Author: Staff Writer

Silent Auction
Rules on social distancing make for a very different tobacco marketing season in Zimbabwe this year.
By Thulani Mpofu

Photos: Taco Tuinstra
All tobacco grown in Zimbabwe since 1936 has been sold at open auction and contract floors in Harare with thousands of growers thronging the southern end of the capital from March to August yearly to sell the “golden leaf.”
Some growers traveled to Harare for hundreds of kilometers sitting precariously on top of tobacco bales loaded in small lorries while others from nearby villages brought theirs in ox-drawn carts. Many slept for days in queues out of trading floors awaiting their turns to sell their tobacco.
Vendors selling food, clothing, radios and cellphones among other items plus agents for formal businesses selling farm inputs, vehicles and insurance policies added to the commotion around the tens of contract floors where contracted growers delivered their crop and the three open auction floors that serve self-funding growers. Bars nearby would remain open late serving growers who were known for lavish spending around their once-in-a-year paydays. Pickpockets, sex workers and beggars found business there too.
The Covid-19 pandemic has upended it all this marketing season.

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To promote social distancing, trading floors have been decentralized from Harare to tobacco growing localities while trading floors that remain in the city do not allow more than 20 growers inside at any time.
Voedsel Tobacco International, a local contractor, has taken advantage of the decentralization to invest in a trading floor in Marondera, a small town 76 km northeast of Harare.
“This is Marondera’s first tobacco trading floor and our first out of Harare,” Innocent Mahufe of Voedsel Tobacco International told Tobacco Reporter.
“Because we are a contractor, ours is a contract buying floor. We are in Marondera to be closer to the farmer and decongest our main floor in Harare. In total, we have 16,000 farmers under contract, and of that number, we expect Marondera to serve 5,000 farmers in Mashonaland East [whose provincial capital is Marondera] and Rusape [in neighboring Manicaland Province].”
At the new trading floor that was opened on May 1, Voedsel Tobacco employed three qualified nurses who check temperatures for all staff and farmers who call in to deliver their tobacco.
“The nurses also sanitize our clients; they oversee the disinfection of the buying floor to ensure [the] utmost hygiene,” said Mahufe. “We also have an isolation room on site just in case anyone is found to be unwell. Social distancing is a must; the same with wearing a mask. We are fully compliant with government regulations to fight Covid-19.”

Zimbabwean authorities are keen this year to avoid the clusters of people like this one at the Harare Tobacco Sales Floors in 2018.
Because of tobacco’s central role in Zimbabwe’s economy, the leaf selling season is a huge moment for the country and always presided over by the national president, his deputy or a delegated minister. This year, the event was delayed from mid-March to April 29 to enable trading floors to set up systems that promote high personal hygiene and social distancing in response to the Covid-19 pandemic. By May 10, Zimbabwe had 36 Covid-19 cases, nine recoveries and four deaths. President Emmerson Mnangagwa declared the disease a national disaster and ordered a seven-week national lockdown beginning March 30.
Tobacco, affectionately known locally as the “golden leaf” not only because of its color when cured but also because of its high export potential, is Zimbabwe’s most lucrative crop and the second biggest foreign exchange earner after gold. In 2019, it generated $747 million in exports mainly to China, South Africa, the United Arab Emirates and Belgium, according to the regulator, the Tobacco Industry and Marketing Board (TIMB). Africa’s largest flue-cured Virginia tobacco growing nation and the world’s fourth biggest after China, Brazil and the U.S. produced 256 million kgs of the crop in 2019, a record since commercial tobacco growing started in the country in the 1890s.
However, because of erratic rainfall, the TIMB expects output to fall to between 225 million kgs and 230 million kg this year. The regulator says 148,084 farmers grew tobacco in the October 2019 to March 2020 farming season. Were it not for Covid-19, this mass of people would have traveled to Harare from the beginning to the end of the marketing season.
“Circumstances demand that we sell tobacco differently this year. This is a big crop for the economy, but the health of the people is supreme,” said Mahufe, whose company is planning to set up three more contract buying floors at Mvurwi and Karoi in Mashonaland West Province as well as at Rusape.
Two weeks prior to the start of the trading period, the TIMB ordered the three licensed tobacco auction floors—Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Auction Floors—and the 65 buyers and contractors to decongest their premises in Harare and decentralize their operations to the four major tobacco growing provinces—Mashonaland West, Mashonaland Central, Mashonaland East and Manicaland. They are bound to set up on-site isolation facilities, provide alcohol-based hand sanitizers and running water.

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A farmer will be allowed to deliver tobacco for sale only once per week. Those selling fewer than 100 bales are barred from attending the sale of their crop but should appoint a representative who will represent other growers to be able to consolidate farmers’ bales to at least 100 and then to deliver them to the auction or contract floors. Farmers and their representatives entering the trading floors must be screened for body temperature and their identification and contact details must be recorded to facilitate easier contact tracing should the need arise in the future. Informal markets were banned.
Nigel Foto who farms in Macheke, 35 km east of Marondera under contract from Voedsel Tobacco International, is happy having sold 43 bales between $4 per kg and $5.60 per kg since May 1, but he would have wanted to sell his crop himself not through a representative.
“It’s a Catch-22 situation,” he said.
“Everyone must be careful with this disease, but to be forced to sell my tobacco in my absence is concerning. This is my sweat. I must be satisfied that it is rewarded as it should, but if I am represented by someone else, I cannot be convinced 100 percent that I got a fair price.”
Berean Mukwende, president of the Zimbabwe Farmers’ Union, is equally worried over the integrity of middlemen.
“The farmer must pay his representative whose reliability a farmer may not know. This is an extra cost to the farmer,” he said.
“I hope that will be reconsidered. Authorities must consider that small farmers, in their large numbers and few bales, contribute the bulk of national tobacco output. So their concerns must be heard.”

Zimbabwe has decentralized its tobacco sales this year to prevent large gatherings.
Andrew Matibiri (left) and Rudo Boka at the Boka Sales Floors
Official statistics indicate that 85 percent of tobacco growers in the country are small-scale producers who plant an average of one hectare under the crop yearly, reaping about 25 bales per hectare. They normally deliver a few bales at a time spread over the marketing season in an effort to capitalize on periodic price increases.
TIMB Chief Executive Andrew Matibiri said nine days into the marketing season that the anti-Covid-19 measures were doing well, with personal hygiene and isolation facilities in place and social distancing being upheld at trading floors.
“We have so far licensed four companies to decentralize to Karoi, two to Mvurwi, one to Marondera and two to Rusape,” he told Tobacco Reporter on May 8.
“Indications are that there will be two more companies buying in Karoi and one more in Mvurwi. In terms of hygiene, handwashing and so forth, we are satisfied that auction and contract floors are complying. Yes, all these present extra expenses as companies are having to lease or buy space at new sites as well as to put in place health systems, but we have no choice because of this disease.”
Minister of Agriculture Perrance Shiri, who was the guest of honor at the launch of the 2020 marketing season, said decentralized tobacco sales help growers cut transport costs and decongest the main trading floors in Harare.
“Please be consistent in turning your practical guidance into action to avoid continued spread of the disease. I urge everyone to continue to implement these guidelines up to the end of the season even after the lockdown is finally lifted in order to avoid resurgence in cases,” he said.
Deliveries were slow in the first nine days of the trading season partly because of restrictions in movement and farmers still familiarizing themselves with the new guidelines. Average prices were, however, higher this season than in 2019, according to the TIMB.
Tobacco farmer Monica Chinamasa said the quality of the crop that is delivered in the early stages of the trading period is typically poor as farmers sell the crop starting with the lower leaves that tend to be of poor quality thus attracting a low price and progressively reaping the leaves higher up the crop, which tend to be of higher quality and thus cost more.
Social distancing is the way to go in fighting Covid-19, she said, adding that the same holds true for decentralized sales.
“Authorities must be thorough with the regulations as this is all about people’s health, but my fear is on the sales representative,” she said.
“Yes, it is the farmer who chooses him, but that person cannot represent the farmer fully, especially when it comes to the price of my crop. Ideally, the farmer must be present when his or her bales are being sold.”
June 1, 2020
Rehumanize Yourself – The WHO’s Backward Priorities
In the fights against smoking, the World Health Organization appears to measure success in bureaucratic rather than human terms.
By George Gay

