Tag: Featured

Stories featured at the top of tobaccoreporter.com

Imperial to Cut CEO Compensation

Stefan Bomhard (Photo: Imperial Brands)
Imperial Brands is cutting CEO Stefan Bomhard’s performance-linked pay in response to shareholders’ concerns over his remuneration package, reports Reuters.
Bomhard and the remuneration committee have agreed that the value of his 2021 long-term incentive plan award will be cut to 315 percent from 350 percent of his salary.
Around 40 percent of shareholders voted against the directors’ remuneration proposal during Imperial Brand’s annual general meeting earlier this month.
The shareholder revolt over Bomhard’s salary came as it was “significantly larger” than his long-running female predecessor, reported The Times.
When Imperial Brands announced Bomhard’s appointment in February last year, it said he would receive an annual salary of about £1.3 million ($1.82 million) and a pension allowance equivalent to a maximum of 14 percent of salary and other usual benefits.
Since joining, the former Inchcape executive has promised to boost the company’s performance by bringing in new talent, changing incentive structures and sharpening focus on top markets.
In 2017, Imperial Brands shareholders balked a proposal to increase the salary of then-CEO Alison Cooper to almost £8.5 million annually from £5.5 million.
February 22, 2021
Reynolds Cleared in Oregon Cancer Suit

Photo: succo from Pixabay
Oregon jurors on Feb. 19 cleared R.J. Reynolds Tobacco Co. of responsibility for the terminal lung cancer Patricia Rickman developed after decades of smoking the company’s cigarettes, reports the Courtroom View Network.
The case, Rickman v. R.J. Reynolds, turned in part on whether tobacco industry messaging swayed Rickman’s smoking decisions. Rickman claims that Reynolds’s participation in a decades-long campaign to misrepresent the health effects of smoking ultimately caused her cancer.
Reynolds countered that Rickman smoked despite knowing the dangers of cigarettes. Representing Reynolds, attorney Steven Geise told jurors Rickman began smoking years after mandatory warnings went onto cigarette packs and continued despite widespread information concerning smoking’s dangers.
The evidence, Geise said, undercut Rickman’s contention that she did not believe smoking was dangerous until about 2015. “It stretches the bounds of reason,” Geise said, “to think that somebody could go into the 2010s and not have any idea that cigarette smoking was bad.”
The plaintiff’s attorney had requested up to $12.7 million for Rickman plus loss-of-consortium damages for her husband and a finding that punitive damages were warranted.
February 22, 2021
Illicit Juul Products Uncovered in Florida

Photo: Steveheap – Dreamstime.com
About 3.3 percent of surveilled retail outlets in Miami-Dade County and Broward County were found to be selling illicit Juul Labs products during a recent enforcement campaign by the company.
Juul Labs’ Brand Protection Team investigated 917 retailers in the Florida counties, which are near a U.S. port of entry and international mailing facility—known entry points for the importation of illicit products. With the support of a third-party compliance auditor, the team conducted product surveillance and obtained samples across retailers. The samples were then evaluated to determine whether they were illicit products.
Of the 30 outlets in South Florida selling illicit products, six outlets sold counterfeit Juul pods, primarily offered in illegally marketed flavors, while one sold counterfeit Juul devices. Ten outlets sold diverted Juul pods, primarily diverted from Canadian and Russian markets, and 13 outlets sold illegal and unauthorized compatible pods, with most of these compatible brands subject to International Trade Commission exclusion orders.
Juul Labs said it would deliver its findings to law enforcement authorities and support their efforts to bring legal action. “We need to be a responsible and trusted steward of vapor products,” said Adrian Punderson, vice president of brand protection at Juul Labs, in a statement. “As such, it is our obligation to support enforcement against illicit and illegal products as we strive to reset the vapor category and earn a license to operate in society.”
February 22, 2021
Tobacco Cultivation up in Africa, Down Globally

