In early September, a federal jury determined that Reynolds Vapor’s Vuse Alto product infringes on three Altria patents.
In its retrial request, Reynolds Vapor stated that “Altria’s improper injection of inflammatory evidence regarding patent infringement allegations against Reynolds in other cases denied Reynolds a fair trial. Erroneous evidentiary rulings also prejudiced Reynolds’ ability to present its defense. Those errors independently, and under the cumulative error doctrine, affected the verdict such that a complete new trial is required.”
Altria said in a statement that “this was a fair trial. There is no basis for another trial, and we are pleased that the jury correctly found that Reynolds Vapor has infringed a number of our patents.”
The complaint concerns three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings in April 2015.
Altria alleged Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.
Reynolds believes the lawsuit was filed in retaliation for patent infringement complaints filed by Reynolds in April 2020 for infringement by Philip Morris International’s IQOS tobacco-heating device of six Reynolds patents.
Until recently, Altria was the exclusive U.S. distributor for IQOS in the United States.
On Sept. 29, 2021, the U.S. International Trade Commission upheld an initial determination from May 2021 that Philip Morris International’s IQOS device infringes on two patents owned by Reynolds. The ruling barred Altria Group from importing IQOS products into the U.S.
BAT will close its Boncourt cigarette factory in Switzerland and move production elsewhere in Europe, reports SWI.
The factory employs more than 200 people, around half of them cross-border workers from France.
The closure will not affect BAT’s Lausanne office, which employs more than 100 other staff.
Boncourt mayor Lionel Maître described the decision as “a shock, a disappointment, a feeling of desperation and a mess.”
The Boncourt factory was founded by the Burrus family in 1814 and was taken over by Rothmans International in 1996 before merging with BAT three years later. In 1887, the site started producing Parisienne, which is the second best-selling cigarette brand in Switzerland.
In 2014, BAT closed a research and development facility in Boncourt with the loss of around 15 jobs.
BAT has conducted a cross-sectional clinical study of Velo, which is designed to provide new insights into the real-world health impact of its modern oral nicotine pouch product compared to smoking. Protocol details explaining the design have been published in the journal JMIR Research Protocols.
The study evaluates exposure to certain toxicants and early indicators associated with smoking-related disease in people who have been exclusively using Velo for over six months and compares them with groups of smokers, former smokers and never-smokers.
The results are currently being analyzed and will be published by the end of the year.
“Modern oral nicotine pouches are an exciting product category, which build upon the extensive scientific evidence available for snus but are designed to offer adult consumers an improved tobacco-free, reduced-risk alternative,” said Sharon Goodall, BAT’s group head of regulatory sciences, in a statement.
“We have already generated data that shows Velo has a toxicant profile better than snus and is comparable to nicotine-replacement therapy. However, we wanted to generate further evidence to demonstrate the important contribution it can make to tobacco harm reduction. I believe the results of this study will provide important new information, and we look forward to sharing them once available.”
BAT has published its Low-Carbon Transition Plan, detailing the actions it will take to reach its climate targets. This includes halving absolute emissions across its value chain by 2030, from a 2020 baseline, and to be net-zero across its value chain by 2050 at the latest.
“We’re proud to take this latest step in our sustainability journey,” said Kingsley Wheaton, BAT’s chief growth officer, in a statement. “By outlining the measures we will take to live up to our net-zero targets through our Low-Carbon Transition Plan, we’re demonstrating our continuing commitment to building ‘A Better Tomorrow.’ As a global company, we know minimizing impacts across our value chain is the right thing to do, as well as making sound business sense. That is why we have set stretching science-based climate-related targets and continue to embed sustainability across our business.”
BAT has committed to reduce absolute Scope 1 and Scope 2 greenhouse gas emissions by 50 percent by 2030 from a 2020 base year.
According to the CDP, tackling Scope 3 emissions, which are indirect emissions from BAT’s value chain, will be the most critical and challenging for the sector, and it constitutes the majority of BAT’s total carbon footprint.
For these Scope 3 emissions, BAT has committed to reduce emissions by 50 percent by 2030 from a 2020 base year by: partnering with suppliers, especially those contributing the most emissions, to ensure sustainability progress; progressively transitioning from air to sea freight as a lower carbon mode of transport on the occasions that products go by air; collaborating with farmers on carbon-smart tobacco leaf farming and other projects; and fostering circularity throughout R&D, designing for end-of-life processes and promoting eco-design principles.