As I get older, I have a growing problem whereby my thought processes move into circular orbits around my head. For instance, I have been reading the 2019 World Health Organization’s (WHO) tobacco report and, while you might expect it to contain much food for thought, just about the only question that is doing the rounds in my mind is: Why does the report contain so many pictures of children (and to be clear, I’m talking about preteen children)? There are so many such pictures that I gave up counting less than halfway through the 200-page online version of the WHO report on the global tobacco epidemic 2019, by which time I had totted up 50 smiling children.
Don’t get me wrong, such pictures, with their air of joy and hope, can brighten the darkest days even for an old cynic. But there is a time and a place, and I thought that mixing such pictures with tobacco was a no-no, unless overwhelming evidence could be presented to support the idea that such juxtapositions would have a significant positive outcome for children in general.
So, perhaps I wouldn’t have questioned the placement of the pictures if the underlying theme of the report had been the prevention of smoking initiation among children, but it wasn’t, and the use of the pictures seemed gratuitous. The theme was “offer help to quit tobacco use,” a seemingly tortuous effort to justify the ‘O’ in ‘MPOWER,’ which was said in a foreword by WHO Director General Tedros Adhanom Ghebreyesus to encompass six measures to help implement the WHO’s Framework Convention on Tobacco Control (FCTC) using “effective interventions that are proven to reduce demand for tobacco.”
To my mind, this foreword is a strange piece in which “success” seems to be measured in bureaucratic terms—in respect of how many countries have been encouraged to implement MPOWER measures—rather than in human terms—the number of people who quit smoking, which doesn’t get a mention.
It seems a strange thing to say, but the FCTC doesn’t seem to do humanity. Rather than try to get to the bottom of why people smoke and help address the issues they have, it encourages governments to threaten them with graphic images of diseases and tax them until they bleed through the eyes. It seems not to be on the side of the smoker but on the side of some greater calling. It seems to be on the side of tobacco manufacturers, through its Protocol to Eliminate the Illicit Trade in Tobacco, and on the side of governments and their revenues, which many spend not on programs to prevent tobacco initiation among smiling children but on armaments, some of which end up blowing the limbs off those children. I suppose you can’t smoke if you don’t have any fingers.
As usual, the United Nations is protecting us from things we can protect ourselves from, but leaving us exposed to those that we cannot
The closest the director general comes to talking about getting smokers to quit their habit is when he suggests that due in part to countries implementing MPOWER measures, “many tobacco users now want to quit, and we know how to help them.” To my mind, the lack of urgency and ambition in this statement beggars belief. But then I guess it’s easy to get used to failure. Part of the summary of the report has this to say: “Unfortunately, only 13 new countries have started providing comprehensive cessation programs since 2007. There are now 23 countries protected by this measure, up from 10 countries in 2007.” At this point, you start to wonder whether the children are pictured because this report is meant to be read by them—or, more likely, only by the very youngest among them. After all, I assume that adults and most children would not need to be told that if a number has increased from 13 to 23, the original number was 10.
The forewords by Michael R. Bloomberg, WHO global ambassador for noncommunicable diseases and injuries and founder of Bloomberg Philanthropies, and Vera Luiza da Costa e Silva, head of the WHO FCTC Secretariat, also seem to measure success in getting countries to implement FCTC policies, and the nearest they get to talking about the numbers of people who have quit—or who would have quit if only—is when the latter says, “If tobacco cessation measures had been adopted at the highest level of achievement in 14 countries between 2007 and 2014, 1.5 million lives could have been saved.” I’m sure that if they could speak, those 1.5 million people would want to thank da Costa e Silva for her encouraging words.
The three forewords run to about 1,750 words, and, despite the number of pictures of children in the report, the word “children” occurs only once in those forewords when da Costa e Silva claims the tobacco industry doesn’t want anything to change, but “for the sake of public health, and in the interests of our children and future generations, things must change.”
Ah, change; it’s all very well, but you do have to be careful what you wish for. In his foreword, Bloomberg highlights some of the WHO’s most important gains, one of which has occurred in Brazil, which “is now the second country [after Turkey] … that has passed all MPOWER policies at the highest level.” It’s true. Policies in Brazil do seem to have changed to ensure that fewer of its children will die of tobacco-related diseases, but mainly, I would suggest, because they will firstly fall victim to the effects of climate change-induced environmental disasters, in which, in fairness, many other countries will be complicit.
As usual, the United Nations is protecting us from things we can protect ourselves from, but leaving us exposed to those that we cannot: climate change, environmental breakdown, pollution, poverty, globalized viruses and those endless bombs sold, according to the logic of the market economy, to any lunatic group with the money to buy them. There is little sense that we should be in preventative rather than reactive mode. When I see the pictures of the WHO’s smiling children, I cannot get out of my mind the faces of children I see in my newspaper: terrified, dirty faces above malnourished, shabbily clothed bodies wandering among rubble-strewn streets a million miles and years from a school, an inspiring teacher and the prospects of a better life. But at least they’re too poor to be using tobacco.
Success in South America
This is not to say that children should not be protected from tobacco and any other products deemed to be suitable only for adults. And Brazil has seemingly done a good job in bringing in measures said by the WHO to encourage people not to start smoking or to quit if they have already done so, starting, according to the WHO report, from 1981 when the Ministry of Health set up the Commission for the Study of the Consequences of Tobacco. In 1999, Brazil also set up the National Commission on Tobacco Control to support the country’s role in negotiating the FCTC, which it signed in 2003 and ratified in 2005. And in 2018, Brazil also ratified the Protocol to Eliminate Illicit Trade in Tobacco Products.
Since 1989, Brazil has taken increasingly stringent steps against tobacco advertising and promotion and introduced bans on smoking in enclosed public places. The country has introduced increasingly graphic health warnings on tobacco packs and integrated cessation treatments into its public health system. And, of course, it has increased tobacco taxes, which, as of 2018, were said to represent 82.97 percent of the retail price of the most popular brand.
One of the more amazing—and rounded, it has to be said—figures to come out of Brazil’s efforts appears outside the special section on the country where, it is said, “when Brazil became the first large country to include its national quit line number in graphic health warnings on cigarette packaging, the quit line received unprecedented call volumes—reaching up to 6 million calls in the first year, and more than all other quit lines globally at that time.” Given that we live in a time of fake news, I should point out that “up to 6 million” could legitimately mean one. Just saying.
Whether due to these measures wholly or in part, adult smoking prevalence in Brazil was said by WHO to have declined from 35 percent in 1989 to 18.5 percent in 2008, the year the MPOWER measures were introduced, and to 14.7 percent in 2013. Adult cigarette smoking was said to have decreased in capital cities from 15.6 percent in 2007 to 10.1 percent in 2017.
But the smiling children didn’t do so well. “Despite declining smoking rates among adults, smoking prevalence among youth remains stable at around five percent, with 19 percent of boys and 17 percent of girls experimenting with smoking during their school years, according to PENSE [National Adolescent School-based Health Survey] 2015,” the report said.
Rather than try to get to the bottom of why people smoke and help address the issues they have, the FCTC encourages governments to threaten them with graphic images of diseases and tax them until they bleed through the eyes.
Brazil is not the only country of South America featured prominently in the report. There is a piece on Colombia that describes how, from 2016 to 2017, tobacco taxes there have been increased hugely. But again, success is measured not against how many people quit smoking because of these increases but on the grounds that civil society groups were able to counteract the tobacco industry’s argument that tax increases would create an unmanageable surge in illicit trade and because Colombia managed “the highest level of achievement under the raise taxes on tobacco MPOWER measure.”
There was also a piece on Ecuador that focused on its integration of tobacco cessation strategies into its health system. But here, at least, we get a glimpse of what should be the focus of the WHO’s efforts: people quitting smoking. “From mid-March to mid-November 2018, 3,916 tobacco users were identified and given advice on quitting,” the report said. “Among the 2,069 patients who completed a follow-up at four months, the seven-day self-reported abstinence rate was 57.2 percent, and of the 968 who completed a six-month follow-up assessment, the self-reported abstinence rate was 48.9 percent.” So, my interpretation of these interventions suggests that just over 470 people are believed to have not smoked for a while. What can you possibly say? It’s a start?
Of course, it is impossible not to set Brazil’s success against the fact that the country is the biggest exporter of leaf tobacco. While Brazil is praised by the WHO for its MPOWERing, it is a major contributor to fueling what the WHO characterizes as the “global tobacco epidemic.” And this raises a number of questions.
Older readers will remember the arguments put forward in the past that EU farm subsidies should not go to supporting leaf tobacco growing, some of which had merit. But some cleaved to the ludicrous claim that if you stopped leaf production in the EU, you would stop smoking there, seemingly forgetting that the EU was a relatively small player in tobacco production and a major leaf importer. Brazil is not the EU, however. If Brazil stopped leaf production overnight, it would MPOWER the WHO’s activities like nothing else. And, of course, it would impoverish a lot of people, especially those in Brazil.
I would not advise such a course of action. As one reformed supporter of globalization once said, the basic responsibility of governments is to maximize the welfare of its citizens not to pursue some abstract concept of the global good.
But what is the WHO’s view? In its eyes, is impoverishment an acceptable side effect of curing the tobacco epidemic? Of course, I cannot know the answer to that question, but something tells me that it would be “yes.” If you look closely at the children whose pictures were chosen for publication by the WHO, most of them seem to be living in or close to poverty. I can assume only that, from the lofty heights of Geneva, Switzerland, poverty seems quite quaint.
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.

June 1, 2020
Knowing The Ropes
Harnessing decades of experience in process instrumentation, Ian Benson sets out on his own.
By George Gay

Photos courtesy of Ian Benson
Shortly after starting a video call with Ian Benson at the beginning of April, I noticed that behind him, on the wall of his office, was a sign that read: “Gone sailing.” If only, he must have been thinking. You don’t have to speak with Benson for long to realize that he is not a man who takes easily to sitting around, and our call took place about a week into the U.K.’s coronavirus lockdown.
His frustration, however, concerned not only his inability to access his boat, which, after having been cleaned over winter, had been returned to the water just three weeks earlier, but the fact that the lockdown was making it difficult to make headway in respect of two consultancy projects—one in progress and another recently negotiated—that he was undertaking as part of the company he set up in October last year, Ian Benson Consultative Solutions (IBCS).
Benson, who has been involved since the 1980s in the design, development and implementation of online and QA/QC process instrumentation for manufacturing industries, such as those producing tobacco, flexible packaging and food, last year went out on his own offering a number of services, including the evaluation and optimization of online process measurements in factories. And it is noteworthy that one of the points he made in a letter sent out on setting up IBCS was that he was internationally mobile—able to visit manufacturing facilities wherever they might be.
For many years, Benson’s life has revolved around travel, whether on water for relaxation or by air for work. Indeed, he mentioned a number of times during our call that he hugely enjoyed traveling, though what he really meant, I think, is that in the case of work travel, he enjoys arriving wherever he is bound for and, especially, meeting people, interacting with them and building relationships that straddle the workplace and restaurant.
Interestingly, however, his work life could have been very different from how it panned out. He told me how, in 1978, after having obtained his chemistry degree and PhD (focusing on organometallic catalytic systems and spectroscopy) at Bristol University, U.K., he had “dreams” of harnessing all the “wonderful skills” he had learned, and so started looking for industry-relevant roles to exploit his knowledge. However, he said, it was not to be because such forward-looking opportunities were scarce if not nonexistent. Clearly, at that stage he could easily have slipped into academia had it not been for the fact that the area of research he was engaged in ran out of road. Looked at from today’s perspective, it’s hard to imagine that, at a time when the world was becoming paranoid about running out of oil, there would not have been enough interest in synthesizing organic oil, but that was apparently the case.

