Author: Marissa Dean

After Disposables

Photo: Image: Viktoria Ostroushko
It is opportune for the industry to revisit the fundamental purpose of vaping—harm reduction and providing a superior consumer experience.
By Douglas Ming Deng
Pro or against? It is undeniable that disposable e-cigarettes have been the most popular format in the market over the past four years. Despite earlier predictions of their imminent disappearance, recent events like TPE24 and Champs in February suggest that manufacturers and distributors are still committed to showcasing elaborate disposable models. With features such as increased puff capacity, larger screens and vibrant colors, there seems to be no limit to the innovations of the disposables they’re introducing.
However, changes are on the horizon, especially since the British government announced a ban on disposable e-cigarettes. The ban has sparked growing concerns among industry stakeholders regarding the life cycle of this category. While compliance has always been a central issue, the heightened emphasis on enforcement in the past months has prompted industry-wide apprehension. Yet, for those familiar with the evolution of vapor products, the shift in exterior designs should not be surprising given the industry’s history of transitioning from closed systems to open systems then to pods, pod-mods and now disposables within the past two decades.

At the TPE24 and Champs Trade show, numerous disposable products were exhibited with minimal differentiation among them. Instead of specifying their current preferences for an ideal e-cigarette, both distributors and shop buyers voiced their anticipation for what would become popular six months down the line. To predict the future trends of products, it becomes essential to unravel the reasons behind the success of disposables.
The affordability of disposables lowers the threshold, allowing for a smoother transition for those seeking to switch from combustibles to risk-reduced products (RRPs). Disposables possess clear advantages over device-based systems, particularly in terms of portability, while retaining key features such as noncompatibility of fake cartridges and adjustable coil voltage. In addition, they contribute to relative environmental protection with the increasing volume of liquid filled. However, the downsides of disposables are apparent. Firstly, their disposability sparks significant environmental protection debates, necessitating solutions that incur additional costs and subsequently leading to a general rise in the price of vapor products. Therefore, the next-generation vapor products will be sold at a higher price margin than the current disposables.
Recently, solutions like paper-based bodies with biodegradable plastic components have been introduced to disposable e-cigarettes. In the EU, regulations mandate the rechargeability of batteries in vape products, establishing a reusable device as the minimum standard for the next generation of e-cigarettes. Moreover, the widespread use of disposables among underage individuals has cast a shadow over the entire category since its inception. While recent reports suggest a decline, with some teenagers deeming vaping immature, the issue remains pertinent. If even a single producer persists in designing disposable vapes with toy-like appearances and cotton candy flavors targeting underage kids, the entire industry could face consequences. This negative externality has become more critical than ever, emphasizing the need for the industry to unite and reach a consensus on addressing these public enemies. It is the right time to reconstruct the value of the whole industry and shape a new image of vapor.
Noteworthy Changes
Since the beginning of 2023, the evolution of disposable e-cigarettes has undergone a remarkable surge. For many, the exterior appearance of these products has transformed so swiftly that some manufacturers express concern that their latest models could become outdated before even hitting the market. The size has shifted from compact to large, the weight from light to heavy and the e-liquid tank from small to enormous. The rapid evolution of disposables suggests that the category is approaching the culmination of its development.
One noteworthy change, above all, is the incorporation of screens on these products. While screens have appeared on vapor products before, recent developments significantly differ, particularly from those on open systems. Within just one year, screens have evolved from simple black-and-white displays to color ones then to TFT-LCD, and some brands have now introduced new products with LED touch screens. The on-screen features change from display of battery life and e-liquid contents to fancy animations ranging from alien UFOs shooting off to fireworks blasting, and they seem to emerge one after another. One might question: Are these high-end features really necessary for a disposable vape product priced at $30?
As a scholar closely studying the industry over the past two decades, I strongly believe that the integration of screens on disposable vapes marks a significant breakthrough in vape products and could mean the evolution of vapor toward an advanced step. Interactivity is poised to become the defining characteristic of next-generation e-cigarettes. This interactivity fosters a dialogue between end users and other stakeholders in the industry chain.
Currently, a major obstacle hindering the expansion of vapor to those who seek RRPs is the lack of communication among manufacturers, sellers, end users and regulators. When end users visit a shop, they often lack knowledge about why they are buying an e-cigarette and what product suits their needs. Shop assistants, with varying levels of expertise, recommend products, and some may lack technical knowledge about flavor differences. Neither end users nor sellers often realize that tobacco harm reduction (THR) is the real selling point of vape products. However, a smart device could facilitate communication between end users, manufacturers and sellers, allowing real smoking experiences to be reported to manufacturers for them to conduct consumer-oriented innovation. During my keynote speech at GTNF 2023 in Seoul, I emphasized the concept of a regulatory sandbox. Such a sandbox would only be viable with the presence of a smart vape device. It would enable vape products to be regulated in a closed loop, fostering innovation by allowing regulators to monitor real-time product testing. Enterprises would receive regulatory feedback promptly, adjusting their research and development accordingly. This approach enhances regulatory efficiency and ultimately builds trust among regulators, enterprises and consumers. Thus, the transition will be achieved from “wait and improve” to “test and innovate.”

