Tag: U.S. Tobacco Cooperative

  • USTC Acquires VP Distributors

    USTC Acquires VP Distributors

    Image: Natee Meepian

    The consumer products division of U.S. Tobacco Cooperative Inc. (USTC), Premier Manufacturing, of Chesterfield, Missouri, USA, has acquired VP Distributors of Williamston, West Virginia, USA.

    By combining the strengths of both organizations, USTC aims to leverage synergies, grow its customer base and ultimately provide an improved customer experience.

    “We are thrilled to announce the acquisition of VP Distributors, a move that underscores our commitment to providing unparalleled convenience, blend of quality products and exceptional service to our customers. This strategic expansion aligns with our vision to enhance accessibility and elevate the overall c-store supply experience,” said Russ Mancuso, USTC’s senior vice president for consumer products.

    USTC anticipates that this acquisition will not only boost its market share but also create new opportunities for VP’s customers and their employees.

  • Stinchfield honored as ‘senior-level leader’

    Stinchfield honored as ‘senior-level leader’

    Photo: USTC

    Cheryl Stinchfield, regional account manager at Premier Manufacturing, was recognized as a senior-level leader at the U.S. National Association of Convenience Stores’ annual convention, U.S. Tobacco Cooperative announced on its website.

    Organized by Convenience Store News, the Top Women in Convenience program honors individuals across retailer, distributor and supplier businesses for outstanding contributions to their companies and the industry at large.

    The 10th class of Top Women in Convenience included 86 established and emerging female leaders in the convenience store industry. The honorees were selected from a pool of nominees based on their innovative corporate initiatives, extraordinary financial and strategic accomplishments, astute problem-solving acumen, exceptional performance, mentorship work and selfless charitable participation, along with other attributes that go above and beyond the call of duty.

    At the award ceremony of more than 450-plus people, Stinchfield was accompanied by Oscar House, Russ Mancuso, Steve Lucas, Mark Schueller and Irene Stinchfield.

  • Premier to Distribute NIC-S Pouches

    Premier to Distribute NIC-S Pouches

    Photo: Premier Manufacturing/Enorama Pharma

    Premier Manufacturing, a subsidiary of U.S. Tobacco Cooperative, and Enorama Pharma have entered into an exclusive distribution agreement regarding the sale of NIC-S, tobacco-free white snus, for the U.S. market.

    “The growth and sales potential in tobacco free nicotine pouch market is growing exponentially”, said Premier Manufacturing Sales Director Steve Lucas. “We wanted to offer our customers and their consumers a broader range of products and NIC-S is a great partner to achieve this”, said Lucas.

    “We at Enorama are very pleased to have entered into this distribution agreement with Premier Manufacturing and we look forward to a long and close collaboration. We are convinced that Premier Manufacturing, its extensive sales organization and a wide contact network, will be a valuable partner for Enorama’s expansion in the American market.” said CEO Annette Agerskov.

    NIC-S is available in a wide range of options allowing the consumer to tailor their nicotine intake. “With three different nicotine strengths—3 mg, 6 mg and 9 mg—and several flavors such as wintergreen, mint, orange, berry, cinnamon and flavor free; consumers will be sure to find a favorite style—or two,” said Lucas.

    “Everyone at Premier Manufacturing is excited about the opportunity to partner with Enorama Pharma to supply our customers with a superior quality premium tobacco-free white pouch that will satisfy the growing number of consumers entering this exciting category,” said U.S. Tobacco Cooperative Senior Vice President Russ Mancuso.

    Premier Manufacturing will be doing a full marketing campaign promoting NIC-S that will include point-of-sale materials, print and digital ad campaigns, display fixtures and various websites. Product will be available via Premier’s distribution network throughout the U.S. in the coming months.