BAT’s chief growth officer, Kingsley Wheaton, called for greater collaboration between the industry, governments and intergovernmental organizations to accelerate tobacco harm reduction becoming the tobacco control policy of choice during the recent Global Tobacco & Nicotine Forum in Washington D.C.
While BAT is determined to reduce the health impact of its business, Wheaton stressed that to bring about change, a “whole-of-society” approach is needed.
“We must provide adult consumers with a portfolio of products that are a better choice than cigarettes. And so that consumers are able to make informed decisions about those choices, public health needs to accurately communicate risk, while the industry should be able to responsibly communicate the benefits of switching via appropriate marketing freedoms,” Wheaton said.
BAT says its business is on track to achieve its ambition of having 50 million adult consumers of non-combustible products by 2030. The company is also investing heavily in research and development. In September 2021, for example, BAT announced it was constructing a state-of-the-art innovation hub in Trieste, Italy. The company is also conducting industry-leading science, with one recent study showing smokers who switched exclusively to BAT’s Glo product saw significant and sustained improvements in several indicators of potential harm
According to Wheaton, transforming the industry and positively impacting public health requires the continued production of robust and accessible science, the freedom to responsibly inform adult smokers about the potential benefits of reduced-risk products and a transition from the old tobacco control approach of “quit or die” to sustainable change, along with engagement between governments, intergovernmental bodies and industry figures, among other things.
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.”
Vuse has widened its U.S. market share lead over Juul to double digits, reports the Winston-Salem Journal, citing the most recent Nielsen analysis of convenience store data.
The analysis, released Sept. 20, covers the four-week period ending Sept. 10.
Vuse’s market share rose from 39 percent in the previous report to 39.7 percent compared with Juul declining from 29.4 percent to 28.1 percent.
Vuse, which is made by Reynolds Vapor Co., has also now edged ahead of Juul in the year-over-year comparison at 32.9 percent to 32.7 percent, respectively. It’s the first time Vuse has led the year-over-year comparison.
According to Barclays, Nielsen largely covers the big chains. For the smaller chains, the group extrapolates trends, which is why trend changes don’t appear immediately in Nielsen. Meanwhile, No. 3 Njoy dropped from 2.9 percent to 2.8 percent while Fontem Ventures’ blu eCigs slipped from 1.6 percent to 1.4 percent.
Juul’s four-week dollar sales in the latest report have dropped from a 50.2 percent increase in the Aug. 10, 2019, report to a 17.7 percent decline in the latest report.
By comparison, Vuse was up 41.4 percent in the latest report while Njoy was down 5.6 percent and blu eCigs fell to 30.2 percent.
Experts attribute the growing gap between Vuse and Juul to the possibility that Juul Labs may have to pull its products from the U.S. market if the Food and Drug Administration’s marketing denial order (MDO) remains in place.
The FDA has suspended its MDO for the duration of Juul Labs’ appeal.
BAT’s corporate venturing unit, Btomorrow Ventures (BTV), has invested an undisclosed amount in the Kanvas Co., a developer of patented electronic vaporizer technology solutions.
The investment will fuel the research, development and growth necessary to commercialize Kanvas’ proprietary Vapetelligence technology platform and further enable scalability of its products, which are designed to promote device safety in electronic vaporizers and regulated marketplaces globally.
“Kanvas is excited to work with BTV as a strategic investor to advance the commercialization of our unique IP portfolio and technology platform, focusing on our patented and temperature-controlled dosing technology and hardware that provides a secure and controlled delivery system for brands,” said Andy Fathollahi, CEO of Kanvas, in a statement.
“Kanvas’ pioneering innovations will be a catalyst for brands to support better, safer consumer experiences through integrating higher quality software and smart-chip technology.”
“BTV is thrilled to support Kanvas. With its innovative product proposition, strong management team and now strategic partnership with BAT, we believe the company is poised for success, and we welcome it to BTV’s portfolio,” said Lukasz Garbowski, BTV investment director.
