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Beijing smoking ban will boost vapor, says e-cig inventor

| June 10, 2015

Hon Lik, the Chinese inventor of the modern e-cigarette, has predicted that Beijing’s new public-places smoking ban will prompt many consumers to switch from smoking to vaping. Although China’s e-cigarette market is still relatively small compared to those in other countries and smoking rates in China remain high, the ban—which took effect June 1—could be the push smokers need to quit combustible cigarettes.

Anyone who violates the ban on smoking in restaurants, hotels, hospitals, schools and certain outdoor public places will be fined CNY200 ($32.35). Other cities in China are expected to follow suit by implementing similar smoking bans as governments seek to improve public health.

AMA remains opposed to e-cig’s smoking-cessation claims

| June 10, 2015

The American Medical Association (AMA) has announced a new policy that will further strengthen its support of the regulatory oversight of e-cigarettes. The update is an extension of the organization’s existing policy, which calls for all e-cigarettes to be subject to U.S. Food and Drug Administration regulations that apply to cigarettes and smokeless tobacco products.

The AMA’s new policy calls for laws and regulations that would set the minimum legal age to buy e-cigarettes and e-liquids at 21; mandate child-resistant containers for e-liquids; and enforce laws against the sale of tobacco products to minors. The existing policy also seeks a ban on claims that e-cigarettes are effective tools for smoking cessation.

“Improving the health of the nation is AMA’s top priority, and we will continue to advocate for policies that help reduce the burden of preventable diseases like cardiovascular disease and type 2 diabetes, both of which can be linked to smoking,” said AMA president Robert M. Wah.

Pax Labs raises $46.7 million in Series C funding

| June 10, 2015

Pax Labs has raised $46.7 million in new funding led by existing investors with participation from Fidelity Management & Research Company; Sivia Capital; individual investors from finance, pharma, entertainment and Silicon Valley leadership; and a group led by Chuck Pieper and Brian Finn. Previous investors participating include Tao Capital Partners and Sand Hill Angels.

Pax Labs will use this latest round of funding to accelerate its mission to apply vapor technology and science across already mature industries, providing better consumer options. The company will expand its product availability both domestically and internationally, scale its category redefining tobacco vapor products led by the newly launched e-cigarette, Juul, and extend the application of its vapor science technology into new verticals.

“Vaporization is a highly disruptive technology, and we are focused on applying our innovations across new industries and use cases,” said James Monsees, CEO and co-founder, Pax Labs. “Our integrated science and technology platforms have the potential to rapidly innovate the $1 trillion existing tobacco industry and have broad applications for entire new delivery systems that will amaze consumers and drive growth. We’re excited to implement this growth round and further shape the future of these industries.”

Over the past two years, Pax has grown nearly 200 percent. The company has sold more than 500,000 units of its revolutionary premium, portable, loose-leaf tobacco vaporizer, Pax, and this year has successfully launched two new products: Pax 2, the next generation of the industry’s number one vaporizer; and Juul, a fundamentally different e-cigarette and e-liquid platform using a variety of patented technologies to provide satisfaction akin to traditional cigarettes.

Among those technologies, Juul introduced nicotine salt technology reverse-engineered from nicotine found in leaf tobacco, rather than free-base nicotine used in standard market products. Juul has been available for retail purchase since June 1, 2015.

Iggesund expands services for Eastern Europe

| June 10, 2015

Iggesund Paperboard—Europe’s third-largest manufacturer of high-quality virgin fiber paperboard—is expanding its services for Eastern Europe by establishing a new freight terminal in Riga, Latvia, as well as a sales office in Moscow, Russia, to boost Russian sales. Construction of the two new facilities is part of Iggesund’s long-term plan to cultivate its delivery services on a global scale.

“We need to be near the customer both in terms of deliveries and other services required by today’s customers,” says Rikard Papp, director Asia Pacific & Merchants Europe at Iggesund.

