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Marc Firestone to Retire; PMI Appoints Successor

Marc Firestone | Photo: PMI
Suzanne Rich Folsom
Photo: Manatt, Phelps & Phillips
Philip Morris International (PMI) has appointed Suzanne Rich Folsom to the position of senior vice president and general counsel, leading legal, ethics and compliance, effective July 1, 2020. She succeeds Marc Firestone, who will retire later this year. Since January 2018, Firestone has held a dual role at PMI: president, external affairs and general counsel. He will continue to lead the company’s external affairs function until a successor is appointed.
Folsom comes to PMI from Manatt, Phelps & Phillips, where she co-chaired the investigations, compliance, and strategic response group and was a member of the government & regulatory and cyber & privacy groups. Before that, she was the general counsel, chief compliance officer, and senior vice president, government affairs and global public policy at United States Steel Corp. Previously, she held leadership positions with a number of global entities, including AIG, ACADEMI and the World Bank, and served in key roles for several heads of state and their families. Folsom holds degrees from Georgetown University Law Center and Duke University.
In her new position based in Lausanne, Switzerland, Folsom will report to PMI CEO Andre Calantzopoulos. Leading the legal, ethics and compliance teams, she will be an ambassador for the company across legal and regulatory environments; influence conversations aimed at creating a climate of change for better consumer choice as the company drives forward with its smoke-free transition; serve as counselor to PMI’s executive leadership team, board of directors, and other leaders; and build support for appropriate, risk-proportionate regulatory frameworks, among other functions.
“Suzanne Rich Folsom comes to us with a reputation as one of the most highly regarded and experienced general counsels and compliance and corporate governance specialists, having operated in very complex business environments,” said Calantzopoulos.
“Together with the board and our senior leadership, I extend enormous gratitude to Marc Firestone for all he has done for PMI,” he added. “A diplomatic statesman beyond compare, Marc has been the external face of PMI, serving as the embodiment of our ethical values and liaising with governments and regulators to inject common sense into the debate around tobacco.”
June 11, 2020
Turning Point Buys Assets From Durfort and Blunt Wrap

Photo: Pete Linforth from Pixabay
Turning Point Brands (TPB), a provider of “other tobacco products” and adult consumer alternatives, has acquired tobacco assets and distribution rights from Durfort Holdings and Blunt Wrap USA for $46 million.
Durfort is the long-time supplier of TPB’s make-your-own cigar wrap products. The transaction combines Durfort’s and Blunt Wrap USA’s intellectual property and manufacturing know-how with TPB’s Zig-Zag MYO cigar wraps brand and national distribution.
“We are pleased to enter into this transaction with our business partner,” said Larry Wexler, TPB president and CEO. “In addition to the immediately accretive financial benefits, the transaction secures long-term control of our Zig-Zag MYO cigar wrap products and provides us access to a deep portfolio of tobacco products with significant immediate and future strategic value. This solidifies our current market position and provides a base for accelerated expansion with novel and leading-edge products.”
Through this transaction, TPB acquires co-ownership in the intellectual property rights of all Durfort’s and Blunt Wrap’s homogenized tobacco leaf cigar wraps and cones. The acquisition eliminates current royalty-related expenses on HTL cigar wraps and cones, providing for expanded margins. TPB will also enter into an exclusive master distribution agreement to market and sell the original Blunt Wrap cigar wraps brand in the USA. The master distribution agreement is expected to be effective in the next 120 days, adding complementary access to difficult-to-reach alternative channels.
“This partnership between Durfort and Turning Point Brands has been highly successful in introducing innovative products to the other tobacco products space,” said Danny Sinclair, founder of Durfort and Blunt Wrap USA. “Durfort looks forward to continuing to work with TPB in bringing exciting new alternative products to adult consumers and in expanding distribution of the Blunt Wrap brand through TPB’s nationwide distribution network.”
June 11, 2020
PMI Presents at Deutsche Bank Conference

Jacek Olczak | Photo: PMI
Philip Morris International (PMI) says it is on-track to deliver second quarter reported diluted earnings per share toward the upper end of its previously communicated range of $1 to $1.10. The forecast includes an unfavorable currency impact, at prevailing exchange rates, of approximately $0.07 per share compared to an unfavorable impact of approximately $0.12 per share communicated previously.
The forecast assumes a currency-neutral net revenue decline—wholly attributable to Covid-19-related factors—around the high end of the company’s previously communicated decline range of 8 percent to 12 percent.
According to PMI, this primarily reflects industry cigarette volume declines at the high end of the company’s initial estimates due to stricter or longer lockdowns in certain Latin America and EU markets during April and May. PMI has observed, however, better-than-anticipated IQOS performance and, in recent weeks, signs of recovery for combustible products.
The forecast also assumes no disruption in the company’s ability to supply its customers based on its current operations and inventory levels.
PMI Chief Operating Officer Jacek Olczak and Chief Financial Officer Emmanuel Babeau address investors today at the Deutsche Bank Global Consumer Conference. An archived copy of the call will be available at http://www.pmi.com/2020deutschebank until 5 p.m. Eastern time on July 10, 2020.
The company will issue its 2020 second-quarter results on July 21.
June 11, 2020
Avail Agrees to Buy Giant Vapes