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So, Benson, in his own words, “moved onto reality,” taking a job in the U.K. with the photographic film company, Ilford, where he initially worked as a research scientist but where he gradually moved to a technical services role, which involved product management—designing products for customers. This move, he said, confirmed to him that he didn’t want to pursue an academic career—that he preferred interacting with customers and providing things that companies needed. Benson laughed somewhat guiltily as he added that this was probably the start of his moving to the “dark side”—sales and marketing.
It was a gradual move. After three years, he left Ilford and, in 1981, joined Infrared Engineering, then a private company of about 30 people, as an applications engineer. In 1992, Infrared was bought by, and became an operating company of, the Fairey Group (later renamed Spectris after Fairey bought Spectris), by which time Benson was working in sales and, shortly after the acquisition, was made a legal director—sales—of Infrared. After taking a number of marketing courses, his role evolved to embrace both sales and marketing; but, eventually, that role became too burdensome as the business grew and, especially, after Infrared acquired NDC Systems, a U.S. company specializing in instrumentation systems for the flexible packaging market, and became NDC Infrared Engineering. At that point, around 1997–1998, he had to choose between sales and marketing, and, having developed an “increasingly passionate” interest in marketing and having worked in sales for more than 10 years, he chose the latter.
As a newly appointed applications engineer at Infrared in 1981, Benson began working with customers to design measurements they needed to make as part of their processes and that could be made using Infrared’s instruments, such as moisture or nicotine in tobacco. He quickly became the manager of what was then a small department and started to travel the world, relishing his immersion in different cultures. “It was a really interesting role and one that I would recommend to anyone who isn’t certain whether they want to get into the sales and marketing arena, because it is a gentle introduction,” he said.
“Interesting” hardly describes things adequately. Benson smiled broadly as he recalled many years ago shivering in a suit and tie as he made a sales pitch during an Asian winter to tobacco company representatives rugged up in a cold, unheated venue, and watched them gradually fall asleep. In fact, a lot of the stories he tells have him as the fall guy. Benson told me also that he was very hands-on and liked to get on with things, though at times he should have been more patient. Once in a GLT plant in South America he quickly climbed a ladder, keen to see where gauges were going to be positioned above a conveyor. But where he climbed to was also an exit port for a strip-tobacco drying station, and he was hit by a nicotine rush that almost had him falling down the ladder. Seeing the state he was in, his hosts, hardly able to contain their laughter, told him they would have warned him had he waited five seconds.

For many years, Ian Benson’s life has revolved around travel, whether on water for relaxation or by air for work.
But such close engagements with tobacco processing and the people involved in it were key to Benson’s success, and he underpinned his company’s position in established markets and led it into new regions and countries. On one trip in the mid-1980s, he managed to hitch a ride on the private helicopter taking the president of Gudang Garam from Surabaya to the company’s headquarters in Kediri, Indonesia, and later returned home with an order worth £250,000 ($311,174), a huge amount of money for a relatively small company in those days. Importantly, too, Benson was one of the tobacco industry pioneers who broke into the China market as that country opened to the West. China became NDC Infrared’s biggest tobacco-sector market and was still the biggest when he left in August 2019.
Later, it helped that, with NDC on board, Benson was able to make sales pitches that underlined the huge range of measurements that his company could offer. He told me that he could take a cigarette pack and tell potential customers that NDC Infrared could measure the thickness of the film that the tear-strip was made from, the adhesive with which it was attached and the thickness of the overwrap to which the tear-strip was stuck. Beyond the wrap, the company’s instruments could measure the moisture in the pack’s board and in the metalized film, and the coating applied to the aluminum foil to stop it discoloring. Finally, in the case of the cigarette itself, measurements could be made of the filter paper, the tow and, hugely importantly, the moisture, nicotine and sugar in the tobacco.
With such a pitch, it was not surprising that NDC Infrared, and Benson in particular, built up close relationships with companies around the world, and he spoke with special fondness of bygone trips to the multiple factories operated by the then Spanish tobacco monopoly, Tabacalera, where he worked closely over long hours checking the performances of his company’s instruments with the monopoly’s engineers and technicians; and where, at lunch and dinner, he joined them again to savor the country’s fine foods and wines.

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Driving forward
But I have to be careful here because I shouldn’t give the impression that Benson is somehow stuck in the past, reminiscing about the good old days, because he isn’t. His naturally restless spirit tends to drive him forward, something that is illustrated in his letter to prospective clients where he points out that he can help in respect of old or new processes, existing or evolving technology, and with new and developing needs, even those where a solution has not yet been identified.
But, having said that, there is one positive aspect of the tobacco instrumentation business that he mentioned as having been lost in more recent times, and it is illustrated above in the anecdote about Spain. In the past, he said, major tobacco manufacturers employed a lot of highly skilled engineers and technicians with whom instrumentation company people could work in situ in testing and improving established devices and developing new ones, but those engineers and technicians had disappeared, victims of cost reductions.
Of course, Benson well understands the reasons why those cost reductions had to be made. After all, he has spent just about all his working life serving an industry that has been under ever-increasing pressure from anti-tobacco activists and regulators. And this raises an interesting point. Despite all of the consolidation the industry has undergone and despite all of the pressure that has seen smoking decrease sharply in at least Western markets, Benson never mentioned any major downturns having occurred in the demand for tobacco factory instruments, which logically should have been indirectly and negatively affected by these developments. And the reason for this is that there haven’t been any significant downturns. What has been lost on the swings has been gained on the roundabouts.
As tobacco products have been changed in response to regulations or the need for cost savings, the need for measuring new or modified products and processes in traditional or new ways has increased, so the demand for the instruments that can make those measurements has increased also. Over the years, various “new” products have been added to blends, including stem, waste in the form of reconstituted tobacco and expanded tobacco of different types. And as Benson says, those changing processes have had to be controlled through new or modified measurements that have required a continuous development cycle in so far as instrumentation is concerned.
And this demand for new measurements and instruments hasn’t been driven only by outside pressure. The increasing speed of cigarette manufacture and increasingly strict industry-set standards have required that whereas primary factories might have used one gauge in the past, now, some of them will be equipped with 40. And then there is the development of heat-not-burn products, the components of which, most of them highly differentiated, have to be measured with the utmost precision.
There is clearly much still to do—well, once the lockdown is lifted and there’s been just a little time to go sailing.
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.

June 1, 2020
Minting Substitutes

Photo: JTI
Cigarette manufacturers are offering alternatives to smokers left in the cold by the EU menthol ban.
By Stefanie Rossel
As the Covid-19 shutdown left many retailers unable to sell off their noncompliant products ahead of the EU menthol ban, tobacco industry representatives pleaded for an extension of the deadline to no avail: On May 20, article 7 of the Tobacco Product Directive (TPD2) entered into force. Since then, sales of cigarettes with “characterizing” flavors other than tobacco have been prohibited throughout the EU. The ban, which predominantly affects the menthol cigarette category, has ended sales of cigarettes with menthol capsules, click on, click and roll, crushball or dual menthol cigarettes. Vending hand-rolling tobacco with mentholated filters or papers is also illegal if they are supplied together. Exempted from the ban are menthol-flavored e-liquids for vapor products, separately available mentholated smoking accessories, menthol-flavored oral nicotine pouches and cigarillos. Outside of Germany, mentholated consumables for heated tobacco products (HTP) also continue to be legal.
The ban has eliminated an entire class of cigarettes throughout the continent. Although menthol is a far smaller business in the EU than it is in the U.S., where it accounts for roughly one-third of all cigarette sales, its prohibition touches around 8 million adult smokers, according to the most recent Eurobarometer report (from 2017) on attitudes of Europeans toward tobacco and electronic cigarettes. The report finds that menthol cigarette consumption varies significantly throughout the common market, with the products being most popular in Finland (24 percent), Denmark (20 percent) and the U.K. (18 percent) and representing a small proportion of the markets in Slovenia, Cyprus and Greece with 2 percent each. Euromonitor International estimates that the category generates $11 billion in sales in Western Europe.

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A matter of taste
The question is how the millions of menthol smokers will respond when they can’t get their favorite fix anymore. Are they going to quit smoking altogether, as the European Commission hopes? Will they embrace regular cigarettes, resort to mentholated tobacco products that remain legal or switch to reduced-risk products (RRPs)?
“It is still too early to predict what current menthol smokers will do once their preferred products disappear from shelves,” says Femi Namfua, corporate media relations director at Japan Tobacco International (JTI). “The EU gave menthol smokers a six-year transition period to switch to other products. We now have to wait and see how smokers will react. We hope the menthol ban in the EU won’t lead smokers to the illegal trade as this will completely defeat the purpose of the ban—something we warned regulators about during the proposal phase of the new regulation.”
Eric Sensi-Minautier, head of British American Tobacco’s (BAT) EU office, shares this view. “It’s the million-dollar question,” he says. “I believe they will resort to looking for other possibilities available. That’s why it is essential that we are able to offer a greater choice of enjoyable and less risky products.”
Earlier this year, JTI surveyed more than 350 retailers in the U.K., a £11 billion ($13.67 billion) cigarette market of which JTI and Imperial Brands jointly hold an 80 percent share. Data that became available after the 2017 Eurobarometer report suggests that around a quarter of the U.K. market, or $3.42 billion, consists of mentholated cigarettes. Of the surveyed retailers, 25 percent believed that former menthol smokers would remain brand loyal within the ready-made cigarette (RMC) category, 19 percent thought they would switch to roll-your-own tobacco and 45 percent were confident that their customers would switch to vaping or other RRPs. Eleven percent expected previous menthol users to leave the category altogether.

Imperial Brands is enticing former menthol smokers to embrace its vapor products.
Photos: Imperial Brands
Ban sparks innovation
To meet all possible consumer preferences, cigarette manufacturers in recent months have become creative in their efforts to provide former menthol smokers with the widest possible range of products, including RRPs.
“Menthol cigarettes account for a significant portion of the European market, so the removal of these products from shops last month means a number of smokers will be seeking to make alternative product choices,” says Simon Evans, group media and online communications manager at Imperial Brands. “It’s important that we provide a range of options at such a time of significant consumer ‘churn.’ Our Myblu vaping product is available in menthol and other flavored varieties, giving extra impetus for smokers to transition away from cigarettes.”
“But we also understand that many menthol smokers will decide to continue to smoke and so we also focus on providing an evolving portfolio of products in line with their expectations,” says Evans. “Rizla Flavour Cards are flavor-infused sheets of card that can fit inside a pack of cigarettes. When left in the pack for at least an hour, the contents will take on the flavor of the card. Menthol and mint varieties are available. Rizla menthol filter tips are also available for consumers of rolling tobacco.”
Aroma cards have been around from other suppliers for some time, for example from Frizc. For the flavoring of loose tobacco, companies like MacBaren offer ampoules with liquid menthol aroma.
BAT, which is preparing for a future that is likely to be in noncombustible nicotine products (see “Beyond Tobacco,” Tobacco Reporter, May 2020), has been extending its vapor product portfolio to cater to former menthol smokers’ needs. In early May, the company introduced a range of new menthol e-liquid flavors and limited-edition starter kits for its Vype brand in the U.K. “Our strategy is to accompany smokers to move to less risky products,” Sensi-Minautier points out. “The entry into force of the EU menthol ban is a good moment for this.”
According to the company, the new range of e-liquids now closely mirrors the experience of smoking a menthol cigarette, with new blends, an innovative tube filter and new formats across the range. BAT has also innovated its Pall Mall, Vogue and Rothmans brands to offer former menthol smokers attractive, nonmenthol cigarettes.

