Author: Staff Writer

Universal Completes Acquisition of Shank’s
Photo: Gajus
Universal Corp. has completed its previously announced acquisition of Shank’s Extracts, a privately held, specialty ingredient, flavoring and food company with bottling and packaging capabilities.
The acquisition expands Universal’s plant-based ingredients platform, adding to the company’s product offerings and growing the value-added services available to its customers by adding flavors, custom packaging and bottling, and product development capabilities.
Shank’s has a strong presence within the flavoring, extracts and bottling marketplace, with significant vanilla expertise, according to Universal Corp. In addition to pure vanilla extract products, Shank’s offers a portfolio of over 2,400 other extracts, distillates, natural flavors and colors for industrial and private label customers worldwide.
Shank’s employs more than 200 people and has a 191,000-square-foot manufacturing campus in Lancaster, Pennsylvania, USA.
October 5, 2021
FDA Issues Two Final Rules for Applications

Photo: Araki Illustrations
The U.S. Food and Drug Administration has issued two final rules for the premarket review of new tobacco products. These foundational rules provide additional information on the requirements for the content, format and review of premarket tobacco product applications (PMTAs) and substantial equivalence (SE) reports—two of the most commonly used pathways through which a manufacturer can seek marketing authorization for a new tobacco product from the FDA.
According to the agency, the finalization of these rules helps ensure that all future submissions contain the basic information needed to determine whether the new tobacco products meet the relevant premarket requirements to efficiently and effectively implement the Family Smoking Prevention and Tobacco Control Act.
“These final rules are important components of the FDA’s comprehensive approach to tobacco product regulation, which includes premarket application review, science-based use of the product standard authority and prioritized compliance and enforcement actions,” said acting FDA Commissioner Janet Woodcock in a statement. “The FDA is committed to protecting Americans from tobacco-related disease and death by ensuring that new tobacco products undergo appropriate regulatory review to determine if they meet the public health standards set by law. If new tobacco products do not meet the standards for these pathways, they cannot be marketed or sold in the United States.”
“Conducting review of new tobacco products before they can be legally marketed is a critical responsibility of the FDA,” said Mitch Zeller, director of the FDA’s Center for Tobacco Products. “These final rules will provide greater clarity and efficiency in review of new tobacco products by describing information that any company must provide if they seek to market a new tobacco product in this country.”
On Jan. 19, 2021, the PMTA and SE final rules were displayed in the Federal Register but did not publish. On Jan. 20, 2021, a memo from the White House Chief of Staff ordered the withdrawal of any rules that did not publish in the Federal Register by noon on that day. Therefore, these final rules were withdrawn at that time. The rules displaying today reflect clarifying changes made from the previous versions but no significant substantive changes. Both final rules will publish on Oct. 5 and are effective Nov. 4. Beginning on the effective date, applications submitted through these pathways must meet the requirements described in these final rules.
October 4, 2021
Estades Re-Elected as Cigar Association Chair
Javier Estades (Photo: Tabacalera USA)
Javier Estades, president and CEO of Tabacalera USA, has been reelected as chairman of the Cigar Association of America (CAA) for a three-year term. Estades previously served as chairman from 2016 to 2020.
“Javier Estades has always just been one of those people who gets it,” said CAA President Craig Williamson in a statement. “When he stepped down as chairman, I said that we would miss his leadership, affable demeanor and steady hand, and now I am thrilled to welcome Javier back as our chairman once again.
“Challenges remain ahead for our industry, but with Javier’s leadership and our continued commitment to speaking as one voice for the cigar and pipe tobacco industry, I know we will navigate the days, months and years ahead successfully.”
“It was an honor to serve as chairman of CAA, and I am excited to once again join my partners in industry to lead this century-old association,” said Estades. “We continue to face a perfect storm of regulatory intervention, increasing tax burdens and evolving industry trends. We will have to join together to preserve our industry for future generations.”
