Author: Staff Writer

High Expectations

Photo: Rolf Hansen | Pixabay
Faced with declining demand for tobacco, industry suppliers are turning their attention to cannabis.
TR Staff Report
The legalization of cannabis and related products in many jurisdictions is creating new opportunities for tobacco companies and suppliers facing stagnating sales of their traditional products.
While the Covid-19 crisis appears to have slowed the long-term decline in demand for some tobacco products—premium cigars in particular appear to have fared well during the crisis—the days of unrestrained growth are clearly over. Global Data predicted in September that tobacco companies would sell $651 billion worth of filter cigarettes in 2020, an 8 percent drop on sales of $707 billion in 2019. For plain cigarettes, the fall is higher at 11 percent, and in niche categories like chewing tobacco, forecast sales were expected to drop by 13 percent in 2020.
The data and analytics firm says the pandemic has prompted significant numbers of consumers to quit tobacco products, citing lower disposable incomes from reduced employment, fewer social settings in which to light up and increased awareness about the importance of respiratory health. This is on top of existing factors depressing demand for tobacco products, including growing health consciousness and anti-tobacco measures, such as smoking bans and taxation. Global Data expects it will take at least until 2023 for global tobacco sales values to fully recover.

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Meanwhile, global demand for cannabis and related products continues to rise steadily. Euromonitor International believes global legal sales of cannabis could increase from $12 billion in 2018 to $166 billion by 2025—a potential increase of more than 1,000 percent. Much of that growth will come from legalizing sales that are currently taking place illicitly. In 2018, only about 8 percent of the global demand for cannabis was filled legally, hinting at the tremendous opportunity for growth.
Cannabis legalization has been gathering momentum. Alongside the U.S. presidential election in November, voters in several states approved ballot measures legalizing marijuana. In 2018, U.S. Congress had already legalized hemp with less than 0.3 percent THC, the psychoactive component in cannabis, in all 50 states.
In December 2020, the U.S. House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act—a bill decriminalizing marijuana at the federal level. Then Senate Majority Leader Mitch McConnell refused to bring it to a Senate vote, but the outcome of recent elections has changed the outlook. With the Democratic party controlling the presidency and both chambers of Congress, the chance for federal legalization of cannabis appears to have increased significantly.
On the global stage, too, cannabis continues to gain acceptance. Late last year, the United Nations (U.N.) removed cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs, where it resided alongside drugs like heroin. The change will open the door to more medical cannabis research. National governments will still decide how to regulate cannabis, but many states look to the U.N. for guidance.
Suppliers of the tobacco industry have been watching the developments with considerable interest. Around the world, tobacco farmers have either shifted to growing cannabis or added it to their repertoire as an additional income source. Zimbabwe, a leading producer of leaf tobacco, legalized cultivation of cannabis for medicinal use in 2019. Local officials have high hopes for the new crop, with some predicting Zimbabwe’s earnings from cannabis exports could outstrip those of tobacco by a factor of three. Treasury spokesman Clive Mphambela expects the country’s cannabis sales to reach $1.25 billion in 2021. By comparison, Zimbabwe earned $444 million from the 2020 marketing season that closed in August, according to the Tobacco Industry and Marketing Board.
Malawi, too, is gearing up to start commercial production and processing of cannabis for medicinal and industrial use. In February 2020, Malawi’s parliament passed a bill that makes it legal to cultivate and process cannabis for medicines and hemp fiber used in industry but stops short of decriminalizing recreational use. The country recently created a dedicated regulatory authority for cannabis. Despite steep licensing fees, many tobacco farmers have already applied for permission to grow cannabis. Their enthusiasm is understandable given that Malawi’s earnings from tobacco have fallen dramatically in recent years.
Elsewhere in the supply chain, companies that have traditionally catered to the tobacco industry are also eyeing cannabis. For example, Hoffmann Neopack, known in the tobacco industry as a supplier of tins and tubes, organized a webinar last year exploring best packaging practices for cannabis products.
Even machinery makers have gotten into the game. Evans MacTavish Agricraft, a longtime supplier of leaf tobacco processing equipment, now offers a broad portfolio of machinery for all steps of marijuana processing—from treating the raw material to overwrapping of the filled cannabis preroll packs. Hauni Maschinenbau, best known for setting speed records with its cigarette production machinery, has also entered the cannabis market. At a recent open house in Richmond, Virginia, USA, the company launched three machines for cylindrical preroll making as well as a range of accompanying equipment.
Traditional tobacco companies, too, have ventured into cannabis. In late 2018, U.S. market leader Altria Group acquired a 45 percent equity stake in Cronos Group, a leading global cannabinoid company, headquartered in Toronto, Canada. British American Tobacco recently launched its first CBD vapor product, Vuse CBD Zone, in Manchester, U.K.
Of course, investing a newly legalized sector presents risks, and some investments have soured. In January, Pyxus International announced that it would divest its cannabis business in order to focus on its more profitable tobacco and e-liquid operations. Regulatory confusion and failures in corporate executions have brought back some of the more outlandish forecasts to what are perhaps more realistic expectations.
Despite such teething problems, however, the long-term narrative remains one of growth: Cannabis will likely continue to gain momentum, and tobacco industry players would do well to keep an eye out for opportunities in the segment.
February 1, 2021
Innovative Solutions