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Providing more choice
In March, JTI launched several alternative products with new tobacco blends in the U.K. Its New Dual range, which is available in the Sterling, Benson & Hedges and Sovereign brands, provides smokers with new, distinctive tobacco blends, replacing the company’s former menthol capsule cigarettes. The same blend will also be used for the “green” product variants of the Sterling, Benson & Hedges and Berkeley “New Superkings” ranges. As long as their products do not contain menthol, retailers are still allowed to sell cigarettes with names that were previously used to describe a menthol product, such as “green.”
For all those who can’t do without their hint of mint, JTI in early February introduced a cigarette-sized menthol cigar, the Sterling Dual Capsule cigarillo, in the U.K. The product is marketed under the same name as one of JTI’s cigarette brands but is exempt from the ban because it is wrapped in tobacco leaf rather than paper. As its name implies, its filter contains a mentholated capsule, which smokers can click to release a peppermint flavor. Being a cigarillo, it sells at half the price of regular cigarettes.
The company also broadened its RRP portfolio, introducing a variety of new menthol flavors for its Logic e-cigarette brand and its Ploom tobacco vapor products, and outside of RRP, its Nordic Spirit nicotine pouches.
Philip Morris International (PMI) in March added a menthol kit to its IQOS heat-not-burn product comprising an IQOS 2.4 device and two packs of mentholated heat sticks. According to the company, 51 percent of menthol smokers would switch to IQOS when their preferred menthol smoke was no longer available, betterretailing.com reported.
Despite the long transition period—the ban on menthol was announced in 2016, with the introduction of the TPD2—awareness of the new rules remained remarkably low among retailers and consumers alike as the deadline approached. In another JTI survey, carried out one week before the ban took effect, more than half (52 percent) of participating U.K. retailers said they expected adult smokers to remain brand loyal within the RMC category; 31 percent believed their customers would switch to vaping or other reduced-risk products; 11 percent think they will switch to roll-your-own (RYO); and just 6 percent expect adult smokers to quit the category altogether. The results show a significant shift in thinking compared to JTI’s previous survey, with more retailers now believing that their customers will remain brand loyal within the RMC category and fewer assuming smokers will switch to vaping, RYO or quit.
Days before the ban entered into force, another poll, conducted for smokers advocacy group Forest, found that the lack of awareness of the ban also extended to consumers: Almost 40 percent of the more than 2,000 U.K. smokers surveyed were oblivious to the new rules. Only 16 percent believed that the ban would lead to a reduction in smoking prevalence whereas 46 percent of smokers thought that it would lead to an increase in illicit trade.
To educate stakeholders, leading tobacco companies created dedicated websites, which also included information about alternatives to menthol cigarettes and companies’ buyback schemes for unsold menthol cigarettes.

When Rizla Flavour Cards are left in a tobacco product pack for at least an hour, the contents will take on the flavor of the card.
Unwanted side effects
The justification for banning menthol cigarettes is that the minty taste masks the harshness of the inhaled tobacco smoke, which might make it easier for nonsmokers, including young people, to take up smoking.
The tobacco industry has long disputed that line of reasoning. “Peer pressure and parental influence are the main reasons for starting to smoke, according to studies, not menthol cigarettes,” says Namfua. “Study results do not support the claim that menthol smokers start smoking at a younger age. There is no sufficient evidence to support the claim that a prohibition of menthol tobacco products will affect smoking rates as campaigners suggest. Such a ban is therefore an unjustified restriction on adult consumer choice and sets a dangerous precedent for other products beyond the tobacco category.”
“Young people don’t start smoking because of menthol,” echoes Sensi-Minautier. “We do not believe the available science supports the idea that a menthol ban will reduce youth smoking or address the health impact of smoking more generally. Personally, I don’t believe that it will have more of an impact on smoking rates than plain packaging, which has had no effect.”
Canada, which prohibited menthol cigarettes in October 2017, provides a cautionary tale. Several of the country’s provinces already had menthol bans in place at the time of the nationwide rule. A study published this February by the National Bureau of Economic Research found that the provincial menthol bans simply increased nonmenthol cigarette smoking among youths, leaving overall youth smoking rates unchanged.
While the menthol ban may not achieve the desired reduction in EU youth smoking, it may very well bring about unintended consequences. “We now have to wait and see how smokers will react, but based on previous bans, what we often see is a coinciding increase in illegal trade and a decrease in tax revenues,” Namfua points out. “Government revenues are jeopardized in case of a ban in any market with mentholated tobacco products, especially in places where a large part of existing smokers choose them, like Poland, for example, as they may look to illegal channels to buy their preferred flavors in [the] future. U.S. law enforcement agencies are publicly opposing a menthol ban due to worries of an increase in organized crime, which remains an important concern.”
If smokers of mentholated cigarettes switch to illegal channels, the impact on government revenues would be substantial. “Studies show that up to 25 percent of menthol smokers would buy cigarettes from the illegal market instead, meaning governments would lose millions,” says Namfua.
In Europe, he says, criminal gangs started taking advantage of the menthol ban even before it was implemented. U.K. law enforcement agencies began finding packs of counterfeit menthol cigarettes as early as October 2019—seven months before the ban.
“Any prohibition of a product may be a driver of illicit trade, but the situation might be more complex,” cautions Sensi-Minautier. “We need to be careful because we don’t know yet if current consumers of menthol cigarettes will consider menthol to be so important to them that they find an illicit source. It would also be interesting to see whether the criminal gangs will seize this opportunity to diversify.”

JTI has broadened its RRP portfolio, introducing a variety of new menthol flavors for its Logic e-cigarette brand and its Ploom tobacco vapor products, and outside of RRP, its Nordic Spirit nicotine pouches.
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.

June 1, 2020
The Unlikely Savior?
Smoking, nicotine and Covid-19: What is going on?
By Clive Bates

Photo: maja7777 from Pixabay
The world is enduring the worst crisis since the 1940s, and people are desperate for some good news. Could that good news come from a most unlikely source? Could smoking, or more precisely nicotine, have benefits in controlling the symptoms of Covid-19, the disease caused by the coronavirus SARS-CoV-2? There is emerging, though inconclusive, evidence that nicotine may have protective effects in preventing severe symptoms of Covid-19. If this turns out to be true, it would be extraordinarily good news—nicotine in its medical and recreational forms is widely available and easily affordable.
The picture is quite complicated, but discussion should start with clarity about which outcomes may be improved. There are at least four relevant stages: infection (simply contracting the disease, often with mild symptoms); hospitalization (serious symptoms); admission to an intensive care unit (ICU) (life-threatening symptoms); and finally death. If there is a protective effect, the data suggest it reduces the number reaching hospitalization. For the purposes of fighting the pandemic and returning to economic normality, preventing the onset of symptoms serious enough for hospitalization is the highest priority.
There are two main strands of evidence that suggest a protective effect: the apparent underrepresentation of smokers in Covid-19 hospital admissions and evidence from human biology.

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Evidence from Covid-19 hospital admissions
Most Covid-19 studies recording hospitalization and smoking status show smokers are strikingly underrepresented compared to the number that would be expected given smoking prevalence in the population. Being a smoker appears to make it less likely that a Covid-19 sufferer will end up in the hospital. There are many doubts and questions about the reliability of this data, but the effect is remarkably consistent across countries where the data is available. Greek cardiologist Konstantinos Farsalinos and his collaborators examined the literature available on April 25, 2020, to assess the smoking status of those entering the hospital with Covid-19 (see Farsalinos et al., “Prevalence of Current Smoking and Association with Adverse Outcome in Hospitalized Covid-19 Patients: A Systematic Review and Meta-Analysis”).
An unexpectedly low prevalence of current smoking was observed among hospitalized patients with Covid-19. Hospitalized current smokers had higher odds compared to noncurrent smokers but lower odds compared to former smokers for an adverse outcome.
These data suggest that fewer smokers are entering the hospital than we might expect, but once they are admitted, their outlook is worse. This is consistent with other findings showing a worse outlook for smokers once hospitalized. (For example, Vardavas and Nikitara, “Covid-19 and Smoking: A Systematic Review of the Evidence.”)
Notably, in the largest study that assessed severity, there were higher percentages of current and former smokers among patients that needed ICU support, mechanical ventilation or who had died and a higher percentage of smokers among the severe cases.
These authors did not draw attention to just how few smokers there were among the patients to start with—but that is the remarkable fact picked up by Farsalinos and his group. So, what could be going on? Farsalinos and colleagues have a theory:
“The possibility that nicotine may have a protective effect in Covid-19, which may be masked by smoking-related toxicity and by the abrupt cessation of nicotine intake when smokers are hospitalized, should be explored.”
So, it may be that nicotine is protecting smokers up to the point where they are admitted to the hospital. However, all respiratory wards require smoking cessation on admission, so smokers make an abrupt withdrawal from nicotine use. To understand what is happening, it is necessary to separate the effects of decades of smoke exposure, which may be causing underlying vulnerabilities through cardiovascular disease and other stresses, from the effect of nicotine, which may be protective. These two effects of smoking—one harmful, one protective—could be pushing against each other and may become relevant at different points in the progression of the disease.

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Evidence from human biology—does nicotine suppress the “cytokine storm”?
So far, this could all be wishful thinking based on poor quality data. However, the second line of evidence means it should be taken very seriously. This provides biological plausibility based on cell-level insights into the mechanism through which nicotine could provide a protective effect. A range of papers have explained the possible mechanism, starting with the renowned French neuroscientist Jean-Pierre Changeux who pioneered research on nicotine receptors in the 1970s (Changeux et al., “A Nicotinic Hypothesis for Covid-19 with Preventive and Therapeutic Implications”). This was followed by an in-depth peer-reviewed publication by Farsalinos and colleagues (Farsalinos et al., “Nicotine and SARS-CoV-2: Covid-19 May be a Disease of the Nicotinic Cholinergic System“).
These theories converge on the role nicotine can play in suppressing the most dangerous symptom of Covid-19, a dramatic immune system overreaction to the virus, a so-called “cytokine storm.” Inflammation is a normal response to infection as the body responds with a series of immune reactions to neutralize invading pathogens. In this model, it is not the virus itself that does the harm but the body’s own immune system triggered by the virus into an excessive response that causes extreme inflammation and damage to the lungs or other organs and ultimately death.
These technical papers suggest that severe Covid-19 symptoms arise from damage to the internal signaling and control system known as the cholinergic anti-inflammatory pathway. This system originates in the brain and makes use of the Vagus nerve, the signaling chemical, acetylcholine and nicotinic acetylcholine receptors throughout the body. Under this hypothesis, nicotine moderates the malfunctioning of the anti-inflammatory control system by inhibiting the release of pro-inflammatory cytokines.
While Covid-19 is clearly new, the idea that nicotine may have therapeutic effects, including on inflammatory diseases rooted in the brain, is not new. In May 2020, researchers at Oxford University published a new finding from the 65-year study of British doctors started by Sir Richard Doll and Sir Austin Bradford Hill in 1951 confirming years of research suggesting smoking (in practice, nicotine) has a protective effect against Parkinson’s disease (Mappin-Kasirer et al., “Tobacco Smoking and the Risk of Parkinson Disease”). A 2013 paper by the U.K.’s bioweapons defense lab at Porton Down highlighted the role nicotine could play in controlling the cytokine storm and moderating some severe respiratory diseases (D’Elia et al., “Targeting the ‘Cytokine Storm’ for Therapeutic Benefit”).
“Nicotine […] is able to suppress the production of proinflammatory cytokines by mimicking the binding of acetylcholine. It has been demonstrated that nicotine can selectively reduce the inflammatory response in a number of infection scenarios, including Legionella pneumophila and Chlamydia pneumoniae infection.”
Following their observation that smokers were underrepresented in Covid-19 admissions to the Pitie-Salpetriere Hospital in Paris (Miyara et al., “Low Rate of Daily Active Tobacco Smoking in Patients with Symptomatic Covid-19”), French researchers are now planning a clinical trial of nicotine-replacement therapy for Covid-19.

