Global Vape Industry Weekly Report (3.20-3.26)

This report provides an update on the latest news from various electronic cigarette companies. The topics covered include product sales, marketing bans, lawsuits, and financial performance. Key players such as JUUL, Smoore, and Ispire are mentioned, as well as notable events like FDA authorizations and investor meetings. If you’re interested in staying up-to-date on the e-cigarette industry, this is a must-read!

Global Market:

Europe

[1]According to The Grocer, a media website, the disposable e-cigarette brand SKE Crystal, which is among the top ten market share holders in the UK, has been removed from the shelves of retailers such as One Stop and Booker. The retailers are concerned that the nicotine content in these e-cigarette oils exceeds the regulatory standards in the UK.

[2]Regarding the incident where BAT submitted disposable e-cigarettes for inspection in the UK, on March 18th, Sam Millicheap, the head of external affairs for BAT’s UK and Ireland companies, received emails from two regulatory agencies acknowledging that BAT UK has conducted tests on its main disposable e-cigarette products.

[3]Recently, the UK e-cigarette market has welcomed several new disposable e-cigarette products. YUEKE (Wuxin Technology) will launch the RELX MagicGo disposable e-cigarette product, which will carry the disposable e-cigarette brand “WAKA soPro” and another brand “WAKA soFit”. Imperial Tobacco (ITG) has launched a new disposable e-cigarette brand “blu bar”, which is currently being sold in retail stores for 5.99 pounds (about 50 yuan) per stick and includes six flavors. PMI has launched the disposable e-cigarette product “VEEBA” in the UK, which is being sold for 4.99 pounds (about 42 yuan) per stick.

[4]According to sources, several leading e-cigarette brands in the Russian market are busy clearing inventory, and some Russian distributors have refused to accept products without honest labels. Russian government regulations require that from March 1st, trade activities engaged in importing e-cigarettes in wholesale quantities must upload retail information of relevant products to the honest labeling system. From April 1st, e-cigarette products without labels will not be allowed through Russian customs.

[5]John Dunne, an e-cigarette industry expert in the UK, said that approximately 459 million e-cigarette products are sold in the UK each year, causing significant environmental pollution. Therefore, measures to reduce the harm of tobacco should include the management of e-waste.

North America

[1]According to the latest report released by the credit rating agency KBRA, about 4.5% of adults in the United States (10.9 million people) use e-cigarettes, and the size of the US e-cigarette market in 2021 is about 7.4 billion US dollars, while the size of the traditional cigarette market during the same period was 215.7 billion US dollars. 30 states and the District of Columbia have implemented a consumption tax on e-cigarettes. The US e-cigarette market is expected to have a compound annual growth rate of 27.3% by 2028.

[2]According to a research report by Drug watch, about 25% of high school students and 6% of adults in the United States use e-cigarettes. West Virginia has the highest proportion of high school students using e-cigarette products, with more than 35% of high school students using them. The state also has the highest proportion of adult tobacco use in the United States, at about 25.2%.

[3]About 250 young people, parents, and advocates from Minnesota participated in the “Smoke-Free Generation’s Day” event in Congress, urging Minnesota legislators to take action quickly to end the sale of flavored tobacco products in the state.

Latin America

[1]On March 24th, Cuban media reported that the tobacco production in Binauldelrio province, known for its high-quality tobacco, is facing huge difficulties due to the impact of hurricanes, and it is expected that the province’s harvest in 2023 will be less than half of the planned target of 11,200 hectares.

Africa

[1]According to statistics from the Tobacco Industry and Marketing Board (TIMB) in Zimbabwe, the rejection rate for tobacco auctions in Zimbabwe is 60.78% higher than the same period last year. According to a survey report from the Chinese Ministry of Commerce, Zimbabwe is Africa’s largest tobacco exporting country and the world’s second-largest tobacco roasting exporting country after Brazil, with an export rate of 99% of its annual production. It is reported that the country’s tobacco is exported to 34 countries, and China is its largest consumer country.

Global Vape Regulation

Global

[1]The Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA) stated that national delegations participating in the 10th Conference of the Parties (COP10) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC) should include at least one nicotine product consumer.

North America

[1]The U.S. federal court rejected the tobacco industry’s appeal against California’s flavored tobacco ban. The judge ruled that the ban only applies to market sales and tobacco companies can still produce flavored tobacco in California. Therefore, it does not constitute an undue burden on interstate commerce.