Photo: Avail Vapor
James Xu
Avail Vapor, a premium U.S. e-liquid retailer, has agreed to acquire Giant Vapes, a major global e-commerce vapor company.
According to Avail, the acquisition would create a global, omnichannel organization with a clear mission to bring value to customers wherever they choose to shop.
“By combining the strengths of Avail’s broad brick-and-mortar footprint and Giant Vapes’ extensive e-commerce platform, the combined company will deliver unique value to its customers both in the U.S. and abroad,” the company wrote in a statement.
Following the acquisition, Avail Chairman and CEO James Xu will lead the combined companies alongside Justin Murphy, vice president of retail and marketing, who will be overseeing the day-to-day operations of both Avail and Giant Vapes.
June 11, 2020
Australia’s Plain Packaging Justified, Says WTO

Photo: Taco Tuinstra
The World Trade Organization (WTO) ruled on Tuesday that Australia’s plain packaging laws are justified, rejecting complaints by Honduras and the Dominican Republic that they are unfair restrictions on trade.
In December 2012, Australia became the first country to require tobacco companies to strip their products of all branding. Cigarettes have since been sold in drab, brown packs with large graphic health warnings but no logos or other distinguishing features. Brand names are printed in generic fonts.
Following the introduction of the measure, Cuba, the Dominican Republic, Honduras and Indonesia—all major tobacco-producing countries—challenged Australia’s measure at the WTO.
The complainants argued that Australia’s Tobacco Plain Packaging Act constituted an unjustified barrier to trade, but the WTO panel found Australia’s measures were not more restrictive than was necessary to achieve the public health goal of reducing smoking.
Honduras and the Dominican Republic appealed against the panel’s findings.
The World Health Organization’s (WTO) appellate body said on Tuesday that it had found no errors in the earlier panel’s conclusions and that it rejected the complainants’ request for Australia to change its packaging rules.
Anti-tobacco activists welcomed the WTO verdict. “This ruling is yet another victory for Australia and global health and a resounding defeat for the tobacco industry, which has fiercely fought plain packaging laws,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids. “This ruling puts to rest any remaining questions about plain packaging under international trade law.”
Myers also suggested that the plaintiffs received technical and financial support from British American Tobacco (BAT) and Philip Morris International to bring their complaints.
The tobacco industry has long argued that plain packaging is an ineffective and disproportionate measure.
“Naturally, we are disappointed with the ultimate findings of the report,” said a spokesperson for BAT, which was not part of the case. “However, it is important to note that decisions from the WTO panel or appellate body do not set a global precedent when it comes to this measure and will only be binding to the parties involved in this dispute.”
BAT also noted that the report is not an endorsement on the effectiveness of plain packaging. “The appellate body actually dismissed the panel’s finding that plain packaging reduced the consumption of tobacco products,” the company wrote in a statement.
Plain packaging is now required in at least 15 countries, and many other governments are in the process of formally considering the policy.
Tuesday’s ruling was the last by the WTO’s appellate body, which serves as a supreme court in international trade disputes but has ceased to function after the United States blocked new appointments. The result is that the Geneva-based WTO can no longer effectively intervene to settle disputes.
June 10, 2020
KT&G Donates Diagnostics Kits to Russia and Turkey

Photo: KT&G
KT&G has provided diagnostic kits worth KRW100 million ($84,136) to Russia and Turkey, where the new coronavirus infection has been spreading rapidly. In early May, the government provided 6,300 diagnostic kits to the Indonesian government.
“We decided to further support Russia and Turkey in order to help overcome the global disaster,” said Kyung-Dong Kim, KT&G’s head of social contribution. “We will fulfill our social responsibilities as a company.”
Headquartered in South Korea, KT&G has substantial operations in both countries.
KT&G has also supported coronavirus relief efforts in its home market. Among other initiatives, the company donated KRW500 million in emergency aid to the National Association for Disaster Relief and delivered KRW1,600 million worth of medical items.
June 10, 2020
Irish Health Authorities Probe Menthol Successor Products

