After forecasting an unexpected slump in profits for this year, Japan Tobacco Inc (JT) said on Tuesday it planned to cut around 1,000 jobs and focus its efforts on winning market share in heat-not-burn (HnB) products such as the Ploom S brand.
Credit: JT
Operating profits for 2021 are expected to fall 23 percent to 363 billion yen ($3.46 billion), compared with the market’s forecast for a slight recovery to 476 billion yen, according to Refinitiv data. JT, despite commanding over half of the domestic cigarette market, has lagged rival Philip Morris in the increasingly popular category of HnB products.
The company said it was looking to cut around 1,000 jobs, offering voluntary and early retirement packages, citing declining sales of conventional cigarettes. At the same time, it said it will bolster investment in what it calls reduced risk products (RRP), including its heat-not-burn Ploom sticks which compete with Philip Morris’ IQOS.
It plans a new heat stick product later this year, aiming to boost its position in Japan, the world’s biggest market for such products as regular e-cigarettes with e-liquids containing nicotine are banned.
“The RRP category in Japan is the most mature and competitive in the world,” JT Group President and CEO Masamichi Terabatake said in a press release. “Reflecting this and the decline of sales volume in recent years… we had to take some difficult yet necessary decisions.”
Indiana is a little closer to placing a tax on vapor products for the first time at $1.56 for a two-pod package. The U.S. state’s legislature also hope to the tax on combustible cigarettes to $2 a pack. A preliminary estimate projects the increase would bring in $278 million.
Credit: Photo Mix
The committee had put off a vote Monday to draft language specifying 40 percent of the money raised — an estimated $112 million — would go to Medicaid, according to Inside Indiana Business. Crown Point Republican Julie Olthoff, the bill’s author, says smoking-related health problems cost Medicaid more than five times that much.
Indianapolis Democrats Robin Shackleford and Greg Porter still voted no. They want all the money earmarked for a new public health fund. Republicans say there’s a separate bill addressing that. Committee chairman Brad Barrett (R-Richmond) notes both bills are headed for the tax-writing House Ways and Means Committee, which will decide where the money goes in the context of the full budget. He says the health committee vote puts the panel on record as urging that the money be spent on health, not just dumped into the state’s general fund.
Brookston Republican Don Lehe also voted no.
Even if the full House passes it, the bill faces a tougher climb in the Senate. In the last five years, senators have killed three bills to either raise the cigarette tax or tax e-cigarettes.
E-cigarette sales continue to recover from a Covid-19 slump. Sales in C-stores are up 12.7 percent after rising 2.9 percent in the previous data release, according to the latest Nielsen convenience store report released last week. Nielsen does not track vape shop data.
Credit: William Thompson
Sales overall had slumped since February 2020, when the U.S. Food and Drug Administration implemented its latest round of heightened regulations on the products, according to the Winston-Salem Journal. Overall e-cigarette sales-volume growth has declined steadily since Nielsen’s Aug. 10, 2019, report, when it was up 60.2 percent year over year.
On Feb. 6, 2020, the FDA, among other things, required manufacturers of cartridge-based e-cigarettes, such as Juul Labs, R.J. Reynolds Vapor Co., NJoy and Fontem Ventures, to stop making, distributing and selling “unauthorized flavorings” by Feb. 6, or risk enforcement actions.
Top-selling Juul’s four-week dollar sales have dropped from a 50.2 percent increase in the Aug. 10, 2019, report to a 5% uptick in the latest report. By comparison, Reynolds’ Vuse was up 82.2 percent in the latest report and NJoy down 22.3 percent.
Juul’s market share dropped from 52.1percent in the previous report to 51.3 percent. It was at 53.3 percent a year ago. Vuse’s market share climbed from 29.2 percent to 30.6 percent, while No. 3 NJoy slipped from 5 percent to 4.9 percent, and Fontem Ventures’ blu eCigs slipped from 3.5 percent to 3.4 percent.
The Malaysian Vape Chamber of Commerce (MVCC) said that the Malaysian vaping industry is valued at RM2.27 billion ($558 million). The figure is one of the primary findings of the recently released “Study on the Malaysian Vaping Industry” report, commissioned by the MVCC.
MVCC president Syed Azaudin Syed Ahma (center) Credit: MVCC
The MVCC has stated previously that the vape industry in Malaysia is too substantial to remain unregulated and has urged the government to immediately introduce appropriate regulations to create a positive multiplier effect to the Malaysian economy.
MVCC commissioned Green Zebras, a market research agency, to conduct the study, the first of its kind in the country, according to a MVCC release. The report found that there are more than 3,300 businesses related directly to the vapor industry, with a workforce of more than 15,000 workers. It was further estimated that workers in vape industry were paid up to RM450 million in wages in total in 2019.
“Our data strongly indicate that this sector is a viable and growing industry in Malaysia and can contribute significantly to the local economy. It has already facilitated the growth of local entrepreneurs, many of which are local and bumiputera businesses,” MVCC president Syed Azaudin Syed Ahmad said. “In addition, the Malaysian vape industry currently has an established ecosystem comprising manufacturers, importers and retailers, and a growing distribution and logistics network.