  • Industry Mourns Tommy Bunn

    Industry Mourns Tommy Bunn

    Photo: New Africa

    Jessie Thomas “Tommy” Bunn, a distinguished leader in U.S. national and state level agricultural policy and marketing and the husband of North Carolina Secretary of State Elaine F. Marshall, passed away unexpectedly July 24 after suffering a traumatic brain event, the North Carolina Department of the Secretary of State reported.

    A native of Zebulon, North Carolina, Bunn formerly served as president of the U.S. Tobacco Cooperative following a 21-year career as executive vice-president of the Leaf Tobacco Exporters Association and Tobacco Association of the United States.

    In addition, he served as deputy director and acting director of the Agricultural Marketing Service Tobacco Division for the U.S. Department of Agriculture in Washington, D.C. and served under Commissioner Jim Graham with the N.C. Department of Agriculture and Consumer Services.

    At the time of his death, he was serving as a consultant to the tobacco industry.

    Bunn was named by the North Carolina State Grange as Man of the Year in 1988 and was honored as a Distinguished Alumni with the College of Agriculture and Life Sciences at N.C. State University in 2012, where he graduated with a degree in Agriculture Business/Crop Science in 1966.

  • New Packaging for ‘1839’ Cigarettes

    New Packaging for ‘1839’ Cigarettes

    Photo: USTC

    Premier Manufacturing, the consumer products division of U.S. Tobacco Cooperative (USTC), has redesigned the packaging for 1839 cigarettes.

    “Premier developed a premium visual design that showcases updated brand colors, a cleaner overall look and the distinctive 1839 logo; all while maintaining some traditional elements to help make 1839 attractive on stores cigarette fixtures,” USTC wrote in a press note.

    “The bold red and rich blues are just some of the colors used in the packaging design that is anchored by historic 1839 elements such as the silhouette of a farmer with the horse and plow on a field image that simulates a tobacco leaf. The 1839 quality seal refers to the heritage and premium blend of tobacco used in the product and the 1839 date is when the flue-cured tobacco process was discovered in North Carolina.”

    Also incorporated is “A Product of US Farmers” that reflects the brands commitment to USTC’s southeast based tobacco farmers who own the cooperative.

    “We believe our new packaging design better reflects the needs of today’s consumers, while reinforcing the brands strength and heritage across the full line of 1839 cigarettes,” said USTC Senior Vice President Russ Mancuso.

  • USTC Exits Bankruptcy

    USTC Exits Bankruptcy

    Photo: USTC

    U.S. Tobacco Cooperative (USTC) exited bankruptcy on July 14. The announcement follows the federal Bankruptcy Court’s approval of the cooperative’s Chapter 11 plan of reorganization on June 23, 2022, along with approval of the settlement terms with the Lewis Class.

    USTC filed for bankruptcy protection in July 2021 in order to meet contractual obligations to its member growers while the company addressed uncertainty presented by the ongoing Lewis class action lawsuit.

    “Today’s exit from bankruptcy marks the end of more than 17 years of class action lawsuits following the termination of the federal price support program that ran from 1946 to 2005,” said USTC CEO Oscar J. House in a statement.

    “Our exit allows us to now focus solely on the services and products our cooperative is known for. I want to thank our customers, employees, suppliers, board of directors and especially our member growers for their continual support throughout the bankruptcy proceedings, which are now officially behind us.”

    In accordance with the plan, the cooperative pays in full its secured lenders, suppliers and unsecured creditors in addition to settlement amounts to the Lewis Class.

    “We are energized,” continued House. “Our business is robust with our farmer members contracting for this fall’s harvest, customers ordering our products and shipments processing daily. With our experienced management team, dedicated employees and our strong market position, the cooperative is poised for a successful future.”

  • USTC Plans Bankruptcy Exit

    USTC Plans Bankruptcy Exit

    Photo: USTC

    U.S. Tobacco Cooperative (USTC) has begun planning an exit from Chapter 11 bankruptcy later this summer. The cooperative originally filed for protection in July 2021 to meet contractual obligations to its member growers while the company faced uncertainty presented by an ongoing class-action lawsuit.

