Tag: Featured

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Scandinavian Tobacco Reports Sales Increase

Photo: Scandinavian Tobacco Group
In the first quarter of 2020, Scandinavian Tobacco Group delivered net sales of DKK1.79 billion ($263.56 million), showing an organic net sales growth of 5 percent. The first quarter of 2020 includes the integration of Agio Cigars.
The company has updated its 2020 financial guidance after seeing the outcome of the first quarter and gaining a better understanding of how Covid-19 may affect the company in the coming quarters. It expects the EBDITA to grow more than 2 percent and free cash flow to be about DKK850 million.
Niels Frederiksen
The guidance is based on assumptions of a moderate decline in organic net sales growth for the full year with the highest decline in organic net sales growth in the second quarter and a gradual normalization over the third and fourth quarter as markets reopen and with no material disruptions to the supply chain. The company expects a contribution from cost savings in relation to the integration of Agio Cigars of about DKK70 million to DKK80 million in 2020 as well as further benefits from the Fueling the Growth program. Special costs are expected to be about DKK415 million to DKK435 million, including a noncash impairment charge of DKK109 million. The intention to initiate the previously announced share buyback program at a total value of up to DKK300 million remains unchanged.
“In the middle of a unprecedented global pandemic with a high degree of volatility and uncertainty in most markets, we are able to present a solid result for the first three months of 2020 with net sales growth and a strong cash flow as well as we have revealed the plans for creating significant value with the integration of Agio Cigars,” said Niels Frederiksen, CEO of Scandinavian Tobacco.
May 20, 2020
‘Menthol Ban Presents Opportunity to Switch’

Photo: VPZ
U.K. vapor industry representatives are hoping that the EU ban on menthol cigarettes that comes into force today will encourage more smokers to transition to less-hazardous vapor products.
The ban of menthol cigarettes comes from the EU Tobacco Products Directive (TPD), banning all cigarettes and rolling tobacco with “characterizing flavor” other than traditional tobacco.
The ban originates from a range of tobacco control measures approved by the European Parliament in 2013, with revisions including mandating the banning of menthol cigarettes by 2022.
In the U.K. there are an estimated 1.3 million menthol cigarette smokers.
Research by the U.K. Vaping Industry Association, the largest trade domestic body representing the sector, shows that menthol vapor products sold by its retail and wholesale members represent an average of 16.5 percent of all sales and nearly double this number, at 30.75 percent, for manufacturers producing such products.
The data suggests that menthol cigarettes are used by up to 12.4 percent of smokers in England, while global sales in 2018 exceeded $80bn. Currently, some 14.4 percent of the adult population in England smoke and there are some 7m smokers across the UK.

Doug Mutter
“I think in normal circumstances this move could have had the potential to significantly reduce smoking rates in the U.K.,” said Doug Mutter, director of manufacturing and compliance at VPZ, a leading vapor company in the U.K.
“However, with vaping stores closed and stop smoking services shut, it remains to be seen how we can engage menthol smokers and encourage them to make the switch.
“This is the biggest change to tobacco law since plain packing was introduced.
“For the vaping industry it presents an opportunity to help smokers finally make the switch, and whilst that will be harder with stores still closed, we believe that vaping presents the best opportunity to stamp out cigarettes for good.
“VPZ has built a digital platform for advice and guidance on smokers switching to vaping for the first time as well as how to pick the best products to help them quit.
“We are expecting a growth in the number of new vapers in the U.K, so it was important to us to use our expert staff to help create a guide for menthol smokers looking to quit through vaping.
“From which device best suits your needs to what strength of nicotine is required, we have tried to cover as many questions as possible. We have even put together some starter kits covering all categories to help with any first-time decision as we appreciate the first step can be daunting, without the opportunity to visit one of our stores.
“It will be difficult for many people just now because vape stores are closed and the temptation to go back to traditional cigarettes is everywhere. We are talking about over one million people in the UK will now not have their menthol cigarettes available and we hope that they are beginning to research which stop smoking products can best help them quit.
“Our message to smokers across the country is that the best time to quit cigarettes is now.”
May 20, 2020
Pyxus Reportedly in Talks About Bankruptcy

Photo: Pyxus International
Pyxus International has reportedly begun talks with creditors regarding a possible bankruptcy filing, according to an article in the Wall Street Journal.
The filing is potentially related to declining cigarette consumption and the Covid-19 pandemic following the company’s struggle to make headway in the cannabis and vapor sectors.
May 20, 2020
Bangladesh Health Ministry Requests Halt on Tobacco Production

Photo: Tobacco Reporter archive
The Bangladesh health ministry has requested that the industries ministry rescind the permission granted to tobacco companies to continue production during the Covid-19 pandemic.
The health ministry cited a World Health Organization study stating that smokers are more likely to suffer severe infections from Covid-19. The ministry also cited Prime Minister Sheikh Hasina’s target to make Bangladesh tobacco-free by 2040.
May 20, 2020
Trump Threatens to Permanently Defund WHO

Photo: Image by Gerd Altmann from Pixabay
U.S. President Donald Trump threatened to permanently end U.S. funding of the World Health Organization (WHO) amid accusations that the agency allowed China to cover up the coronavirus outbreak in the early stages.
Trump stated that the WHO must “actually demonstrate independence from China” and “commit to substantive improvements within the next 30 days,” but Chinese officials claimed that Trump was trying to shift the blame for his administration’s “incompetent response” to the pandemic, according to the Washington Post.
The threat to end WHO funding came after Trump stated that he has been taking hydroxychloroquine as a preventative for Covid-19. Experts have continuously urged people not to take this drug outside of hospitals or clinical trials as it can cause heart problems and other side effects, including death, and has not been proven to help prevent Covid-19 infections. The drug is usually used to treat lupus, rheumatoid arthritis and malaria.
May 19, 2020
Imperial Brands Disappointed With Six-Month Results