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Where does that leave policy and practice?
With the Covid-19 pandemic raging everywhere, policymakers are in a position analogous to trying to repair an aircraft while flying it. It is not known for sure whether nicotine is protective against the more severe forms of Covid-19, just that it is suggested by data on hospital admissions and that it is biologically plausible. Yet decisions made today in hospitals and advice given to smokers and vapers could have life-saving or life-threatening consequences. The usual approach to such uncertainties would be to wait for more evidence and then make better-informed recommendations, but that is no different in practice to acting as though there is no protective effect.
It would be wrong to advise people to continue to smoke because of the longer term health implications and the underlying vulnerabilities to Covid-19 caused by smoking. But if people are advised to quit nicotine, they may be losing a protective effect at the point of their greatest vulnerability. The way to resolve this dilemma is to make a working assumption about the effect of nicotine based on what is known and what remains uncertain taking account of the consequences of making the wrong assumption. Recommending continued nicotine use in a situation where it turns out there is no protective effect does not seem likely to cause serious problems. Conversely, advising or requiring nicotine users to stop using nicotine only to find later that nicotine was protective may cause lethal harm. On a precautionary basis, policymakers should probably assume there is a protective effect until proven otherwise.
It follows that health professionals should advise smokers to quit smoking using any method that works but to maintain the use of nicotine—either by using nicotine-replacement therapy, vaping or some form of low-risk noncombustible tobacco—at least until there is a more complete understanding of the role nicotine plays. Vaping as an alternative to smoking should be encouraged not banned or locked down. What about people like me, who have never used nicotine and have no wish to—what should we do? Well, if I came down with Covid-19, I’d consider trying nicotine as a precautionary measure. What is there to lose?
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).

June 1, 2020
Feeling Their Pain
The International Tobacco Growers Association is campaigning to help noncontracted farmers cope with the coronavirus pandemic.
TR Staff Report

Photo: Taco Tuinstra
While the multinational cigarette makers are likely to emerge from the coronavirus pandemic with only minor bruises, some of their suppliers are in dire straits. For noncontracted tobacco farmers, who rely on busy sales floors and healthy farm hands to ply their trade, the crisis has been downright devastating. The International Tobacco Growers Association (ITGA) has started a campaign to alleviate their suffering. Using an appropriately socially distanced method of communication—email—Tobacco Reporter asked the organization about its initiative. Because the answers were compiled by a team, ITGA requested we attribute them to the organization rather than an individual.
Tobacco Reporter: Which leaf-producing countries will be hit hardest by the coronavirus pandemic?
ITGA: So far, the most affected is India due to the Andhra Pradesh marketing season disruption. The tobacco auctions were active both in Karnataka and Andhra Pradesh. The auctions were suspended in the two regions; however, in Karnataka, the auction was close to its ending date, while in Andhra Pradesh the marketing season had recently started, so the impacts of the suspension will be felt there more severely. The lack of international leaf dealers—especially from China—due to traveling restrictions during the Karnataka auctions was one of the reasons for prices not being higher.
The difficulty of storing tobacco will affect Andhra Pradesh. The region’s tobacco production may suffer critical reductions due to this unforeseen situation. The decreased demand due to tobacco companies not being deemed “essential” will also affect tobacco growers by causing financial losses due to the erosion of both the quantity and quality of the production. In Andhra Pradesh, only 5 percent of the tobacco was sold [in early May] compared with 50 percent last year. The tobacco manufacturers and tobacco businesses had to close, and demand for tobacco products has been estimated to have decreased by 20 percent.

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In South America, after a period of suspended operations, tobacco manufacturers and leaf dealers have resumed their operations and the activities are in full swing. In Argentina, the regional governments have put in place strict regulations to protect everyone involved in the marketing season. Dialogue between tobacco associations and tobacco companies has progressed with a deal having been struck for the tobacco purchased in the Misiones region, with a 59 percent price adjustment compared to the one paid last year. Argentina stands out for the macroeconomic difficulties the country was already facing; together with the Covid-19 disruption, that is sure to affect tobacco growers directly. The closing of the tobacco factories has caused shortages of cigarettes and tobacco cooperatives to be stuck with unsold tobacco.
Afubra, the national tobacco growers’ organization of Brazil, has downgraded the value of tobacco products. The drought felt in southern states during December 2019 and January 2020 caused losses in the Rio Grande do Sul of around 16 percent. Both Argentina’s and Brazil’s tobacco associations have made a plea to tobacco manufacturers for an advance on the price of the tobacco bought that would be deducted from the final sale price. Tobacco growers would use the revenue to finance wages, inputs and other expenses during this period.

Because the tobacco market in Andhra Pradesh was suspended shortly after it had commenced, the disruption there will be felt severely. Photo: Taco Tuinstra
In African countries such as Zimbabwe and Malawi, which both depend heavily on tobacco as a foreign exchange earner, tobacco auctions have been suspended and then opened amidst the Covid-19 crisis. What impact do you expect for farmers due to the delay?
The Malawi Tobacco Commission had announced at the beginning of April that excessive rainfall and the lower prices during last year’s campaign had affected the 2019 to 2020 tobacco crop. Tobacco output was estimated to decrease by 6.62 percent to 155,000 tons. There were growing concerns that if the marketing season were to be delayed further into the future that the tobacco could suffer in return due to the lack of facilities to adequately store tobacco for longer periods of time. An extended delay would result in part of the production to be lost, which would have an extremely negative impact on the livelihoods of those who rely on tobacco as a source of income.
In Zimbabwe, the marketing season had been delayed before the Covid-19 [virus] became an issue in the country. Episodes of rainfall close to the beginning of the marketing season allowed for the crop to recover from episodes of drought that it faced earlier in 2020. The Tobacco Industry and Marketing Board has assessed that tobacco output will reach 225,000 tons, a decrease of 13 percent from last year’s production. The tobacco output was initially expected to be significantly lower due to decreased growers’ registrations and tobacco seed sales.
Both Malawi and Zimbabwe are highly dependent on tobacco as a source of foreign exchange—a reality that the Covid-19-induced economic crisis will surely worsen. Therefore, this year’s marketing season must be a successful operation so that the livelihoods of the millions involved in tobacco growing do not suffer dramatically. Although, it is premature to assess the impact of the Covid-19 pandemic on the African marketing season. The auction and contract floors opened with higher measures of hygiene and protection with the aim to protect tobacco growers, leaf dealers and everyone involved in the sales. In Zimbabwe, even though the first bale received a lower price than last year—$4 versus $4.50—the amount of tobacco sold and the revenue generated on the first day was higher. Tobacco growers don’t usually send their best tobacco at the beginning of the season to better understand how prices will progress, thus saving the best for last. In Malawi, the introduction of a new bidding system has been singled out as the reason behind the higher rejection rates. As farmers adapt to this new system, rejection rates will likely decrease. Tama Farmers Trust and ITGA President Abiel Kalima Banda has called for a stakeholder meeting to address the problem and find a solution.

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Most tobacco sales today take place under growing contacts. To what extent do you expect the current crisis to change this?
Most of the tobacco growing is done through contracts; however, there is still a significant number of independent farmers. The trend of the increasing share of contract growers will persist or become even more evident. The Covid-19 pandemic will only exacerbate the differences between contracted and noncontracted growers. Independent farmers are much more exposed to the effects of the coronavirus as they don’t benefit from the tools and support the companies provide, while contracted growers are assisted by the companies with both knowledge and supplies. With the closing or demand turbulence of the auction floors or demand disruption, the only growers that are certain that their tobacco will be bought are the ones subject to contracts. That is the main reason behind our campaign—#Togetherwecare—to support the tobacco growers that are most undefended against a threat of this nature.
What impact do you anticipate from the coronavirus crisis for the supply-demand of leaf tobacco?
Tobacco production has been decreasing over the past few years as an effect of the lower demand for tobacco products. Tobacco growers are adapting to this situation by lowering the area under tobacco production. Due to weather events both in Brazil and Zimbabwe, the estimate for tobacco output has been adjusted downward from what was initially projected. As ITGA members are spread around the globe with significant economic and cultural differences, the ability to adapt and to respond to situations differs from country to country. Regarding the market adjustment, only when the marketing seasons are well underway can the effects be correctly assessed. The main Asian tobacco markets of China, India and Indonesia are key to understand if major demand shock will occur. For India, a 20 percent demand reduction has been estimated while Philip Morris International has confirmed a significant reduction in the Asian markets. Indonesia has also introduced minimum price regulation that may exert more pressure on the lower end of the market. With the economic effects following the pandemic with higher unemployment rates, smokers usually change to cheaper brands, an effect that is negated with the minimum price.
How will this affect cigarette manufacturers, most of whom claim to have sufficient stocks?
Tobacco manufacturers are not to suffer from reduced sales due to the nature of tobacco products demand. The consumption of cigarettes, heated-tobacco units and other types of nicotine-delivery systems is not expected to be affected by the coronavirus. Analysts from the Jefferies Investment Bank have characterized tobacco stocks as being “recession-proof,” the reason for this being that smokers are less worried about health concerns. Smokers have been bombarded with ever-increasing warnings for a long time and have developed a certain immunity to health warnings. Also, the link between anxiety and the use of tobacco products has been the subject of many studies, and the fact that a relevant percentage of the world’s population is being motivated to stay at home can increase the levels of anxiety which would lead to an increase of the consumption of tobacco products. Tobacco manufacturers have reported strong first-quarter results with important revenue growth. The tobacco operations are spread throughout the world although the main manufacturing centers are in the regions that were most affected by the pandemic, with several operations having closed for some time. The main tobacco companies have, however, reiterated that the supplies of tobacco products are sufficient for up to two months.