In 2022, the introduction of the Lil Aible by KT&G was groundbreaking. This smart device seamlessly integrates the use of heated-tobacco products (HTPs), incorporating both granular and reconstituted tobacco, along with vape technology. The exterior of Lil Aible mirrors the trend observed in disposables today—a robust device featuring a high-definition touch screen. However, the interior features of Lil Aible offer a glimpse into the future of vapor products: the incorporation of an AI function powered by a robust digital CPU. This function not only empowers the e-cigarette to optimize the smoking behavior of each individual user, enabling them to control the total puffs consumed every day, but also enhances harm reduction capabilities. Moreover, the implementation of facial recognition on a smart vape device, when used with due consideration for privacy, can effectively prevent usage by minors. This technology alleviates the burden on regulators for monitoring purposes.
Furthermore, an AI-empowered device would revolutionize the flavoring process. Currently, manual flavoring is often considered an art, with the addition of various flavor chemicals relying on the blender’s personal taste and experience. However, in the era of digital flavoring, the process resembles coding basic substances through chromatographic fingerprints. The flavor can be precisely replicated on an AI smart vape device, a concept known as decoding. It’s crucial to recognize that e-cigarettes possess a natural electronic endowment, making them inherently suited for digital flavoring. In comparison to substances like alcohol or perfume, e-cigarettes have a distinct advantage in executing digital flavoring. This advantage is particularly pronounced in tobacco-flavored e-liquid, where manual methods may fall short of achieving promising results. The inherently possessed electronic capabilities of e-cigarettes may facilitate more straightforward communication between producers and users.
Computer Chips Vs. Potato Chips
Instead of dwelling on the next exterior appearance of e-cigarettes after disposables, it is opportune for the entire industry to revisit the fundamental purpose of vaping—harm reduction and providing a superior consumer experience. Shenzhen, China, renowned as the “Vape Valley,” possesses the capability to spearhead the creation of the next generation of e-cigarettes. During GTNF 2023, we delved into discussions about the future trends of vapor products. Moving forward, professional and technical forums like CORESTA or the Tobacco Science Research Conference serve as valuable platforms to gauge the direction of the next generation of vape products. It is in these forums that the industry can collectively shape the future while staying true to the core principles of harm reduction and delivering an enhanced user experience.
In the years to come, e-cigarettes will embody characteristics of both fast moving consumer goods and more advanced, versatile electronic durable goods. Rather than opting for radical change, the transition from disposables to next-generation devices will be gradual. Like I said during a 2023 industry conference in Shenzhen, involution might only lead to the production of “potato chips” instead of “computer chips.” While potato chips can satiate basic appetites, aiming for the sophistication of computer chips elevates the vape industry to a higher standard. It is crucial for the industry to recognize this potential, as failure to do so may result in being confined to the low-end recycling sector.
In conclusion, the narrative of disposable e-cigarettes mirrors the industry’s dynamic spirit—a story of adaptation, innovation and a relentless pursuit of excellence. The application of screens on disposables might disclose the future of vapor. Standing at the precipice of evolution, the industry is not merely chasing trends but actively shaping a future where harm reduction, end user-centric experiences and technological advancements harmoniously coexist. The tale of disposables is but a chapter in a grand saga, with each exhale marking a step into a future where vaping transcends boundaries and emerges as a beacon of possibilities.
Douglas Ming Deng is a professor of next-generation products industry studies at Yunnan University.

