive due to the presence of nicotine, are designed to be reduced risk¹ compared to cigarettes. These products can help adult smokers to switch instead of continuing to smoke.
As Professor Michael Russell said in his 1976 pivotal paper, “People smoke for nicotine, but they die from the tar,”² and we know if you take the nicotine away or offer very low amounts, consumers may not be satisfied and revert back to cigarettes rather than switching completely to a reduced-risk alternative that is backed by scientific research, such as vaping.

In RRP development, one of the most pressing challenges is youth initiation. To what extent can innovation help prevent underage consumption? Will it be necessary to sacrifice all nontobacco vaping flavors to achieve this goal?
We are clear that our products are for adult consumers only and that youth should never use any nicotine products, be it cigarettes or vaping products.
Our products are sold to adult consumers via reputable retailers that verify the age of consumers before sale and follow our youth access prevention standards, which include prominent 18-plus labels on the front of all packaging and on all communications.
This is in addition to robust age verification on our own e-commerce channels, our youth access prevention training and certification for retailers and our “iCommit” training for employees.
It is worth highlighting that alternative products need to be satisfying to prevent adult consumers from going back to cigarettes, and research has shown that flavors play an important role in encouraging adult smokers who would otherwise continue to smoke to switch to better alternatives. However, a priority for BAT is ensuring that our flavors and device colors are designed to appeal to adult consumers, not youth.
In order to switch away from combustibles, consumers need to like the alternative, less hazardous product. What still needs to be done to improve nicotine delivery and consumer satisfaction? Can you please give an example of how you improved one of your next-generation products in this respect?
When we develop any new product, we think holistically about the consumer experience, and we use science and consumer insights to guide our development programs and deliver products that consumers want and find satisfying. For example, when we think about a product, we think about many aspects, including the design, the feel, the power of the battery, ingredients of the liquids, taste, etc. BAT was one of the first companies to use nicotine salts, as we knew that consumer satisfaction is important to make vaping more acceptable to cigarette smokers. This is just one example of how science and consumer insights combine to enhance our products.
For tobacco harm reduction to succeed, product must be affordable, especially to customers in the low-income and middle-income countries where many of the world’s smokers reside. What solutions in addition to nicotine pouches are you researching in this regard?
Our purpose is to build “A Better Tomorrow” by reducing the health impact of our business. We are doing this by developing a wide choice of alternative products for adult consumers who would otherwise continue to smoke, tailored to meet their evolving preferences.
Two key components of every innovation program we undertake are sustainability and affordability. It is important that these aspects are considered from the outset and at every step of the way so that we deliver a product that consumers want. We continue to launch these in markets across the globe, and our aim is to switch 50 million consumers to our noncombustible products by 2030.
Sustainability is increasingly important. BAT has introduced a recycling campaign for its electronic nicotine-delivery devices and has begun replacing plastic elements of vapor products with pulp-based alternatives. However, vaporizers contain circuit boards, which in turn contain plastics and heavy metals, and they also use lithium-ion batteries. How is BAT tackling this issue?
Every product developed has sustainability as a key component of the development plan, and we are committed to carbon neutrality across our operations by 2030. In May 2021, Vuse became the first global carbon neutral vape brand due to our ongoing efforts, notably by offsetting its carbon impact.³
Also, in many markets where Vuse is available, there is a takeback scheme in place, which allows consumers to return products for responsible disposal.
As part of our ongoing Vuse “Cut the Wrap” initiative, Vuse Go packaging has no external plastic poly wrap. The initiative, which is our commitment to reduce single-use plastics in our packaging, has already saved approximately 250 tons of plastic, the equivalent to more than 10 million plastic bottles.⁴
Misconceptions about the relative risks of RRPs and misconceptions about the nature of nicotine also present major challenges to harm reduction. An increasing number of U.S. adult consumers believe that vaping is as hazardous or even more hazardous than smoking, for example, and there are also misperceptions in the scientific and medical world. Such misunderstandings are often fueled by flawed studies. What can the industry do to address this problem without being accused of lobbying and in an environment where many are skeptical about tobacco industry-funded research?
At BAT, we think that the solution cannot be delivered by industry alone. To the contrary, BAT needs to work together with the wider scientific community and other key opinion leaders to create a system that is clear about the harm caused by smoking yet recognizes, holistically and consistently, where real public health gains can be made. A system that encourages adult consumer choice. We want a “whole-of-society approach”—as referenced by the United Nations—to this important public health issue.
There is also a need for the ongoing generation of robust scientific evidence. BAT continues to invest in scientific studies and openly share the results to help build the evidence base that supports alternative tobacco and nicotine products and their potential role in tobacco harm reduction.
At BAT, we believe that adult consumers should have access to information that enhances their understanding and allows them to make informed choices based on the best available evidence.