Photo: Tobacco Reporter archive
One traditional tobacco industry supplier that has recently diversified into servicing the legal cannabis business is LLFlex. With headquarters and manufacturing facilities in Louisville, Kentucky, USA, the company is a global leader in metals-based laminates for packaging and industrial solutions in the wire, cable, construction and other consumer markets. For nearly a century, LLFlex has supplied packaging materials to the tobacco industry. Its innerliner is available both laminated and coated and in a vast array of colors. The company’s innerframe offering includes plain and printed materials.
LLFlex has also been working on new packaging designs that will incorporate its laminated carton board into flip-top boxes and cartons. According to LLFlex Business Segment Director Kelley Stearman, the company sets itself apart through its long history and commitment to the tobacco industry and its willingness to make investments to service this industry. “Our reputation of high-quality materials and excellent service is second to none,” she says.
With sales offices in the U.K. and China and an extensive network of agents, LLFlex services the entire globe. Recently, the company opened a new factory in High Point, North Carolina, USA, allowing it to efficiently service the high concentration of tobacco customers in that region.
As numerous U.S. states legalized cannabis in recent years, LLFlex started exploring opportunities in that segment as well. While the market remains small compared to that for tobacco, the potential for growth is considerable. “Data shows a huge exponential increase in demand for cannabis packaging over the next five years, and we want to be part of that growth,” says Stearman.
Cannabis packaging is similar to tobacco packaging in that it requires innocuous materials that won’t impart any taste or odor on the cannabis or tobacco products. From there, however, the similarities diminish. “As we know, most cigarettes are packaged on high-speed packing lines due to the high production volume of these products,” says Stearman. “Cannabis products for the most part are still being made and packed on a much smaller scale. And the cannabis product that a consumer buys typically is in a much different format than a cigarette. Whether it’s a cannabis flower or an edible, the packaging is very different from a cigarette pack.”
Complicating things from a packaging supplier’s perspective, every U.S. state that has legalized cannabis has its own unique regulations for cannabis packaging. Some states require cannabis packaging to be reclosable, for example. One requirement, however, is common to all jurisdictions: Cannabis products must be sold in child-resistant packaging.
With its LoCRite product, LLFlex can help cannabis producers comply. LoCRite is a laminated tear-resistant board that can be used to make folding cartons with certain child resistant opening features. The tear-resistance of the board combined with the specialized opening features of the carton make the finished carton child-resistant.
The LoCRite product has been used in several cartons that have been certified as child-resistant. In developing LoCRite, LLFlex evaluated different types and gauges of films. “The film had to be printable, and we had to achieve superior bond strength in the laminate,” says Stearman. “The finished product had to be printable on both sides, foldable and scorable.” Unlike competing solutions on the market, LoCRite is available in a variety of substrates. It can be made with various paper and board calipers and with Forest Stewardship Council-certified materials. The film component of LoCRite can be clear or metalized, including decorative options such as custom holographics. LLFlex has been supplying LoCRite for cannabis applications for more than three years and partnered with one of its key customers to develop a CR-certified carton for medical or recreational marijuana products. The folding carton is composed of LLFlex’s LoCRite board and is certified child-resistant in compliance with the U.S. Consumer Product Safety Commission (CPSC) 16 CFR 1700.20 testing protocol.
For the time being, cannabis packaging accounts for a relatively small portion of LLFlex’s business portfolio. The market is likely to grow, however—and when it does, LLFlex will be ready. “We have several projects underway with customers utilizing our LoCRite material, and the child-resistant certifications are in various stages of progress,” says Stearman.
“We are also working on a completely new packaging format called PotPodz, which was introduced to the market last year as a concept.” The company has received lots of positive feedback and interest in this concept and is working toward commercialization. “Between our LoCRite product and development of the PotPodz concept, we expect our cannabis packaging to become a larger portion of our total business in the next few years,” says Stearman.
What’s more, as some tobacco companies invest in the cannabis space, LLFlex is able to bring its cannabis packaging solutions to its tobacco consumers. “It’s a great win-win scenario: Our tobacco customer can work with a known and trusted packaging partner, and we can help our existing customers as they expand into new markets,” says Stearman.
Looking forward, Stearman says she hopes to see more consistency in packaging regulations as cannabis legalization proliferates in the U.S. “Right now, each state has their own unique packaging requirements, which presents challenges for the supplier,” she says. “It will be easier to achieve economies of scale once there is more of a national standard for packaging.”
While LLFlex does not anticipate having to alter its materials to allow for the fast production speeds common in cigarette manufacturing, the company does expect order sizes to increase. This, says Stearman, will be beneficial for the entire supply chain and ultimately allow LLFlex to offer consistent pricing and short lead times.
February 1, 2021
Continued Momentum

SPI has recently experienced an increase in demand for upgrades of glue applicators from gravity systems to pump systems.
Innovative products and environmental drivers are creating new opportunities for adhesives even in a testing time.
By George Gay
SPI manager Danielle Roxborough appeared chuffed when I asked her in January what were the main factors driving the market for equipment used to apply tobacco industry glues. And she was chuffed; and the reason why she was chuffed turned out to be that while, in the past, the usual market drivers for such equipment have been cost reductions and efficiency improvements, currently, one of the main drivers was concern for the environment—and this she found pleasing. Of course, drives to improve efficiencies, especially, for instance, where they target waste reduction, can be seen as environmentally advantageous, but what Roxborough was talking about involved a direct link.
For various reasons, the major cigarette manufacturers are apparently showing renewed interest in finding an efficacious filter material that biodegrades more easily than does the most commonly used traditional filter material, which is made of cellulose acetate hardened with the application of triacetin. Of course, the search for more environment-friendly filter materials has been going on for a long time, which indicates that there are no obvious substitutes, but Roxborough said the industry was now investigating the use of crimped paper, and this was raising the possibility of some interesting developments in which ITM, a company that manufactures filter-making machinery and that is related to SPI through the Tembo group, was heavily involved. And, in turn, ITM had been approaching SPI because the efficient application of glue would be crucial in constructing such a filter and because SPI is the group’s acknowledged expert in respect of glues and glue application.
In part because of new regulations, such as the EU’s ban on single-use plastics, everybody was having to think about their products, the waste they produced and what effect they were having on the environment, said Roxborough, and so it was exciting to be involved in a new project such as this, especially since the group’s ethos was built around developing more environment-friendly products. It was exciting to see an environmental issue pushing developments, she added.
There are a number of reasons why paper has not been used more widely as a cigarette filter material, one of which concerns taste, and, again, this is an issue of interest to SPI, which is involved also in the development and supply of flavor application systems. The idea of using crimped paper as a filter material had thrown up problems, but, wherever there was a problem, there had to be a solution, said Roxborough; so one of the projects SPI had been looking at involved incorporating a filter-material flavor system onto production machinery. However, she added one important caveat. The idea was to try to make a paper filter that offered the same taste as did a traditional filter, when attached to similar tobacco rods. It wasn’t a case of trying to introduce additional flavors. It was about trying to give consumers products that tasted as close to those that they had become accustomed to but that had better environmental credentials. Inevitably, it would be something of a balancing act, but then, there was some resistance when plastic straws were replaced by paper ones, and people got used to them.

