Weekly Update on Tobacco Industry Development

Aug.07.2022
Weekly Update on Tobacco Industry Development
The tobacco industry is facing regulatory changes globally, including taxation and bans on flavored products. Companies are adapting and seeking licenses.

This week, the State Tobacco Monopoly Administration has issued licenses to over 50 tobacco production companies. Well-known companies in the industry, such as Smoore International, BYD Electronics, and Han Qingda, have all been listed on the official website since August 6. Meanwhile, discussions on the management of e-cigarettes are still ongoing in Russia. While different government departments hold varying opinions on the issue, the Russian Tobacco Expert Council has indicated that e-cigarettes will not be banned and that a special tobacco regulatory agency is being considered for the industry. The issue of e-cigarette taxation has also been a hot topic in the industry, with experts commenting that international practice generally sees e-cigarettes taxed at a lower rate than traditional tobacco. As the cornerstone of the e-cigarette regulatory system, policies on e-cigarette taxation are still in the development stage.


On August 6th, the website of the State Tobacco Monopoly Administration published a notice regarding the issuance of licenses to more than 50 tobacco manufacturers. Details can be found in the original article.


On August 4th, BYD Electronic, Jingjia Holdings' subsidiary Yunpuxinghe, and three subsidiaries of Simoer Group announced through official media accounts that they had obtained the "Tobacco Monopoly Production Enterprise License". Read the original texts from BYD, Jingjia, and Simoer.


On August 5th, Shenyang Tobacco Company conducted an e-cigarette logistics bidding process, which is the first time in the country to use social logistics distribution. It is reported that the bidding process is expected to have a monthly order volume of 1000, and there are four different packaging sizes.


On August 7th, the government website of Yangjiang City reported that a counterfeit electronic cigarette operation was recently uncovered in the city, resulting in the arrest of six suspects. Approximately 100,000 counterfeit electronic cigarettes and 19,700 counterfeit electronic cigarette tubes were confiscated, with an estimated total value of over 30 million yuan.


The U.S. Food and Drug Administration (FDA)


Over the past three weeks, the FDA has rejected more than 88,000 pre-market applications for synthetic tobacco products. Moving forward, the FDA will continue to evaluate over 350 synthetic nicotine products.


The FDA is conducting a final review of the "menthol ban." Read the original article.


The FDA will release a comprehensive proposal timetable in May of next year aimed at reducing nicotine levels in tobacco products. Read the full article.


The European Union


An administrative department of the European Union has proposed a ban on the sale of flavored heated tobacco products. The proposed ban has been submitted for review by member states and members of the European Parliament.


Russia


According to the Russian Tobacco Expert Council, Russia will establish a dedicated tobacco regulatory agency that will directly address tobacco-related issues. Additionally, starting in November 2023, Russia will completely prohibit the sale of unmarked tobacco products.


Pakistan


Four new tobacco companies have joined Pakistan's "tracking system." It is reported that all tobacco companies operating in Pakistan must use the tracking system, and only tobacco products with identification markings can enter the domestic market in Pakistan.


Kazakhstan


Kazakhstan plans to impose a consumption tax on nicotine-containing liquids such as e-cigarette e-liquids, which will gradually increase from 2023 to 2025. It is expected that the tax will increase by about 3.12 Chinese cents per milliliter of e-liquid annually. Read original article.


Global


According to a study conducted by Zion Market Research, the global nicotine replacement therapy market is predicted to reach $44.5 billion in 2021 and is expected to grow to $103.4 billion by 2028, with a compound annual growth rate (CAGR) of 15.1%.


The United States.


The usage of electronic cigarettes among young people in Colorado has decreased by 10% in the past three years, due to an increase in the age requirement to purchase tobacco products to 21 years old. Reading the original article, the state of Massachusetts saw a decrease in cigarette sales of up to 33% due to a ban on menthol, while in 33 states without a menthol ban, cigarette sales decreased by 8% and sales of menthol-flavored cigarettes decreased by 3%. Read the original article for more information.


Fidelity Investment Group has lowered its valuation of JUUL by 88% in the second quarter, resulting in a series of write-downs for investors. In 2018, Altria Group spent $12.8 billion to acquire a 35% stake in JUUL, but as of June 30th, their investment is now only worth $450 million.


Britain


Sales of tobacco products in UK convenience stores have decreased by 47% in the past three years. The survey results also emphasize the need to reduce the supply of local tobacco products to achieve the government's goal of eliminating smoking in the next decade.


PMI (Project Management Institute)


Due to the impact of the ongoing conflict between Russia and Ukraine, Philip Morris International (PMI) will begin cigarette production at the Imperial Tobacco factory in Kiev this month. The factory will adhere to PMI's high standards of quality.


Pharmaceutical company Femore's "cash-for-prescriptions" plan in Australia has been halted. Under the plan, doctors would receive incentives from Femore for prescribing or recommending VEEV e-cigarettes to their patients. This has been met with strong opposition from health experts in Australia. Read more in the original article.


British American Tobacco (BAT)


British American Tobacco (BAT) recently opened an $82 million tobacco product production line at its Kanfanar factory in Croatia. BAT claims it will use 100% renewable energy and recycle all waste water. Read more in the original article.


To achieve the UK's "smoke-free target" by 2030, British American Tobacco and Imperial Brands invested a total of $589 million last year into researching new products, such as heated tobacco and e-cigarettes.


British American Tobacco's vaping brand, Vuse, has seen a 47% increase in revenue, bringing in £590 million in the first half of this year. Their disposable product, Vuse GO, has also climbed to the third-highest market share in the UK. The company plans to expand the product's distribution to other European markets in the latter half of the year.


JTI (Japan Tobacco International)


JTI showcased three new low-risk tobacco products at a summer event in the UK, including the Logic Compact closed-system e-cigarette, HTP Ploom smokeless non-burning e-cigarette product, and Nordic Spirit nicotine pouch. The company remains committed to achieving net-zero greenhouse gas emissions by 2050.


Yueke RELX is a brand of electronic cigarette.


Shenzhen-based quality and safety laboratory Yueke (Wuxin Technology) has received accreditation from the China National Accreditation Service for Conformity Assessment (CNAS). The laboratory specializes in the testing of product physical and electrical performance, and is the second Yueke laboratory to receive CNAS accreditation.


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Shenzhen Rayeonix Technology Co., Ltd. Testing Center (MOTI 2019 Laboratory) has received CNAS certification. It has been reported that Rayeonix Technology is intensively researching and developing new products that comply with national standards. Several products have already passed technical evaluation.


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YOOZ, for the first time, has released pictures of its laboratory to the public. According to reports, YOOZ has established a product testing laboratory in accordance with the CNAS standards, which will reference the CNAS laboratory testing standards and electronic cigarette national standards for product development research. Read the original article for more information.


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