October 4, 2021
First Lawsuits Filed Over Marketing Denials

Turning Point Brands has challenged the Food and Drug Administration’s orders that denied some of the company’s products access to the U.S. market. The company first filed a petition for review with the U.S. Court of Appeals for the Sixth Circuit. TPB then filed an emergency motion to stay the FDA’s order to remove TPB’s products from the market.
TPB is asking the court to review the FDA order “on the grounds that it is arbitrary and capricious, an abuse of discretion, contrary to the Federal Food, Drug and Cosmetic Act, as amended by the Family Smoking Prevention and Tobacco Control Act of 2009, and otherwise not in accordance with law.” The company requests the court “vacate or modify” the FDA order and asks that TPB be allowed to “continue to market the products subject to the challenged order.”
TPB accuses the FDA of moving the goalposts for data needed to receive a marketing order based on what the agency “learned” from the “review [of] PMTAs for flavored ENDS so far,” according to the stay. TPB noted that the “North Star of administrative law” is that agencies cannot induce regulated parties to rely on “agency representations about regulatory requirements,” then penalize them using the previously unannounced criteria after the fact.
“But that is precisely what FDA did here,” the stay motion states. “[The] FDA reasoned that TPB failed to conduct ‘a randomized controlled trial and/or longitudinal cohort study’ or other studies performed ‘over time’ to show that TPB’s specific flavored products help adult users stop smoking more than tobacco-flavored products do. Yet FDA previously deemed these studies unnecessary.”
Bidi Vapor and at least one other company have reportedly filed similar suits.
October 4, 2021
‘Tobacco firms breached Belgian competition law’

Photo: Schlierner
Belgium has charged four cigarette manufacturers with breaching competition law by exchanging information of future prices to wholesalers, reports Reuters.
The Belgian Competition Authority (BCA) identified the firms as subsidiaries of Philip Morris International, Imperial Brands, Japan Tobacco and British American Tobacco, which together account for 90 percent of cigarette consumption in Belgium.
“The competition prosecutor alleges the existence of anti-competitive practices that lasted for several years and consisted in repeated exchanges of information on their future prices through wholesalers,” the BCA wrote in a statement.
It said that, through the wholesalers, they received information on the future prices of competitors.
A formal inquiry started in May 2017, followed by raids a month later as part of the investigation.
October 4, 2021
Troubled Waters

A flat corporate hierarchy and short lines of communications helped Glatz Feinpapiere cope with the coronavirus pandemic disruptions. (Photo: Glatz Feinpapiere)
The cigarette paper sector is coping with rising costs for raw materials, energy and transportation.
By Stefanie Rossel
Paper manufacturers have learned to cope with the pressure brought about by slumping global cigarette consumption and the simultaneous rise of paperless next-generation products. Since 2013, worldwide sales of combustible cigarettes have decreased every year, with consumption standing at 5.06 trillion cigarettes in 2020, down 3.7 percent from 2019, according Euromonitor. In 2019, the combustible cigarette category accounted for an estimated 95 percent of the global tobacco market, down from 94 percent one year previously.
As if this hadn’t been enough, Covid-19 presented a range of further challenges for paper suppliers. “On top of [the shrinking global combustible cigarette market], the situation this year has been exacerbated by container shortages, resulting in higher raw material prices and delivery delays,” says Omar Rahmanadi, CEO of Indonesian cigarette paper maker BMJ. “Nonetheless, like Albert Einstein once said, ‘In the middle of difficulty lies opportunity.’ The global crisis has forced many buyers to revisit their sourcing strategy, which has subsequently opened new business opportunities.”
Katrin Hanske
“Security of supply is even higher on the agenda since the Covid-19 crisis,” says Katrin Hanske, vice president and general manager of SWM’s Tobacco and Alternative Solutions division. “The cigarette paper manufacturers have to ensure a high level of service and quality and must be even more agile in a rapidly changing environment. Having a global footprint and a strong global supply chain is a true advantage to serve our customers located all around the globe.”