    Oscar House

    “On February 2, after 17 years of litigation, we were able to reach economic terms of a settlement with the Lewis Class,” said USTC CEO Oscar J. House. “As we await final approval from the court this summer, we are beginning to prepare our exit from bankruptcy and continue providing the exceptional service and quality products our organization is known for across the globe.”

    USTC originally filed for protection in federal bankruptcy court to satisfy obligations to its 550-plus member-growers, 200-plus employees, suppliers and customers. The settlement and plan of reorganization will allow the cooperative to honor its commitments worldwide and emerge from bankruptcy well positioned to serve its member-growers. Details of the agreement will be provided in the ordinary course of obtaining formal court approval of the settlement and USTC’s plan of reorganization.

    “USTC is healthy and set for a sustainable, successful future,” continued House. “Throughout the bankruptcy process we have fulfilled all obligations to all stakeholders: our customers, grower-members, vendors and employees. Going forward we will continue to do so, stronger than ever.”

  • Lawsuit Delays USTC Bankruptcy Plan Vote

    Lawsuit Delays USTC Bankruptcy Plan Vote

    Photo: USTC

    A class action claim seeking more than $1 billion postponed U.S. Tobacco Cooperative’s (USTC) bankruptcy exit, as the co-op agreed to suspend a hearing on its proposed reorganization plan to mediate lingering disputes with lenders and former grower members, reports Bloomberg Law.

    In July, USTC filed for Chapter 11 protection in federal court to meet short-term contractual obligations to its member growers during the 2021 crop season.

    “This filing will allow USTC to reorganize and restructure to honor commitments to stakeholders and ensure the organization’s sustainable future,” the company wrote in a press note at the time.

  • USTC Files for Chapter 11 to Fulfill Contracts

    USTC Files for Chapter 11 to Fulfill Contracts

    Photo: USTC

    U.S. Tobacco Cooperative (USTC) has filed for Chapter 11 protection in federal court to meet short-term contractual obligations to its member growers during the 2021 crop season.

    “This filing provides us the best way possible to meet our short-term obligations and plan for the future,” said Oscar J. House, CEO and president of USTC, in a statement.

    “In no way does this action reflect on the health of the organization and its ability to continue operations well into the future. In fact, this action is in response to the uncertainty presented by the ongoing class action litigation brought against us in 2005. Rest assured that our obligations to our member growers, employees, suppliers and customers have always been and will continue to be our highest priority and concern.”

    This filing provides us the best way possible to meet our short-term obligations and plan for the future. In no way does this action reflect on the health of the organization and its ability to continue operations well into the future.

    Oscar J. House, CEO and president, USTC

    As a result of this proactive filing, USTC intends to satisfy obligations to its more than 550 member growers and more than 200 employees. The company says suppliers and customers will continue to receive the exceptional service and products the organization is known for across the globe. “This filing will allow USTC to reorganize and restructure to honor commitments to stakeholders and ensure the organization’s sustainable future,” the company stated.

  • Enduring Resilience

    Enduring Resilience

    Photo: Taco Tuinstra

    Emerging from the pandemic, the leaf tobacco industry has once again proven its mettle.

    By Stefanie Rossel

    One and a half years into the Covid-19 pandemic, the world has yet to return to normal. Leaf merchants around the globe have felt the impact on their business, too, as they had to cope with new challenges in their operations. Yet tobacco has once again proven its famed resilience in times of crisis, and leaf traders have found solutions to handle the unprecedented circumstances. Tobacco Reporter asked several of them to describe their experiences and provide a snapshot of the current global leaf market.

    “Global leaf markets have come out of the gate sizzling hot in 2021,” says Jay Barker, founder of U.S.-based JEB International Tobacco. “The dynamics of the Brazil crop have been heavily affected by the Covid lockdowns, and prices have subsequently skyrocketed. Zimbabwe seems to be quite firm also, and contracted volume in the U.S. was up substantially from 2020 levels. These are the times when being in the tobacco business is the most fun; there is never a dull day.”