Iggesund will also take part for the second time in the RosUpack exhibition, which will be held June 16-19 in Moscow.

“The intense interest we met with last year convinced us that we should establish a sales office for the Russian market. It is a major market that definitely has room for a high-end product like [our flagship product] Invercote,” says Papp.

Iggesund Paperboard’s terminal in Riga became operation in April, and the sales office in Moscow will be inaugurated in July.




AOI’s volume, sales impacted by global oversupply

| June 10, 2015

Alliance One International’s CEO and president, Pieter Sikkel, said on Monday that the company’s fiscal year 2015 volume and sales were impacted by global oversupply as a result of customers modifying their inventory positions in response to reduced consumer demand in some markets during the past 36 months.

Global oversupply appeared now to be moving back towards equilibrium with reduced crop sizes planned and market pricing to suppliers that reflected the oversupply imbalance.

Later in his presentation of the company’s fourth-quarter and full-year results, Sikkel said it would likely take another crop cycle to achieve equilibrium or undersupply in certain qualities, though the market had begun to tighten in certain origins. “We will continue to monitor our customers’ requirements as we further strengthen our operations, improve our global footprint and move further up the supply chain to meet our customers’ evolving sourcing parameters and simplification strategies,” he said.

“Partial vertical integration strategies by some manufactures are beginning to reverse as the efficiency benefits and costs savings of further leveraging compliant leaf merchants’ capabilities are presenting opportunities for growth.

“We will continue to focus on enhancing best agricultural practices globally and further improving sustainability programs essential to our company and customers.”

Sikkel said he was “really pleased” with the performance the company’s global team had achieved through fiscal year 2015 under challenging trading conditions.

“Important to full year results, our fourth quarter sales improved 19.9 percent to $738.1 million versus last year and was the second best quarter in the company’s history,” he said.

“Adjusted EBITDA improved 188.5 percent to $59.3 million or 8.0 percent of sales.

“For the year, sales decreased 12.3 percent to $2,065.9 million, while adjusted EBITDA improved 9.8 percent to $173.2 million and was 8.4 percent of sales with improved total debt less cash divided by adjusted EBITDA of 5.36x.”

Sikkel reported that phase one of Alliance’s restructuring and efficiency improvement program that was started in March was on track to deliver between $30.0 million and $35.0 million of recurring annualized savings with 75.0 percent to 80.0 percent of the actions targeted enacted by the end of September 2015.

“In addition to reducing our cost structure, we plan to further optimize our global footprint including rationalizing certain markets that are neither meeting internal performance expectations nor part of our customers’ future planning, while improving core markets where we have invested,” he said.

“Our internal forecasts anticipate improved sales and adjusted EBITDA for next fiscal year compared to fiscal 2015, and consistent with trends over the last several years, we are forecasting increased sales and profit levels in the second half of fiscal year 2016 versus the first half of the year.

“Additionally, following four years of significant investment in our operations, we are targeting approximately $19.7 million of capital expenditures in fiscal year 2016, principally for maintenance purposes.”

Leaf tobacco prices fall as growing costs rise

| June 10, 2015

Flue-cured tobacco growers operating in the Indian state of Andhra Pradesh are urging the union government to address immediately their concerns about a steep fall in sales this year, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The growers are said to be faced with making losses this year because of a ‘slowdown’ in the state’s tobacco auctions.

They said that while the manufacturers and exporters were claiming the slowdown had been caused by a global oversupply of leaf, the current predicament was down to the government and its policies.

The growers argue that since flue-cured tobacco is a regulated crop and the crop size set by the Tobacco Board according to trade assessments, the total harvest should be bought.

They say also that flue-cured tobacco prices have fallen by between 20 percent and 30 percent during the past three years while production costs have rise by 30 percent.

The problems are not impacting only flue-cured growers, and so farmers from 12 tobacco-growing states in India are preparing to take part in a protest rally in Delhi.

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