Tag: Featured

Stories featured at the top of tobaccoreporter.com

Philip Morris Korea Wins Trademark Fee Battle

Photo: Tobacco Reporter archive
Philip Morris Korea (PMK) has won a legal battle against South Korea’s tax authority over trademark usage fees, reports The Korea Herald, citing legal sources.
The Seoul Administrative Court on March 1 ruled in favor PMK, ordering Seoul Main Customs to cancel a KRW9.82 billion ($8.7 million) tax.
The ruling comes four years after the Korea Customs Service ordered the company to pay KRW3.4 billion in customs duties, KRW3.7 billion in value added tax and KRW2.6 billion in penalty tax over royalties paid to its headquarters.
PMK appealed the decision.
PMK has been producing tobacco products in Korea with raw materials exported from its headquarters since 2012. The tax authorities moved against the firm, believing the Korean unit had been paying royalties to use the company’s trade secrets.
According to Korea’s Customs Act, companies are subject to a levy when importers pay their business partners a low price and make the rest of the payment in royalties to evade taxation.
The March 1 ruling dismissed the argument by the tax authorities, saying that the royalties paid by PMK include trademark fees as well as tobacco leaves and business secrets and that the tax needs to be recalculated.
March 1, 2021
BAT Highlights Environmental, Social and Governance Goals

Photo: BAT
British American Tobacco (BAT) is highlighting its goals and achievements around its enhanced environment, social and governance (ESG) ambitions this week. Across its digital channels, the company will share its sustainability story with the outside world.
In 2020, the company announced its new corporate purpose to deliver “A Better Tomorrow” by reducing the health impact of its business, putting sustainability front and center. Since March last year, BAT has launched the industry’s first ever human rights report; was the only tobacco company to be included in the Dow Jones Sustainability World Index, its 19th consecutive year in the index series; was awarded an ‘A’ score for climate change by the Carbon Disclosure Project (CDP); and was named as a Diversity Leader by the Financial Times in its inaugural Diversity Leaders report.
The company announced its latest ambitions, including increasing BAT consumers of noncombustible products to 50 million by 2030, achieving carbon neutrality by 2030 and accelerating other existing environmental targets to 2025, and eliminating unnecessary single-use plastic and making all plastic packaging recyclable by 2025.
In December 2020, BAT announced its Covid-19 vaccine candidate had progressed to human trials, further demonstrating its commitment to innovation and science. BAT also announced last week that it is on track in its ambition to increase the number of consumers of noncombustible products, doubling the rate of consumer adoption in the second half of 2020.
Kingsley Wheaton
“One of the core commitments we made in 2020 was to continually track and report on our sustainability progress,” said Kingsley Wheaton, chief marketing officer. “This new BAT ESG week gives us the chance to share our continued progress with the outside world, given our purpose-led ambition to reduce the health impact of our business.”
ESG Week will be followed by the launch on March 9 of BAT’s Annual ESG Report, which will provide details on all the company’s sustainability initiatives and progress.
March 1, 2021
FDA Sends Fresh Round of Warning Letters

Photo: Jhvephotos | Dreamstime.com
The U.S. Food and Drug Administration issued warning letters to 18 manufacturers selling unauthorized e-liquids. The companies did not submit premarket tobacco product applications (PMTAs) by the Sept. 9, 2020, deadline.
The companies that received warning letters include Square Vape Labs, The Vapor Emporium, Tally Ho Vapor Tonic, The Vape Corner., Dripco d/b/a Dripco Vape Co., VaporIce, Vapor Maven E-Juice, Vapor City Plus, Vapor Invasion, Vaporatory, Chuckin’ Clouds Vape Shop, Black Dog Reserve, California Vaping Company, The Chubby Baker, Smooth, Bulldog Vapor, Adore eLiquid and E-Cig Outlet.
While each warning letter issued cites specific products as examples, collectively these companies have listed a combined total of more than 234,000 products with the FDA.
Per a court order, applications for premarket review for certain deemed new tobacco products on the market as of Aug. 8, 2016—including e-liquids—were required to be submitted to the FDA by Sept. 9, 2020. For companies that submitted applications by that deadline, the FDA generally intends to continue to defer enforcement for up to one year pending review unless there is a negative action taken by the FDA on the application.
The FDA recently published an update on its progress on the processing and review of the applications received by Sept. 9, including a list of companies that submitted timely applications.
March 1, 2021
Kaival Expands Distribution
Kaival Brands has three new distribution partners for its Bidi Vapor products: Smoker Friendly International, Avail Vapor and Hilmes Distributing. These three additional distributors push the potential U.S. store count for Bidi Vapor products above 46,000, up from 10,000 in 2020.
According to Bidi Vapor, distributor interest in its products has increased greatly following its receipt of a premarket tobacco product application filing letter from the Food and Drug Administration. As the company’s product moves into the substantive review phase, Bidi Vapor anticipates it will continue to update investors on additional new distribution agreements.
“These new partners will become a large new revenue stream for Bidi and Kaival,” said Niraj Patel, CEO of Kaival Brands, in a statement. “It is important to note our 2020 sales of just under $100 million were achieved with a distribution network of 10,000 stores and in less than 10 months of operation.
“Today’s new distribution partner announcements bring our network to over 46,000 store locations. The strength and breadth of these partnerships fuels our confidence in our ability to meet or exceed our 2021 projection of $400 [million] to 450 million in sales.”
March 1, 2021
JTI Boosts Philippines’ Tax Collections