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Transition to new products
Another factor driving the market for glue-application systems has arisen because of the transition being made from the production of traditional combustible cigarettes to that of more modern products, such as heat-not-burn (HnB) cigarettes. Clearly, while new, less risky products are seen as the future, their development is being funded in part by the income from the sale of traditional cigarettes; so the question arises as to how to keep existing traditional-cigarette production machinery running efficiently while avoiding the need to make major investments in new machinery that could be spent more wisely on developing new products. This situation, said Roxborough, had created an opportunity for SPI, which, by upgrading the glue-application systems on existing machinery, especially filter-making machinery, could greatly improve the efficiency of such machines at a fraction of the cost of a new machine. And as a consequence of this, SPI had seen an increase in demand for upgrades of glue applicators from gravity systems to pump systems. That had been a surprising knock-on effect of people wanting to reduce their investments in new machinery for combustible-cigarette production, she said.
Interestingly, while such a shift in investments is not directly aimed at protecting the environment, it may be seen as having such an effect. Switching a machine from a gravity-fed to a pump-system glue applicator is said to reduce waste, as, of course, does upgrading a machine rather than sending it to the machine graveyard.
The above market drivers come on top of one that has been around for a few years now and that was set in motion by the arrival of HnB devices. While many different next-generation products have been developed in recent years, for a while it looked like the market would be dominated by vaping devices, which offered few opportunities for SPI. However, with the arrival of HnB, things changed because, while these devices represented a clear break with the past, they were manufactured in ways that were reasonably similar to the production methods used for traditional combustible cigarettes. The arrival of HnB products opened the door again to opportunities for traditional tobacco industry companies because they used slightly different materials in slightly different ways, and what this meant in practice was that there was a need to rethink such things as glue application, Roxborough said. This might involve something simple, such as repositioning an applicator or reassessing how much glue to apply, but sometimes it involved a complete redesign.
The above, I think, gives an indication that whereas the tobacco industry has traditionally been seen as conservative, in recent years it has undergone huge changes. And this idea was underlined by Roxborough when I asked about what pieces of SPI’s equipment were the most in-demand. She replied that the answer to that question would depend on what week I was talking about, before going on to explain that, within the tobacco industry, little was predictable. Every year, SPI managers met to set targets for the year ahead and, while the overall targets were met, it was usually the case that the sales that helped the company meet those targets were of equipment different from the ones that had underpinned the predictions. This lack of market predictability was not necessarily a disadvantage, however, because SPI was flexible and its equipment was modular, so it could change direction quickly; it never became stuck in a position where it needed to sell a particular product.

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Riding the roller coaster
Danielle Roxborough
Of course, it goes without saying that 2020 was particularly unpredictable and, in answer to a question about how the Covid-19 pandemic had affected SPI’s business, Roxborough admitted that it had been a testing time—a roller-coaster year. The major issue that the company ran into was in March and April when it proved difficult to ship equipment. “We thought that the problem would be the supply chains,” said Roxborough, “but they were fine. But we were left with boxes that we couldn’t ship for three [weeks] to four weeks because some of our customers’ factories weren’t open.”
Still, SPI seems to have weathered the pandemic well. It has kept its factory open and fully functioning. It has not furloughed or made redundant any of its people, and neither has it recorded any confirmed cases of Covid-19. According to Roxborough, this success in the face of adversity has been down to the company’s being pragmatic. The first consideration was ensuring that people stayed well; so those who could work from home were sent home immediately while those on the factory floor were given an extra day off each week so that at any one time the factory could be kept running but with one fewer person in the building. And, of course, the more obvious steps were taken in respect of such items as masks and screens.
Infrastructure-wise, SPI was obliged to rethink its whole building, which was not necessarily a bad thing, said Roxborough. The company’s offices had become overcrowded and the pandemic forced it to have a clear out to create more space for people to spread out, something that had been under consideration since well before the pandemic struck but had never been implemented. Staff and the company have benefited too from another change that was implemented because of the pandemic—one that provided office staff with more flexible working hours and that meant the office is now open for an hour longer each day, a particular advantage since SPI works closely with Netherlands-based ITM.
Which subject brings us to Brexit. The U.K. concluded a deal with the EU shortly before it left on Jan. 1 after a year’s transition period, and I was interested to find out whether SPI yet knew how the new trading arrangements with the EU would affect its business. “In short, no,” said Roxborough. “We’re pleased there’s a deal; that helps, but we suspect there will be more administration. We’re shipping a unit this week to Europe and it has to go through more procedures in terms of paperwork and checking. But this is nothing new to us. We have been used to shipping outside Europe and we use a broker for imports and exports. We are going to monitor the situation cautiously for now and see what happens.”
When it comes to Brexit, SPI has the advantage of being linked to ITM, though Roxborough pointed out that the link-up wasn’t made because of Brexit. More than anything, the link-up had provided stability, which, in turn, was providing confidence about the future, she said. SPI still operated independently, but it had access to the facilities and know-how of a big group, and, at the same time, that group had access to SPI’s expertise.
The association with ITM has come in handy during the coronavirus pandemic because, while SPI’s engineers have been unable to travel, in some regions it has been able to call on local ITM engineers to help with equipment installation. However, what the pandemic had proved also, added Roxborough, was that SPI’s equipment was relatively easy to install. By using modern technologies and software, and by having dedicated teams on standby in the U.K., the company had been able to guide some of its customers through installation processes, both in respect of glue and flavors equipment. It was with some hesitation, she admitted, that the company started down the road of having its customers instal equipment, but it had worked out very well.