“Like the whole world, we were also not prepared to face the challenges of a worldwide pandemic,” says Nina Ritter-Reischl, CEO of Glatz Feinpapiere in Germany. “However, we were able to quickly adapt to the new situation, especially due to our flat hierarchy and short lines of communication. Particularly during the first months of the pandemic, we were faced with high demand for our papers, so we quickly increased our capacity by adapting flexible working hours or shift systems. In combination with the new sanitation and distance regulations, this was a challenge of its own.”
Coping with Costs
Rising prices for raw materials and energy, too, are impacting cigarette paper producers. “The global cigarette paper market in 2021 is dominated by a rapid increase in the costs for pulp,” says Ritter-Reischl. “From January to August, the costs for short fibers have increased over 70 percent and the costs for long fibers over 50 percent. This rapid increase is joined by rising costs for transportation, energy, chemicals and additives in general. Worldwide logistics and workflows still suffer from lockdowns of the Covid-pandemic. Therefore, the cigarette paper industry, just as the paper industry worldwide, is struggling with unexpected high costs, transportation challenges and the consequences of Covid.”
As a consequence of this development, SWM raised prices by up to 15 percent across its engineered papers portfolio on July 1, 2021. The increases, the company said in a press release, were a direct result of sharp rises in raw material prices, with market wood pulp costs up by 50 percent in the past six months. “Largely because of the Covid-19 pandemic, 2020 saw a lower than expected demand for wood pulp and higher inventory levels,” SWM commented. “Since Q4 2020, demand in Asia has recovered strongly, driving inflation and a fast decrease in global inventory levels. Supply levels have turned toward Asia, leading to one of the sharpest price increases in recent history. In addition, polymer prices and packaging material costs remain highly volatile. At the same time, shipping companies are capitalizing on high demand following periods of congestion to leverage their pricing power as well as providing limited visibility on freight rates and special surcharges.”
Although heated-tobacco products represent less than 2 percent of global tobacco retail volumes, according to Euromonitor, they will likely have an impact on the paper business, predicts Rahmanadi. “Heat-not-burn [HnB] products have disrupted the conventional cigarette industry,” he says. “This will undoubtedly disrupt cigarette papers as well. This development requires us as a specialty paper manufacturer to intensify our innovation to support the growth of HnB products.”
Trend Toward Sustainability
Despite current challenges, cigarette paper manufacturers remain optimistic. New business opportunities, they agree, are about to arise from tobacco companies’ focus on sustainability. “This is a trend and customer need we can serve, as it is in our genes,” says Reischl. “As a family-owned company with more than 135 years of history, we are sustainable in more than one way. Not only do we live and work carefully with the resources that nature is giving us—from water quality, emission reduction to energy savings, we [also] yearly reduce our footprint. We are also a sustainable partner for all our business partners, suppliers as well as customers.”
Rahmanadi sees big opportunities in developing a paper-based material that can replace single-use plastics, not necessarily exclusive to the cigarette industry. “The global pandemic has demonstrated that people have the capability to tolerate changes more than what they thought they could. This could mean that people might be willing to sacrifice convenience for environmental sustainability by using paper-based materials instead of plastics, among others,” he says.
“With the EU’s 2019 single-use plastics directive, paper filters made from cellulose fibers represent a great sustainable alternative for the industry,” notes Hanske. “They provide many benefits being an efficient plastic-free solution made with 100 percent renewable raw material, leaving no trace thanks to its faster degradation. We also observe that the industry is looking to use more natural materials for their packaging. It is again an opportunity for SWM to put decades of know-how at the service of the market.”
According to Hanske, SWM is ready to serve its customers no matter where the market takes them. “Beyond cigarette papers, the priority at SWM today is to offer the technical solutions needed by our customers to adapt and grow their business, be it in the traditional cigarette market or in the developing spaces like heated-tobacco products, smokeless or cannabinoids.”
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.