Photo: Taco Tuinstra
Even as tobacco cultivation declined globally, it increased in Africa, reports Down to Earth, citing a study by the World Health Organization (WHO).
Worldwide, the area under tobacco cultivation decreased by 15.66 percent between 2012 and 2018—but in Africa, it increased 3.40 percent during the same period. Leaf production decreased globally by 13.9 percent between 2012 and 2018; in Africa, however, it increased by 10.6 percent. In 2018, global tobacco leaf production was 6.3 million tons; in Africa, it was 722,187 tons, representing 11.4 percent of global production.
In 1995, there were only two major tobacco leaf growing countries in Africa—Malawi and Zimbabwe. Over the past two decades, other African nations have substantially increased their production of tobacco leaves.
Today, the main tobacco leaf growing countries in Africa are Zimbabwe (25.9 percent of Africa’s output), Zambia (16.4 percent), Tanzania (14.4 percent), Malawi (13.3 percent) and Mozambique (12.9 percent).
Many African governments view tobacco farming as a tool to alleviate poverty. From 2012 to 2018, the value of tobacco leaf exports from Africa increased by 10.51 percent to $2.08 billion.
African countries thus showed a favorable trade balance of approximately $1.26 billion in 2018. Two main tobacco leaf exporters in Africa in 2018 were Zimbabwe (40.61 percent) and Malawi (25.27 percent).
The WHO maintains that tobacco farming has many negative consequences on the health and well-being of farmers as well as for the environment and the long-term well-being of the countries concerned. The health body believes domestic leaf cultivation also boosts local cigarette consumption.
The number of tobacco users in the WHO African Region increased to 73 million in 2018 from 64 million adult users in 2000. This increase contrasted with a decline in the number of tobacco users globally to 1.34 billion from 1.4 billion over the same period.
February 19, 2021
Zimbabwe Marketing Board Seeks New CEO

The TIMB headquarters in Harare (Photo: Taco Tuinstra)
Andrew Matibiri will step down as CEO of Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) after his term ends in April, according to Newsday.
Andrew Matibiri
Matibiri has led the industry regulator for 15 years. Government regulations restrict a parastatal CEO’s term to 10 years, but the rule was not yet in effect when Matibiri took the helm.
The TIMB board has contracted Industrial Psychology Consultants (IPC) to search for the new CEO.
“Industrial Psychology Consultants (Pvt.) Ltd. has been contracted by the Tobacco Industry and Marketing Board to assist with the recruitment and selection of a suitable candidate for the position of chief executive officer,” IPC said in a vacancy advert published in late 2020.
“The CEO is accountable for leading the business through the initiation and implementation of strategies to unlock its full potential through the effective utilization of the material, financial and human resources, and supervision of all operational units.”
According to TIMB data, 180.8 million kg valued at $452.3 million was delivered to the country’s contract and auction floors during the 2020 season. During the same period last year, 240 million kg valued $479 million went under the hammer.
February 19, 2021
Postal service Invites Input on ENDS ban
Photo: Vladimir Daragan – Dreamstime.com
Stakeholders will have 30 days to comment on the proposed U.S. Postal Service rules for mailing electronic nicotine-delivery systems (ENDS). The USPS posted the rules on Wednesday and they were published in the Federal Register today. Comments must be submitted by March 22. The rules are expected to take effect March 27.
“The Postal Service proposes to revise Publication 52, Hazardous, Restricted and Perishable Mail, to incorporate new statutory restrictions on the mailing of electronic nicotine-delivery systems,” the listing reads. “Such items would be subject to the same prohibition as cigarettes and smokeless tobacco, subject to many of the same exceptions.”
The Preventing Online Sales of E-Cigarettes to Children Act, which placed ENDS under the PACT Act, was enacted on Dec. 27, 2020, and becomes effective 90 days after enactment (March 27, 2021). The USPO rule states that the agency will only mail ENDS products under narrowly defined circumstances.
Exceptions from the ban include:
Intrastate shipments within Alaska or Hawaii;
Shipments between verified and authorized tobacco industry businesses for business purposes, or between such businesses and federal or state agencies for regulatory purposes;
Lightweight shipments mailed between adult individuals, limited to 10 per 30-day period;
Limited shipments of cigarettes sent by verified and authorized manufacturers to adult smokers for consumer testing purposes;
Limited shipments by federal agencies for public health purposes under similar rules applied to manufacturers conducting consumer testing.
The unpublished rules suggest that business-to-business shipments will be allowed. According to Azim Chowdhury, a partner at Keller and Heckman, the PACT Act has historically exempted business-to-business deliveries from the USPS ban. Specifically, the USPS ban does not extend to tobacco products mailed only for business purposes between legally operating businesses that have all applicable state and federal government licenses or permits and are engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation or research.
February 19, 2021
Illicit Cigarettes One-Fifth of Sales in Latvia

