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MO earnings callMO conducted their 2nd quarter earnings call this morning following the release of their earnings. Once again, nothing particular new, but a few things I heard worth mentioning: - While the e-vapor category grew strongly year-over-year, it actually declined slightly from the first quarter of 2022. So there is still not a major uninterrupted trend going on. MO did not disclose JUUL market share, they did present a chart which shows that device & pod products like JUUL, are now less than half of all e-vapor volume sold in the US. The majority is now disposable e-vapor sticks, which often use synthetic nicotine to skirt FDA rules. However, the FDA has now passed rules that regulate synthetic nicotine the same as nicotine, meaning these products will have to gain FDA approval as well. I believe most of these are Chinese imported. Its unclear how effective and aggressive the FDA will be in going after illegal products, but they said they will police them, which MO obviously supports. Interestingly, the disposable e-vapor product of IQOS-VEEV is the type that PM is currently pushing in Canada. - The FDA is conducting a review using outside firms to determine how it should go forward in approving products under their PMTA and MRTP authority. MO stated that less than 1% of applications have been approved. My guess is that whatever is eventually decided, it will benefit big tobacco companies and MO. - The PM relationship is almost certainly over. All MO would say is that they are "in discussions" with PM over IQOS. They further touted their acquisition of the heat not burn technology from PODA that Alfalfa1234 mentioned in June, and announced they would introducing two of their own heat-not-burn technologies by the end of the year. Basically, it seems very likely they are just negotiating an out to the IQOS license agreement with PM. As I've posted, for all their other issues, MO has good lawyers so it will be interesting to see what concessions or settlement MO is able to extract from PM. - MO continues to believe in the strength of Marlboro despite the economic downturn, and presented charts showing the high customer loyalty it still holds, much more so than in other categories like food items or home goods. Furthermore, they noted that despite raising the price of Marlboro by over 10% so far this year, customers at retail have seen only about a 5% increase in pack prices, given the fact that the excise taxes on cigarettes (which make up nearly half of the retail price) have stayed essentially the same year over year. |
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