    “At this stage in the tobacco calendar, we are noticing an increased demand which exceeds supply in certain key export markets,” notes Alex Mackay, CEO of Premium Tobacco Group, which is headquartered in Dubai. “This in both the flue-cured Virginia (FCV) and air-cured burley varieties. The overall increase in demand will have a positive impact on all unsold inventories of which are at lowest levels seen for many years.”

    Mackay has noticed a further reduction in the production of air-cured burleys this year. “We believe that certain manufacturers may face supply challenges as core sourcing origins deliver less volume than demand requires,” he says. “However, smaller niche markets could see increased interest as a result. Outside highly specialized and high-value cigar products that are still enjoying reasonably good demand, dark-fired production for the medium[-value] to super-value segments predominately for the Middle East, North African regions have dropped steadily for the past few years. We are expecting supply to stay restrictive and demand set to increase as crop production in African and Indian origins continue to decline.”

    Hardy Kohl Jr.

    Brazil plays a special role this year. The price of Brazilian flue-cured has surged recently, according to Mackay, and higher-than-expected demand continues to be seen across all quality segments. “We believe certain manufacturers are keen to capitalize on the current crop quality, and the potential threat of a shorter crop next year may necessitate longer range buying patterns to strengthen durations,” he says.“In Brazil, we have a signal for a reduction in production for 2022, among other reasons, due to the excellent gain of farmers with other products,” confirms Hardy Kohl Jr., general manager of Kohltrade in Brazil. “It has also been a challenge for players to deal with Brazilian exchange rate volatility, which, together with the reduction in margins, has increased the risk of operations.”

    Miguel Goerck, sales director of ATC-Associated Tobacco Co. Brazil, also observes strong demand for tobacco, especially out of Brazil. “There will be no stocks available after the current season,” he says.

    “Brazil has always been, along with Zimbabwe and USA, a source of quality tobacco. On the past two seasons, the demand has increased because of a few factors. The Brazilian Real suffered a steep devaluation; Zimbabwean tobacco is expensive and committed to a few customers; Chinese tobacco stocks are lower, and there are not as many lots available at very low prices as before. Many customers are looking for price and cheap tobacco only. With commodities’ prices and tobacco growing costs increasing, it will be interesting to observe what will be the market reaction already on the next crop.”

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    Kohl anticipates the market to head toward a shortage of certain tobacco grades for the next few years. This is also a trend in the U.S., says Rick Smith, founder of Independent Leaf Tobacco Co. in Wilson, North Carolina, who observes a tendency toward tighter supplies of flavor styles and domestic underproduction of these types, especially dark types. “Other flavor markets are also beginning to show the same tendencies,” he says. “Prices are inching up, cutting into the dealer’s ability to make a profit. Filler styles are available.”

    Oscar House, president and CEO of U.S. Tobacco Cooperative (USTC), has singled out a new business opportunity for U.S. farmers. “Given that USTC only deals with flue-cured tobacco, the most significant thing that has occurred is China returning to the market to not only buy the 2018 and 2020 crops but also with indications for the 2021 crop,” he says. “This gives our farmers an opportunity to increase their growing contracts by up to 80 percent with the cooperative, which will greatly help their farming operations with the cuts of the past two years. With China back in the U.S. buying tobacco, it will be a boost for the flue-cured crop going forward.”

    With China back in the U.S. buying tobacco, it will be a boost for the flue-cured crop going forward.

    Oscar House, president and CEO, USTC

    Quality Remains Key

    While the South American and African tobacco crops are in mid-season, with both FCV and burley in high demand, marketing of the African crops has recently begun with demand again appearing to be in line with projected crop size, notes Jim Schneeberger, director of global leaf sales at CNT in Germany. “But quality will be the determining factor if indeed demand is to align with supply,” he says. “Weather continues to play an important role in the quality of tobacco crops and in turn farmers’ viability. Demand for competing agricultural crops is increasing, and there are some indications that tobacco growers may convert to food crops.”

