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TOBACCO BUSINESS INTERNATIONAL
MARCH/APRIL 2015
NEWS & TRENDS
MARCH/APRIL 2015
Paul Sturman, former
president of Pfizer Consumer
Health Care, will take the
helm.
E-cigarette company NJOY has
named Paul Sturman as its new CEO.
Sturman served as global president
and general manager of Pfizer Con-
sumer Health Care’s business, where
he was responsible for the $3 billion
division’s global operations, prior to
joining NJOY.
“I am confident that Paul Sturman
has the ability and commitment to
pursue making combustible tobacco
obsolete,” said Dr. Richard Carmo-
na, 17th U.S. Surgeon General and
chairman of NJOY’s Scientific Ad-
visory Board. “Doing so will reduce
preventable tobacco-caused chronic
disease, thereby improving the pub-
lic’s health while reducing the cost of
health care.”
New CEO
for NJOY
Smuggling on the
Rise as Taxes Increase
Illinois is coping with the largest increase
in black market activity.
According to the Tax Foundation, the rising cost of cigarettes on every level is
pushing the rate of cigarette smuggling higher, with Illinois seeing the largest
change. In 2013, 20.9 percent of all cigarettes consumed in Illinois were smuggled
in from other states, compared to 1.1 percent in 2012. Increased taxes on tobacco
products have created incentives for black market cigarette trafficking between
states, which also found that:
• Smuggled cigarettes make up substantial portions of cigarette consumption
in many states and greater than 20 percent of consumption in 15 states.
• The highest inbound smuggling rates are in New York (58 percent), Arizona
(49.3 percent), Washington (46.4 percent), New Mexico (46.1 percent) and Rhode
Island (32 percent).
• The highest outbound smuggling rates are in New Hampshire (28.6 percent),
Idaho (24.2 percent), Virginia (22.6 percent), Delaware (22.6 percent) and Wyo-
ming (21 percent).
• Cigarette tax rates increased in 30 states and the District of Columbia between
2006 and 2013.
• Large differentials in cigarette taxes across states creates incentives for black
markets to develop.
“High tax rates on cigarettes have led to unreliable revenue and increased crimi-
nal activity,” sums up Scott Drenkard, economist andmanager of state projects for
the Tax Foundation. “Policymakers seeking additional revenue would be better off
choosing more stable sources that don’t incentivize black-market behavior.”
Engle Progency
Cases Settled
R.J. Reynolds Tobacco, Philip Morris USA
and Lorillard recently negotiated an agree-
ment to resolve virtually all Engle progeny
cases pending and not yet tried in the Flor-
ida federal courts. These individual smok-
ing and health cases arose out of the so-
called Engle class action in Florida. Under
the terms of the agreement, R.J. Reynolds
will pay $42.5 million to resolve these fed-
eral cases. Philip Morris will pay an equal
amount and Lorillard will pay $15 million.
Swisher Strategizes on E-Vapor
Jacksonville, Florida-based cigar and smokeless tobacco maker
Swisher International is entering the e-vapor category. John Miller,
CEO of the newly formed sister company E-Alternative Solutions
(EAS) and senior vice president of sales and marketing for Swisher,
says EAS’s advantage in the vapor space is its history, as the market
is “very crowded, but it’s very crowded by people who don’t have the
history…heritage, and knowledge of consumers.”