Illustration: Tobacco Reporter archive
The Philippines’ tobacco tax receipts have been substantially boosted by Japan Tobacco International’s (JTI) recent expansion in the country, reports Business World.
As of Feb. 18, the Bureau of Internal Revenue (BIR) had collected PHP29.1 billion ($598.43 million), up 73.5 percent from a year earlier.
The BIR was also above target for the month by about 4.3 percent. According to the Department of Finance, the bureau had collected PHP17.57 billion from excise taxes on tobacco products, exceeding the target for the month of PHP16.85 billion.
The tax take was 110 percent higher than the total collected in the equivalent period from the previous year.
BIR Deputy Commissioner Arnel Guballa said the bureau collected more taxes from JTI, which had expanded its Batangas factory.
“Noticeably, we have a big increase in the collection of tobacco excises because JTI opened its plant in Batangas. So it’s in full operation … That’s also why we have quite a collection in tobacco for this month,” Guballa said.
JTI Philippines established a manufacturing plant in Batangas City in 2017 and expanded last year.
JTI Philippines also acquired the tobacco business of Mighty Corp. in August 2017 for PHP46.8 billion, adding the Mighty and Marvels brands to its lineup.
Bulacan-based Mighty shut down in July 2017 after a series of tax evasion complaints before the Justice Department due to its use of fake tax stamps. Its total tax settlement with the government amounted to PHP30 billion.
According to the Department of Finance, tax collections from Mighty surged immediately after the takeover.
Recent laws raised the excise taxes on tobacco products along with other “sin” products, such as alcohol and electronic cigarettes.
The BIR is tasked to collect PHP2.081 trillion this year, which if achieved would be up 7 percent on its actual collections in 2020.
March 1, 2021
Mitt Romney Calls For Nationwide Flavor Ban

Photo: Office of Mitt Romney
Utah Senator Mitt Romney has called for flavored vaping products to be pulled from shelves across the United States, reports 2KUTTV. Romney introduced legislation in September 2019 that would have banned the sale of all flavored vapor products except tobacco flavors, but it was never taken up for a vote.
“The analysis shows that nearly one-fourth of high school kids are vaping on a regular basis—tobacco products—and in many cases marijuana as well,” Romney said, adding that the government needs to do everything it can to stop the sale of flavored vaping products and implement a robust public education campaign to warn kids about the dangers of vaping.
In October 2019, the Utah Department of Health issued an emergency order banning the sale of flavored vapor products in Utah, which was met swiftly with a lawsuit from tobacco retailers. The products remain available for sale today.
In 2019, the legal age to purchase tobacco products in the U.S. was raised from 18 to 21.
March 1, 2021
Former EU Health Boss Loses Appeal in Scandal

Photo: janeb13 from Pixabay
Former EU health commissioner John Dalli lost his final appeal before the bloc’s high court in a nearly decade-old bribery scandal, reports the Courthouse News Service.
On Feb. 25, the European Court of Justice upheld a lower court ruling that dismissed the Maltese politician’s claim for €1 million ($1.2 million) in damages stemming from his resignation following accusations of fraud in 2012.
In 2012, the EU anti-fraud office found that Silvio Zammit, an associate of Dalli, attempted to facilitate a €60 million bribe from a Swedish smokeless tobacco company in exchange for lifting an EU-wide ban on the product (the ban doesn’t apply in Sweden on cultural grounds). The snus company rejected the offer as improper and reported it to the European Commission.
Denying knowledge of the bribe, Dalli claimed that he was illegally forced from his post. In 2015, a lower EU court found that Dalli resigned voluntarily, a decision that was upheld in a 2016 appeal. A second lawsuit, in which Dalli demanded financial compensation for what he alleged was his wrongful termination, was rebuffed by the lower court in 2017.
The Court of Justice upheld that ruling Thursday.
February 26, 2021
Menthols Linked to Extra Smokers, Early Deaths