    “Tobacco demand is firm in most countries, and unsold stocks are in line with pre-pandemic average volumes,” says Rainer Busch, managing director and owner of Germany-headquartered NewCo Global Tobacco Trade & Service. “What is surprising is that, although the seasonal workforce is large and infection could be easy, the harvest volumes have not decreased dramatically. The same applies to the intensive workload in the factories, but no significant effects were found.”

    Aylin Bahcevan, marketing supervisor of Istanbul-based Star Agritech International, hints at a development that began impacting the leaf market long before Covid-19 entered the scene. “Traditional tobacco product consumers are gradually inclining toward smoking alternatives due to the rising awareness about health concerns,” she explains. “Thus, the introduction of innovative tobacco products with unique taste options has become essential.

    As a result, manufacturers have shifted their focus on premium tobacco products produced with flue-cured tobacco and fine whole leaf. The launch of low-nicotine and alternative smoke products are expected to rise and fuel the market growth of the next-generation tobacco products segment.

    Prominent players in the industry, including us, are investing in research and development more than ever to meet the changing needs of the industry and lead the way of innovation. Such efforts bear the potential to help attract a larger customer base for tobacco products.”

    Aylin Bahcevan

    Traditional tobacco product consumers are gradually inclining toward smoking alternatives due to the rising awareness about health concerns.

    Aylin Bahcevan, marketing supervisor, Tar Agritech

    The Challenge of Logistics

    Last year’s season saw disruptions in key markets due to the Covid-19 pandemic. Travel restrictions not only caused shortages of agricultural inputs and seasonal farm workers, but also prevented many buyers and sellers from visiting the sales floors. In TR’s survey, leaf merchants unanimously named logistics as an issue of concern.

    “By far, the most pressing issue for me is logistics,” says Smith. “With the pandemic raging, it is hard to get a shipment from point A to point B in a timely manner. What used to take 45 days now takes 90 if you are lucky. This seems to be true for all sources.”

    “We face higher shipping and transportation costs and delivery delays due to the overbooking of certain routes,” echoes Busch.

    For House, the biggest concern for his company is the supply chain. “This has been exacerbated by the Covid-19 pandemic, and it will take some time before shipping lines have a good handle on where goods are coming from and going to in order to smooth out the disturbances in the system,” he says. “Trucking has also been affected in the U.S., and it will also take time before there are the right amount of trucks for the right amount of drivers for the right amount of customers.”

    “The impact of Covid-19 is still adversely affecting the leaf supply sector; we have seen some delayed decisions within the trade last year as customers postponed placing orders, tried to better utilize or manage existing inventories and gauge potential cigarette sales given restrictions and lockdown requirements,” says Mackay. “To further compound matters, the dramatic increase in freight rates from Asia and the general lack of availability of containers and shipping routes caused dramatic cost increases and caused longer than usual transit times. As we continue to deal with the potentially longer-term impact of this pandemic, we sense the industry will inherently be more cautious in tobacco production and financing. The cost of business could be more restrictive and might limit worldwide production plans and see diminished inventory levels that could lead to an undersupply in some segments.”

    Nevertheless, leaf merchants remain optimistic. “The tobacco industry has proven to be very resilient in the face of Covid-19, and the only significant decline in combustible products is from the inactivity in global duty-free shops at airports and the like,” explains Schneeberger.

    “The Covid-19 virus and the challenges that came along with it have made it our priority to facilitate a transformation for ourselves and our industry—a transformation that calls for a better understanding and improvement,” Bahcevan points out. Kohl expects a stabilization of the pandemic that should generate a recovery in investments. “It is a transition moment as we believe we are seeing this imbalance in basic market rules, such as the balance between supply and demand.”