The concept of harm reduction has been widely accepted in fields such as substance abuse. Why does it face so much resistance when applied to tobacco, and how can this be overcome?
Firstly, it is important to recognize that there are some governments, such as the U.S., U.K., Sweden and New Zealand, who have adopted progressive public health policies that reflect the growing weight of evidence that supports the role of alternative tobacco and nicotine products in providing less risky alternatives to those who would otherwise continue to smoke. In these countries, although not all at the same stage, we see the continued decline in smoking rates and progress toward becoming smoke-free (under 5 percent of the population).
In other countries, many of whom have adopted policies that do not differentiate between cigarettes and alternative products, we see little or even a reversal in progress. Often the reason for such an approach is the “precautionary principle.” Essentially, in the absence of epidemiological data about alternative products, governments will not recommend them.
However, we believe, based on the already available evidence about alternative products and providing a complete switch, that these are reduced risk¹ compared to cigarettes. This is a view reflected through the work of independent organizations, such as Public Health England, who determined that based on current knowledge, vaping is at least 95 percent less harmful than smoking.⁵ However, it is important to note that these alternative products are not risk-free and contain nicotine, an addictive substance.
BAT has started to build an innovation hub in Trieste, Italy. What role will this hub play within the company’s global strategy for innovation and sustainability? What does this mean for your R&D site in Southampton?
The Trieste innovation hub will host a range of facilities, including a new manufacturing site for BAT’s New Category products, a digital boutique, innovation lab and Centre of Excellence for digital transformation and digital marketing. These activities, alongside the activities undertaken at our other R&D and innovation sites, complement and build upon the research and development work undertaken in Southampton, which is focused on generating the science needed to substantiate our products whilst ensuring they are produced to high standards.

What role should tobacco harm reduction play nowadays?
Tobacco harm reduction is one of the most important public health strategies. Science plays a critical role in delivering the alternative products that enable it but also allows us to measure the impact and outcomes of switching completely from cigarettes.
Work by scientific experts, using advanced computing and modeling, has shown us the potential for substantial life year gains and premature deaths caused by smoking-related diseases averted than can be delivered by switching smokers to vapor products.⁶ The longer these alternative products are on the market, the more real-world data we will be able to collect, which will be very powerful and reinforce our belief about the critical role they play in tobacco harm reduction and building “A Better Tomorrow.”
¹Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk-free and are addictive.
² Russell MJ. Low-tar medium nicotine cigarettes: a new approach to safer smoking. BMJ 1976;1:1430–3.
³ Based on Vuse Go, [Vuse Go Max], Vuse ePod, ePen, eTankmini, Alto devices and consumables internal sales forecast (calculated March 2022) for 12 months starting from April 2022. Vuse will have reduced its carbon emissions by circa 55 percent (as of March 2023) through its internal sustainability initiatives since launched in 2019 and has now offset the remaining circa 45 percent.
⁴ Plastic saving was calculated from 2020 global sales volumes and 2021 forecasted sales, and the plastic bottles comparison was based on a 22.9 g bottle weight, representative weight of 500 mL commercially available soft drink bottles (May 2020).
⁵ Evidence review of e-cigarettes and heated-tobacco products 2018 (publishing.service.gov.uk).
⁶ Potential deaths averted in the U.S. by replacing cigarettes with e-cigarettes – PubMed (nih.gov).
January 1, 2023
Study Shows Velo Offers Reduced Risk