March 1, 2024
Chilling Effects

Image: Jolita Marcinkene
Is a menthol ban appropriate for the protection of public health? Hopes, concerns and a reality check
By Cheryl K. Olson
Is a U.S. menthol ban finally coming? The 2009 Tobacco Control Act exempted menthol cigarettes from its blanket ban on candy and fruit flavors. Menthol was left out, according to CNN, due to “serious lobbying from the industry.”
As the Washington Post reported, plans to finalize the rule have been made—and postponed—multiple times by the Biden administration. The announcement of a finalized rule was planned for this month.
The Food and Drug Administration first announced its “proposed product standards to prohibit menthol as a characterizing flavor in cigarettes” back in April 2022. The stated purpose? To reduce appeal to and experimentation by youth that will lead to regular smoking addiction and to reduce disease and death among adults via fewer cigarettes smoked and more quitting. A ban is also “expected to reduce tobacco-related health disparities.” The ban would target making and selling not individual possession or use.
Concerns that banning menthol could exacerbate waning enthusiasm for Biden among Black voters appears to be one factor behind the delay. (Hoping to capitalize on this, one conservative group is reportedly testing menthol-focused ads on Black South Carolina primary election voters.) Four in five Black adults who smoke report choosing menthols.
The National Association for the Advancement of Colored People, a venerable advocacy organization for Black Americans, supports a federal menthol ban. In a Jan. 12 press release, its senior vice president of global policy called out “the relentless predatory marketing of menthol-flavored cigarettes, [which] has inflicted devastating consequences on Black communities.” This included ads in Black-oriented media, such as Ebony magazine, and sponsored events, such as the Kool Jazz Festival.
Other organizations, such as Reverend Al Sharpton’s National Action Network, have argued against singling out menthol for a ban. Sharpton has expressed concern that a menthol focus could increase over-policing of Black communities, pointing to the New York City police killing of Eric Garner, who was suspected of selling “loosie” untaxed cigarettes.
“The illicit market is always open and doesn’t check IDs.”
Why Menthol?
In the U.S., menthol has been added to cigarettes for at least 100 years, at times promoted as throat-soothing for coughs and colds. National government surveys find that, as smoking rates overall trend down, the proportion of menthols smoked has crept up.
These surveys show that menthol smoking is disproportionately higher among subgroups of people regulators consider disadvantaged or vulnerable. This includes Black and Hispanic adults who smoke, young adults, women and persons reporting serious psychological distress.
Concern that menthol may be a drag on cessation rates has boosted support for a ban. Because it reduces irritation, menthol may make it easier to start smoking. It’s used more often by people who smoke intermittently or experimentally. Researchers have called for more studies to parse and prove a causal role for menthol in increasing smoking and deterring quitting.
In this century, smoking rates have been stagnant among African-American adults who smoke. A 2020 analysis of U.S. studies did not find an overall effect of menthol on smoking cessation but did find that among African-Americans who smoked, use of menthol was linked to 12 percent lower odds of quitting.
Can bans help people quit smoking? To some degree, yes. Pooled results from a 2024 systematic review and meta-analysis of English-language menthol ban studies found that 24 percent of those who smoked menthols had quit cigarettes a year or two later. But results varied widely; bans took place under a variety of conditions, and most of the studies included had small or unrepresentative samples.
For example, a survey of San Francisco’s ban of menthol and other flavors in all tobacco products found decreased flavored e-cigarette and cigar use and a slight uptick in smoking. The study used a small convenience sample of 247 young adults. Even rigorous economic studies of bans admit to trouble tracking illicit and cross-border sales and other workarounds.
Regulators are aware of the need for better research. The FDA recently awarded a $3.6 million grant to researchers at the Medical University of South Carolina to study whether banning menthol in cigarettes (and e-cigarettes) would increase quitting or switching. Meanwhile, Rutgers University received two grants totaling $7 million via the National Institutes of Health to study anticipated “disinformation” from industry, aimed at Black and Hispanic young adults, that could “undermine the impact of a ban on menthol cigarettes and flavored cigars.”
What Could Go Wrong?
The FDA expects minimal illegal trade in event of a ban. Richard Marianos disagrees. He is a retired assistant director at the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and a faculty member at Georgetown University. Marianos says banning products creates crime.
Illicit sales of individual cigarettes and contraband packs are already problematic, in part because taxes have driven up costs. Marianos showed me photos of several men, one with a gun in his waistband, at an illegal sales spot outside of a Washington, D.C., Metro station.
“People come off the train, buy four loosies from the spot, then ration them out during the day,” he says. “You can get your marijuana, your cocaine and your Newports.”
The flavor ban in California has sparked increased robberies of convenience stores across the border in Arizona, according to Marianos. “A pack of menthol cigarettes that they can steal and sell for $2 apiece at the spot derives a greater profit than a cash register robbery,” he says. “I have videos of crews hitting a Circle K or Wawa, jumping over the counter, sticking up the clerk and—like Santa—putting the cigarettes into a gigantic tarp and taking off.”
A Canadian study of intended and unintended effects of their menthol ban found that many people purchased menthols on First Nations reserves, where the ban did not apply. Marianos expects that Native American reservations in the U.S. would similarly help meet demand.
The practical path forward for advocates of an enforceable menthol cigarette ban is to actively promote harm reduction.
Menthol Workarounds
The assumption by many tobacco control advocates that Big Tobacco will sabotage menthol bans overlooks the likely ingenuity of individuals. Marianos described one case he ran across: “A guy was going on eBay and buying menthol crystals, spraying regular cigarettes in his basement and then selling them on the corner as menthols.”
Noting that products to alter cigarette characteristics are illegal under the proposed rule, “FDA does not anticipate a substantial number of individuals would utilize such products.”
Researchers have documented sales of flavor cards and menthol drops in Canada and various flavor accessories in the European Union to circumvent their menthol bans—predictably leading to calls to ban those items too.
“The illicit market is always open and doesn’t check IDs,” notes Nicholas “Grimm” Green, a YouTuber and tobacco harm reduction advocate. “As long as $10 ‘menthol injectors’ exist on Amazon, the idea of a menthol ban is silly.”
That’s not to say that companies won’t do their part to circumvent a menthol ban. “Tobacco companies have already introduced nonmenthol-menthol cigarettes into the market in California,” says Green. Further, enforcement is lax. “Menthol disposable vapes are available at almost every gas station and head shop in the state,” he adds.
The California ban, approved by voter referendum, went into effect in December 2022. It covers not just menthol cigarettes but nearly all flavored nicotine products. Researchers have found synthetic cooling agents that give menthol-like effects in cigarettes sold in that state. A journalist from STAT News found widespread sales of flavored products, even in cities that had their own longstanding flavor bans.
Legal Hurdles
If the menthol rule comes to pass, store shelves aren’t immediately cleared. Flavor bans enacted by states can take effect within months. Because the proposed federal ban comes out of the FDA’s complex rule-making process, it could take years.
“If they publish that rule on a Monday, the next day, you’ll see a legal challenge filed to prevent it from ever going into effect,” says Jeffrey Weiss, partner at Flagstaff Ventures and formerly chief engagement officer and general counsel at Njoy.
He predicts a dead-end fate for the menthol ban, similar to that of the final rule requiring graphic health warnings on cigarette packs. Why?
U.S. law requires that adoption of tobacco product standards must be appropriate for the protection of public health. In supplementary information to the proposed menthol rule, the FDA cites research, including population models and expert opinions, on what is expected to happen after a menthol ban.
“They model that a certain percentage will switch to tobacco cigarettes, a percentage will buy black market menthol cigarettes, a percentage will quit and a percentage will switch to an e-cigarette, primarily menthol,” Weiss says. “But that model doesn’t actually exist—in the sense that there are no authorized menthol e-cigarettes for smokers to switch to.”
Post-ban, more menthol users are expected to switch to menthol e-cigarettes than to quit using tobacco. In sum, much of the health benefit from banning menthol is supposed to come via unauthorized product use. Products that are themselves banned in a growing number of states and localities.
Regulators are not unaware of this conundrum. FDA Commissioner Robert Califf has publicly expressed concern about the difficulties that people dependent on menthol cigarettes will face if the products are taken away. For example, he remarked at a 2023 Congressional budget hearing, “[W]here do they [menthol users] go to get help, coming off of a terrible addiction? Our healthcare systems are not set up to deal with that right now.”
What about evidence for a menthol ban preventing harm to youth? The respected nationally representative Monitoring the Future study found that past-month menthol and nonmenthol cigarette use by non-Hispanic black teens is now less than 1 percent. It’s fallen so low in recent years that “prevalence levels approach a floor effect.” Moreover, today’s Black adolescents use menthol cigarettes at lower levels than non-Black youth.
A Better Way?
Given the high risk of unintended effects and the limited certainty of benefits, is a menthol ban our best plan? “It would be best if the government would think first in the direction of ‘how can we affirmatively help people make positive change?’” Weiss says. “Because prohibitions are hard and costly to enforce.”
The lack of authorized reduced-harm menthol or mint products is just part of the problem. Another is the FDA’s limited and ambivalent reduced-risk communications.
Weiss points to the FDA’s routine tweeting of its one-page list of 23 authorized e-cigarette products. At the bottom of the page is a disclaimer: Being authorized “does not mean that these products are safe nor are they ‘FDA approved.’ All tobacco products are harmful.”
“If you want a current menthol smoker who can’t completely quit to switch to a regulated reduced-harm product—how are they going to do that when you’re telling them that none of these products are safe?” says Weiss. “If it’s an unsafe product, why is that a better choice for me” than a tobacco-flavored cigarette or an illicit menthol one?
Active promotion of reduced-harm menthol alternatives seems a sensible way to limit ban backfires. A rigorous laboratory study of adults who smoked menthol cigarettes daily found that menthol-flavored e-cigarettes outshone tobacco-flavored ones in reducing cigarette cravings—including urges to smoke for pleasure. According to the authors (affiliated with prominent universities), this is a known strong predictor of successful smoking cessation.
The practical path forward for advocates of an enforceable menthol cigarette ban is to actively promote harm reduction. “Encourage FDA to start authorizing menthol e-cigarettes, among other things, so that these smokers would have something to switch to,” says Weiss. “And to make it more likely that a menthol ban could withstand a legal challenge.”
Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Advisors. She spent 15 years on the faculty of Harvard Medical School.