October 1, 2021
Australia to Crack Down on Nicotine Imports

Photo: amazing studio
Effective today, Australian Border Force Agents will have the power to intercept vaping products sent from overseas, reports Filter. Vapers who import nicotine illegally into Australia risk fines of up to AUD222,000 ($161,070).
Australia regulates nicotine for vaping as a medicine. An Australian smoker looking to switch to vaping must visit a doctor and get a prescription. The pharmacy then has to stock the desired vaping product or be able to deliver it. To get around the prescription requirement, many vapers have been importing their products from overseas.
The new rules are meant to end that practice.
Therapeutic Goods Administration (TGA) head John Skerritt said the ban was to prevent people from taking up nicotine vaping.
“There are a lot of tobacconists and convenience stores, and even things like sex shops, who are selling these products illegally at the moment,” Skerritt told ABC Australia.
“Especially young children; we’ve had many reports of schools, in fact, some even year 7 students, kids who are 11, 12, 13 using high levels of nicotine vapes.
“The trend is on the up in Australia.”
Australia’s prescription model has attracted heavy criticism from tobacco harm reduction proponents, given that combustible cigarettes—which are far more harmful than vapor products—remain readily available as consumer products. The policy will keep smokers smoking, drive vapers back to cigarettes or encourage consumers to purchase illicit products, according to critics.
“The people who will be most affected will be the people who are currently smoking and who decide they want to switch to vaping,” said Alex Wodak, director of the Australian Tobacco Harm Reduction Association.
“Some people who are currently vaping will undoubtedly go back to combustible cigarettes.”
About 2.5 million Australians still smoke, with around 21,000 smoking-related deaths every year. There could be up to 600,000 vapers in Australia, according to some estimates.
October 1, 2021
PMI Closes Business Transformation Credit

Photo: alswart
Philip Morris International has entered into an agreement for its first financing instrument following the issuance of its August 2021 Business Transformation-Linked Financing Framework. The new revolving credit facility provides for borrowings up to an aggregate principal amount of $2.5 billion and expires on Sept. 29, 2026, unless extended as per the terms of the credit agreement.
“We are pleased with the broad engagement and support of lenders for our first business transformation-linked financing instrument,” said Emmanuel Babeau, chief financial officer at PMI. “This credit facility further reinforces our industry-leading transformation and our commitment to accelerate the end of smoking and to use our strong capabilities to develop products that go beyond nicotine and have a net positive impact on society.”
Consistent with the company’s framework, the facility includes business transformation-linked pricing adjustments based on progress on two of PMI’s most ambitious and strategic business transformation metrics: PMI’s smoke-free/total net revenue percentage and the number of markets where PMI’s smoke-free products are available for sale. The adjustments may result in the reduction or increase in both the interest rate and commitment fee under the credit agreement if PMI achieves, or fails to achieve, certain specified targets.

This credit facility further reinforces our industry-leading transformation and our commitment to accelerate the end of smoking.
Emmanuel Babeau, chief financial officer, PMI
“Investors, lenders and other stakeholders can play an important role in driving change by encouraging and supporting companies that are committed to transform and improve their impact on society,” said Jennifer Motles, chief sustainability officer, in a statement. “We look forward to continued engagement with our stakeholders in order to further accelerate our smoke-free transformation and set an example for other companies, both inside and outside our industry.”
The facility replaces PMI’s existing $3.5 billion revolving credit facility, which was set to expire on Oct. 1, 2022, and was terminated effective Sept. 29, 2021.
October 1, 2021
A Paradigm Shift

Photo: BAT
Contributed
For years, smokers weren’t interested in supposedly safer cigarettes. There were some attempts by R.J. Reynolds in the 1990s with a “heated not burned” cigarette in the U.S. (under the brand name Eclipse), Germany (HI.Q), Sweden (Inside) and Japan (Airs). But the time seemingly wasn’t ripe for novel products.
