How COVID-19 Is Reshaping Tobacco Retailing

CHICAGO — While the coronavirus pandemic has more demonstratively affected convenience-store categories such as foodservice and fuel, tobacco has also seen its share of upheaval.

The pandemic has altered the trajectory of a once-stable category, leading to events such as a temporary shutdown of a major cigarette manufacturing facility and the likely extension of the U.S. Food and Drug Administration’s (FDA’s) deadline for submitting premarket tobacco applications (PMTAs).

Here’s a rundown of the most recent developments ...

Despite consumer health and respiratory concerns as well as slowing customer traffic, the tobacco category for c-stores may prove resilient during the pandemic, a New York analyst said on a March 23 industry call, citing no significant change in tobacco sales at the onset of the COVID-19 emergency.

Referring to internal sources, Nik Modi, an analyst with RBC Capital Markets, said that while consumers are not stockpiling, they seem to be buying the same amount of tobacco products with “no dramatic change.”

In early April, Altria Group’s subsidiary Philip Morris USA (PM USA) began bringing its cigarette and tobacco products factory back up and operational on a “modified basis following extensive sanitary procedures [and] implementing enhanced best practices,” as recommended by the Centers for Disease Control and Prevention and other public health authorities, an official told CSP Daily News.

The maker of Marlboro cigarettes March 19 said it temporarily shut down its Richmond, Va.-based manufacturing facilities for two weeks due to coronavirus precautions.

“The health and welfare of our employees is our top priority, and we are approaching the startup of the factory with care, discipline and enhanced health and safety protocols,” officials said in an April 6 response to CSP’s request for an update. Part of those new protocols is limiting facility access to essential employees.

Regarding product inventory, the Altria spokesperson said it has sufficient “finished-goods cigarette inventory” for approximately two months, based on current estimated shipping volume, in addition to current wholesale and retail inventories.

On the same day the Richmond, Va.-based company announced the temporary closure and that two factory employees had contracted the coronavirus, Altria officials also said Howard Willard, Altria’s CEO, had tested positive for COVID-19 and would take a temporary leave of absence. The Altria spokesperson said Willard is currently recovering at home.

The FDA took a critical step toward pushing back the May 12 deadline for tobacco and nicotine manufacturers to apply to keep e-cigarettes and other new products on the market, the agency has announced.

On March 30, the FDA filed a motion with the U.S. District Court for the District of Maryland requesting a 120-day extension of the premarket application deadline for many e-cigarettes, cigars and other tobacco products. On April 3, Judge Paul Grimm agreed with the delay, passing the motion on to the U.S. Circuit Court of Appeals for the Fourth Circuit, which would also need to respond. As of posting time, that second court had yet to weigh in.

Manufacturers of e-cigarettes, cigars and other tobacco products (OTP) generally supported the propsed extension of the PMTA deadlines. For its part, Altria Group on March 25 sent a letter to the CTP expressing concerns about the effects of the coronavirus pandemic. The tobacco manufacturer said the company and many of the third-party contractors involved in creating its PMTAs have mandated remote working requirements and social distancing.

“We are on track for the original deadline, and we are committed to submitting our applications according to whatever timeline is imposed,” an Altria spokesperson said. “We asked that the FDA consider these extraordinary circumstances and how they impact employees, and the agency has heard similar requests from many manufacturers.”

San Francisco-based Juul Labs said, “We are committing all necessary resources to submit a scientifically rigorous PMTA designed to provide FDA with the science and evidence needed to assess the role our products can play moving smokers away from cigarettes, while combating underage use. We respect the PMTA process and look forward to sharing our comprehensive scientific research program.”

In an unexpected development, British American Tobacco (BAT), through a U.S. biotech subsidiary, is developing a potential vaccine for COVID-19 that uses tobacco leaves and is now in pre-clinical testing, according to the company.

If the London-based tobacco company secures partners and support from government agencies, the owner of Reynolds American Inc. (RAI) could produce 1 million to 3 million doses of the vaccine per week beginning in June through RAI-owned Kentucky BioProcessing (KBP), Owensboro, Ky., BAT said.

In 2014, KBP was one of the companies that developed an effective treatment for Ebola, having manufactured ZMapp with San Diego, Calif.-based Mapp BioPharmaceuticals in partnership with the U.S. Biomedical Advanced Research and Development Authority (BARDA), BAT said.

KBP recently cloned a portion of COVID-19’s genetic sequence that led to the development of a potential antigen—a substance that induces an immune response in the body and, in particular, the production of antibodies. This antigen was then inserted into tobacco plants for reproduction and, once the plants were harvested, the antigen was then purified, and it is now undergoing pre-clinical testing.

BAT is now exploring partnerships with government agencies to bring its vaccine to clinical studies as soon as possible.