Photo: Makalu from Pixabay
Illicit cigarettes accounted for 20.4 percent of the Latvian tobacco market in 2020, 3.6 percentage points more than in 2019, reports the Baltic News Network, citing Nielsen figures.
The Latvian Chamber for Commerce and Industry (LTRK) notes that with this share, Latvia has come close to Lithuania where the percentage of illegal cigarettes was 21.8 percent last year. In Estonia, by contrast, the percentage of illegal cigarettes on the market was only 9.5 percent of the total market volume.
LTRK Chairman Janis Endzins attributed the increase to the impact of Covid-19 on consumer purchasing power, a recently enacted ban on menthol cigarettes and Latvia’s excise tax policy.
“At the end of 2020, we observed continued reduction of the illegal market, reaching its lowest point in the past 10 years. However, currently, there is no reason to expect positive changes,” he said. “Likely, this negative trend with illegal trade will remain in the future and will definitely affect alternatives to cigarettes, such as smokeless products, for which the government decided to rapidly increase excise tax in spite of experts’ recommendations.”
According to Endzins, illegal online trade of e-cigarettes is on a rise, and there have been cases of contraband tobacco-heating devices being intercepted by the State Border Guard.
Data from the study shows that 2.4 percent of all cigarettes consumed in Latvia last year were counterfeit. This means the total percentage of counterfeit cigarettes among all illegal cigarettes consumed in Latvia last year was nearly 12 percent. The largest portion of illegal cigarettes was carried to Latvia from Belarus (67.2 percent). Similarly to previously reported study periods, 61 percent of the total illegal cigarettes volume consisted of cigarette brands such as NZ, Premier, Queen, Minsk and Fest.
Nielsen studies the illicit market every year by collecting empty cigarette packs and determining the origin of tobacco products based on excise labels and health warnings.
February 19, 2021
SWM Reports Full-Year Financial Results

Photo: SWM
Schweitzer-Mauduit International (SWM) reported sales of $1.07 billion in 2020, up 5 percent from 2019. GAAP operating profit was $128.8 million, or 12 percent of sales, down 4 percent. Adjusted operating profit was $171.6 million, or 16 percent of sales, up 8 percent.
“We are very proud of the performance of our business in a year marked by volatility and uncertainty,” said SWM CEO Jeff Kramer. “We delivered another year of adjusted EPS [earnings per share] growth to $3.68, over $128 million of free cash flow, and exited the year with strong organic sales momentum in AMS [advanced materials and structures].”
In the engineered papers segment, SWM reported sales of $530.9 million in 2020, down 3 percent from 2019, with immaterial currency impacts.
A volume decline of 3 percent was partially offset by positive price/mix performance of 1 percent. Price/mix benefited from a higher mix of high-value cigarette, heat-not-burn, and battery separator papers and a smaller proportion of lower margin nontobacco volumes compared to the prior year period. The 2020 volume decline was driven primarily by the continued strategic deemphasis of lower margin nontobacco volumes while tobacco-related papers declined modestly, in line with industry attrition.
GAAP operating profit was $116.8 million, down 2 percent, and included the $16.2 million of restructuring and site closure expenses. During the third quarter, SWM reached an agreement with a large customer to shift production of papers purchased from the company’s Spotswood, New Jersey, USA, site—which exclusively served this customer—to other SWM facilities. As part of the transition, SWM worked collaboratively with the customer to co-develop a new production technology to better meet the customer’s needs, and SWM and the customer signed a new multi-year supply agreement.
SWM shut down the Spotswood facility during the fourth quarter, and for full-year 2020 incurred $11.7 million of restructuring and related site closure costs, which are excluded from adjusted financial metrics.
February 19, 2021
Jack Bowles: 2021 pivotal year for BAT