March 1, 2024
Altria to Use Bluetooth to Prevent Youth Use

Image: sdx15
Altria is finalizing submissions to the U.S. Food and Drug Administration for Njoy products in blueberry and watermelon flavors, according to Billy Gifford, Altria CEO, reports BNN Bloomberg. The company is currently waiting for a decision from the FDA on a menthol version.
The fruit-flavored products would use Bluetooth technology to prevent underage use, though the company has not detailed how it will do so.
“We’ve demonstrated the age-gating restrictions are effective at preventing underage access in virtually all cases,” said Gifford at the Consumer Analyst Group of New York conference yesterday.
February 22, 2024
Zimbabwe Prepares for Marketing Season

Image: Taco Tuinstra
Zimbabwe’s tobacco growers are preparing for the 2024 marketing season, set to begin in March, reports Xinhua News.
Farmers remain hopeful for a successful season despite unfavorable weather patterns that affected some crops—late onset of rains and severe hailstorms in some areas.
This year’s projection is 250 million kg of tobacco due to the dry spell compared to last year’s record high of 296 million kg, according to Chelesani Tsarwe, public affairs officer of the Tobacco Industry and Marketing Board (TIMB). By 2025, the government aims to increase production to 300 million kg per year.
Tobacco auction floors will open March 13, according to the TIMB. Contract floors will open March 14.
Favorable pricing will be crucial for farmers to cover costs, especially for small-scale farmers, who make up over 80 percent of the country’s tobacco farmers, according to George Seremwe, president of the Zimbabwe Tobacco Growers Association.
Tobacco is a major foreign currency earner in the country.
“We think it will be very important for the government and the stakeholders to work on value addition, that is, value addition locally; with that, probably, we hope that the profits will also be shared among farmers,” said Seremwe.
February 20, 2024
BEA Proposes 70 Percent Tax

Image: Dmitry Chulov
The Bangladesh Economic Association (BEA) has proposed a 70 percent tax on all types of cigarettes and tobacco, according to The Business Post.
By setting the tax as such, the BEA estimates that smoking will decrease by about 66 percent and the state will generate BDT17 billion ($154.89 million) in revenue.
The BEA submitted the proposal to the National Board of Revenue during the pre-budget discussion. According to the BEA, the 70 percent duty would increase cigarette prices by an average of 130 percent.
February 20, 2024
KT&G Recognized for Sustainability

Photo: KT&G
KT&G has been selected as a leading company (Leadership Grade) in the climate change response and water resource management sectors by the global environmental assessment organization CDP (Carbon Disclosure Project).
Following last year, KT&G has achieved the top grade in the Leadership category in both climate change response and water resource management. In particular, in the water resource management sector, it has risen from Leadership A- last year to the highest grade, A, with only three domestic companies in South Korea receiving an A grade out of the 100 winning companies worldwide. The climate change response sector maintained its Leadership A- grade from last year.
KT&G established its medium-term to long-term environmental management vision, 2030 Green Impact, in 2021 and has been practicing ESG management to achieve carbon neutrality throughout its value chain. It has set greenhouse gas reduction targets contributing to limiting the rise in global temperatures to within 1.5 degrees Celsius and achieved a 7.5 percent reduction in greenhouse gas emissions from domestic and overseas facilities as of 2022 (compared to the base year of 2020). Additionally, it has enhanced the reliability and objectivity of greenhouse gas emission data by undergoing third-party verification for the emissions in its supply chain.
In the water resource management sector, KT&G has set a goal to reduce water usage in domestic and overseas manufacturing facilities by 20 percent by 2030 compared to 2020 and is implementing measures to achieve this target. KT&G plans to systematically practice environmental management in the future through the expansion of renewable energy use, water recycling and energy efficiency enhancement.
CDP, founded in the U.K. in 2000 as a nonprofit organization, requests environmental management information disclosure from over 23,000 companies worldwide and conducts analysis and evaluation of this information. It is also recognized as a credible sustainability assessment organization along with Morgan Stanley International.
“We have been recognized as an excellent company by CDP for our climate change response and systematic water resource management capabilities in line with global standards,” said a KT&G representative in a statement. “We will continue to promote genuine ESG management, including leading the acceleration of the transition to a circular economy.”
February 20, 2024
Setting It Fre