Photo: Imperial Brands
Imperial Brands’ adjusted tobacco and next-generation product (NGP) revenue for the six months ending March 31, 2020, was down 1.7 percent from the same period last year.
The company’s total adjusted operating profit also fell 9.3 percent. On a reported basis, revenue rose 2 percent while total operating profit fell 19.6 percent.
“While we delivered against our revised expectations, we are disappointed with these results, and we remain fully focused on all opportunities to strengthen performance,” said Dominic Brisby and Joerg Biebernick, joint interim chief executives for Imperial Brands.
“We would like to thank our employees for their hard work and commitment in these challenging times. Their support has been outstanding, and we continue to prioritize their health, safety and well-being.
“Our enhanced focus on tobacco has driven stronger in-market execution and an improved share performance, with gains in most of our priority markets. We have reduced our NGP spend following the poor returns on investment last year, and this, together with recent weaknesses in the vapor category, has resulted in lower NGP revenue.
“Overall, Covid-19 has so far had only a small impact on trading, but we expect this to be more pronounced in the second half due to continued pressures on our duty-free and travel retail business, changes in consumption patterns including downtrading and a reversal of some first-half inventory build.”
May 19, 2020
Forest: Banning Menthol Will Not Stop Children Smoking

Simon Clark | Photo: Taco Tuinstra
The EU ban on the sale of menthol cigarettes will needlessly restrict adult smokers’ choices while doing little to prevent underage smoking, according to smokers’ rights group Forest.
Responding to claims by the anti-smoking group Action on Smoking and Health that the ban on “child-friendly” menthol cigarettes is long overdue, Forest said there is no evidence that banning menthol cigarettes will stop children smoking.
“The ban on menthol cigarettes is a gross restriction on consumer choice that will do nothing to stop children smoking, said Simon Clark, director of Forest.
“Evidence from Canada, where menthol cigarettes were first banned in 2015, suggests that the ban had no overall impact on youth smoking rates because younger smokers simply switched to non-menthol cigarettes,” said Clark.
“Many adults have smoked menthol-flavored cigarettes for decades,” he added. “This week that small pleasure will be taken away from them and the only people who will benefit are the criminals who supply the black market with illegal and counterfeit goods.”
Menthol cigarettes will be banned in the European Union starting tomorrow.
The ban will also outlaw flavored cigarettes, skinny cigarettes and flavored rolling tobacco. The measure is part of the EU Tobacco Products Directive and aims to stop younger people from smoking as well as curb smoking rates among current smokers.
May 19, 2020
Malawi Farmers Pull Leaf, Citing Below-Cost Prices

Photo: Taco Tuinstra
Farmers from Dowa and Lilongwe have pulled their tobacco from the auction floor due to low selling prices.
The average selling price of the tobacco has been $1.10, which farmers say is not enough to cover production costs. The farmers have reached out to officials from Limbe Leaf Tobacco and the Tobacco Commission.
“These buyers are leaving us in slavery,” said Bazale Mobayana, one of the farmers. “They are leaving us with huge debt to settle because with these low prices, we cannot be able to repay back the loans we took from commercial banks and other financial lending institutions.”
May 18, 2020
Shunbao Technology Banned From Selling IQOS ‘Knockoff’ in U.K.

Photo: PMI
A London judge has prohibited Shenzhen Shunbao Technology from marketing an alleged “knockoff” of Philip Morris Product’s (PMP) IQOS tobacco heating device in the U.K. because of European design protections.
High Court Judge Anthony Mann granted PMP’s request for default judgment in the case since Shunbao Technology had not participated in the proceedings.
He also granted PMP’s request to extend the intellectual property protections the company currently has for its product under a European Union registered community design so it will remain in effect in the U.K. after Britain leaves the bloc.
The smoking device dispute dates to November 2018 when PMP sued Shunbao Technology for infringement of its registered design.
Phillip Morris filed its claim in the U.K. shortly after discovering the rival company had created a “cheap knockoff” smokeless product called AMO that was already being marketed in China, according to its written arguments to the court.
May 18, 2020
PMI Investigated for Tobacco Heating Patent Infringement

Photo: R.J. Reynolds Vapor Co.
The U.S. International Trade Commission (ITC) has opened a probe into vapor products imported by cigarette giant Philip Morris USA (PM) after R.J. Reynolds complained that PM’s tobacco-heating system infringes Reynolds’ patents, according to a report by Law360.
The investigation will determine whether the IQOS tobacco vaporizers marketed by Philip Morris and parent company Altria use tobacco-heating systems and sticks that violate patents for R.J. Reynolds’ Vuse vaping system. R.J. Reynolds seeks cease-and-desist orders barring imports of the allegedly infringing products.
The patents describe a device that heats tobacco held in a removable cartridge to 350 degrees when vapors containing nicotine are released without producing smoke, according to R.J. Reynolds’ April 9 complaint to the ITC.
R.J. Reynolds, which is owned by British American Tobacco, said Philip Morris has sold the alleged copycat IQOS system in the U.S. since October 2019 and has imported the product from manufacturers in Italy, Switzerland and Malaysia for years to use in clinical testing.
“We believe the allegations are without merit, and we are fully prepared to defend ourselves,” Philip Morris spokesman Corey Henry told Law360 in a statement Wednesday, noting the company has spent $7 billion developing its smoke-free tobacco products over the past two decades.
R.J. Reynolds filed a suit accusing Altria and Phillip Morris of six counts of trademark infringement in Virginia federal court the same day R.J. Reynolds filed its ITC petition. In that case, the company seeks treble damages and court declarations that Altria and Philip Morris have infringed its intellectual property.

Photo: PMI
May 18, 2020