George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

February 1, 2021
Homework Due

Photo courtesy of the ECLT Foundation
Indonesia commits to eliminating all forms of child labor by 2022.
By Stefanie Rossel
Child labor affected an estimated 152 million children globally in 2018. It’s also present in Indonesia, which in 2002 committed to eliminating all forms of child labor by 2022 to fulfill global development pledges. Over the past four decades, the island state has developed from one of the world’s poorest countries into a low-to-middle income nation with a poverty rate in the single digits. Progress has also been made in the elimination of child labor. According to the United Nations, the number of child workers declined from more than 4 million in 2009 to 2.9 million in 2018. Today, 7.4 percent of Indonesian children are working, mostly in agriculture. Perhaps unsurprisingly, considering the size of the tobacco sector in Indonesia, an estimated 60 percent of them labor in the tobacco sector.
In a recent report, the U.S. Department of Labor (DoL) attested Indonesia had made “moderate advancement” in 2019 in its efforts to eradicate the worst forms of child labor, which include commercial sexual exploitation and performing dangerous tasks in plantation agriculture. In addition to publishing a report with the most recent data on child labor, Indonesia’s government had increased its labor inspectorate funding from $10.2 million in 2018 to $16.7 million in 2019, with specific funds allocated to enforcing child labor regulations, according to the DoL. The country’s Ministry of Manpower, however, still lacked the financial and staff resources to fully enforce child labor laws throughout the country, the DoL study found, and there was no information available on the number of investigations conducted, violations found, prosecutions initiated and convictions secured.
Although Indonesia has ratified the key international conventions concerning child labor, 3.7 percent of the country’s 10-year-olds to 14-year-olds are working, the DoL report said. The majority (61.6 percent) work in agriculture where they fulfill tasks such as harvesting kernels for palm oil or applying fertilizer to tobacco. Many of them work long hours in extreme heat, a condition also considered hazardous for children. The minimum age for work in Indonesia is 15 years and that for hazardous work is 18.
Several institutions have been established to enforce child labor laws. The Ministry of Manpower, for example, provides legal information to employers and works with law enforcement officials to investigate and address instances of child labor. The Ministry of Women Empowerment and Child Protection coordinates the provision of social services to children, including those involved in child labor. Labor inspectors are regularly trained; they are authorized to conduct unannounced inspections and assess penalties. To coordinate its efforts down to the local level, the government has established regional action committees and task forces at provincial and district levels. A National Plan of Action (NPA) provides a framework for the elimination of child labor, whereas a roadmap toward a child labor-free Indonesia in 2022 supports implementation of the NPA for the elimination of the worst forms of child labor. Social programs provide block grants for schools and cash transfer programs.
Difficult mission
Karina Jabulatova
Despite increased efforts, eradicating child labor within the next two years will be a tall order, in part due to the country’s demographic and geographical particularities. With 267 million people, Indonesia is the world’s fourth most populous country. Its 17,508 islands make it the largest archipelago in the world. Half of the population lives in Java. Agriculture employs roughly one-third of the workforce.
The country is also the world’s second-largest cigarette market, after China, and ranks fifth among global top tobacco producers. Six million Indonesians are involved in the tobacco industry. Smoking prevalence is high, standing at 29 percent among people aged 15 and older. Indonesia also struggles with significant child smoking. In 2018, the Health Ministry reported 0.7 percent of children between the ages of 10 and 14 were smokers.
“There are many challenges, the most recent one being the Covid-19 pandemic. We are supporting the government in the implementation of child labor-free policies, and maintaining this positive relationship with the government is always a priority for us,” says Karima Jambulatova, executive director of the Eliminating Child Labor in Tobacco-Growing (ECLT) Foundation, which is present in the country as a founding member of the Partnership for Action Against Child Labor (PAACLA) and its Kesempatan project.
The latter project was initiated in 2019 in five districts in East Java Province and West Nusa Tenggara Province—Indonesia’s largest tobacco planting areas—to reduce the prevalence of child labor in the agriculture sector. At the subnational level, the program advocates child-friendly villages through engagement with local institutions, information dissemination for members of the village community, including farmers and farm workers, and activities for children. The PAACLA partnership works toward eliminating all forms of child labor by 2025 in line with the UN Sustainable Development Goals and is coordinated by the government. According to the ECLT, this cross-sector initiative promotes shared accountability and strong commitments necessary to mitigate the risk of child labor and promote sustainable change.
Stephanie Garde
To support the government’s efforts, ECLT closely cooperates with various stakeholders and helps by providing models and best practices. “Our project in Indonesia focuses on prevention of child labor, on protecting children’s needs and rights and on increased commitment in the villages,” says Stephanie Garde, ECLT’s program manager. “The child-friendly village approach modeled from the namesake government program and implemented by the project includes activity centers where children get support doing their homework or do sports and other educational activities instead of hanging around the fields.”
Child labor in Indonesia usually occurs in informal settings, whereas laws and conventions are better placed to cover formal employment, Jambulatova explains. “The problem with child labor on smallholder farms, where income-generating crops like tobacco are grown alongside food crops, is that the whole family often goes to work to meet their needs,” she says. “Obviously, there is no employment contract between children and their parents. ECLT’s programs are designed to not simply remove children from child labor in one supply chain but to adopt a more systemic response focusing on cross-sector collaboration and multistakeholder engagement, which support government efforts to make sure no child is left behind.”
When talking about child labor, it is necessary to understand its nature. “The causes of child labor are far-reaching and complex, including poverty and lack of access to quality education and infrastructure,” says Jambulatova. “As with anything that affects the way people live, these issues become part of cultural practices as well, meaning that encouraging change also requires investment in awareness-raising to shift mindsets. To bring long-lasting change for children and their families, we need to understand the root causes of child labor and how they relate to each other in a wider system.”
A question of awareness
Eradicating child lavor is made more challenging due to farmers’ heavy dependence on the tobacco. There is less government support available to diversify their incomes with complementary crops than in other countries. What’s more, most farmers in Indonesia also don’t own the land they cultivate. During the harvesting season, it is common that neighbors come with their children and help.
Elimination of child labor is further complicated by the structure of the Indonesian tobacco market. While leading multinational manufacturers and leaf merchants are members of the ECLT and PAACLA and have committed themselves to keep their farms free of child labor, some of the domestic companies still have work to do. Moreover, a large number of “free” tobacco farmers sell their tobacco to traders and middlemen, which makes tracing within supply chains more difficult. Many small-scale farmers prefer selling their tobacco to these middlemen as they can sometimes offer higher prices than those fixed at the beginning of a season through contract farming.
ECLT member companies represent only approximately 35 percent of the tobacco sector in Indonesia. There is, however, progress among domestic manufacturers. “Some national companies are moving to vertical integration, with suppliers to these companies also opening up to this,” says Jambulatova. “PAACLA presents a unique opportunity for national companies to form a part of a partnership for the elimination of child labor specifically in Indonesia to step up to the challenge and close the gaps for sustainable change.”
As in many countries, tobacco in Indonesia is grown only during a short period of the year. During the remaining months, the farmers cultivate other crops, such as rice. “This is why we can’t limit our support to farmers to the tobacco supply chain only,” says Jambulatova. “It’s not a supply chain issue but an agricultural issue. Until there are collaboration and investment to address root causes and fight child labor across crops, we risk simply pushing children out of tobacco fields and into another crop down the road or during another season.
“The fact that this is a global issue across regions and industries shows that no one actor can solve this alone. Our long-term strategic vision is to engage across crops and levels building commitments and coordination that support economic growth for thriving farming communities free of child labor. We invite the government, companies and other industries to renew and deepen commitments so that we can reach this necessary goal as fast as the UN Sustainable Development Goals demand.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