Kanvas has a diverse portfolio of patents in technology, software and hardware products to offer brands a comprehensive suite of premium solutions for electronic CBD, cannabis and nicotine-delivery systems.
The full results from a year-long study showed that smokers switching exclusively to Glo, BAT’s flagship tobacco-heating product (THP), achieved significant and sustained improvements in several indicators of potential harm associated with early disease development compared to smokers who continued to smoke. This included lung disease, cancer and cardiovascular disease.
Published in Internal and Emergency Medicine, the results build upon the favorable changes reported at three and six months. The improvements observed were sustained over the 12 months of the study, adding to the weight of evidence that supports Glo as a less risky alternative for adult smokers who would not otherwise quit, according to BAT.
“The results from this study are the most important data we have ever generated about Glo and for the THP category in general,” said David O’Reilly, director of scientific research at BAT, in a statement.
“This real-world study allows us to assess the changes that adult smokers switching exclusively to Glo experience by assessing early indicators of potential harm associated with disease development. It provides much needed new evidence about the size of the change and durability of the effect switching completely to Glo can have and reinforces Glo’s potential as a reduced-risk product.”
To BAT, “A Better Tomorrow” is more than a catchy slogan.
By Stefanie Rossel
Flora Okereke
Flora Okereke is head of global regulatory insights and foresights at BAT, responsible for the analysis and forecasting of international regulatory developments on behalf of the company’s 180-plus markets. She has previously held several senior country, regional and global roles at BAT, including legal, corporate and regulatory affairs director for West Africa; head of regulatory affairs for Africa, the Middle East and Eastern Europe; global head of regulatory strategy and engagement; and senior director of government affairs and international policy at Reynolds American Incorporated Services, a subsidiary of R.J. Reynolds Tobacco based in Washington, D.C. She is an advocate of evidence-based regulation. Okereke was called to the Bar of England and Wales (Middle Temple) and later admitted as a solicitor by the Law Society. Tobacco Reporter caught up with Okereke to discuss her views on the remarkable transformations taking place at BAT and throughout the tobacco industry.
Tobacco Reporter: It has been some years since BAT set out on its transformation journey from a single-category company to a multi-category player. In March 2020, it announced its new corporate purpose: to build a better tomorrow, with the aim to reduce the health impact of its business through offering a greater choice of reduced-risk products. You have been with BAT for more than 20 years—can you please describe how working for BAT has changed since the transformation process started?
Okereke: I’ve had the great fortune of working in most parts of our business over the years across every region of the globe. Given the long history and focus on combustibles, the transformation since we launched our first e-cigarette in 2013 is nothing short of miraculous. We have seen the emergence of a multitude of products that are giving adult consumers compelling choices as an alternative to combustibles. And this is a very good thing. Recognizing the strong potential of these new products to reduce the risk in comparison to continued smoking, our CEO invited everyone in our organization in 2020 to embark on a transformation journey to reduce the health impact of our business. The goal of this transformation journey is what we call “A Better Tomorrow.”
Being part of this transformation has engaged employees across the business like never before. There’s a real rise in energy and a renewed commitment and sense of pride amongst our employees as we work together to reduce the health impact of our business.
During the recent Global Forum on Nicotine, you participated in a panel debating whether the industry’s transformation is a myth or reality. Being inside a company during the transformation process, what do you think?
The transformation is real, and we are making tangible change. We are laser-focused on providing adult consumers with a wide range of less risky* products. We are making significantly increased investments year-on-year in reduced-risk products—in 2021 alone, we invested £496 million [$602.73 million]. We are proactively communicating with our adult consumers, encouraging them to switch through over 1 billion inserts to date and over 136 peer-reviewed scientific publications on product manufacturing safety and performance standards of our products.
In parallel, we are expanding availability of reduced-risk products, which are in 57 countries to date, 20 of which have the highest smoking prevalence. We are actively engaging regulators and public health and governments advocating for a regulatory and fiscal framework that recognizes the important role of tobacco harm reduction and is designed to incentivize adult smokers who would otherwise continue to smoke to switch.
We aim to switch 50 million adult smokers to reduced-risk products by 2030. E-cigarettes were only invented in 2003, by a Chinese pharmacist, so when we see the level of progress BAT is making in this area, I think we are doing pretty well.