The goal of the ITGA’s #Togetherwecare campaign is to support the tobacco growers that are most vulnerable to the Covid-19 threat. Image: ITGA
Is the crisis an opportunity to rethink established supply chains and processes in the leaf-producing sector?
Without doubt, this has been one of the most challenging quarters in recent history. The Covid-19 pandemic has affected the world as a whole. One of the side effects of the pandemic has been its ability to disrupt the global supply chain. Globalization affected the way companies and industries operate. Supply chains have evolved to a planetary dimension and it is common to consume products that are produced half a world away. Despite the disruption to the global supply chain, the trend of moving tobacco production from developed countries to developing countries is not expected to change. The reasons behind moving the sources of tobacco have not changed with the pandemic. The pressure on tobacco products demand means companies will continue to lower costs along the entire value chain. As tobacco volumes will not increase, companies can search only for efficiency and margins gains.
Please elaborate on ITGA’s campaign to help small, noncontracted growers.
The ITGA has been in close contact with its members to assess the difficulties that this pandemic has been posing. Despite the global character of the outbreak, certain difficulties are particular to each region. Our members in the most affected regions have highlighted that they are starting to notice a lack of inputs for tobacco farming and that travel and transport restrictions have impacted the regular operations of growing tobacco. As tobacco is a labor-intensive product, any disruption to the movement of workers or to the hiring process could disrupt the harvesting season. The difficulty in earning a work visa or blocking the travel particularly affects products that rely on seasonal migrant workers. Our campaign is focusing on raising awareness and bringing basic equipment to smallholder farmers. Prevention and information are key at this phase to avoid a much more uncontrollable situation in these countries with fragile health systems and infrastructures. We have been seeking support since early April in view of the start of the selling season, which was delayed until the last week of April in Malawi and Zambia and the beginning of May in Zimbabwe. Coordination in these three countries has been outlined. It is very unfortunate that the ITGA acted in advance, foreseeing the free movement of noncontracted growers and inappropriate gatherings between farmers lacking basic protective equipment, but our plans in coordination with our members are set back in the absence of support.

As ITGA members are spread around the globe with significant economic and cultural differences, the ability to adapt and to respond to situations differs from country to country. Photo: British American Tobacco
It is imperative that the sector unites to protect the chains most exposed to the difficulties highlighted by Covid-19. As studies show, tobacco is grown as a cash crop in a multi-production system. Most tobacco growers do not exclusively produce tobacco. As other sectors and supply chains are disrupted by the outbreak, the noncyclical nature of the tobacco sector and its ability to outperform other industries during economic slowdowns is key to reinforcing the role of tobacco as the source of income for many growers.
June 1, 2020
Grace Under Pressure
Industry leaders relate how they have been coping with the coronavirus pandemic.
By Stefanie Rossel

Photo: Taco Tuinstra
Roughly six months have passed since China announced the outbreak of a mysterious lung disease, and Covid-19 is still raging around worldwide. On its journey around the globe, the virus has prompted governments to introduce strict measures to curb infections. Entire industries have been paralyzed, supply chains have been disrupted and global travel has been placed into an artificial coma. Under anti-coronavirus restrictions, consumer behavior changed in many countries as distribution channels were cut off and the question of what constitutes an “essential business” was hotly debated.
Living up to its reputation, the tobacco industry has so far appeared resilient (see “An Ill Wind,” Tobacco Reporter, May 2020). Amid growing uncertainty, Philip Morris International (PMI) in April announced strong quarterly results, generating net revenues of $7.15 billion in the first three months of 2020, up from $6.75 billion during the same period last year. However, CEO Andre Calantzopolous expected the pandemic to adversely impact PMI’s full-year results. The pandemic, he said, had already severely reduced the company’s duty-free sales, slowed IQOS user acquisition and delayed minimum price enforcement in Indonesia. “We also have to assume that, in certain markets, unemployment and related reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small retailers to operate,” said Calantzopolous.
The company reemphasized that it maintained sufficient inventory of inputs and finished goods and didn’t expect to see a disruption to its supply. According to the press release from April 21, all heated-tobacco unit facilities were operational while manufacturing facilities representing 20 percent of the company’s cigarette production were closed.
British American Tobacco (BAT) and Japan Tobacco International (JTI) provided a similar picture in their first quarter 2020 results. While acknowledging that the impact from the Covid-19 pandemic is difficult to predict, both maintained their full-year forecasts. BAT, which at the end of April stated that most of its factories were open and operating at full capacity, said it expected the global industry cigarette and heated-tobacco product volume to decline by around 5 percent, compared to 4 percent earlier, but maintained its forecast for a 5 percent drop in the U.S.

Iqbal Lambat
Increased demand
Analysts insist the cigarette industry continues to offer a haven in the current uncertain business environment. In a survey of 2,000 consumers, Morgan Stanley found that smoker behaviors and attitudes toward cigarettes appeared unaltered by the pandemic—an observation shared by Iqbal Lambat, president and CEO of Star Agritech International (SAI). Headquartered in Turkey and operating in 40 countries, SAI sources its leaf worldwide and thus has a good feel for the state of the global industry.
“Cigarette consumption has probably increased since social lockdowns were enacted,” says Lambat. “Our clients have also benefitted substantially from this phenomenon. As an example, in Italy at the start of the outbreak, the Italian government shut down all industries in the north in the Vicenza area. Two weeks later, the government declared cigarette production an absolute necessity and allowed cigarette factories to resume production. Our tobacco shipments to these clients have doubled as the factories try to keep up with demand. Demand has also grown with most of our clients worldwide, except in South Africa where the government imposed a complete ban on the sale of cigarettes, tobacco products and alcohol to minimize social gatherings.” The ban was not lifted when South Africa eased its lockdown restrictions on April 24. It is expected that the ban will only be lifted when the country declares a level 2 pandemic versus the current high level 4.

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The global reach of the pandemic is forcing tobacco firms to rethink their supply chains, which increasingly relied on just-in-time deliveries and minimal stock keeping. According to Lambat, SAI was already well positioned for the new operating conditions. “Star is the only leaf merchant in the world that has established tobacco depots within close geographic proximity to that region’s clients,” he says. “We store in these depots the most popular tobacco grades and tobacco derivatives, such as reconstituted tobacco, DIET, CRES, fines and stems for the clients of that geographic cluster.
“As such, we have tobaccos in Antwerp, Belgium, to service the EU; Kostrama, Russia, to service the CIS states; Johannesburg, South Africa, to service Southern Africa; Jember and Malang, Indonesia, to service South East Asia; Busan, South Korea, to service North Asia; and Santiago, Dominican Republic, to service cigar manufacturers in [the] Dominican Republic and Nicaragua.
“These depots are well stocked and replenished. So when the pandemic struck beginning [in] March, we were in excellent shape to continue supplying globally ex-depot. As the industry knows of our stocks’ availability, we even received requests to supply from our depots to new clients whose orders were blocked at origin.”
Several sourcing countries suspended their tobacco auctions due to the coronavirus crisis. SAI experienced disruptions in Argentina, India, Indonesia and China. “There were short temporary disruptions from Brazil,” he adds.
Most of the company’s Indian tobaccos are destined for Europe. “We typically carry a three-month rotating stock for these tobaccos in Antwerp,” says Lambat. “The late starts of auctions in Malawi and Zimbabwe will not affect Star Agritech as, over the years, we have migrated much of that sourcing to Argentina, Brazil and Tanzania.”

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A lesson to be learned
While warehouses will sustain the supply of leaf in the short term, replenishment of raw tobacco will become a challenge as travel restrictions persist. Buying tobacco usually involves the physical examination of leaf quality by the merchant. “This has become a problem,” says Lambat. “Fortunately, we work with excellent suppliers that minimize the risk of the merchandise not being in correlation with the received reference sample on which the order is placed.”
Assessing the future impact of the pandemic on the leaf sector, Lambat recalls the years 2014–2016 when the tobacco industry struggled with severe oversupply. “This was created by major buyers’ ‘bean counters’ who decided that manufacturers should not procure but de-stock to carry one year of inventory versus two years and minimize working capital,” he says. “As I respond to your questions, I am in lockdown in Turkey with most of the world in a similar situation. So this can go on for a long time.”
The lesson companies should learn from the coronavirus crisis, says Lambat, is about security of supply. While multinational manufacturers have the working capital to cope with the disruption, smaller players should consider partnerships with merchants that can ensure non-balance sheet security of supply, he suggests.

Bolstered by sufficient inventory of inputs and finished goods Philip Morris International expected to avoid a disruption to its supply. Photo: Philip Morris International
Two-months’ halt
Home to a state-of-the-art PMI cigarette/tobacco-heating unit factory and several prominent tobacco machinery manufacturers, Italy was among the hardest hit countries in the pandemic. On March 23, the Italian government extended its mandatory closure of nonessential commercial activities to heavy industry.
“The wise decision of our government, which perhaps came a little late, was very useful for the health of our population, and we are seeing and appreciating the good results now,” says Lorenzo Curina, chief operating officer and sales director of Godioli & Bellanti, a company specialized in leaf processing and primary equipment.
But economy is a different story, he notes. Production at Godioli & Bellanti was at a complete standstill for almost two months. “Now we have begun to work again—since April 28 at ‘full steam,’” says Curina. “With [the] corona[virus] being a pandemic, our international clients understood such a situation, and they have adapted to such an emergency. International solidarity!”
Throughout the crisis, Godioli & Bellanti kept in touch with its customers daily. “Thanks to smart working, ourselves and our engineers and our technicians operated locked down at their homes,” says Curina. “We utilized communication platforms to talk about work, to exchange technical opinions and to give each other psychological support in the sense of ‘don’t worry, our company is alive in spite of such an epidemic.’”
Italy’s statistical office estimates the economic damage of the lockdown at around €100 billion ($108 billion) per month in addition to a loss of added value of €27 billion. The country’s government has announced a €400 billion aid program for companies, which may also help some of the tobacco engineering firms affected by the crisis.