[2]U.S. Senate Majority Leader Chuck Schumer called on the FDA to investigate ELFBAR and ban its products from the market. He believes that ELFBAR attracts young customers with colorful packaging and evades U.S. advertising regulation by marketing on social media.

[3]A proposal to ban all flavored e-cigarette products in Maine is gaining support from major bipartisan lawmakers. The measure would prohibit the sale of flavored e-cigarettes in Maine except for tobacco flavor. Currently, five cities in Maine have banned flavored tobacco products.

[4]According to a report from the Massachusetts Multidisciplinary Illegal Tobacco Task Force, the state lost millions of dollars in tax revenue in 2022 due to the smuggling of e-cigarettes and other products. Currently, the cigarette tax in Massachusetts is $3.51 (about 24 yuan) and there is also a sales tax of 6.25%.

[5]To address the increase of non-tobacco nicotine in popular tobacco products, the U.S. Congress passed a law regulating non-tobacco nicotine products under the Federal Food, Drug, and Cosmetic Act. The new law will expand the scope of tobacco product requirements in the Act to cover manufacturers, importers, retailers, and distributors of non-tobacco nicotine products.

[6]On March 21, lawmakers in Georgia passed a bill that will restrict the use of e-cigarettes in public places. The bill will manage e-cigarettes in the same way as existing tobacco control regulations in the state, and violators may face fines of $100 to $500.

[7]On March 23, the U.S. Food and Drug Administration (FDA) published a new webpage on its website to showcase all citizen petitions related to tobacco products received by the Center for Tobacco Products (CTP) to enhance FDA review transparency.

Europe

[1]In the Spring Budget, British Chancellor of the Exchequer Jeremy Hunt increased the UK’s tobacco tax. The overall cigarette tax was raised by 12.1%, and the price of a pack of 20 cigarettes is expected to exceed £14 (117 yuan).

[2]The German Federal Senate has developed a plan to ban disposable e-cigarettes. The Senate is now urging the federal government to consider implementing the ban. German Federal Environment Minister Steffi Lemke said she would support the resolution.

[3]A Belgian court imposed millions of euros in fines and imprisonment on companies and individuals involved in the manufacture of millions of cigarettes. The company and its executives were fined 36.71 million euros because these cigarettes were not declared to customs and tax authorities, and the executives were sentenced to one year in prison.

[4]The Russian State Duma’s Committee on State Building and Legislation recommended that the lower house of parliament pass a bill in the first reading. The bill provides for administrative and criminal liability for the production and circulation of tobacco and tobacco products without a license. Violators will face fines of 500,000 to 10 million rubles (about 44,000 to 890,000 yuan) or up to 3 years in prison.

[5]On March 21, the Youth Policy Committee of the Russian State Duma proposed to equate the sale of nicotine consumption devices with the sale of cigarettes. It also proposed to increase fines for selling e-cigarettes to minors and to support the government’s bill to regulate tobacco sales.

[6]On March 23, Russian Prime Minister Mishustin stated during a parliamentary session that he will consider the proposal to ban e-cigarettes raised by the speaker of the Lower House and representatives. In response, Russian e-cigarette industry expert Liang Jiasen said that Russia has already implemented a strong regulatory model for the e-cigarette market using “honest labeling,” and the regulatory effect will be tested after April 1. If the regulatory measures are effective, it is likely that Russia will ban e-cigarettes, and the tobacco industry will still be rampant.

[7]The Lincolnshire Report in the UK revealed that from April to December 2022, law enforcement officers removed 5,417 unsafe products from the market, of which 5,062 were illegal e-cigarettes. Some of these e-cigarettes advertised having 10,000 puffs, which is 16 times the limit set by UK law.

Oceania

[1]Australian medical institutions have called for a comprehensive ban on the import of all non-prescription nicotine e-cigarettes. The Minister of Health stated that the government will take strong action against illegal e-cigarettes, but the Australian National Party believes that the current prescription model should be abandoned in favor of a new system.

Asia

[1]Cambodia will promote the smoke-free movement at the 32nd Southeast Asian Games and the 12th ASEAN Para Games. The authorities announced that the current Southeast Asian Games will ban the use, sponsorship, distribution, and promotion of cigarettes and e-cigarettes.

