As the tobacco industry undergoes structural change, suppliers of adhesives face new challenges.
By Stefanie Rossel
For the tobacco industry, 2013 marked a watershed moment: For the first time, global cigarette sales volume declined (by 1.4 percent) even when including China, according to data provided by market research company Euromonitor. The trend continued with another 0.4 percent decline in 2014, Euromonitor said, amounting to total cigarette consumption of 5.8 trillion sticks worldwide, according to The Tobacco Atlas.
The ongoing decrease of cigarette volumes affects not only tobacco companies but also their suppliers, among them manufacturers of tobacco adhesives and the respective application equipment. For the manufacture and packaging of every 1 billion cigarettes, an estimated 15.5 tons of adhesives are needed. Hence, weakening cigarette volumes indeed make a difference.
Little wonder then that suppliers of adhesives and adhesives application systems have mixed emotions about the future of their segment.
“The global number of sold cigarettes is shrinking worldwide. Consequently, the total demand of adhesives needed in the industry is going down as well,” says Joerg Liebe, sales manager of adhesives manufacturer Tuermerleim, which is based in Germany. “The overall perspective, quantity-wise, for this market is clearly negative.”
Marc Gonzalez, technical director of Spanish adhesives supplier Pujadas, is more upbeat: “We are facing significant growth opportunities, so our view is a very positive one. Big tobacco multinationals and independent manufacturers are supporting our growth [and are] willing to promote a healthy category with alternative suppliers and competitive adhesives solutions,” he says.
“On the other hand, we are aware that traditional markets present some challenges due to a certain decline in sales and the growth of legislation against smoking,” Gonzalez notes. “Tobacco companies are working hard and very creatively against this evolution with more innovative and attractive products. The new focus of the companies is clearly to differentiate themselves from others, and the way to achieve this is innovation. The differentiation process and the value creation process are extended to all components of the cigarette.”
Cihan Olucay, tobacco adhesives sales manager at the industrial adhesives business unit of Turkish manufacturer Organik Kimya, which is a newcomer to the tobacco industry, stresses that despite cigarette volume declines, the value of the worldwide tobacco market continues to grow. “The market is increasingly controlled by multinational companies,” he says. “However, we believe that small corporations will continue to add the greatest value to customers through their fast decision-making conditions, customer orientation and innovative approach in providing solutions to their customers.”
Henry Tuck, managing director of adhesives application systems manufacturer SPI Developments, in the U.K., draws a different picture. With the advent of vapor devices and modified versions of traditional cigarettes such as heat-not-burn products, the tobacco industry has a much wider range of products on offer than merely conventional cigarettes, according to Tuck. “The decline in the manufacturing of conventional cigarettes suggests the adhesive market would reflect the decline,” he says. “However, when you consider that adhesive and application systems are used in all aspects of conventional and ‘new product’ cigarette manufacturing, it is hard to conceive how the market can be negative. We believe it is not a question of positive or negative, but more of an evolution as trends and changes affect the tobacco industry as a whole.”
Opportunities for growth
Among adhesives suppliers, views vary as to whether next-generation tobacco products will have a positive or negative impact on their businesses. Gonzalez sees them as an opportunity to introduce new adhesives that are currently being used for other applications, or to directly develop new formulations. “In fact, some of our packaging glues have been used in the packaging of heat-not-burn products,” he says.
“We believe that the adhesives business will not be affected by e-cigarettes in the short term,” says Olucay. “But it is a fact that in the long term there will be fewer smokers. Tobacco is an important agricultural product for many countries. So there will be demand for innovation in the tobacco industry for less hazardous products, and therefore development in related product categories will enable growth and other opportunities.”
Liebe points out that e-cigarettes need totally different adhesives—if any. “Every substitution of classical cigarettes by e-cigs, by nicotine patches and by nonsmoking reduces the demand for the adhesives used in production.”
Following the downward trend in cigarette volume sales, Tuck says, cigarette producing companies are not investing in new machinery in the way they used to, but instead are investing heavily in other product areas. “From the point of view of an adhesive application system manufacturer, this increases the opportunities to upgrade old machinery to improve its performance at relatively low cost, whilst new-generation products which are not e-cigarettes are a good source of innovative adhesive-system project work.”
Wanted: performance
Getting back to the manufacture of conventional cigarettes, the list of requirements adhesives will have to meet is obviously getting longer. In the light of shrinking sales volumes, the quest for enhanced production efficiency to ensure profitability has gathered momentum. Adhesive formulations for the tobacco market need to be high-performance products in order to meet all the challenges during the production process of cigarettes, explains Gonzalez: “Producers target to achieve higher productivities with high-speed machines, so runnability and cleanness of the glue are key factors.”
The faultless assembly of filters and tipping paper presents a particular challenge for adhesives, and suppliers have been developing new products to meet that challenge. “Regarding tipping, we can offer to our customers adhesives specially designed for high-speed machines with production output of up to 20,000 cigarettes per minute (cpm) that presents good results not only in fully surface application but also in glue pattern,” says Gonzalez. “Also, new grades have been introduced in the market for difficult-to-bond tipping papers, especially [those] used in slims and superslims configurations. Finally we include in our portfolio new special glue grades for filter seaming, [which are] recommended to use when the wrap-up paper presents very high porosity.”