    For Dora Gleoudis, managing director of Nicos Gleoudis Kavex, which specializes in Greek oriental tobacco varieties, business life has returned almost to normal. “We are travelling a lot,” she says. “It’s good to see some recovery.”

    Global leaf markets have come out of the gate sizzling hot in 2021.

    Jay Barker, founder, JEB International Tobacco

    Supply Chain Challenges

    Meanwhile, strong demand for leaf tobacco is pushing farmer prices “to the roof,” according to Goerck. “The recent strengthening of the Brazilian Real is also pressuring the free-on-board prices up, which can make some customers source tobacco from other regions,” he says.

    Ever stricter regulations only add to the pressure. In the EU, pending legislation will require companies to examine their supply chains for risks to human rights and the environment—and fix any shortcomings. The U.S., too, is enforcing social governance policies with regards to tobacco trade and delivery.

    “Since the introduction of the U.N. Guiding Principles on Business and Human Rights in 2011 and the U.N. SDGs in 2015, there has been a rapid shift in focus to ensuring companies implement supply chain due diligence,” says Mackay. “The focus is on: ‘Was there minimal social and environmental impact during production?’ Companies are expected to follow and implement transparent programs using the procedure of: Identify. Prioritize. Respond. Measure. Report. The new STP program [Sustainable Tobacco Program—an industry-wide initiative that helps to drive standards in agricultural practices, environmental management and social and human rights areas] focuses on several themes, social and environmental issues being of particular significance.”

    A prime example are chemical residues. “As with all agricultural products and increased consumer awareness, the elimination and use of highly hazardous pesticides in the supply chain is critical,” says Mackay. “To achieve this, the implementation of proactive programs focusing on safe application of reduced-risk products, coupled with robust traceability systems, is key for suppliers. For some regions and suppliers, this will be challenging, which could redefine the tobacco industry going forward. The regulatory landscape is rapidly evolving, and the ability of suppliers to effectively address and fulfill new requirements will determine their long-term success in an increasingly competitive industry.”

    Compliant crop production, along with sustainable and responsible supply, will become more essential, according to Mackay. “The requirements and obligations by all future suppliers could have a dramatic effect on the way tobacco is produced, crop sizes and the countries and companies that can implement these potential requirements. The elements needed to ensure all tobacco is grown, processed and delivered in an environmentally, socially responsible, compliant and transparent manner that is likely to redefine the tobacco industry soon.”

    Schneeberger believes the regulatory environment will remain a major factor within the tobacco industry. “The focus on the ESG [environmental, social and governance] footprint of manufacturers and suppliers alike will further regulate the way tobacco is produced, and countries that are unable to satisfy international sustainability standards will most likely lose their markets for tobacco, especially as relates to exports,” he says. “The apparent impact of climate change and resultant drought conditions in certain nonirrigated tobacco crops will continue to increase production of certain ‘nondesirable’ styles of high nicotine FCV and burley for which there is little demand.”

    Spotlight: Macht Tabak

    Leaf tobacco trade has a long tradition at Macht Tabak MIJ (MTM). The family-owned business, which is part of Macht Global Holdings, has roots in the tobacco industry dating back to 1951. Headquartered in Hong Kong, the leaf-dealing company has presence in Dubai, Izmir, Moscow and Luxembourg.

    MTM provides a wide variety of leaf tobaccos from a selection of origins tailored with custom value-added services to become an essential solutions partner to its clients’ supply chain. While primarily supplying directly from the origins, MTM holds select tobacco stocks in Belgium and Dubai to fulfill the prompter requirements of its clients in the respective regions.

    Furthermore, the company offers in-house cut rag blend selections for traditional American and Virginia blends as well as a tailor-made service to provide its customers with their very own rich taste signature blend.

    In collaboration with its partners, MTM additionally serves in the supply of DIET and CRES products.

    Hand in hand with activities of its affiliates, MTM supports its very own impact investment platform that focuses on sustainable solutions for a greener energy and resource-efficient future.

     

    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.