Africa

[1]Egypt has confirmed that e-cigarette oil needs to pay taxes, with a levy of 2 Egyptian pounds (about 0.4 yuan) per milliliter of oil, including nicotine-containing and non-nicotine-containing oil of various flavors.

Vape Company News

Philip Morris International (PMI)

[1]On March 16, the FDA authorized the sale of Copenhagen Classic Snuff, a smokeless tobacco product, as a modified risk tobacco product (MRTP) by the U.S. Smokeless Tobacco Company. Copenhagen Classic Snuff is a type of moist snuff sold in bulk.

Altria

[1]On March 23, Altria held its Investor Day Conference at the New York Stock Exchange. Altria announced that it sold 800 million units of smokeless products in 2022 and expects sales to grow by at least 35% by 2028, generating $5 billion in revenue, of which $2 billion will come from smokeless products.

ELF BAR

[1]On March 21, ELF BAR revealed that British American Tobacco had made an acquisition proposal to the company in August 2022. After four months of negotiations, ELF BAR rejected the proposal. In February this year, ELF BAR’s product was found to have exceeded the limit of nicotine content in the UK market, which experts claimed was a common “acquisition + morality” strategy in the international tobacco industry.

R.J. Reynolds

[1]The FDA issued a marketing refusal order against two menthol-flavored electronic cigarette products under R.J. Reynolds’ Vuse Solo brand. The FDA requires the applicant to provide compelling evidence that menthol-flavored e-cigarette products can significantly reduce the use of combustible tobacco products by adult smokers and are more beneficial than tobacco-flavored e-cigarettes.

[2]In response to the marketing ban by the FDA on the two Vuse electronic cigarette products under R.J. Reynolds’ brand, British American Tobacco (BAT), the parent company of Reynolds, is seeking a stay on the enforcement of the ban.

[3]The U.S. Court of Appeals has allowed Reynolds American to continue selling two Vuse mint-flavored products. Prior to this, the two products had been subject to a marketing refusal order (MOD) by the FDA. Reynolds said it planned to seek an immediate stay on the ban to allow the products to continue to be sold.

[4]Reynolds American has released its first white paper in a series, aimed at increasing awareness of tobacco harm reduction (THR). Reynolds considers it a public health strategy, encouraging adult smokers who do not want to quit smoking completely to switch to non-combustible alternatives.

[5]British American Tobacco, the parent company of Reynolds American, reported a 10.7% reduction in the number of employees at Reynolds American and its subsidiaries to 4,274 in 2022.

JUUL

[1]Members of the Hillsborough County School Board in Florida are expected to approve a settlement payment from JUUL to schools on Tuesday, which will be paid out over the next few years and is expected to reach millions of dollars. According to two sources, JUUL has paid out a total of $2.6376 billion in settlement funds and still faces nine independent lawsuits from other states.

[2]On March 22, Harris County, Texas, announced that it had settled its lawsuit with e-cigarette company JUUL for $20 million. The settlement funds will be used to mitigate the effects of nicotine addiction among teenagers.

Smoore

[1]On the evening of March 20th, Smoore International released its 2022 performance report. According to the financial report, Smoore’s operating revenue for 2022 was RMB 12.145 billion, a decrease of 11.7% year-on-year; the net profit for the full year in 2022, after adjustment, was RMB 2.575 billion, a decrease of 52.7% year-on-year. Smoore launched a new disposable e-cigarette product in the European market, which generated sales revenue of RMB 1.93 billion in 2022, an increase of 1919% compared to RMB 95 million in 2021. Among them, the sales revenue in the second half of the year was RMB 1.611 billion, a year-on-year increase of 1761%.

Others

[1]On March 17th, CBD vaporizer provider Ispire reduced the size of its planned initial public offering from 6 million shares to 3 million shares. In the first half of 2022, the company had a net loss of $2.95 million (approximately RMB 20.32 million) and revenue of $58.8 million (approximately RMB 400 million).

[2]On March 23rd, China Boton released its 2022 annual report. The report showed that its operating revenue for 2022 was RMB 2.3257 billion, an increase of 1.7% year-on-year. The profit was RMB 84.5 million, a year-on-year decrease of 62.5%. The e-cigarette products division and the flavor enhancer division together contributed approximately 84.3% of the total revenue.