How can we verify that tobacco companies are really transforming?
For BAT, “A Better Tomorrow” is a world where smokers who would otherwise choose to continue to smoke have the option to switch to less risky alternatives to combustible tobacco. But A Better Tomorrow also represents a renewed commitment by BAT to improve society for all those that are sharing the road in our transformation journey—we are measuring ourselves against the expectations of our customers, our employees, our shareholders, our government partners and the public.
We are setting clear and ambitious goals, measuring ourselves and sharing progress with all of our stakeholders. And we are making significant progress in support of those goals.
We have set a goal of 50 million consumers of our noncombustible products by 2030. Today, over 20 million adult consumers have chosen to use our many reduced-risk products, with 14.6 percent of group revenue delivered by noncombustible products.
We also aim to achieve at least £5 billion in New Category revenues by 2025. In a few short years, we have built a £2 billion New Category revenue business, and we are confident of more than doubling this to reach our revenue target by 2025.
In your panel presentation, you said that the core of the change was the transformation of BAT’s portfolio, but behind it, this meant that smokers are encouraged to switch and that BAT is therefore doing something for society. While this is working quite well in the developed world, what can tobacco companies do to repeat this success in low-income countries?
BAT’s reduced-risk products are available in 57 countries to date—something we are truly proud of. We are rolling these out as fast and as responsibly as we can, including in low-income countries.
It is important to remember that we are not alone in our transformation journey—our governments in low-[income] and middle-income countries have an especially crucial role to play. Progressive, evidence-based regulatory measures will help encourage smokers to transition to reduced-risk products. We believe governments in low-[income] and middle-income countries can introduce three types of regulation to accelerate the transition of smokers from combustibles to reduced-risk products. These include regulations and policies that enable and encourage companies to innovate and bring new products to market, permit clear communications with consumers about the relative risks of products and incentivize consumers to switch from combustibles to reduced-risk* alternatives.
Regulations should allow flavors that adults enjoy, ensure high enough levels of nicotine to satisfy adult smokers, and where products are taxed, acknowledge the reduced-risk profile of products like e-cigarettes, oral nicotine pouches and tobacco-heating products compared to combustibles. To realize the benefit of tobacco harm reduction, the products must remain affordable.
What does the transformation process mean for BAT’s company culture?
My earliest impression when I first joined BAT was how diverse it is, which gave rise to our motto, “Strength in Diversity.” For a company with over 52,000 employees based in over 175 countries with multiple languages and time zones, the advent of the “A Better Tomorrow” vision has been a global rallying cry that has motivated and organized our people around a common purpose to transform our business and benefit society.
The “A Better Tomorrow” purpose has affected our culture positively in many meaningful ways. [For example], 72 percent of new senior management hires are from outside the tobacco industry, and 39 percent of women [work] in management roles. [There are] employee initiatives supported by management to drive and reward new ideas that generate solutions; [and the company has] a comprehensive environmental program addressing factory waste, emissions, plastic and litter.
Most notably, there has been a shift in who our people are and how they expect the business to operate. As we make progress in our transformation, I have personally noted our people taking more pride in our organization and raising their expectations for the company in the way we deliver our commitments. This is making BAT a better company and improving our contribution to society.
Increased focus on complex novel nicotine-delivery systems requires a different composition of staff, i.e., an increasing share of scientists also coming from other industries. How far have these new arrivals impacted on the internal spirit and atmosphere at BAT?
Probably the biggest change I’ve noticed is the diverse types of profiles now applying to join BAT. We have moved from a company selling a product based on agriculture to a high-tech and innovation-focused company. This requires all kinds of expertise that is new—[as mentioned], 72 percent of new senior management hires are now from outside of the tobacco industry. These new hires are bringing new perspectives and capabilities to drive our business transformation.
I believe this shift in hiring will only strengthen our culture and DNA while at the same time propelling us all toward our “A Better Tomorrow” goals.
*BAT use the terms “less risky,” and “reduced risk” based on the weight of evidence and assuming a complete switch from cigarette smoking. The company is keen to stress that these products are not risk-free and that they are addictive. BAT says that its products sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to Food and Drug Administration regulation and that it will make no reduced-risk claims regarding these products without FDA clearance.
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.