Photo: BAT
Users of BAT’s Velo modern nicotine pouch showed significant reduced risk of smoking-related diseases compared to smokers, according to a new cross-sectional clinical study published in Biomarkers.
The study included participants who had been using Velo exclusively for over six months as well as current smokers, former smokers and never-smokers. For the Velo consumers and current cigarette smokers, usage patterns and overall consumption were not controlled under the study protocol as the aim was to assess the impact among people using the products in their “normal” way rather than in a controlled way. Four different groups were enrolled and studied.
The results showed that the levels for the biomarkers of exposure, based on priority toxicants as defined by the World Health Organization, were substantially lower in Velo consumers compared with smokers. The data also showed favorable differences between the Velo consumers and smokers in the majority of the biomarkers of potential harm, with four achieving statistical significance and the others having similar levels across the Velo consumers, former and never smoker groups.
A single set of samples of blood, urine and other clinical measurements was tested for certain toxicants and a range of biomarkers thought to be linked to the development of diseases such as cancer and cardiovascular disease.

“These results add further evidence that supports the important contribution Velo can make to tobacco harm reduction.”
David O’Reilly, director of scientific research, BAT
“These results are very important for Velo and the modern oral nicotine product category,” said David O’Reilly, director of scientific research at BAT, in a statement.
“They build on the extensive scientific evidence, including epidemiological data, that already exists for oral tobacco and add to the weight of evidence that supports our belief that Velo is a reduced-risk product for smokers who completely switch from cigarettes as compared to continued smoking. We have already generated data that shows Velo has a toxicant profile better than snus and comparable to nicotine-replacement therapy. These results add further evidence that supports the important contribution Velo can make to tobacco harm reduction.”
Based on the biomarkers measured, compared to smokers, Velo consumers who had been using the product exclusively showed significantly lower levels in biomarkers of exposure to priority tobacco toxicants; significant favorable differences in a biomarker of potential harm relevant to lung cancer risk; significant favorable differences in a number of biomarkers of potential harm relevant to cardiovascular disease; and significant favorable differences in a biomarker of potential harm relevant to general inflammation.
For the biomarkers that showed no significant difference between the Velo consumers and smokers, similar levels were observed between the Velo and former and never-smoker groups.
Participants were based in Denmark and Sweden, aged 19–55 years old and in good general health.
December 13, 2022
BAT Reports Continued Gains in Noncombustibles

Photo: BAT
BAT gained 3.2 million consumers within its noncombustible business during the first nine months of 2022, thanks in part to new product launches and geographic expansion, CEO Jack Bowles wrote in a trading update.
The New Category business continues to drive strong volume, revenue and market share growth and has become a significant contributor to group performance, according to BAT.
The global value share of Vuse vapor cigarettes reached 35.7 percent in key vapor markets by September 2022, up 2.2 percentage points over full-year 2021. In the U.S., the brand extended its leadership position by 6.8 percentage points, achieving a total value share of 39.3 percent.
BAT’s Glo tobacco-heating product (THP) increased its category volume share by 1.6 percentage points in key THP markets to reach 19.5 percent by September 2022. In Europe, Glo achieved a 20.4 percent volume share in key THP markets, up 4 percentage points. In Japan, Hyper drove Glo’s total nicotine volume share up 50 base points versus 2021 to reach a share of 7.3 percent.
BAT’s Velo modern oral brand reached a volume market share in Europe of 69.1 percent.
Meanwhile, BAT reported a flat combustible cigarette value share, with gains in the United States, Asia-Pacific and the Middle East offset by declines in the company’s Americas, Sub-Saharan Africa and Europe regions. In the U.S., BAT begun new sales strategies in the second half to offset “early signs of accelerated downtrading,” according to Bowles.
BAT reiterated its guidance for mid-single percentage growth in adjusted earnings per share at constant currency this year. Price increases and marketing campaigns should offset higher raw material prices, according to the company.
December 8, 2022
BAT Nigeria Recognized as Top Exporter