Photo: Photo:Beverly Buckley from Pixabay
Ireland’s Health Service Executive is investigating whether cigarette makers are breaching a recently enacted EU ban on menthol cigarettes, reports The Irish Times.
The move comes after Minister for Health Simon Harris accused tobacco companies of “undermining” the ban by exploiting loopholes in the new rules.
Cigarette manufacturers throughout the EU have been introducing substitute products targeting former menthol smokers, but critics contend some of the new products fall foul of the ban. Japan Tobacco International’s (JTI) Silk Cut Choice Green variant, for example, still contains low level of menthol, but the company insists this is legal as long as the cigarettes have no other smell or taste than tobacco.
JTI says it shared in advance the ingredients for its new menthol-added product with the relevant authorities in Ireland and the EU. “So there is full transparency throughout this process,” the company said.
Philip Morris International launched Marlboro Bright, which it sells as a “menthol blend without mentholation.”
Meanwhile, Irish retailers, who commit a criminal offence if they sell menthol-flavored cigarettes, have started contacting manufacturers asking for confirmation that the substitute products they introduced after the menthol ban are legal.
The Irish market for menthol cigarettes was valued at €250 million ($284.27 million) prior to the EU ban.
June 10, 2020
BAT Shares Down on Lower Growth Projections

Photo: BAT
Shares in British American Tobacco (BAT) fell almost 4 percent after it lowered revenue and profit growth estimates for this year by a couple of percentage points each.
In adjusting its guidance, BAT pointed to a worsening outlook for an industry that had previously reported little impact from the coronavirus pandemic on sales and operations.
The company also pushed back its target for reaching £5 billion ($6.3 billion) in sales from next-generation products like e-cigarettes to 2025 from 2023–2024.
At the start of the pandemic, BAT insisted the coronavirus disruption was having little impact on consumer demand. During a recent conference call, however, CEO Jack Bowles said that earlier numbers had covered periods when many of its markets were still in the early stages of lockdowns.
BAT now expects adjusted revenue growth of 1–3 percent this year instead of 3–5 percent while earnings per share are anticipated to be up by a mid-single digit rather than a high-single digit percentage.
Nonetheless, the company will continue its dividend policy of paying out 65 percent of profit.
“All things considered, British American Tobacco has been doing relatively well against a very difficult backdrop,” said Russ Mould, investment director at AJ Bell.
June 10, 2020
FDA to Review Altria Nicotine Pouches

Photo: Tobacco Reporter archive
The U.S. Food and Drug Administration (FDA) has accepted and filed for substantive review premarket tobacco product applications for 35 On! products manufactured by Helix Innovations, an Altria joint venture.
To support these applications, Altria submitted more than 66,000 pages of documentation, including six primary studies.
“We believe the scientific evidence in these applications demonstrates that the marketing of On! is appropriate for the protection of public health,” said Paige Magness, senior vice president of regulatory affairs for Altria Client Services. “On! nicotine pouches are a key part of our vision to responsibly lead the transition of adult smokers to a noncombustible future.”
On! nicotine pouches are tobacco-leaf-free and are available in seven flavors and five nicotine levels. In the fast-growing nicotine pouch category, On! currently offers the broadest portfolio of choices for adult tobacco consumers seeking alternatives to traditional tobacco products, according to Altria.
On! was distributed in more than 28,000 stores at the end of the first quarter, including the top five U.S. convenience store chains by volume. According to IRI, total oral tobacco derived nicotine category sales in 2019 grew approximately 275 percent compared to 2018.
June 10, 2020
Court to Hear Arguments Over Disputed Florida Settlement Payments

Photo: Michal Kalasek | Dreamstime.com
A U.S. appeals court will hear arguments today in a dispute about $100 million in payments related to a landmark legal settlement between the state of Florida and tobacco companies, reports Florida Politics.
R.J. Reynolds Tobacco Co. wants the 4th District Court of Appeal to overturn a ruling that said the company is responsible for making payments to the state related to the Salem, Winston, Kool and Maverick cigarette brands.
R.J. Reynolds was part of the 1997 settlement in which cigarette makers agreed to pay hundreds of millions of dollars a year to the state because of smoking-related health costs and, in exchange, received liability protections.
In 2015, Reynolds’ parent company sold the four brands to ITG Brands to gain regulatory approval for its acquisition of Lorillard Tobacco Co. As a result of the sale, R.J. Reynolds contends it is no longer responsible for making payments linked to the four brands.
A Palm Beach County circuit judge, however, ruled in 2017 that R.J. Reynolds remained responsible for the payments. Reynolds appealed that ruling, and its arguments will be heard today.
ITG Brands, which was not part of the 1997 legal settlement agreement, contends the appeals court should uphold the circuit judge’s ruling that R.J. Reynolds is responsible for the disputed payments.
June 9, 2020