Image: Turning Point Brands
Turning Point Brands prepares to roll out its FRE nicotine pouch nationally in the U.S. this year.
By Timothy S. Donahue
It’s looking like a FRE market in 2024. Turning Point Brands (TPB) is expected to release its 2023 financial results in late February. While the Louisville, Kentucky, USA-based nicotine product conglomerate remains one of the best stock bets in the tobacco sector, its 2024 goals are taking a more “modern” approach. TPB is getting ready to go full force with its premium modern oral nicotine product and is expecting that this year more consumers will trade in their combustible sticks for its FRE white pouch nicotine product.
Graham Purdy, president and CEO of TPB, said during an earnings call that the company is excited about FRE’s U.S. national rollout in 2024. The product will compete in a billion-dollar-plus market that continues to grow rapidly. The company spent much of 2023 shoring up FRE’s supply chain to ensure consistent product quality, according to leadership.
“[We have been] analyzing consumer feedback and testing online [and] select in-store marketing and merchandising programs to ensure a successful national rollout. Given our progress to date, we are now focusing on prudently ramping up our sales and distribution efforts to achieve steady growth over time,” said Purdy. “Our early learnings and performance in test markets have given us more confidence to now leverage our sales and distribution expertise to profitably expand FRE’s profile in-store count similar to what we achieved with Stoker’s Moist Snuff over time.”
While confident about FRE’s prospects, Purdy expects market share gains to be “small and incremental.” “I think Q4 is sort of the time of the year where we [start] expanding out the foundation. I think our expectation for the product is to look similar to Stoker’s over time as we compete against the large players in the category,” Purdy explained. “It’s really a store output focus on the product, similar to some of the past practices we’ve had with other categories, specifically Stoker’s …. We focus on the stores that have the highest volume.”
TPB reported a 5.6 percent drop in sales for the third quarter, ending Sept. 30, as it faces stiff challenges in a tight market. The company, known for its Zig-Zag and Stoker’s brands, reported a decline in consolidated net sales to $101.7 million, which is believed to be due to the current economic challenges faced by the consumer goods sector.
Zig-Zag, a stalwart in TPB’s portfolio, suffered a 10.2 percent sales decrease compared to the same quarter last year. However, sales in the Stoker’s segment, TPB’s smokeless tobacco division, which includes FRE, rose by 10.1 percent. This illustrates modern nicotine’s growing popularity among consumers seeking traditional tobacco alternatives.
It isn’t surprising that TPB is embracing FRE’s potential. The global modern oral market is booming. In a recent report, Polaris Market Research valued the worldwide nicotine pouches market at an estimated $1.6 billion in 2022 and projected the segment’s revenue to reach more than $26.8 billion by 2032.
Summer Frein, chief revenue officer at TPB, said FRE has been well received in the marketplace and that consumer engagement has been encouraging. “We continue to focus on maximizing the value of our brands, executing against the plan we’ve established and growing our business with both our retail and end consumers,” she said. “We continue to focus on maximizing [the] value of our world-class brands and extensive distribution capabilities.”
Asked during the conference call whether the company would go after stores with higher volumes and potentially higher price points, Frein said the company considers FRE a premium brand that can hold its own against bigger brands.
“We have a strong belief in our point of difference … which is higher nicotine strength options available for our consumers, which we continue to see resonate both in-store and there’s been a strong response online, and [we] plan to profitably compete in the segment against those big brands,” she said.
Purdy added that despite this year’s challenges, which included navigating wholesale inventory reductions at Zig-Zag Canada, and continuing with some additional difficult comparisons, he feels good about 2024. “Particularly our progress in the [alternative] channel and FRE,” he said. “We remain focused on demonstrating further progress for the balance of the year and into 2024.”
TPB is also going to continue expanding into the alternatives markets, such as cannabis products. Purdy said that as additional states greenlight medical and recreational cannabis, his company will focus on providing a better shopping experience for consumers. In addition to more legal dispensaries and manufacturing and processing facilities, other retail outlets like head shops are drafting off this trend, he explained. “Our alternative B2B business saw Zig-Zag sales accelerate, growing over 40 percent during the quarter,” he said. “We also continue to be proactive in optimizing our capital structure.”
Frein said the company’s future isn’t based exclusively on next-generation nicotine products. Online sales are also growing. While it may be making progress on its multiyear roadmap to establish FRE and continue Zig-Zag as lifestyle brands, it’s particularly focused on the cannabis market with Zig-Zag. After all, Zig-Zag continues to increase its brand awareness, and TPB’s leadership wants to build on Zig-Zag being well-known in the alternative market segment.
The company is also focusing firmly on FRE being a premium product and continuing to boost its growing online sales segment. Frein said the nicotine market can be challenging and often takes a company in multiple directions simultaneously.
“In our B2B alternative segment, we had a strong quarter with increased sales of Zig-Zag papers and cones. We also saw a double-digit rise in both the number of customers and orders on our alternative platform, with an increase in average order size. We made significant progress across the business this past quarter as we saw growth in every subcategory with the alt channel, which includes head shops, smoke shops, dispensaries, including … distributors, cultivators and manufacturers and processors,” Frein emphasized. “Additionally, we are seeing increased engagement across our digital platforms. The total online traffic sessions on our dedicated B2C site are up 33 percent [compared] to a year ago.”
Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