Instead, the tobacco industry entered an era of consolidation, the majors embarking on a large acquisition spree to expand their sales and distribution reach and to build on the popularity of global brands. The alcohol companies followed a similar strategy. The one exception was Swedish Match, which sold off of its cigarette interests to prioritize less harmful snus. That was before the EU decided to impose a ban on the product.
The emergence of vaping technology, alongside the continuing focus on the health impact of smoking and an increase in regulatory restrictions saw the arrival of startup companies like Blu, Ploom (now Juul), NJOY, E-Lites and Ruyan. These businesses were at the forefront of starting what Swedish Match originally envisaged—a widespread transition for smokers from tobacco to alternative nicotine-delivery products.
The tobacco majors stood briefly on the sidelines but quickly began acquiring many of these businesses and renewing their investments in the previously trialed heated-tobacco technologies. Philip Morris International led the way, soon publicly proclaiming its intentions for a “smoke-free future” and committing to transition smokers to less harmful products. Indeed, PMI’s latest acquisitions in the pharmaceutical sector, including those of OtiTopic, Vectura and Fertin Pharma, are intended to transition their business even beyond the nicotine segment.
But prevailing public perceptions of the tobacco industry are slow to change, and with increasing attention on environmental, social and governance (ESG) issues, many investors have taken a restrictive approach toward tobacco stocks. Whether or not compounded by the disruptive threat of new challenger technologies, tobacco stocks have shed circa $300 billion over the past five years. This is despite the industry’s history of paying generous dividends, which in theory should attract investors. Similarities with “stranded assets” in the oil, gas and coal-mining industries immediately come to mind.
There is already a noticeable difference in valuations between faster and slower transitioning tobacco companies, skewered in favor of the more active ones. The meteoric rise of Juul (albeit one that has now somewhat deflated) and the explosive valuations afforded to the likes of Smoore and RELX are also indicative of where investors see the future value in nicotine businesses.
Increasing public health concerns and huge consumer demand for harm reduction products, set against a complex regulatory landscape, fuel the reduced-risk product (RRP) categories.
PMI, Altria and BAT are prominent in outlining their significant investment in and commitment to a portfolio of RRPs and their plans to transition smokers away from combustible products. While Japan Tobacco may have appeared to prioritize combustibles, recent developments suggest an intention to increase its presence in the RRP category too. Imperial Brands, while still undergoing a change in the senior management team, is following a similar strategy.
Tobacco companies are increasingly becoming lifestyle companies with broad product offerings but streamlined brand portfolios.
Although not widely commented on, this development and the plans that the tobacco majors seemingly have for the RRP category will have significant consequences for a number of industry participants, not least tobacco leaf growers. Prominent tobacco-producing nations, such as Malawi and Zimbabwe, will therefore face significant challenges and will likely need to restructure their entire economies.
As a result of these developments, tobacco companies are increasingly becoming lifestyle companies with broad product offerings but streamlined brand portfolios. PMI is the most ambitious, trying to converge lifestyle and pharmaceutical categories focusing on inhalation technologies, benefiting from PMI’s expertise in this area. However, the acquisition of U.K.-based Vectura met with protests. On the other hand, PMI’s acquisition of OtiTopic, a U.S. respiratory drug delivery development company did not trigger such a strong public outcry. While Japan Tobacco has long had a pharmaceutical division, no areas of overlap or corresponding synergies with the tobacco business have been made apparent.
The entrepreneurial small-size and mid-size enterprises, who kickstarted the vaping industry from the grassroots, initiated the transition we’ve seen in the last 10 years. At the outset, public health and tobacco control activists in many countries considered grassroots vaping companies to be a welcome alternative to the large tobacco multinationals. The majority of those early vaping companies were preoccupied with product launch, sales and distribution and overlooked the importance of the public policy and regulatory arena. Many, such as Blu, Ploom, E-Lites, Logic and Juul, then accepted tobacco industry investment, but this led to a negative view toward the category for many in public health and tobacco control.
Seemingly the stigma associated with the tobacco industry—the “Big Tobacco” factor—quickly attached itself to the vaping industry.