February 1, 2021
Recon Reconsidered

Photos: Hauni
Garbuio has developed a new process for making reconstituted leaf tobacco.
By Stefanie Rossel
With the advent of heated-tobacco products (HTPs), reconstituted tobacco leaf (RTL) experienced a renaissance. The consumables of HTPs require a dedicated form of recon, custom-made from carefully blended tobacco leaves. Invented in the 1950s to save the valuable raw material by combining remnants of virgin tobacco during production, recon is today used in the tobacco blend to reduce the filling cost for cigarettes, cigars or of pipe and smoking tobacco blends. It also plays an essential role in cigarette blend design. Enriched with cloves for kretek cigarettes or containing hemp components, RTL even allows for the creation of completely new products.
There are several methods to produce reconstituted tobacco. Next to the paper-making technique, there is the nano fiber technology and a process called band cast, which is also known as slurry-type recon. All recon types can be used in HTP consumables. Paper recon and slurry recon are currently the most widely used forms but require much space and energy to produce, while taste, drying and tensile strength can present challenges.
Now Garbuio, an Italian specialist in primary machinery and part of the Hauni Group, has developed an alternative technology. The company has designed a recon plant that works with what it calls the tobacco dust amalgamation (TDA) process, an evolution of the slurry technology. The raw material, which can be tobacco, hemp or clove, is first ground to a powder. Moist components, including glycerin, water and binder, are then added to produce a dough, and cellulose microfibers are added to stabilize the tobacco foil.

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Alexander Dzingel
The latter ingredient is not used in the slurry process. Instead of spreading the thick mass on a metal belt conveyor as would happen during slurry making, it is taken into an extruder where it is pressed into pellets that are transferred into a rolling mill. Under high pressure, rollers flatten it into an even paste before it is dried. “Through this process, we get a tobacco foil with uniform and controlled thickness, which cannot be achieved with the slurry method,” explains Alexander Dzingel, product consultant HTP at Hauni. “Roller spacing can be adjusted exactly. In the future, the main application of recon will be in HTP, for which the accuracy and constancy of material thickness will be decisive. This guarantees consistency in downstream processes and helps to ensure that important product specifications, such as nicotine content, are always within the specified range.”
If used for HTP or wrapping cigars, the rolled recon sheet is wound on a bobbin. Optionally it can be cut into flakes if intended as an add-back for the primary.

Garbuio’s tobacco dust amalgamation technology retains more flavor and uses less water.
Pilot plant for testing
There are a number of other advantages to the TDA process: In contrast to the paper-making and slurry technologies, in which the raw material has a water content of up to 95 percent and 60 percent to 70 percent, respectively, the TDA technology needs little water. The dough contains only 20 percent to 40 percent moisture. As a consequence, the drying process of the mass is significantly reduced—Garbuio’s recon plant works with a dryer instead of a long drying line; preheating processes are unnecessary. Water and energy consumption are hence considerably lower than in other recon technologies, and the plant has a much smaller footprint.
“As the paste dries much faster, there is a much better retention of nicotine and flavor in the material,” says Dzingel. “In other, more water-consuming processes, flavors that one would actually prefer to keep in the recon are partly lost during the long drying phase. Besides, the TDA process uses fewer binders, which reduces their unpleasant influence on flavor during combustion.”
The TDA process provides manufacturers with the option to produce recon in-house instead of buying it from specialized suppliers.
Garbuio has set up a TDA pilot plant at Hauni’s Hamburg-Bergedorf site, which customers can use to try out new products from various starting materials and manufacture mini-batches for test markets. “Our clients are very interested in the plant—we have had a lot of testing by leading cigarette manufacturers since the line was installed in late 2019,” says Dzingel. “In November, we sold a pilot plant to a customer who sees a lot of potential in producing recon in-house with substantially reduced energy consumption.”

The new plant has a much smaller footprint than that of previous facilities.
Specializing in HTP equipment
Allowing for a material width of up to 300 mm and an output of up to 40 kg per hour, the pilot has been designed for small production volumes (the typical industrial bandwidth would be around 1,000 mm). Capacity, however, can be expanded at any time and adapted to the needs of the location, the company says, so manufacturers can react quickly to changes in the market. Investment and production costs per kg, complexity and energy consumption as well as plant size remain low compared to the paper or cast sheet processes, Hauni claims, whereas filling power is medium to high and flavor excellent.
To further process the tobacco foil produced with TDA technology, Garbuio recommends a special cutting and rod making process, such as in Hauni’s Strip Cut Maker (SCM). It takes the recon sheet off the bobbin and cuts it into long, identical narrow strips with a width of 1 mm at a speed of 200 m per minute and turns it into rods for further combining of the final product.
“This is important for the construction of the HTP device,” says Dzingel. “The different models come with their own challenges. Some systems heat the consumable from the outside, which makes insertion or removal of the consumable easier and cleaner, since the tobacco does not need to be pushed onto a heating element. However, the tobacco needs to be heated through the paper, the smoldering temperature of which lies under the vaporization temperature of nicotine.
“Other systems use an element that heats the tobacco from the center of the rod. Inserting or removing this heating element can be difficult if the base rods are made purely from unstructured, cut tobacco. “The SCM provides manufacturers with a solution for making stable base rods without loose end. It creates a parallel arrangement of thin recon strips in the base rod segment. This makes it easier to insert and remove the heating element.”