February 1, 2024
Inscrutable Islands

Photos: Taco Tuinstra
Home to an infinite number of tobacco varieties, Indonesia is among the world’s most diverse leaf origins.
By Taco Tuinstra
Forget Zimbabwe. Forget Brazil. If you want to understand Indonesian leaf tobacco, you may gain more insights by studying at the Hogwarts School of Witchcraft and Wizardry, the fictional magical boarding school in J.K. Rowling’s Harry Potter series, where nothing is what it seems. At least, that was the advice one aspiring leaf trader received upon arrival in the archipelago. His mentor was joking, of course, but the analogy isn’t entirely frivolous: The baffling Indonesian market is not the easiest place to start your career in leaf tobacco. Unraveling its mysteries takes time and dedication.
In 2022, Indonesia’s growers harvested 225.58 million kg of leaf, according to the Ministry of Agriculture, but it’s not the volume that is likely to confound the trainee. Rather, it’s the seemingly endless variety of tobaccos. Whereas the novice in Zimbabwe or Brazil will be learning about one or two internationally recognized tobacco types, his counterpart in Indonesia will have to memorize a bewildering list of local names and regional variations, many of them unique to the island nation.
Indonesia is home to a seemingly unlimited number of tobaccos. AOI’s team alone procures 17 different tobacco varieties across Java, Madura and Lombok.
“You may have one seed variety that’s cured, grown and handled under very similar practices—but if it’s from a different area, it will have a different name,” explains Michael Green, country manager at Alliance One International (AOI), which procures 17 different tobacco varieties across Java, Madura and Lombok. Likewise, a seed planted on one side of a mountain will yield a very different tobacco than its identical counterpart sown on the other side.
That may have something to do with Indonesia’s size and topographical variety. Sprawling across three time zones and at least 17,000 islands, the country boasts majestic highlands, lush rainforests and barren volcanic landscapes, among other features. Projected onto a map of the United States, Indonesia’s extremities would extend 1,000 km from the mainland into the Pacific Ocean and the Atlantic Ocean, respectively.
Yet leaf tobacco production is concentrated in a relatively small region of this vast nation: Flue-cured Virginia on the islands of Lombok and Bali, burley in the Lumajang regency of East Java and dark fire-cured tobaccos in Central Java’s Klaten and Boyalali regencies. In addition, there are countless sun-cured varieties, which are typically named after the region where they are grown. Prominent sun-cured tobaccos include Jatim and Kasturi. Many of these are used to manufacture Indonesian clove cigarettes (kretek), although Kasturi is also exported to the European Union and the United States, where it is used in chewing tobaccos.
Indonesia projected on map of the United States
Among foreign tobacco buyers, Indonesia has historically been known for the dark air-cured tobaccos cultivated in East Java. With a volume of 8 million kg in a good year, the largest of these is Besuki Na Oogst (NO), which means “late harvest” in Dutch, the language of Indonesia’s former colonial rulers. Besuki NO is widely employed in machine-made cigars as well as in the bobbins used in the manufacturing of such cigars.
In addition, there is Besuki Tembakau Bawah Naungan (TBN), or “tobacco under sheet,” in Bahasa Indonesia, the country’s lingua franca. This plant was developed in the 1970s and 1980s and is grown under shade for cigar wrappers. The reduced exposure to direct sunlight results in thinner and more elastic leaves, which not only facilitates handling but also contributes to a smoother smoking experience. Shade-grown tobaccos are typically more uniform in appearance than sun-grown varieties, with fewer blemishes and imperfections—and thus highly valued by premium cigar manufacturers. A crossbreed of the Besuki and Connecticut styles, TBN is among the world’s most expensive wrappers on the market today.
Indonesian dark air-cured tobaccos also include Vorstenlanden and Sumatra. Interestingly, the famous Sumatra cigar wrappers that were originally derived from seeds native to the eponymous Indonesian island are now cultivated primarily in Central America.
Indonesia’s largest tobacco product by far, however, is Rajangan cut rag, which accounts for up to 70 percent of the country’s total leaf production volume. Rajangan is widely deployed in kretek production, with individual varieties named after the region where they are produced. Unlike the cut rag produced elsewhere, Rajangan tobaccos are cut while they are still green and then dried in direct sunlight on mats. Ranging in color from lemon to brown, this product may remind some Western visitors of the straw used to decorate Easter baskets.

Shadegrown tobaccos are typically more uniform tin appearance than sun-grown varieties, with fewer blemishes and imperfections–and thus highly valued by cigar manufacturers.
Multiple Players
Contrary to the situation in many other leaf origins, where growers cultivate tobacco primarily for exports, at least 70 percent of the tobacco planted in Indonesia is smoked locally. With an annual consumption of nearly 300 billion sticks, according to TMA, Indonesia is not only one of the world’s largest cigarette markets, but it is also a unique place in terms of taste preferences, with kreteks outselling white cigarettes by a factor of 10. Despite the efforts of some multinationals to steer Indonesian smokers toward “international” cigarettes, the transition from dark tobaccos to blond tobaccos that occurred in southern Europe and elsewhere never took place in the archipelago.
Numerous leaf merchants, serving both domestic and foreign customers, operate throughout the archipelago. Aside from AOI, whose footprint stretches from Central Java to Lombok and includes a processing factory in Mojokerto, there are well-known players such as Universal (known as Universal Tempu Rejo locally), Premium Tobacco and Hail & Cotton, which goes by the name Mayangsari in Indonesia. In addition, the country has multiple home-grown players, including Sadhana and Mangli Djaya Raya (MDR).
Sadhana was established by former Sampoerna executives after the 2004 sale of their company to Philip Morris International. The leaf dealer exclusively supplies Sampoerna, which has evolved into the cigarette market leader since becoming part of the multinational. MDR is a privately owned Indonesian operator, established in 1960 and acquired in 2007 by Njoto Permadi. Today, the business is run by his son, Christian A. Njoto Njoo. MDR is the only company with a redrying facility in Jember, the heart of Indonesia’s dark air-cured tobacco business in East Java. Since 2009, MDR has also had a dedicated cigar business, manufacturing products for both the domestic market and the international market.