However, not every maker in the tobacco industry is a high-speed machine, says Liebe: “As there are still many cigarette producers who are running machines with ‘normal’ speed, say, 8,000 to 9,000 cpm or even slower, suppliers also need to offer adhesives that work well on these machines. Therefore it is not enough to have only the top high-speed adhesive in your portfolio; you have to cover all types of machines, also slower ones. To have a broad product range is as important as to be at the front of R&D.”
As far as running performance is concerned, much depends on the application equipment, Tuck explains: “Whilst having good-grade adhesive, high-quality substrates and a routine maintenance schedule all help with the application equipment’s functionality and performance, the ability to precisely control the amount of adhesive applied using electronic pump systems is also highly beneficial to runnability and improved production performance,” he says.
“Historically we have found that the smallest change in material can affect the application and, ultimately, the quality of the finished product. So the adjustability and repeatability provided by the electronic controls makes a big difference in handling the wide range of adhesives and other materials.”
Apart from continuing to upgrade its equipment and improving the detail performance of its modules, SPI Developments has launched a new mobile adhesive system that can be configured to suit different arrangements of polyvinyl alcohol, and hot-melt pump modules to suit the latest product specifications. “This provides more flexibility when retrofitting older machines, particularly when creating new product specifications,” says Tuck.
A complex task
Meeting the requirements for cigarette packaging adhesives is perhaps even more of a challenge, as cigarette manufacturers, under the pressure of a declining cigarette market and increasing regulations, are increasingly seeking to differentiate their products from the competition through ever more sophisticated packaging, using new substrates such as polyester, and novel printing/finishing technologies and materials. “We see metallized surfaces or hydrophobic coatings,” says Liebe. “Each surface may require a special adhesive. Sometimes the standard products work well, but at other times some R&D is needed to give the customers a choice concerning speed, performance,” he points out.
“The varnishes or coatings used on packaging cartons in order to increase visual attractiveness can be incompatible with the common adhesive used in production,” agrees Olucay. “Therefore it is important to establish a partnership with adhesive suppliers before promoting a new product to the market.” He adds that Organik Kimya has developed a packaging grade for hard-to-bond surfaces like metallized cardboards, which is an important issue in the industry: “This grade is also particular in that it can be applied both by disc and by nozzles.”
Regulatory impact
Increasing regulation, such as the revised European Tobacco Products Directive (TPD2), which will enter into force this May, makes matters even more complex for adhesive manufacturers. “So far, all the adhesives used for the manufacturing of cigarettes, at least in Europe, need to be in compliance with the German Tobacco Regulation [TVO],” Liebe explains. “That is an indispensable requirement of all our customers in Europe. With the TPD2 there seem to be changes ahead. The TVO was a ‘positive list,’ defining clearly a list of allowed ingredients for all nontobacco materials [NTM] like paper, glue, filter tow, etc. Now there is a ‘negative list’ of specific products under discussion, which are not allowed to be in the NTMs. We have seen only drafts so far. We need to wait and see what the regulation will finally be.”
Outside Europe, he adds, most customers request a full compliance with FDA 21 CFR Ch. I §175.105, the U.S. code of federal regulations that covers the use of adhesives in food packaging
While new regulations have little impact on the application system hardware, Tuck believes that regulations will impact the equipment software. “We anticipate new regulation will require the logging of manufacturing data, to give full traceability for the manufacturing process, and this includes adhesive application. We predict that there will be an increase in requirements for equipment to monitor, record and log manufacturing information.”
Focusing on innovation
Despite the many challenges induced by an industry undergoing structural changes, the tobacco sector also holds many business opportunities, as the interviewed suppliers of adhesives agreed. “There is always room for new products, and new ways of manufacturing these products,” says Olucay. “We produce our own homopolymer, which enables us to formulate a wider range of products. This is an advantage to us while customizing and adapting our products in these challenging times.”
Gonzalez believes that, in the near future, the production of eco-friendly or sustainable products will be a key factor for adhesives manufacturers to set themselves apart from their competitors and to create added value for its customers.
“Because of this we work on the introduction of sustainable raw materials in our products. In our product portfolio we clearly identify all our solutions that are based on sustainable raw materials and we call them ‘green products.’ Also, we ask our suppliers to follow this path, giving us alternative raw materials coming from renewable and sustainable sources. Our commitment is to increase the content of such natural ingredients in our glues, and therefore we are working on partial substitution of standard synthetic ingredients with natural ones. Right now the cigarette companies look for added value that permits them to differentiate themselves from their competition. These extra values could come from the usage of eco-friendly products with less impact on the environment. So we think that the tendency for the coming years will be to maximize the usage of natural raw materials.”
For Liebe, opportunities arise with every new technology on the machine side and every new requirement on the tobacco industry side: “From our perspective it is not the hunt for higher speed anymore but more for a stable and smooth running of the machines with less interruption, reduced cleaning times and quicker readjustments to other formats, etc. Here again a close cooperation between the glue manufacturer, the machine producers and the cigarette producers is essential for the development of new adhesives.”
Tuck expects regulations to dictate the need to monitor, record and store data on manufacturing and material usage, and therefore anticipates that future application equipment will need to incorporate software that has the capability to log data. “Our equipment can now be supplied with the function of data logging, ensuring that the customer is ready for existing and any future regulations.”