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Hauni is also working on a cross-cut process for its TDA recon, meaning the narrow strips are cut in shorter segments. “By cross-cutting the tobacco foil, you can influence the orientation of the fibers so that they are as parallel as necessary but still a bit more randomly oriented so that they have more filling power,” says Dzingel. The shorter strips can be processed in a way that has more similarity with cigarette making.
The TDA recon plant is only one element in a full range of equipment the company has developed for HTP, ranging from the primary for recon tobacco to base rod making, optional pre-combining, final combining and special logistics. “In short, everything you need for a powerful and efficient THP production plant.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

February 1, 2021
Wake-Up Call

Derek Yach
To speed up the demise of combustible cigarettes, the Framework Convention on Tobacco Control needs serious modifications, says Derek Yach.
By Stefanie Rossel
The World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) made headlines on its 15th anniversary in 2020. Unfortunately, the news was not that it was an overwhelming success but that progress toward getting rid of combustible tobacco was slow. Over the past two decades, overall global tobacco use has fallen, from 1.397 billion in 2000 to 1.337 billion in 2018, or by approximately 60 million people, according to the WHO. Eight million people still die every year from tobacco-related diseases. Critics warn that if the FCTC doesn’t modernize, a smoke-free world will remain a distant goal.
“The FCTC remains essentially frozen in time,” says global health expert and anti-smoking advocate Derek Yach, founder and president of the Foundation for a Smoke-Free World (FSFW). As a cabinet director and executive director of the WHO, Yach was instrumental in the development of the FCTC. “With the FCTC, which is a fairly ambitious document, we achieved our first goal to put tobacco use on a much higher footing within global health—and it has had its impact,” he continues. “In the late 1990s, global health meant infectious disease control to most people, and now it includes noninfectious diseases as well, such as heart disease, diabetes, cancer and mental health. Smoking prevalence has started to decline slowly in some parts of the world, although there are still countries where smoking rates are extremely high and rising.”
Eighty percent of the world’s smokers live in low-income and middle-income countries (LMICs). Applying the FCTC to these regions is the biggest challenge of the treaty, Yach says. “When looking at the single most impactful component of the framework convention—increased excise taxes—most LMICs have yet to even partially meet FCTC targets.
“I suspect this has to do with the universal problems of treaties. It’s nice to sit in Geneva and think about what laws will work in developing countries. If you take your examples from advanced industrialized countries instead of understanding the harsh realities of adapting regulations in poor countries where enforcement potential is low and political priorities are very different, things are a lot easier. In countries such as India or Indonesia or certain parts of Africa, we have not seen success, mainly because there’s weak legal enforcement on the tax side, a lot of corruption in the system and no political will or capacity to put smoke-free public policies in place. Some of the marketing bans have worked, but the tobacco industry continues to interfere with legislation in many countries, and this undermines anti-smoking laws.” Yach predicted that, even if the full range of FCTC recommendations was implemented, annual smoking-related deaths would still increase to 10 million by 2030.