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The Nigerian Export Promotion Council (NEPC) recognized BAT Nigeria as a top contributor to non-oil exports to African markets, reports Business Day.
NEPC issues the award based on the pre-shipment inspection reports by the non-oil exporters, according to Ezra Yakusak, executive director and CEO of NEPC.
BAT Nigeria exports to 14 countries in West Africa and Central Africa, generating more than $500 million in revenue. BAT Nigeria is one of the country’s top five non-oil exporters each month and generates and repatriates over $110 million in foreign exchange annually. The company employs, directly and indirectly, more than 350,000 Nigerians.
“The Nigerian Export Promotion Council’s recognition of the volume of our exports to African markets is a testament to BAT’s contribution to the region’s economic growth and development,” said Odiri Erewa-Meggison, external affairs director at BAT West and Central Africa. “We have been involved with Nigeria as well as the West and Central Africa region. We remain committed to advancing the non-oil sector in Nigeria as we create ‘A Better Tomorrow.’”
Non-oil exports accounted for 11.32 percent of 2021 exports in Nigeria.
December 5, 2022
BAT Donates Cigarette Destruction Machine

Photo: Taco Tuinstra
BAT has donated a Hammermill cigarette destruction machine to the Uganda Revenue Authority (URA) to support the national fight against illicit cigarette trade, reports the PML Daily.
Receiving the machine at the URA head offices in Nakawa, acting Commissioner of Customs Okaka Godfrey said that the Hammermill will provide a more convenient and cost-efficient way to destroy illicit cigarettes compared with manual methods.
The acquisition of the machine follows a report by Kantar suggesting that nearly one-third of the cigarettes sold in Uganda are illicit. More than half of these illicit cigarettes are manufactured in Uganda for export, with the rest being manufactured in other countries before being smuggled into the country.
The government misses out on an estimated USH30 billion ($8.01 million) in tobacco tax revenues each year due to the illicit cigarette trade. BAT attributes a recent 41 percent drop in tax remittances to the URA to competition from the illicit market.
According to BAT Managing Director Mathu Kiunjuri, the illicit trade problem has become worse recently. This year, the share of the illicit market has increased to 27.5 percent from 23.8 percent in 2021 and 15.4 percent in 2020.
Between 2019 and 2022, URA enforcement teams seized more than 293,099 cartons of illicit cigarettes valued at $340,000. The major brand intercepted was Super Match made in Uganda for export, followed by high end brands such as Dunhill, Business Royal and Sportsman.
December 1, 2022
Chasing Unicorns