It seems only a matter of time before history repeats itself in the cannabis industry. Altria, BAT, PMI and Imperial Brands have all made investments in cannabis. Whether a preemptive step or not, it’s certainly a cost-effective manner to understand the sector and thereby be positioned to participate as and when restrictions come to be lifted.
Only a few years ago, the tobacco industry was considered to be a dinosaur set for extinction. Some industry participants, whether encouraged by early successes of vaping businesses or otherwise, took on the challenge and are reinventing themselves as lifestyle companies, and PMI is daringly entering the pharmaceutical sector. Those that are prepared to transition away from combustible tobacco products have been given a new and exciting line of life.
The tobacco industry is only at the beginning of its paradigm shift. Special efforts to engage with regulators—which are not only the industry’s biggest partner but will ultimately decide on the success of the “new nicotine” sector—will be required. It seems likely that those industry players who make those efforts and who experiment with new technologies, new products and new business models will be those best placed to thrive in the future.
This article was contributed by GMTL, a leading risk advisory, due diligence and corporate intelligence firm headquartered in London.
October 1, 2021
A Versatile Tool

Photo: IOTO
Reconstituted tobacco can help cigarette manufacturers reduce waste and control cost. It is also a useful tool for product design. Most recently, recon has played an instrumental role in the development of tobacco-heating products. Perhaps less well known are the further environmental gains that have been brought about by refining reconstituted tobacco processes. Tobacco Reporter spoke with representatives of IOTO and SWM to discuss the latest developments in the field.
Bruno de Veyrac
A Diminished Carbon Footprint: SWM Reduces Its Dependence on Fossil Fuels
In August, the Physical Science working group of the International Panel on Climate Change (IPCC) published its contribution to the Sixth Assessment Report of the IPCC, and it made scary reading. At the same time, however, it helped reinvigorate the environmental debate and encouraged us all to run informal audits on our own carbon footprints and those of the organizations, companies and industries with which we are associated.
An environmental audit of the tobacco industry would prove to be incredibly complex, but one thing is obvious: the industry’s positive developments are often brought about by a desire to save costs. And one of the prime examples of this has been seen in the development of reconstituted tobacco, which is formed largely from tobacco that would otherwise go to waste.
This is well known. But what is probably less well known is that, during the 40 or so years the industry has been using reconstituted tobacco, further environmental gains have been brought about by refining reconstitution processes. In answer to a question posed during an email exchange in August, SWM said that it had decreased its CO2 emissions by 140,000 tons during the past six years following the installation during 2014 of a biomass boiler at its LTR production site in France. That is apparently the same environmental advantage as would be achieved by cancelling 140,000 round-trip flights from Paris to New York.
According to plant manager Antoine Uzu, the biomass boiler, which has reduced the plant’s dependence on fossil fuels, operates on locally sourced wood harvested from sustainable, well-managed forests and supplies the steam needed to operate the plant’s machines 24 hours a day. Additionally, the hot water generated during the production process is used for heating some of the company’s buildings, and SWM’s LTR production site strategy is to continue to reduce its fossil-fuel consumption until, within two years, it will have all of its buildings heated using renewable energy—what would otherwise be thermal losses from its renewable energy-driven process. And, as part of its global Operational Excellence program, it is studying whether it would be possible to use by-products of its own manufacturing as fuel for the biomass boiler, an exciting prospect that would reduce its waste production while increasing the share of renewables in its energy consumption.
In summary, what you have here is a process largely driven by renewables in which tobacco that would otherwise have to be disposed of is being reconstituted and returned to the tobacco manufacturing process, and the prospect that the waste from the reconstitution process will be used to help drive that process. Little wonder then that Bruno de Veyrac, director of NGP [new-generation products] & Recon at SWM, described the reconstitution process as working on the principles of the circular economy by adding value to tobacco that would otherwise be difficult to use by providing for a better control and specification of traditional tobacco products, and by enhancing the tobacco so that it can be used as the raw material for reduced-risk, heated-tobacco products (HTPs).