Framework deficiencies
One challenge is that 17 of the FCTC’s signatories own significant shares in tobacco companies. These companies account for almost 50 percent of the global tobacco industry (see “The Contortionists,” Tobacco Reporter, January 2021). They tend to have a real conflict between their revenue and tax-raising needs, and a need to reduce the health effects of tobacco. Other shortcomings include the FCTC’s neglect of adult tobacco consumers who are trying to quit, which contributes to smoking rates staying high. “If you only focus on children not taking up smoking, you will see health benefits 50 years from now, but we want that impact in 15 [years] to 20 years,” Yach says. “For that to occur, better cessation strategies and the global rollout of harm reduction products are critical.”
FCTC recommendations that weakly impact tobacco use, such as health warnings on cigarette packs, have been widely introduced. Cessation assistance has not been promoted, and there is only slow implementation of the FCTC’s Articles 17 and 18, which stipulate the need to develop alternative livelihoods for tobacco farmers. Governments have also not been willing to hold the tobacco industry accountable for its actions, which is specified by the FCTC’s article 19.
Finally, promoting tobacco harm reduction (THR) products, which was part of tobacco control efforts in 2003 when the FCTC was drafted, remains undeveloped and currently only includes nicotine-replacement therapy (NRT). One reason for this is that governments remain deeply suspicious of tobacco industry claims that their new products will cut death and disease. Governments are also unwilling to seriously consider industry research, which they think is self-serving.
However, an examination of scientific output and patent filings shows that current research, regardless of the sponsor, is leading to new technologies capable of transforming the industry. “When we drafted the FCTC, we never anticipated this and as a result neglected the role of intellectual property rights,” says Yach. “At the time, we did not think something innovative and lifesaving could come out of tobacco companies, so why bother about intellectual property? How wrong we were!”
Filling the gaps
A nonprofit organization established in 2017, the FSFW aims to accelerate progress. The FSFW focuses on identifying and filling gaps in FCTC implementation and transforming the tobacco industry. It has developed a three-year strategic plan around three pillars—health, science and technology; agriculture and livelihoods; and industry transformation.
The FSFW’s approach and philosophy differ substantially from other philanthropies that support the FCTC. Yach pointed out that Bloomberg and the Gates Foundation support selected elements of the FCTC but actively back campaigns against THR products. “We’ve been very clear that we support provisions that children should never vape or smoke. However, our main objective is to help adult smokers quit by making cessation aids accessible and to support adult smokers switching to approved harm reduction products. These include snus, e-cigarettes, heated-tobacco products and nicotine pouches,” says Yach. “In the long term, tackling cessation together with harm reduction is the only way to bring smoking rates down relatively soon. If today’s adult smokers quit or switch, even into their fifties or sixties, they will see improvements in their quality of life.”
The FSFW strongly believes in investing in building research capacity in the nations in which it is doing research. No other major funders do this. “The health of a whole country improves when it has strong national scientific research capacity,” says Yach. “The scientists in a country become advocates for good policy in time, whereas keeping the money in the U.S., or doing all the work there and flying the experts in, undermines the development of tailored solutions that actually work.”
As the FSFW’s first strategic plan comes to an end, Yach says the Foundation is pretty much on target. “We have created a network of outstanding grantees who are producing work and scientific research that did not exist before, such as the second issue of the Global State of Tobacco Harm Reduction (GSTHR), which was released in November 2020.” (See “Uphill Struggle,” Tobacco Reporter, December 2020.)
In polls, the FSFW has tried to assess how important people’s perceptions of risk are to ending smoking. “We found out that knowledge of the risks of smoking is good in most countries but not in countries such as India or South Africa,” says Yach. “The intention to quit is often very high, but the resources available to [smokers] to do so successfully is often low. Access to NRT and reduced-risk products (RRPs) is almost zero in LMICs, yet we know that the countries doing best, such as the U.K. or Japan, are not just providing good cessation services and high-quality harm reduction alternatives, they are also helping smokers get access to these products, which is a big missing element in other countries. Our polls, however, show that more people now believe that nicotine causes cancer than they did two years ago. It does not. That view impedes smokers switching to reduced-risk tobacco products.”
Tools to drive change
The FSFW is supporting three institutions to drive change: the Center of Excellence for the Acceleration of Harm Reduction at the University of Catania in Italy; the Center of Research Excellence: Indigenous Sovereignty & Smoking in Auckland, New Zealand; and the Rose Research Center in North Carolina in the United States. Led by Jed Rose, co-inventor of the nicotine skin patch, the Rose Center is working on novel compounds and innovative treatments to improve the efficacy of smoking cessation therapy and harm reduction products.
The publication of the first Tobacco Transformation Index (see “Incentivizing Transformation,” Tobacco Reporter, April 2020) was another milestone. The index will help investors get a good idea of what tobacco companies are actually doing to address the health impacts of tobacco use, which will guide their investment policies. “For the investor, the question is where do I place my money to maximize my return and also maximize my impact on the environment and health,” says Yach. “We think the Tobacco Transformation Index is helpful guidance for them.”
The FSFW also has a hands-on approach to the FCTC goal of creating alternative livelihoods for tobacco farmers. It has set up the Center for Agricultural Transformation in Malawi, one of the most tobacco-dependent countries in the world. According to trendeconomy.com, unmanufactured tobacco accounted for $498 million, or 54 percent percent, of Malawi’s merchandise exports in 2019.
“Malawi has had a change in government, and the new administration is deeply committed to reducing dependence on tobacco,” Yach says. “We have signed a memorandum of understanding with the government and the National Planning Committee on accelerating alternatives and have created and supported the first National Policy Center that brings together government, industry, NGOs and academics. We support entrepreneurial agriculturalists, smallholder farmers and women. As a result, there have been new vegetable and dairy production projects as part of a broader portfolio. We see an upward movement, not only in agriculture, but in the economy.” The foundation is currently building a campus at Malawi’s major national agricultural university.
Challenging the COP9
The Foundation has many new research projects in the pipeline and will focus even more intensely on how change can be fast-tracked, how to counter misinformation on THR products and how to connect with doctors and health professionals in 2021, Yach says. Certainly the most important event this year is the Ninth Session of the Conference of the Parties to the FCTC (COP9), which had to be postponed until November of 2021 because of the Covid-19 pandemic. Article 28 of the FCTC addresses amendments to the convention. In a 2020 article published in Drugs and Alcohol Today, Yach provided a detailed agenda on how COP9 could modernize the FCTC, principally by a change in philosophy.
“I hope that the FCTC will align its policy to where the science is going, which would mean creating policies and actions that support harm reduction,” says Yach. “In addition, we seek progress on smoking cessation. It is long overdue that the COP discuss the pricing and availability of THR products in LMICs. I suspect many governments are likely to reverse their initial reactions to THR products based on emerging science and in response to the U.S. Food and Drug Administration’s decisions related to snus and IQOS. Historically, U.S. FDA decisions have been regarded as the gold standard of norm setting. That should be as true for THR products as it is for pharmaceuticals, vaccines and food.”
Yach is confident that even FCTC article 5.3, which excludes the tobacco industry and those it funds from the dialogue, might be overcome. The FSFW was immediately boycotted by the WHO because, even though the organization is independent, it receives funding from Philip Morris International Global Services.
“The voices [against dialogue with the tobacco industry] are loudest from a very small group of people who grew up in tobacco control decades ago and got stuck in their careers with a very strong view,” says Yach. “However, there’s a new generation coming out of new areas of science and IT. They look at science in a different way than we did. They believe in private partnerships. They seek real change and not endless rhetoric. They are less interested in what the tobacco industry did decades ago than in what it can do today to save their mother or father.”
Because there is no internationally accepted research agenda on smoking reduction, there are significant research gaps in many countries and scientific fields, and most of them center around THR products. Yach thinks these products must be incorporated into the FCTC, and he indicated that the foundation is leading efforts to define research that could improve tobacco harm reduction in any way and guide and accelerate the end of smoking. Addressing these gaps will involve people in academia, regulatory bodies and industry. The list should be completed later this year.
“My view is that there will be an inevitable rise in the use of THR products and a decline in the use of combustible cigarettes. My hope is that we can speed that process up. If we do that, 3 million to 4 million tobacco-related deaths could be avoided every year over the next four decades. It’s worth pushing hard to achieve that goal.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