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Reviving Italy’s industries
Regarding the impact of the pandemic on his company’s supply chain, Curina distinguishes two phases: the period of deep lockdown and the current reopening. “During lockdown time, everything was slow: couriers, suppliers, providers, bankers,” he says. “Thank God we had in our warehouse most of the components and pieces necessary to continue assembly and production.”
Curina believes it’s to early to judge how the reopening will proceed, but he takes comfort from history. The greatest economic boom of the 20th century, Curina recalls, recurred after one of its greatest disasters—World War II. “I feel that people want to restart, want to work, want to show that they are alive,” he says.
The continuing travel restrictions, however, are an issue for Curina and his sales force as well as for his engineers and technicians. “This is a real problem and will be the last problem to be solved,” he says. “The pandemic is a world problem. Perhaps Italians will be authorized to fly out in the next few months while few countries where our customers live will still be locked down.”
Curina is cautiously optimistic that his country’s economy will recover. “I don’t have a crystal ball but today, Monday, May 4, is the first day we, as Italians, are authorized to begin production again, to open our factories just like before. If, in the next 15 to 20 days, the curves indicating the number of newly infected people and deaths do not rise, we can begin to cautiously think that the worst is over.”

Lorenzo Curina
E-cigarette delivery bottlenecks
The Covid-19 pandemic has also created considerable challenges for the vapor business. Because the pandemic originated in China where more than 90 percent of the world’s e-cigarette hardware is manufactured, the electronic nicotine-delivery system (ENDS) category experienced significant supply chain disruptions early on.
According to a report published by TMA in April, the coronavirus outbreak shuttered factories throughout Guangdong Province—the epicenter of China’s e-cigarette manufacturing industry—between January and mid-February 2020.
What’s more, the pandemic came on the heels of new restrictions on the online sales of vapor products in China to discourage underage access. As a result, many e-cigarette manufacturers were in the process of shifting sales to physical stores just when the pandemic hit. Coupled with the Covid-19 outbreak, the industry was hence dealt two heavy blows in a short time. By April 20, only a few enterprises in the ENDS industry had resumed production.
Horst Winkler
“The majority of technical components is being produced in China,” says Horst Winkler, spokesman of Verband des e-Zigarettenhandels (VdeH), a German association of e-cigarette retailers. “Since the corona[virus] outbreak there already led to extensive limitations and quarantine measures at the beginning of the year, there were delivery bottlenecks even before the pandemic reached Europe. Meanwhile, the China-based companies have recommenced manufacture under strict safety measures and are able to supply [their customers]. However, companies’ dispatch logistics are under enormous pressure, which causes further delays.”
VdeH is in continuous contact with its members in China. “We keep each other up to date with regard to the situation,” says Winkler. “As restrictions are increasingly being eased and the situation in China slowly begins to normalize, we expect the situation to improve in the short term.”
To comply with national regulations, most e-liquids for the German market are produced domestically or in other EU countries. When it comes to hardware, however, most countries depend heavily on China. “The production in Europe and especially in Germany is restricted to a few high-end devices that cannot replace Chinese products—neither in quantities nor in pricing,” says Winkler.

Cigarette consumption has likely increased as smokers cope with greater anxiety and fewer restrictions to indulge while cooped up at home.
Is vaping essential?
Distribution of sales outlets
presented another problem for the German vapor industry during the early weeks of the pandemic. The decision of whether vape shops could stay open because they provide an essential service was made at the federal, state and local community levels, creating a patchwork of inconsistent rules until all shops with sizes up of to 800 square meters were allowed to open on April 24.
“Some retailers tried to compensate for the complete loss of revenues with collection and delivery services. But even in places where such services were possible, only a fraction of the otherwise usual turnover could be generated,” says Winkler. “Nevertheless, it was important to show some presence to regular clients and to enable them to cater to their needs.”
Many vape shops fear for their existence. “This could have been avoided if politics had assessed the meaning of e-cigarette retailers in the primary care of the population correctly from the start,” says Winkler. “Some shops have been closed permanently, but we do not have any concrete data yet. We will probably be able to determine the impact of the crisis only in a few months.”
Without doubt, he concludes, online retail was the big winner. His organization observed a considerable increase in the quantities ordered through that channel—although the gain was partly offset by capacity limitations among shipping companies.
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.

June 1, 2020
Shots on Goal
Two tobacco plant-based vaccine candidates have entered the race for a serum against Covid-19.
By Stefanie Rossel

Photos: British American Tobacco
As the coronavirus pandemic continues to take a devastating toll around the world, the race for a vaccine against Covid-19 among pharmaceutical and biotech companies, universities, research institutes and other stakeholders has accelerated. According to a report by Verband Forschender Arzneimittelhersteller, the German association of researching drug manufacturers, there were more than 70 vaccine projects for the novel coronavirus SARS-CoV-2 globally in early April. The aim of such a vaccine is to create an adaptive immune response in the form of antigens in the vaccinated person that will protect against an invading microorganism and the disease it causes, in this case an infection with the coronavirus. Vaccines, which are biological preparations, are considered the most effective preventive measures against infectious diseases.
Coronaviruses, a group of viruses that belong to the family Coronaviridae, have always been around. Infections caused by other members of that family include severe acute respiratory syndrome (SARS), which appeared in 2002 to 2003, and the Middle East respiratory syndrome (MERS), which appeared in September 2012. On both occasions, vaccines were developed, but to date, none of them has received drug approval—in comparison with other infectious diseases, such as influenza and HIV, SARS and MERS produced relatively few and locally restricted cases, thus lowering the willingness to further invest in vaccine development. Nevertheless, this earlier research may now help scientists in their quest for an antidote against SARS-CoV-2, which, with its high transmission rate and resulting numerous deaths, is of a different caliber.
To combat the novel virus, scientists have a range of processes at their disposal. Depending on the disease-causing agents, how it infects the cell and how the immune system responds to it, they decide which type of vaccine might be the most promising. Current options include live attenuated vaccines, which use a weakened form of the virus or bacteria that causes a disease, and inactivated vaccines that contain bacteria or viruses that have been killed by a chemical treatment or heat. Subunit, recombinant, polysaccharide and conjugate vaccines use specific pieces of the virus or bacteria—like its protein, sugar or capsid. Finally, toxoid vaccines use a toxin made by the virus or bacteria that causes a disease.
In the production of vaccines, embryonated chicken eggs play an important role. In 1931, they were discovered to be the perfect bioreactors for growing viruses and thus the best tool to produce vaccines. Almost 90 years later, 95 percent of all flu vaccine doses still contain egg-grown viruses, according to the German Max Planck Society. It’s easy to imagine that this production process will quickly near its limits in the case of a pandemic that affects millions of people.

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Tobacco as a bioreactor
Enter tobacco. Since the early 2000s, the plant has proven its potential as a highly efficient biopharmaceutical producer of vaccines—more precisely, of recombinant therapeutical proteins. Basically, the process involves identification and reception of genetic sequences from a pandemic strain to produce a virus-like particle (VLP). VLPs resemble a virus, allowing them to be recognized readily by the immune system; however, they lack the core genetic material, making them noninfectious and unable to replicate. Before the genetic construct representing the protein of interest is inserted, plants are seeded, germinate and grow. They are then genetically modified with the VLP—or antigen—in a technique known as transient expression. With this transformation, plants incubate for several days during which they are reproducing the target protein. At this point, they are harvested and crushed to create a green juice slurry. This liquid passes through filtration processes and sophisticated purification techniques to produce a final product. Reportedly, the process, which employs Nicotiana benthamiana, a close relative of the tobacco type used for cigarette manufacture, can deliver a vaccine for testing in less than a month after production of the VLP.
In a virus outbreak such as the current one, rapid serum production of scale is vital. Two biopharmaceutical companies working with tobacco-based systems joined the race early on for a vaccine. Medicago, a privately held Canadian biotech company in which Philip Morris International bought a stake in 2008, in April announced that its candidate coronavirus vaccine could be ready for human trials by July or August; the company plans to submit a dossier to authorities to get approval for the drug by November 2021.

Kentucky Bioprocessing’s plant-based vaccine has several potential advantages over conventional serum production technology, including safety, speed of development and stability at room temperature.
Advantages over conventional technologies
David O’Reilly
The other player is U.S.-based Kentucky Bioprocessing (KBP), a subsidiary of British American Tobacco (BAT). The company’s candidate vaccine uses BAT’s proprietary fast-growing plant technology and TAP platform, a new system for vaccine production that allows antigen selection closer to the time it is needed to avoid mutations. The serum is presently also in the pre-clinical testing phase that is expected to finish soon. “We have been engaging with government agencies to bring our candidate vaccine to clinical testing as soon as possible,” explains David O’Reilly, BAT’s director of scientific research. On May 15, the company announced that it was ready to start testing its vaccine on humans once it gets approval from the U.S. Food and Drug Administration (FDA).
Through collaborations with government and third-party manufacturers, KBP hopes to produce between 1 million and 3 million doses per week from June, says O’Reilly. “We will be ready to start clinical trials in late June and start manufacturing in parallel. It is impossible to say when it will be available, and this will become clearer when we know what testing governments will require.”
The plant-based vaccine has several potential advantages over conventional serum production technology, according to O’Reilly. “It is potentially safer given that tobacco plants can’t host pathogens which cause human disease. It is faster because the elements of the vaccine accumulate in tobacco plants much more quickly and with high fidelity—six weeks in tobacco plants versus several months using conventional methods. The vaccine formulation KBP is developing remains stable at room temperature, unlike conventional vaccines, which often require refrigeration. And it reproduces the antigen with high fidelity every time without making unwanted changes.”
He is not worried about the frequent headlines about the progress of other conventional vaccine manufacturers. “This is noncompetitive, and BAT is fully prepared to work with other vaccine companies with our unique vaccine development technologies,” says O’Reilly. “As such, BAT is looking for help from governments to accelerate clinical trials to demonstrate the candidate vaccine is safe and effective. We also need help with downstream manufacturing in terms of conjugation and dispensing and are open to working with governments and other partners to build scaled-up manufacturing.”