SWM has decreased its CO2 emissions by 140,000 tons following the 2014 installation of a biomass boiler at its LTR production site in France. (Photo: SWM)
Another way in which reconstituted tobacco might be thought of as contributing to the positive environmental credentials of the industry is that it can be used in traditional-cigarette manufacturing facilities without the need for modifications, and it allows companies to start manufacturing HTPs using as much as possible of their existing assets. In part, this is because it is delivered in the same sizes of lamina and strips as is raw tobacco and in the same C48 cases. But it is also because of the advantages that have accrued from SWM having upgraded the quality standards of its LTR factory and having invested significantly in its analytical laboratory.
Meanwhile, special reconstituted tobacco products have been developed to help smaller manufacturers move more easily into the production of HTPs by making it unnecessary for them to undergo major research and product development programs. Bruno Stefani, product manager of heated-tobacco products at SWM, said his company had developed a portfolio of ready-to-use augmented tobaccos, each of which had been developed using the company’s expertise in aerosol generation—expertise that had been built up during a seven-year research and development program and that was based on the selection of the right tobacco grades and their processing into high-quality materials.
SWM’s reconstituted-tobacco filler substitute Nexfill allows manufacturers to replace part of their filler tobacco and offers security of supply at a time when deliveries of raw material might be interrupted.
The major use of reconstituted tobacco remains, of course, as a component of traditional cigarette blends where it is used to help with blend design and in contributing positively to smoke delivery controls. De Veyrac pointed out that reconstituted tobacco was a convenient tool to help manufacturers better comply with existing regulations and to help the industry prepare for more demanding regulations in the future.
And as de Veyrac pointed out, such future regulation could include a requirement by the U.S. Food and Drug Administration that nicotine deliveries are tightly controlled. Given such a situation, he said, reconstituted tobacco could be used to help reduce nicotine deliveries. The key advantage of SWM’s reconstitution process, which is based on the paper-making process, was that it worked on the basis of separating the fibers and the extract, and then adding back the extract, at which point various compounds, such as nicotine, could be removed or their level controlled. Otherwise, other reconstituted botanicals with no nicotine could be added to blends, alone or in combination with reconstituted tobacco.
Specifically, SWM offers two reconstituted-tobacco filler substitutes that were launched two years ago under the name Nexfill, one lemon-style and one orange-style flue-cured Virginia product. De Veyrac said these products had been popular from the start because they allowed manufacturers to replace part of their filler tobacco but that they had come into their own recently because they offered security of supply at a time when deliveries of raw material might be interrupted, such as during the current pandemic. Two other Nexfill products are on their way. Nexfill Oriental, which has been developed recently, and Nexfill Burley, which is still under development.
Not surprisingly, given the above, de Veyrac seems confident about the future. The flexibility of the reconstitution process meant that it was capable of helping the tobacco industry meet the challenges it was facing with regard to the need for waste management and recyclability, he said. SWM today offered a wide range of products for the manufacture of cigarettes, cigars, cigarillos and NGPs. It had also developed its product and service portfolio, which included prototyping and scientific support in developing HTPs. From the new NexFill family of grades to special grades for HTPs, and reconstituted botanicals, innovation is to the fore more than it ever has been. —G.G.

Hemp cut rag (Photo: IOTO)
Herbal materials present new opportunities for reconstituted products.
It would be wrong to give the impression that homogenized herbal materials make up anything but a small fraction of the market for the various reconstituted plant-based products that, mostly and traditionally, have been used in tobacco production. Nevertheless, it is difficult not to become caught up in the buzz that surrounds these materials.
In the past, reconstituted tobacco has been the utilitarian product par excellence. It has played all manner of important—sometimes vital—roles in the development of tobacco products, most recently in respect of heat-not-burn (HnB) products, but it has done so largely out of sight; it has tended, for various reasons, to hide its light under a bushel.