Credit: MVCC
In Malaysia, the government has already announced an excise tax on vape devices and e-liquids which has been implemented since 1st January 2021, according to thesundaily.com. However, MVCC believes that the tax regime needs to be broadened to include e-liquids with nicotine which make up 97 percent of the Malaysian market, in order to effectively contribute to the government’s revenue.
“The Malaysian vaping industry has significant potential that can be unlocked with practical and comprehensive regulation that must include the use of e-liquids with nicotine. This will spur the growth of SMEs, which will in turn create jobs and generate tax revenue for the Government,” added Syed Azaudin.
Malaysia is in good position to attract FDI into vaping sector as other sectors are seeing challenges to attract investments, according to Syed Azaudin. “MVCC believes the vaping sector is ready and capable to attract quality FDIs given its established ecosystem that global investors and multinational companies would find appealing,” he said.
The global e-cigarette and vape market size is expected to reach $67.31 billion (RM272.54 billion) by 2027, registering a revenue-based CAGR of 23.8 percent from 2020 to 2027, according to a new study conducted by Grand View Research.
“MVCC has spearheaded this study in order to provide the Government with a solid data driven foundation to immediately introduce regulations on the vape industry,” Syed Azaudin said.
To download the full report, visit the MVCC’s website.
The outlook for many small vapor companies and online retailers looks bleak following the enactment of new rules that prohibit the U.S. Postal Service (USPS) from shipping e-cigarettes, according to Keller and Heckman’s Azim Chowdhury and Galen Rende.
Writing on The Continuum of Risk law blog, the attorneys discuss the fallout of a recent amendment to the 2009 All Cigarette Trafficking (PACT) Act.
In late December, Congress overturned a veto from former President Trump and voted into law a $2.3 trillion coronavirus relief and government funding bill that contains a provision banning the USPS from delivering vapor products. The USPS was already prohibited from delivering cigarettes and smokeless tobacco products to consumers under the PACT Act. The law passed in December extends the Act’s original definition of “cigarette” to include electronic nicotine delivery systems (ENDS).
Azim Chowdhury
Tobacco and vapor companies may use private services to ship their products to consumers, but the PACT Act requires them to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the tobacco tax administrators of the states into which a shipment is made. Delivery sellers are further required to verify the age and identity of the customer at purchase and maintain records of delivery sales for a period of four years after the date of sale, creating substantial administrative burdens.
Critically for the vapor industry, the most popular carriers, Federal Express and United Parcel Service, have recently announced that they would cease all deliveries of vapor products.
The prohibition on the mailing of ENDS is scheduled to take effect after the USPS promulgates regulations clarifying the mail ban, which it is required to do within 120 days of the enactment—i.e., by April 27, 2021.
An association of Australian retailers has formed a new Committee to serve as the voice for sellers of vaping products in the country. The National Retail Association (NRA) states that the committee will continue lobbying the government against the “illogical” policy that allows people to buy vaping products freely online from overseas retailers, but not in Australia.
Credit: Patty Jansen
The Therapeutic Goods Administration (TGA) recently ruled that from 1 October, consumers would only be allowed to access nicotine e-cigarettes and vape products with a doctor’s prescription from a pharmacy. The essentially locks out thousands of small businesses that have a proven history of responsibly selling regulated products such as tobacco, lotteries, and alcohol. The NRA is urging any retailer or importer of vaping products to join the NRA’s Emerging Business Committee to have their voices heard in Canberra.
Jeff Rogut, the former CEO of the Australasian Association of Convenience Stores (AACS) has been appointed as advisor and spokesperson for the committee. Rogut has been a spokesperson for retailers for more than 10 years and has strongly supported the rights of retailers and smokers through numerous government submissions and appearances at government inquiries.
Rogut said the NRA believes Australian retailers should be able to responsibly sell nicotine products over the counter in the same way as stores in New Zealand, the US, the UK, Canada, Korea, and other countries around the world.
“Vaping is one of those things that has grown in popularity and there are an estimated half a million consumers of vaping products in Australia,” says Rogut. “The issue is that nicotine is an illegal product and cannot be sold by retailers, and we’ve recently seen the shortsightedness of the government in not allowing convenience stores, tobacconists or anybody else to sell it. They are looking at restricting that to pharmacies, which we are lobbying quite fiercely against. They’re making all of this legislation and regulations without fully understanding the full impact of their decisions.”
The NRA and AACS have long urged the Federal Health Minister to allow small businesses to supply smoke-free alternatives to current consumers of cigarettes and tobacco products. The Chair’s report from a recent Senate Inquiry on Tobacco Harm Reduction agreed with their stance and set out a clear and rational case for making it easy for tobacco users to transition to less harmful smoke-free alternatives.
But Rogut says that the TGA’s ruling goes against this and will make it more difficult and more expensive for consumers to transition away from tobacco products and towards nicotine vape products, potentially leading to an increase in black market sales.