Photo: pimmimemom
In their quest for cutting-edge innovations, tobacco companies have set up venture capital subsidiaries.
By Stefanie Rossel
Incessant innovation is at the heart of tobacco companies’ transformation process. Eager to move their businesses away from combustible cigarettes toward less hazardous alternatives and opportunities beyond nicotine, cigarette manufacturers have invested billions of dollars into innovation and scientific research. They have substantially expanded their research and development teams, recruiting talent from sectors such as consumer electronics while acquiring companies in adjacent business areas, including pharmaceutics.
To avoid missing out on innovative trends and new technologies, however, tobacco companies in their transformation process need to think out of the box, or rather outside the organization, and keep an eye on the startup scene. For this purpose, the leading players have established platforms to serve windows on future technologies. In addition to using corporate venture capital (CVC), they are working with incubators, accelerators and universities.
Japan Tobacco International has chosen the latter approach. In March 2019, it teamed up with Silicon Valley-based Plug and Play Tech Center, a technology incubator, to run Vapetech, a program aimed at bringing together innovators and data experts to develop technology that improves the user experience and health benefits of vaping. Each year, Plug and Play selects about 20 startups that will develop ideas and solutions for a more enhanced vaping experience, JTI said in a statement. Startups with new devices or technology applicable to the Internet of Things (IoT), biometrics, data and lifestyle will enter a three-month program to develop their products and services and have access to investment and corporate partnerships.
“We need new innovative products coming on in future years, so the Vapetech process will be really instrumental,” explains Suzanne Wise, senior vice president of corporate affairs and communications at JTI. “We surround startups with the right ecosystem and provide them with all they need. It’s a process where you get people completely from outside the industry, with different mindsets, who are looking at what we are facing as challenges, and they just come up with stuff that we say, gee, why not us?”
Wanted: Extraordinary Solutions
With PM Equity Partner (PMEP), Philip Morris International was the first tobacco company to set up a CVC division in 2016. CVC is a variant of venture capital where the required capital comes from a corporation outside of the financial sector. In contrast to risk financing, which primarily aims to generate a return for the venture capitalist, CVC also pursues strategic goals.
Established companies use their CVC arms to develop new technologies or new business models, to explore other markets or for diversification. Staying ahead of competitors in a specific market is another motivation for CVC. In turn, startups benefit not only from the funding but also from getting access to technological know-how, distribution channels and cooperation partners.
PMEP invests in early stage and growth-stage companies with technology-based business models and proven commercial traction, such as existing revenue or contracts, that fit into the focus it shares with its parent company: the ambition to replace cigarettes with smoke-free alternatives and explore new markets beyond nicotine.
Candidate companies should be able to make a positive, significant and sustainable contribution to PMI’s core business and science-centric, technology-driven smoke-free vision, and they should operate in one of the four investment corridors defined by PMEP: life sciences, industrial technologies, consumer engagement and product technologies. Aspirants could, for example, offer innovations in inhaled therapeutics and computational research methodologies, industrial robotics and automation, or technology-based process optimization. Or they could bring in their solutions for bioauthentication, user identification or innovative customer care.
“The startup should have developed an innovation in one of these areas that substantially differs from other technologies currently used in its respective market segment,” explains Alexander Stoeckel, head of PMEP. “Furthermore, it should have left the startup phase behind and ideally have customer relations or a testable prototype because usually we test the startup’s innovation together with PMI’s respective departments and decide on an investment after we have understood which contribution this technology could contribute to our success as PMI.”
Strong Funding Basis
Being the CVC arm of a well-known company such as PMI helps generate business, according to Stoeckel. The fact that PMEP’s parent company is a tobacco corporation hasn’t been any hindrance yet, he says. “Founders are regularly surprised to find out how professional and broadly positioned PMI is.”
The CVC team is in constant communication with PMI’s division heads to identify their challenges, suggestions, problems and innovation requirements in order to find startups that develop or already market matching solutions. In return, the investee companies will be able to make use of PMI’s extensive R&D capabilities, operational and marketing excellence, and deep involvement in supply chain. PMPE says it provides its entrepreneurs with long-term support not only in financing but also for mutual benefits at strategic and commercial levels. More precisely, it helps entrepreneurs strategize, steer partnerships, help with negotiations and raise and utilize capital.
In October 2021, PMI allocated a further $200 million to the CVC’s initial $150 million investment. According to the company, ideal investments are between $2 million and $10 million in Series A stage companies, with flexibility to also consider investments in seed or late-growth companies. (Series A funding is the first round after the seed stage; companies need to have a strong plan for developing a business model that will generate long-term profit.)
To date, PMEP has invested in 13 companies, according to Pitchbook.com. Among the companies still in PMEP’s portfolio is BOW Group, a startup specializing in wearables, connected vehicles and smart home products. The company is supporting PMI to deliver on its commitment of a consumer-centric ecosystem. Another investee company, Biognysis, enables PMI with its disruptive technology to identify biomarkers and understand the biological impact of switching to PMI’s IQOS heated-tobacco product.
Driving the Change
BAT created BTomorrow Ventures (BTV) in 2019 and established a £150 million ($176.33 million) fund to help accelerate BAT’s transformation. As BTV’s managing director, Lisa Smith, pointed out during the recent GTNF in Washington, D.C., “Transformation requires innovation, and BTV has set up a number of innovation ecosystems. It’s a highly competitive market, and finding the best innovators out there is difficult. Our role is to be the outward-looking ‘handshake’ to the outside world to show that we are the preferred partner of choice.” BTV’s job, she said, was to channel these innovators to the right part of its business. “There are many tasks in transformation, such as to quickly move the environmental, social and governance (ESG) agenda and to build the science and credibility to be able to operate in the beyond-nicotine world.”
The CVC therefore invests in specialist categories, including consumer brands, digital transformation, new technologies, future sciences and sustainability. BTV has also established an accelerator and growth platform called BTV Labs and divided them it three categories: Consumer Delight Lab (focusing on consumer brands), Futures Lab (focusing on science, technology and digital) and an ESG Lab. In its portfolio are businesses from the functional food and beverage, electronic equipment and instruments, and cannabinoid sectors. To date, BTV has invested in 22 companies. Unicorn-nest.com estimates that the average round size was $3 million. With building a community a core part of BTV’s value proposition, the corporate venture unit stages “Binspired” events, a collaborative forum for CEOs or founders, investment partners and senior executives. In addition, it runs the “Battle of Minds” in partnership with BAT, which is a “business pitch” competition for students, graduates and early stage startups from around the globe.
Lexy Prosszer, BTV’s investment principal who previously worked in BAT’s merger and acquisitions department, says that BTV was established to accommodate a different type of deal. “M&A was not set up to deliver on that in terms of speed, scale and credibility to get these entrepreneurs at the table to want a conversation with us and believe that BAT has got the right intentions to change and transform. With BTV, we’re meeting a real need that the corporate [sphere] has.”
According to Prosszer, collaborating and engaging with startups has contributed to shift in mindset among BAT employees, encouraging them to do things faster. “They’re excited, engaged and love working with the entrepreneurs. Much has been achieved. It’s been a cultural shift to being open to how an entrepreneur might do things and how that can be leveraged to us to get our result faster.”
Through BTV, observes BAT Finance and Transformation Director Tadeu Marroco, the company suddenly has access to understanding better products that otherwise would take ages to develop internally. “We can be closer to them and see how they perform in the markets. For entrepreneurs, it means that they can leverage on the massive strengths that BAT has as a multinational company with massive distribution capabilities.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