Jack Bowles (Photo: BAT)
Speaking at the Feb. 18 Consumer Analyst Group of New York (CAGNY) conference, British American Tobacco (BAT) CEO Jack Bowles shared his growth plans and ambitions for the next phase in the company’s transformation.
With strong new category momentum and a clear pathway to 2025 profitability, Bowles called 2021 a “pivotal year” for BAT, announcing an ambitious program called QUEST to accelerate the company’s transformation to create the “enterprise of the future.”
QUEST stands for “Quantum,” Unleashing innovation, Empowering the organization, Shaping sustainability and Technology and digital. The program aims to propel the continued evolution of BAT’s portfolio, structure, culture and ways of working.
According to Bowles, BAT’s goal is to build “A Better Tomorrow” by reducing the health impact of its business. Central to its strategy are the company’s reduced-risk products. These include vapor, tobacco-heating products and modern oral products. Following the January launch of its new CBD vaping line in a test market in Manchester, BAT now also offers products that go beyond nicotine.
In December 2020, BAT announced it had progressed its Covid-19 vaccine candidate into human trials—a significant milestone that further demonstrates the company’s commitment to innovation and science.
BAT has 13.5 million consumers of its noncombustible products, a growth of 3 million in 2020. As BAT works toward its aim of achieving 50 million consumers of noncombustible products by 2030, the company will continue to target its offering in high-growth future areas, including the beyond nicotine on-the-go well-being and stimulation space.
“We are at a key moment in our transformation,” said Bowles in a statement. “We are accelerating our transformation toward ‘A Better Tomorrow’ and committed to building ‘The Enterprise of the Future.’”
“We have made great progress. We have invested in strong foundations for the future. We are building and driving new capabilities, with a clear focus on digital and the sharpening of our science and innovation pipeline. And we have done this while consistently delivering financial returns.
“Our strategy, growth and investment priorities are building BAT into a sustainable, leading consumer-centric, multi-category consumer products company of the future. Our transformation is moving us from a company that is known for tobacco to one that is focused on technology and innovation.
“Our clear roadmap for the future is leveraging our strengths, new capabilities, innovation portfolio and brands with purpose to build ‘A Better Tomorrow.’”
February 19, 2021
KT&G Recognized in Morgan Stanley Index
KT&G received an AA rating in Morgan Stanley Capital International’s (MSCI) environment, social and government (ESG) index evaluation—one level higher than it received last year and the highest score for a Korean company.
Every year, MSCI classifies more than 8,500 listed companies worldwide by industry. The investment information provider evaluates management status related to the environment, social responsibility and corporate governance to assign ratings ranging from AAA to CCC.
Among the 11 tobacco companies evaluated this year, KT&G took first place for responsible marketing and excellent quality management within the “Product Safety and Quality” category.
In the “Governance” category, KT&G received high marks for newly established items such as “business ethics” and “tax transparency.” The company’s board of directors was rated best in the industry in terms of its diversity and expertise.
“The evaluation result this year is meaningful in that KT&G’s ESG management has been recognized worldwide and that the company is now classified into the ESG Leader group,” a KT&G spokesperson said in a statement. “We will continue to strive for the sustainable development of the company based on our advanced governance.”
KT&G was also honored with the “Grand Prize” of the corporate governance evaluation conducted by the Korea Corporate Governance Service in 2019 in recognition of its sustainability management system.
February 19, 2021