Steeped in Tradition
Tobacco cultivation is a massive, labor-intensive business in Indonesia, involving as many as half a million growers. Averaging between 0.25 ha and 0.5 ha, plots tend to be small and scattered. Farmers either grow under contract with one of the leaf merchants or sell their produce on the open market through middlemen. Contract growing provides buyers with a high degree of oversight of the production process. By providing their farmers with the appropriate crop protection agents (CPAs), personal protective equipment, inputs and knowledge of good agricultural practices, the leaf merchants ensure that tobacco meets both their own standards and those of their customers, which sometimes exceed those set by the Indonesian government. For example, some CPAs still permitted in Indonesia are no longer accepted by many international cigarette manufacturers.
Jasper Kuitems
Farmers who grow tobacco under contract benefit not only from greater yields, better quality and consistent prices but also from the certainty that they will sell their crop. Contracting also helps growers cope with adverse events such as crop failures and natural disasters. For example, after the Mount Raung volcano erupted in 2015 and covered much of the region’s tobacco in ash, Mayangsari had to take on the additional expense of washing tobacco—but it kept buying. Farmers selling in the free market, by contrast, were stuck with their ash-covered crops because many middlemen decided to take a break that year. “We support our contracted growers in both good times and bad times,” says Jasper Kuitems, leaf manager for Mayangsari.
Despite the advantages of working with growers directly, most buyers also purchase leaf on the open market. Not only is contract growing an expensive and big logistical undertaking, but it also represents competition for the middlemen, who represent a powerful constituency in Indonesia. Buying through both channels allows merchants to supplement their contracted volumes and helps maintain social harmony in their communities.
Tobacco is a notoriously demanding crop, requiring more human interventions throughout the growing cycle than, say, corn or rice. Nonetheless, it remains a solid cash crop for both contract growers and free-market farmers in Indonesia, as evidenced by the fact that landlords charge tobacco growers higher rents than producers of other crops. “If done correctly, tobacco offers an attractive return on investment,” says Green. Of course, everything depends on supply and demand. When prices are poor, farmers may look at alternative crops; in good times, they may plant extra tobacco.
Demand has been strong in recent years, particularly for Indonesia’s dark air-cured tobaccos. According to Martijn Schaap, acting country manager for Universal Tempu Rejo, this is partly a result of two consecutive poor Besuki NO harvests and partly due to cigar makers’ reduced inventories in the wake of the Covid-19 pandemic. The growing popularity of cigar smoking in China has, too, boosted demand for Indonesian dark air-cured leaf.

No machine can mimic the fine motor skills required to sort, open and stack the delicate cigar tobaccos.
Post-Harvest
The Indonesian tobacco industry’s contribution to employment is not limited to the field. A significant share of kretek cigarettes continues to be constructed by hand, and the government favors manual production with lower tax rates. Its policies have helped reverse a long-term trend toward mechanized manufacturing, and handmade products now account for nearly one-third of the market, according to Sampoerna, which in November 2022 announced a major investment in new factories for hand-rolled cigarettes.
The leaf merchants, too, employ large numbers of workers post-harvest, particularly in the dark air-cured segment. After the leaf is delivered to the buyer, it is separated based on quality, moisture, length and color, among other parameters. Unlike in Latin America, where the bundles go directly into the fermentation rack, Indonesian companies open the leaves one by one—a painstaking process involving hundreds of women, who are said to be more patient and dexterous than their male counterparts.
Martijn Schaap (right)
After opening, the leaves are stacked into fermentation piles that can reach up to several meters in height and weigh up to 12 tons. During fermentation, which can last several months, enzymes and microorganisms break down organic compounds within the tobacco leaves, triggering various biochemical changes. The combination of temperature, humidity and pressure causes the leaves to obtain the desired color, flavor and aroma. To achieve uniform fermentation, the piles must be regularly “turned”—restacked from the ground up to ensure an even distribution of moisture and temperature, along with proper aeration. Timely restacking is crucial because if the temperature in a bale rises too high, it will turn the tobacco black and cause it to fall apart.
The labor-intensive nature of their operations causes tobacco processors’ payrolls to swell significantly during the season. While Indonesian wages are low by international standards, they have been rising rapidly. In 2023, the minimum wage in the Jember area jumped by 8.5 percent compared with an overall inflation rate of 3.08 percent nationwide. The industry expects another hefty minimum wage increase, of approximately 10 percent, in 2024.
The rising cost of labor presents a challenge for the cigar leaf companies because few of their activities lend themselves to mechanization. Tobacco farm plots tend to be too small and too dispersed to effectively deploy farm equipment, and no machine can mimic the fine motor skills required to sort, open and stack the delicate tobacco leaves yet. Universal did recently purchase a new seeding machine, however. Due to more accurate seed placement and other improvements, the new device offers significantly higher germination rates than the company’s existing seeder.

The rise in labor cost presents a challenge for the cigar leaf tobacco merchants because few of their operations lend themselves to mechanization.
Taking Responsibility
Like their counterparts elsewhere, leaf dealers in Indonesia are investing heavily in environmental, social and governance (ESG) projects. AOI, for example, has been fitting its contracted farmers’ curing barns with new gasifying systems that burn biomass rather than wood. Not only does this reduce pressure on Indonesia’s forest cover, but it is also more efficient because biomass has a higher calorific value than wood. On a cost-per-kilo basis, it’s about 30 percent cheaper than using wood, according to Green.
This year, AOI and its processing joint venture partner ITS have planted 5,000 trees in cooperation with a local organization, Trees4Trees. The project aims to plant 60,000 trees by 2030. In addition, AOI installed four deep water wells and tanks, assisting almost 300 families on Madura Island. The company intends to expand the project into other AOI regions where water scarcity is common through the dryer months.
The company has also engaged professional storytellers to educate the communities where it sources tobacco about the importance of health and safety, fair treatment and avoiding child labor. To date, the program has reached almost 20,000 participants. AOI aims to maintain an audience of more than 5,000 participants annually. In Jember, meanwhile, the tobacco sector is building playgrounds and supporting schools to keep children out of the fields.
The industry has also invested in waste management, which represents a considerable problem in Indonesia, where 40 percent of the country’s 142 million urban residents still lack basic waste collection services. In the Jember region, Universal has helped set up facilities that purchase waste from local communities, reducing litter and offering villagers an additional source of income. The money generated by the waste depots helps pay for the playgrounds, among other projects. Universal also sponsors initiatives that help people in the communities where it operates set up small businesses. The goal, says Schaap, is to make the projects self-sustainable so that they will endure and grow to serve the community as a whole.
Mayangsari recently made a remarkable contribution to tackling the waste problem. A regional superstition that burning disposable diapers brings bad luck to the baby prompted many mothers in the Jember area to dispose of used nappies in rivers, where they would leach chemicals, spread bacteria and cause blockages in waterways, including irrigation canals. By supplying more than 2,000 young mothers in its growing communities with reusable diapers, Mayangsari not only helped decrease diaper waste by more than 300 tons but also reduced the occurrence of diaper rashes, urinary tract infections and, importantly, household expenses. According to Kuitems, the money saved by not having to buy disposable diapers for six months is equivalent to 150 kg of rice, enough to feed two adults for an entire year.