Photo: Photo: Miriam Doerr | Dreamstime.com
Menthol cigarettes contributed to 378,000 premature deaths in the United States between 1980 to 2018, according to a new University of Michigan study.
The research shows that about 10 million smokers were attributable to menthol cigarettes, which researchers estimate accounted for about 3 million life years lost.
“Our results indicate that mentholated tobacco products have had a significant impact on public health and could continue to pose a substantial health risk,” said David Mendez, senior author of the study and an associate professor in the department of health management and policy at the University of Michigan School of Public Health.
“We hope these data will help the Food and Drug Administration evaluate the potential regulatory actions for mentholated tobacco products.”
The study, published in Tobacco Control, indicates that the most important drivers of the relative impact of menthol cigarettes were the effects that menthol has in smoking initiation and cessation, said first author Thuy Le of the Department of Health Management and Policy at the University of Michigan’s School of Public Health.
“Previous studies have shown that menthol experimentation is positively associated with progression to established smoking,” Le said. “In addition, menthol smokers are less likely to quit smoking than nonmenthol smokers. These observations were incorporated in the model and are the key factors in determining the outcomes of our study.”
For their study, the researchers calibrated a well-established model developed by Mendez and colleague Ken Warner, dean emeritus of the University of Michigan School of Public Health. Le and Mendez used the model in conjunction with National Health Interview Survey data and other public data sources to reproduce the overall U.S. adult smoking prevalence between 1980 and 2018 and associated mortality.
They then used the model again with adjusted parameters to reflect a scenario in which menthol cigarettes were assumed not to be present in the market over the same period. Finally, they compared both scenarios to quantify the public health harm attributable to menthol over the 1980 to 2018 period.
Mendez said they hope the FDA will look at this and other data as it evaluates potential regulatory actions for mentholated tobacco products.
Menthol cigarettes were created in 1925 and became widely spread in the 1950s and 1960s. In 2009, the Family Smoking Prevention and Tobacco Control Act gave the FDA authority to regulate the manufacture, distribution and marketing of tobacco products. The FDA banned flavors such as candy, spice and fruit, but menthol was not banned.
In 2011, the Tobacco Products Scientific Advisory Committee submitted a report to the FDA concluding that the removal of menthol cigarettes from the market would benefit public health. To date, the FDA has not taken any regulatory action on mentholated cigarettes.
February 26, 2021
Vuse Alto Vapor Brand Expands in the U.S.

Photo: R.J. Reynolds Vapor Co.
The Vuse vapor brand announced today a national expansion in the United States of Vuse Alto Golden Tobacco 5.0 percent and Alto Menthol 5.0 percent four-pod packs and the national release of Vuse Alto Golden Tobacco 2.4 percent and Alto Menthol 2.4 percent four-pod packs.
The four-pod packs provide adult vapor consumers with three Vuse Alto configuration options as they can now choose from single-pod, two-pod or four-pod packs. The national availability of four-pod packs gives Vuse the most expansive portfolio of choice for adult vapor consumers with three flavors, in three nicotine strengths across three configuration formats as well as the many options for device customization with a range of device colors, wraps and engraving options.
“Done responsibly, our ambition is to make Vuse the No. 1 vapor brand in the U.S. market,” said Christy Canary-Garner, vice president of Vuse commercial development at R.J. Reynolds Vapor Co, in a statement. “This portfolio expansion provides us with the opportunity to better compete and enhances our price competitiveness to drive conversion among existing adult vapor consumers and boost loyalty.
“The four-pod pack configuration is the most popular among competitive pod-mod vapor products, and four-pod packs enable Vuse Alto to compete against competitors on a per-pod price point. The new four-pod packs are available to all retail outlets.
“Coupled with our release of single pods in November of 2020, this national rollout of four-pod packs now gives adult Vuse consumers more options than any other brand.”
The national expansion of the four-pod packs will begin this week.
February 26, 2021
Vector Group Reports Financial Results

Photo: Steve Buissinne from Pixabay
Vector Group reported revenues of $554.6 million in the fourth quarter of 2020 compared to revenues of $439.6 million in the fourth quarter of 2019. The company recorded operating income of $87.3 million in the fourth quarter of 2020 compared to operating income of $45.6 million in the fourth quarter of 2019. Net income attributed to Vector Group for the fourth quarter of 2020 was $32.3 million compared to net income of $10.7 million in the fourth quarter of 2019.
For the year ended Dec. 31, 2020, revenues were $2 billion compared to revenues of $1.9 billion for the year ended Dec. 31, 2019. The company recorded operating income of $245.1 million for 2020 compared to operating income of $231.1 million for 2019. Net income attributed to Vector Group for 2020 was $92.9 million compared to net income of $101 million for 2019.
For the fourth quarter of 2020, the tobacco segment had revenues of $286.1 million compared to $260.3 million for the fourth quarter of 2019. For the full year of 2020, the tobacco segment had revenues of $1.21 billion compared to $1.12 billion for 2019.
Operating income from the tobacco segment was $79.7 million and $319.5 million for the three months and the full year 2020, respectively, compared to $60 million and $261.6 million for the three months and year ended Dec. 31, 2019, respectively.
“Vector Group’s strong fourth quarter results reflect our ongoing commitment to creating long-term stockholder value,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “We are pleased that both our tobacco and real estate segments reported significant increases in operating income this quarter, including record operating income at Liggett, which is well into the income growth phase of its Eagle 20’s brand strategy.”
February 26, 2021