“As we have seen with tobacco, the harder you make it and the more expensive you make it, you drive the products underground,” he says. “The danger for the government is that consumers will move to buying these products from the criminal elements and the ‘black market’ importers, as we have seen happen with tobacco products, and they won’t know what the product is or what it contains. Yes, it might be cheaper and easier to get but from a health point of view it might do more harm than good, and that is the shortsighted thing that the government appears to have overlooked.”
Hall Analytical is offering a virtual seminar on Feb. 11, 5-6 pm GMT about the U.S. Food and Drug Administration’s premarket tobacco product application process.
E-liquid and device manufacturers will have an opportunity to take part in a live Q&A session with subject matter experts.
Panelists include David Lawson, CEO, Inter Scientific; Patricia Kovacevic, founder and principal, Regulation Strategy; and Sally McGuigan, principal scientist, Hall Analytical
This session is limited to the first 50 registrants, and therefore places will be offered on a first come, first served basis.
The World Health Organization (WHO) will reappoint Michael R. Bloomberg as the WHO Global Ambassador for Noncommunicable Diseases (NCDs) and Injuries.
Both as mayor of New York City and as a philanthropist, Bloomberg made it a top priority to combat noncommunicable diseases and their underlying causes. As mayor, he introduced the Smoke Free Air Act and other public health initiatives. His foundation, Bloomberg Philanthropies, promotes policy solutions around the world that reduce rates of noncommunicable diseases like cardiovascular disease and hypertension as a result of factors such as poor diet while also supporting road safety and drowning prevention initiatives.
Vapor advocates have criticized Bloomberg for his rejection of tobacco harm reduction (THR) strategies, and his philanthropies’ attempts to influence policymaking around the world.
Recently, the International Network of Nicotine Consumers Organizations urged Vietnam to exercise “true independence” in its regulation of THR products, citing concern that the country’s regulations would be drafted by Bloomberg-financed organizations.
Anti-tobacco groups welcomed Bloomberg’s reappointment. “Michael Bloomberg is uniquely qualified to focus global attention on this public health crisis and serve as a catalyst for life-saving action around the world, and we look forward to partnering with him and the WHO on proven policy solutions to reduce NCDs and save lives,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids and the Global Health Advocacy Incubator, in a statement.
Broughton Nicotine Services has published a summary of the U.S. Food and Drug Administration’s rule for the premarket review of new tobacco products.
Released on Jan. 19, the FDA’s final rule makes amendments and recommendations to the previous rule and helps ensure that PMTAs contain sufficient information for the agency to determine whether a marketing granted order should be issued for a new tobacco product.
The purpose of the rule is to improve the efficiency of the submission and review of PMTAs as well as providing applicants with a better understanding of the information a PMTA must contain.
Amongst other topics, the rule addresses:
The submitting of detailed information regarding the physical aspects of the new tobacco product and full reports of information regarding investigations that may show the health risks of the new tobacco product.
Whether the product presents the same or different risks compared to other tobacco products. The FDA requires the submission of these health risk investigations to ensure it understands the full scope of what is known about the potential health risks of a new tobacco product.
Electronic submission of the PMTA.
Post-market reporting requirements for applicants that receive marketing granted orders.
Retention of records requirements for PMTAs
Procedures by which the FDA reviews a PMTA
Broughton Nicotine Services summarized the 516-page recommendations and requirements report into a digestible guide, which is available for download here.
The Indiana state legislature has begun to debate raising taxes on vaping products … again. The annual introduction centers on a proposed tax rate of $1.56 on a two-pod pack, the equal nicotine content to a pack of combustible cigarettes.
Credit: Davis Mark
Indiana’s traditional cigarette tax of just under a dollar a pack is the 13th lowest in the nation. Legislators are considering a bill to double it, and tax e-cigarettes for the first time, according to an article on wibc.com. Marion County health director Virginia Caine says it’s critical to include e-liquids in the bill.
She says vaping among teenagers has doubled in the last two years, wiping out any progress the state has made in reducing teenage smoking. Recent U.S. CDC reports say that teen smoking rates declined in 2020. Mason Odle, owner of Just Vapors in Fishers, says he fully supports raising the cigarette tax, but argues e-liquids shouldn’t be included.
He contends e-cigarettes are a more popular and effective means of quitting smoking than FDA-approved products like nicotine gum or patches. That brought a fierce pushback from health officials, who point out the FDA has specifically banned vape manufacturers from marketing their product as a stop-smoking aid until they produce more evidence that it works. And Caine says there are serious concerns about lung damage from vaping.
Former Libertarian candidate for governor Don Rainwater argues increasing cigarette taxes would punish store owners at a time when they’re already reeling from the coronavirus pandemic. But the main objection from House Public Health Committee members centered on the lack of a specific plan for the proceeds from the tax. A vote has been put off till next week to add language earmarking the money for health programs.
Governor Holcomb and House and Senate leaders have all said a cigarette tax hike isn’t on their agenda, without flatly ruling out the possibility. The House approved an increase in 2016 and 2017, and a vape tax in 2019. All three times, the proposals died in the Senate.