Reconstituted herbal materials, however, partly because of their range and, sometimes, their rather exotic constituents, but mostly perhaps because they offer a wealth of new opportunities, seem to be destined for the spotlight. During an email exchange earlier this year, Helder Tullio, director of operations at IOTO International, the U.S.-based and Brazil-based manufacturer of homogenized wrapper, cut filler and binder for the smoking industry, told Tobacco Reporter that his company had already manufactured herbal sheets from many different materials, including yerba mate, chamomile, sage, cocoa, lemongrass, coffee, hibiscus, clove, stevia and black, green and white tea. “We can produce herbal blends according to our customers’ demands,” said Tullio. “IOTO is committed to partner with our customers for the development of reconstituted herbal products according to their needs. Some herbal materials we have manufactured were suggested by our customers.”
This, of course, raises a question about what determines whether a particular herb can be made into a homogenized product. Naturally, it has to be readily available in big enough quantities, but are there other factors, such as fiber structure? “The cell wall composition and fiber structure are the main factors that determine the conversion of the herbal materials into reconstituted sheets,” said Tullio. “However, due to our process flexibility and expertise to adapt our formulas, we have succeeded even when using soft materials, such as hibiscus flowers.”
One of the things that I found most exciting about the availability of such a range of reconstituted herbal materials and the potential for expanding that range was the fact that, in a press note earlier this year, IOTO talked of being able to accommodate smaller initial production runs. This clearly has the potential to attract entrepreneurs who could take such materials into new markets and new areas. In fact, Tullio said that IOTO could work with production runs of as low as 50 kg, which would help small and new companies get a foot on the ladder leading to increasing volumes.
The press note issued by IOTO earlier this year announced that the company had expanded its herbal offerings to include U.S.-produced premium reconstituted hemp sheet. Demand for reconstituted hemp wrappers has been increasing significantly in the U.S. and it is fortunate that, due to its high fiber content, hemp is easily converted into homogenized sheet. Additionally, there is a plentiful supply of hemp in the market, and IOTO’s process can accommodate different parts of the hemp plant, such as its flowers, leaves and stems.
“All the hemp materials used by IOTO are tested for THC content, heavy metals, residual pesticides and presence of microbes to guarantee the best quality products to our customers,” said Tullio. “A full cannabinoids spectrum analysis is also performed to guarantee the highest quality of hemp.”
Testing the hemp for THC content is important to ensure that the level is below the legal definition of marijuana because IOTO is based in North Carolina where marijuana is not legal. However, given the similarities between hemp and marijuana, the company says it will be able to process marijuana when and if it is made legal there.
IOTO can provide reconstituted hemp on bobbins for use in the production of wrappers and cones, and the company can provide it in square sheets, threshed sheets and cut rag for use as filler materials. In addition, since IOTO’s process is patented, it is able to sell its equipment and license customers to produce their own homogenized sheets.
So what is the outlook for reconstituted hemp? Well, according to Tullio, demand will certainly grow in every country in which hemp and or cannabis is legalized. Before hemp was an alternative, tobacco and paper were the rolling products of choice for most RYO smokers, he said. But, once legalized, hemp naturally became an alternative because hemp wraps provided a flavorful, slower burn for hemp and cannabis users. Hemp wraps offered the advantage of retaining the terpenes and CBD naturally present in the plant, and they were being offered in the market in a variety of flavors, such as grape, pineapple, lemon and lime.
The reconstituted herbal sheet market is seen by IOTO as a growing one, not only in respect of hemp cigarettes but also for other nontobacco products, such as cocoa and tea. But Tullio said it was already a very competitive market, and to thrive in it, companies were adding a variety of flavors to their herbal products as a means of differentiating them.
Meanwhile, originally used as a tool to reduce waste and costs during cigarette production, reconstituted tobacco is now a key component of blends, in no small part because it can help manufacturers regulate nicotine levels and the chemical composition of smoke in line with the restrictions placed on tobacco product delivery levels. It can be used also as cigar binders and wrappers.
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.

October 1, 2021