What’s Happening in Tobacco? June-August 2017

Legislation and regulatory updates

US FDA plans steps to reduce nicotine in tobacco products

For the first time in its history, the US Food and Drug Administration (FDA) is seeking to limit nicotine content in tobacco products,. The goal is to “render cigarettes minimally addictive” by reducing the amount of the addictive chemical, which, according to the FDA, is the leading cause of preventable death in the US.

Markets and products updates: Big fall in smoking in Beijing

According to the Beijing municipal government, the number of cigarettes sold in the region in 2016 fell by 8%, while smoking prevalence among the population aged 15 or older fell by 4.7 percentage points to 22.3% with smokers falling by some 200,000.

Mergers and acquisitions: Lucrative US cigarette market

BAT has announced the completion of its acquisition of the 57.8% of RAI that it did not already own. The acquisition makes BAT a major player in the US market accounting for some 34% by volume and owning Newport the second largest and fastest growing major brand.

Illicit trade updates: Illicit trade falls in the EU

According to the latest Project Sun report by KPMG, illicit cigarettes volume in Europe in 2016 compared with 2015 fell by 8.8% to 48.3 billion sticks as incomes rose and unemployment fell. However, contraband cigarettes still accounted for 9% of total consumption in 2016.

Cigars: China the game changer

The China National Tobacco Corporation (CNTC) and Cuba’s Habanos S.A. have signed a letter of intenton under which Habanos will advise on cigar production in China while increasing cigar sales there. Cuba’scigar sales to China accounted for more than half volume and 70% by revenue. Habanos is a joint venturebetween Cuba’s state-owned Cubatabaco and Altadis, an affiliate of Imperial Brands recorded revenue ofabout USD450 million in 2016.