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Long-winded approval process
Even though other candidate vaccines appear to be one step ahead, it doesn’t mean that they will be the first and only ones that become approved and commercially available. Each new vaccine project must go through a six-stage process to get approval by the FDA or the European Medicines Agency. The stages include analysis of the virus, design of the vaccine and animal testing in the pre-clinical phase, which is followed by trials with volunteers, approval procedure and mass production of the vaccine. Although the process has been significantly accelerated in recent years due to new technology and previous experience with serum developments against related viruses, it may nevertheless take up to 36 months—under normal conditions. Will the unprecedented dimensions of the Covid-19 pandemic speed up matters?
“Testing any vaccine candidate for safety and efficacy is paramount. This requires extensive and complex clinical testing and evaluation of the results,” O’Reilly explains. “During clinical testing and through pharmacovigilance, i.e., drug safety assessment, potential side effects can be identified. If they are serious then this is likely to mean the vaccine will not be authorized for use. Under pandemic emergency situations, regulators have the option of ‘emergency use authorization.’ The U.S. FDA authorized our ZMapp Ebola treatment through this pathway in 2014.”
Together with Mapp Biopharmaceutical, KBP developed an Ebola drug that came to be considered the standard of care after a small study suggested it might reduce mortality rates. Long-term studies, however, showed that the treatment didn’t provide the anticipated degree of protection, so it failed to receive permanent approval.

Each new vaccine project must go through a six-stage process to get approval by the FDA or the European Medicines Agency.
Costly development
Time can become the decisive hurdle in drug development. History has shown that the search for a suitable vaccine sometimes is too slow: In 2009, the swine flu outbreak quickly waned, leaving drug makers sitting on their vaccine. “That’s a real problem and it remains to be seen how quickly vaccines can be developed, tested and approved in the case of Covid-19,” says O’Reilly. “We must also remember that there are other lines of attack being developed such as treatments to reduce the effects of the disease once contracted. There’s also an emerging view that SARS-CoV-2 may be with us for some time and return every year in the way that the seasonal flu virus does. If this happens then vaccines will play an important role.”
Historically, just 6 percent of vaccine candidates end up making it to market, according to a Reuters report. “Vaccine development is tremendously challenging and complex. Most candidates will fail during development, so it’s great news that so many candidates are being developed for Covid-19. Of the 75 plus in development, hopefully enough will succeed to cover the world’s needs,” says O’Reilly.
Developing a vaccine is also an enormous investment. According to the U.S. Biomedical Advanced Research and Development Authority, development of a vaccine and treatment will cost $1 billion each. “We are in the early days of this, and the costs are not yet significant. Total costs will become clearer when we better understand the testing requirements going forward,” says O’Reilly.
While remaining a commercial operation, KBP intends to carry out its Covid-19 vaccine work on a not-for-profit basis. “The most important issue here is to find a vaccine that beats the virus,” O’Reilly says. “It is about collaboration for the greater good and the benefit of society at large. That’s why for Covid-19, we are operating on a ‘not-for-profit’ basis.”
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.

June 1, 2020
The New Normal

Photo: Taco Tuinstra
Shenzhen’s vapor hardware manufacturers have resumed operations, but it’s hardly business as usual.
TR Staff Report
The Covid-19 outbreak hit Shenzhen hard. From mid-January to mid-February, authorities ordered factories and offices in the southeastern Chinese city to suspend their operations to prevent the spread of the coronavirus. That had severe implications for many supply chains, including those for vapor products.
Shenzhen is the world’s workshop for a wide variety of electronic products ranging from cutting-edge drones to ordinary lightbulbs. Its factories produce not only Apple’s iconic iPhone but also the anonymous circuitry that powers appliances around the globe. Many of the world’s electronic nicotine-delivery system (ENDS) manufacturers, too, are based in Shenzhen.
Because China was the first country to be hit by Covid-19 in 2019, it was also the first to start easing its lockdowns. Most Shenzhen ENDS companies restarted their operations in the second half of February. However, the disruption of the lockdown combined with pre-Covid challenges—such as the Chinese government’s November 2019 directive to cease internet sales of vapor products—and new working requirements such as social distancing are presenting formidable obstacles for ENDS manufacturers as they resume operations.
Tobacco Reporter spoke with Amei Zhang, senior economic analyst and China specialist at TMA, about the outlook for Shenzhen as the world’s vapor product manufacturing capital.
Tobacco Reporter: Please illustrate with some statistics the importance of Shenzhen to the global vapor business.
Amei Zhang: Over the past decade, the e-cigarettes produced in Shenzhen accounted for 90 percent of global ENDS production. According to statistics of the Electronic Cigarette Industry Committee of the China Electronics Chamber of Commerce, as of August 2018, there were 678 e-cigarette factories in China and there were 1,558 companies operating in the “electronic atomizer” category. Shenzhen-based manufacturers account for 86.7 percent of those 678 makers.
How severe was the Shenzhen lockdown? Were businesses required to cease operations altogether, or could they continue manufacturing at a low level?
On the evening of Jan. 23, Guangdong Province initiated a first-level response to a major public health emergency, and as a result, all factories were closed until Feb. 10. During that period, none of them could continue manufacturing even at a low level. Many ENDS companies restarted their operations between Feb. 16–19 while some started later because they had to wait for approval from the government.

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By how much did the output of Shenzhen’s ENDS manufacturers decline following the lockdown?
There is no number regarding total output of ENDS production decline, but there is information about some specific cases.
The period between New Year’s Day and the Spring Festival on Jan. 24 is the traditional peak season for sales, but the outbreak of the coronavirus ended the peak season early. Electronic cigarettes companies faced difficulties in funding, sales and getting back to work.
Flow, a brand manufactured by Flowclub International, reportedly did not pay its employees for two months while [also] laying off 70 percent of its workforce. SnowPlus, another famous brand, laid off more than 50 percent of its employees. After the negative information about Flow became public, dealers began to sell many goods to pay off debts. Distributors reduced their product prices from CNY20 per piece to as low as CNY10 per piece while the official retail price of Flow is CNY39 per piece.
However, some brand-name e-cigarettes have proved very resistant to risks during the epidemic. Bode Electronic Cigarette for example on Feb. 18 started recruiting workers for more than 100 positions involving sales, operations, research and development, products and other departments.

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Do you expect customers to reduce their reliance on Shenzhen by sourcing more vapor products from other sources in the wake of the crisis? Are there alternatives to Shenzhen?
In my view, currently, it is nearly impossible for the ENDS customers to reduce their reliance on Shenzhen or find alternatives. The reasons are as follows: 1) Many of Shenzhen’s e-cigarette producers have been in business as producers of small electronic devices since the 1990s and have lots of experience conducting foreign trade; 2) the supply chain is located in Shenzhen, which provides geographic convenience for upstream, middle stream and low stream companies; 3) over the past decade, those Shenzhen companies have accumulated overseas customers and strong skills in design and manufacturing—characteristics that help them easily attract capital from the domestic market. In short term, Shenzhen’s ENDS manufacturers are unreplaceable.
There are some signs, however, that should not be neglected. In Indonesia, there are now about 200 producers and traders of new-type tobacco products, although the Indonesian government prohibited e-cigarettes in November 2019.
There are also signs that Shenzhen companies have adjusted their supply chains to deal with the high tariffs from the U.S. in 2018. They split accessories, declare the origin as a third country or simply set up a factory in a third country to avoid U.S. tariffs. But recently, the United States has begun to strictly investigate whether the origin of goods and the names of declared products are consistent with the actual situation.
Whether the e-cigarette manufacturing supply chain [will] be gradually transferred overseas remains a question.
How do you expect the crisis to impact the Shenzhen manufacturers in the future?
In this pandemic, larger and more competitive companies have more chance than small companies to survive. Therefore, the ENDS sector may reshape its current structure while small or less competitive companies are likely to merge, be acquired or go out of business.
It has been reported that Flowclub is now producing face masks, which may help the company to compensate for the losses it incurred during the lockdown.
Whether Shenzhen will recover its previous output is difficult to say.
June 1, 2020
Trump Cuts U.S. Ties With WHO, Cites ‘China’s Control’

President Donald Trump said Friday that the U.S. will be terminating its relationship with the World Health Organization. He said that the UN agency failed to adequately respond to the coronavirus because China has “total control” over the global organization.
He said Chinese officials “ignored” their reporting obligations to the WHO and pressured the WHO to mislead the world when the virus was first discovered, according to an AP story.
He noted that the U.S. contributes about $450 million to the world body while China provides about $40 million.
The U.S. is the largest source of financial support to the WHO and its exit is expected to significantly weaken the organization. Trump said the U.S. would be “redirecting” the money to “other worldwide and deserving urgent global public health needs,” without providing specifics.
May 29, 2020

Author: Staff Writer

Rules on social distancing make for a very different tobacco marketing season in Zimbabwe this year.

In the fights against smoking, the World Health Organization appears to measure success in bureaucratic rather than human terms.

Success in South America

Harnessing decades of experience in process instrumentation, Ian Benson sets out on his own.

Driving forward

Cigarette manufacturers are offering alternatives to smokers left in the cold by the EU menthol ban.

A matter of taste

Ban sparks innovation

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Providing more choice

Unwanted side effects

Smoking, nicotine and Covid-19: What is going on?

Evidence from Covid-19 hospital admissions

Evidence from human biology—does nicotine suppress the “cytokine storm”?

Where does that leave policy and practice?

The International Tobacco Growers Association is campaigning to help noncontracted farmers cope with the coronavirus pandemic.

Tobacco Reporter: Which leaf-producing countries will be hit hardest by the coronavirus pandemic?

Most tobacco sales today take place under growing contacts. To what extent do you expect the current crisis to change this?

What impact do you anticipate from the coronavirus crisis for the supply-demand of leaf tobacco?

How will this affect cigarette manufacturers, most of whom claim to have sufficient stocks?

Is the crisis an opportunity to rethink established supply chains and processes in the leaf-producing sector?

Please elaborate on ITGA’s campaign to help small, noncontracted growers.

Industry leaders relate how they have been coping with the coronavirus pandemic.

Increased demand

A lesson to be learned

Two-months’ halt

Reviving Italy’s industries

E-cigarette delivery bottlenecks

Is vaping essential?

Two tobacco plant-based vaccine candidates have entered the race for a serum against Covid-19.

Tobacco as a bioreactor

Advantages over conventional technologies

Long-winded approval process

Costly development

Shenzhen’s vapor hardware manufacturers have resumed operations, but it’s hardly business as usual.

Tobacco Reporter: Please illustrate with some statistics the importance of Shenzhen to the global vapor business.

How severe was the Shenzhen lockdown? Were businesses required to cease operations altogether, or could they continue manufacturing at a low level?

By how much did the output of Shenzhen’s ENDS manufacturers decline following the lockdown?

Do you expect customers to reduce their reliance on Shenzhen by sourcing more vapor products from other sources in the wake of the crisis? Are there alternatives to Shenzhen?

How do you expect the crisis to impact the Shenzhen manufacturers in the future?