February 1, 2021
Court Upholds Brazil’s Power to Ban Tobacco Additives

Photo: Taco Tuinstra
Brazil’s Federal Regional Court of the First Region on Jan. 25 affirmed the Brazilian Health Regulatory Agency’s (ANVISA) power to ban the use of additives in tobacco products.
With this decision, the federal court affirms a February 2018 ruling of Brazil’s Supreme Federal Court–the country’s highest court that recognized ANVISA’s authority to regulate tobacco products and upheld a 2012 regulation prohibiting flavors and additives in tobacco products sold in the country.
Due to a quorum issue, the ruling of the Supreme Court did not have a binding effect over other lawsuits previously filed with ordinary federal courts by tobacco companies and the trade group Sinditabaco.
Based on these lawsuits, British American Tobacco subsidiary Souza Cruz and Phillip Morris International were granted injunctions and allowed to continue selling flavored products. The Federal Regional Court ruling on Monday lifted those injunctions and set a precedent for other similar cases in the country.
“This decision reaffirms Brazil’s role as a global leader in tobacco control,” said Patricia Sosa, director of Latin American and the Caribbean programs at the Campaign for Tobacco-Free Kids, in a statement. “We urge other countries in the region and around the world to follow its lead and ban all flavored tobacco products to protect youth and other vulnerable populations.”
In 2012, Brazil became the world’s first country to ban the use of flavors and additives in tobacco products, including menthol. This ban was approved following two years of public hearings and broad stakeholder participation.
January 30, 2021
PMI Partners with Homeland Security

Photo: Tobacco Reporter archive
Philip Morris International has signed a memorandum of understanding (MOU) with the National Intellectual Property Rights Coordination Center at the U.S. Department of Homeland Security (DHS) to assist and support Homeland Security Investigations’ illicit tobacco trade operations and other intellectual property rights investigations.
“We are thrilled to partner with DHS and the IPR Center to combat the illicit tobacco trade,” said PMI’s head of illicit trade prevention for the U.S. Hernan Albamonte in a statement. “This partnership will provide both parties necessary information to thwart terrorist and criminal organizations that profit from the trade of illicit tobacco and jeopardize our national security.”
The MOU is focused on comprehensive strategies and coordinating efforts to disrupt and combat all forms of illicit tobacco trade, as well as to address vital areas of intellectual property, brand protection, and anti-counterfeiting strategies. The agreement will also facilitate knowledge transfer between the center and PMI to share mutually beneficial information and research to combat the illicit tobacco trade and assist in other intellectual property rights investigations.
“The agreement being signed today, is a continuation of a years-long partnership between the IPR Center and PMI to protect the American public by enforcing the nation’s intellectual property rights laws and educating consumers on the dangers of illicitly traded tobacco products,” said Steve Francis, IPR Center director. “The IPR Center will leverage this robust public-private partnership to develop outreach, training efforts and share referral information to open investigations and target these criminal acts.”
J.B. Simko
“PMI is focused on developing smoke-free alternatives that are a better choice for adults than continued smoking,” said PMI’s Vice President Of External Affairs J.B. Simko. “Our goal is that one day these products will replace combustible cigarettes for good. The illicit trade undermines these efforts by making unregulated products more accessible, so we are determined to do our part to fight it.”
January 30, 2021
Smoking up During Kiwi Lockdown

Photo: Tobacco Reporter archive
Many smokers upped their cigarette consumption during New Zealand’s Covid-19 lockdown, according to new research published by the Society for Research on Nicotine and Tobacco.
New Zealand’s response to the Covid-19 pandemic was one of the most restrictive lockdowns of any country, inevitably causing stress for many people. Because situations that increase stress and anxiety are associated with higher smoking prevalence, the researchers examined self-reported smoking before and during the lockdown, and analyzed factors associated with reported changes in cigarette consumption.
The scientists conducted an online panel survey of a demographically representative sample of 2010 adult New Zealanders during the Covid-19 lockdown; the final, weighted sample included 261 daily smokers and 71 weekly smokers. We measured psychological distress and anxiety, as well as situational factors, tobacco consumption and demographic attributes.
Nearly half of daily smokers reported smoking more during than before the lockdown, on average, an increase of six cigarettes a day; increased daily cigarette consumption was associated with loneliness and isolation. Most weekly smokers reported either that their smoking during the lockdown had not changed or had slightly reduced.
“As governments introduce unprecedented measures to manage Covid-19, they need also to consider other public health risks, such as increased smoking among current smokers or relapse among recent quitters,” the authors wrote in their report. “Evidence that loneliness was associated with increased smoking during a lockdown suggests a need for cessation out-reach strategies that promote and support smoke-free practices.”
January 30, 2021
Vapor Group Welcomes U.K. Consultation

Photo: Gerd Altmann from Pixabay
The U.K. Vaping Industry Association (UKVIA) says it welcomes today’s announcement that the government is consulting on changes to the Tobacco and Related Products Regulations (TRPR).
As the U.K. prepares to leave the European Union and take control of its regulatory landscape and ahead of recently announced development of a new tobacco control plan, there is an enormous opportunity to seize the public health potential of vaping, according to the UKVIA. “Our members have been working tirelessly to agree what a new settlement for vaping should look like, to bolster harm-reduction opportunities and support the government’s ambition for a Smoke Free 2030,” the organization wrote in a press release. “This will form the basis of our Blueprint for Better Regulation in the vaping industry, a document which we will be publishing shortly.”
Whilst smoking prevalence has declined across the U.K. between 2018-2019 by 0.6 percent, according to the Office for National Statistics, there are still 6.9 million smokers, representing some 14.1 percent of the adult population. Moreover, despite vaping being acknowledged as one of the best ways to quit smoking, and according to research has higher quit success rates than nicotine replacement therapies, there are still nearly a third (32.4 percent) of adult smokers in Great Britain that have never tried vaping. Therefore, positive regulatory change has the potential to unlock the public health prize presented by vaping, according to the UKVIA.
John Dunne
“We have been eagerly awaiting the news of the consultation for some time,” said John Dunne, director general of the UKVIA. “As an industry, the vaping community has done much to provide vital information and alternatives to smokers for many years, but there is only so much we can do in the confines of current EU regulations. With the support of all stakeholders, including government and regulators, the potential improvements to public health can increase tremendously.
“The British public is keen to see how new ways of doing things can improve their lives post-Brexit. The government’s handling of vaping will be a key, early test-case. The UKVIA’s Blueprint for Better Regulation document will show just what is possible when progressive, evidence-based approaches are taken.
January 29, 2021