December 1, 2022
BAT Invests in Charlotte’s Web

Photo: bukhta79
BAT is investing £48.2 million ($57.4 million) in Charlotte’s Web Holdings. Based in Colorado, USA, and listed on the Toronto Stock Exchange, Charlotte’s Web offers hemp extract wellness products. Its product formats include tinctures, capsules, chews and topicals.
“The appeal of Charlotte’s Web is clear to us: a wide portfolio of high-quality products, strong brand equity, an extensive retail presence and robust B2C e-commerce platform serving a loyal U.S. consumer base and a track record of in-depth scientific research,” said BAT Chief Growth Officer Kingsley Wheaton in a statement.
“Our investment in Charlotte’s Web represents another step for BAT in our exploration beyond tobacco and nicotine.”
“This investment will provide Charlotte’s Web with funding that we anticipate will help unlock deeper and broader research and development that is key to our continued innovation, global footprint and the advancement of our intellectual property portfolio,” said Jacques Tortoroli, CEO of Charlotte’s Web.
November 15, 2022
Illicit Trade Persists After Lockdown

Photo: Tobacco Reporter archive
The illicit cigarette trade continues to thrive in South Africa despite recent enforcement actions, according to a new Ipsos study.
According to Ipsos’ latest study, shops nationwide are still flooded with illegal tobacco products more than two years after the unconstitutional tobacco sales ban was imposed by the government as part of their response to the Covid-19 pandemic.
The study found that almost four out of five stores in the Western Cape (77.9 percent) sell cigarettes below the minimum collectible tax (MCT) rate of ZAR22.79 ($1.28) per pack. Almost three in four shops in Free State (72.3 percent) sell cigarettes below the MCT as do 66.2 percent of outlets in Gauteng, a significant increase compared to research conducted a year ago.

“The latest Ipsos study is irrefutable proof that the unconstitutional lockdown tobacco sales ban created a monster with an insatiable appetite.”
Johnny Moloto, general manager, BAT South Africa
A single pack of 20 cigarettes can be bought for as little as ZAR7, down from ZAR8, which was the lowest price found in the October 2021 study, according to Ipsos.
“The latest Ipsos study is irrefutable proof that the unconstitutional lockdown tobacco sales ban created a monster with an insatiable appetite,” said Johnny Moloto, general manager of BAT South Africa.
“Criminal manufacturers of tax-evading cigarettes are refusing to give up their control of the South African tobacco market and are pocketing billions in illicit profits that deprive the state of vital revenue and destroy honest jobs.”
November 9, 2022