A Tilted Playing Field
While the leaf dealers’ investments in ESG make them good corporate citizens, the business case is not always straightforward. According to the merchants featured in this article, it can be challenging to communicate and recover the added value provided by such projects. Whereas programs in the coffee and cacao business allow suppliers to charge a premium for responsibly sourced products through certification labels, there is no equivalent in the tobacco business. “A smoker cannot tell the difference between a responsibly sourced cigar and another product from its packaging,” says Kuitems.
Another challenge is that not everyone plays by the rules. Leaf dealers that pay minimum wages, forgo harmful crop protection agents and provide their growers with personal protective equipment must compete with players who don’t (and thus enjoy lower operating costs).
This means that responsible companies must work twice as hard as their less conscientious counterparts. “It forces us to operate as cleverly and efficiently as possible,” says Kuitems. While acknowledging the challenges, the merchants who contributed to this piece said they remain firmly committed to their standards—not only because their blue-chip customers insist on it but also because it is the right thing to do. The extra work, they noted, comes with the territory. It’s just one of the ways in which the complex Indonesian leaf tobacco market will keep the traders on their toes.

Taco Tuinstra is Tobacco Reporter’s editorial director.Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.On his watch, Tobacco Reporter has won several awards for editorial excellence.Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.

February 1, 2024
The Potential of Pouches

Photo: Stefanie Rossel
Some markets have been more receptive to modern oral products than others.
By Stefanie Rossel
The modern oral nicotine category continues growing but struggles to reach a wider global audience. Modern oral nicotine products, which are white, pre-portioned little bags comprising a nicotine-containing carrier material, are considered the advanced, cleaner version of Swedish snus, a pasteurized oral tobacco that is available as loose products or pouches and is credited with helping Sweden achieve its record-low smoking prevalence by offering smokers a less harmful way to consume nicotine.
According to Euromonitor International, global sales of nicotine pouches grew from 17.09 billion units in 2022 to an estimated 20.77 billion units in 2023. The overwhelming majority of sales, however, take place in the U.S., where an estimated 14.97 billion units were sold in 2023 compared to 12.61 billion units in 2022. Sweden ranks second, with 1.8 billion units sold in 2022 and an estimated 2.2 billion units sold in 2023. It is followed by Denmark with a forecast 745.3 million units in 2023 (versus 589.2 million units in 2022), Pakistan and Austria with estimated sales of 695 million units and 477 million units, respectively.
As far as value is concerned, Euromonitor estimates the category to be worth $10.29 billion globally, up from $8.47 billion in 2022. By 2027, the business intelligence firm expects the segment’s value to reach $15.99 billion. Despite their relentless expansion, modern oral nicotine products remain a niche within a niche—they are a small part of a larger oral tobacco market, which accounted for only around 2 percent of the global nicotine industry in 2022.
Raphael Moreau
In the U.S., retail sales of nicotine pouches generated $8.58 billion in 2023 compared to $7.23 billion in the previous year. Raphael Moreau, head analyst at Euromonitor, expects the U.S. modern oral nicotine market to reach $11.03 billion by 2027.
“The U.S. has benefited from a solid legal framework, with the Food and Drug Administration controlling the market chain, requiring authorization to market, nicotine health warnings and premarket assessment,” Moreau says. “Generally, the U.S. has a strong tradition of oral, i.e., chewing, tobacco. This definitely helped. Nicotine pouches are convenient and discreet to use, and they are taking share from chewing tobacco and Swedish-style snus, which has boosted U.S. sales.”
As consumers become more familiar with the product, Moreau anticipates the market to continue growing rapidly. In 2023, just under 3 percent of the U.S. adult population consumed modern oral nicotine products. “Over the next five years, we will see an increase because of more awareness of the brands,” he says. “There is a wide flavor selection, which appeals to consumers who can’t use flavored vape products anymore as they are banned. The return to office work after the Covid pandemic will also contribute to the category’s growth: When working from home, people were more likely to vape. At the office, pouches are more convenient. Besides, the products are used as a cessation aid away from cigarettes and other combustibles.”
Moreau suspects that the majority of modern oral nicotine is used in combination with other tobacco products. “This also has caveats because potentially, consumers may just try them and not become regular users, so prediction is difficult,” he says.

With a 77 percent category retail value share in the third quarter of 2023, Zyn remains the U.S. market leader.
(Photo: Swedish Match)
Zyn Pulls Further Ahead
With a 77 percent category retail value share in the third quarter of 2023, Zyn is the U.S. market leader by a large margin. Shipment volume of Zyn nicotine pouches amounted to 104.5 million cans during that period, a 65.7 percent increase compared to the third quarter of 2022, according to Philip Morris International. PMI became the owner of the Zyn brand through its acquisition of Swedish Match for $16 billion in late 2022. The move has given PMI a comfortable lead in the U.S. nicotine pouch market, where it previously had no presence to speak of, and will help the company to achieve its goal of becoming substantially smoke-free by 2023.
At PMI’s Investor Day Conference in September 2023, Lars Dahlgren, president of smoke-free oral products and CEO of Swedish Match, forecast “stellar growth” for the product also because Zyn is cheaper than cigarettes, retailing at $5 per can compared to a price of $8 for a pack of cigarettes. According to news platform Seeking Alpha, the brand is popular among Generation Z, which has otherwise been a hard market for traditional tobacco companies to crack.
In addition to Zyn, some other brands have made gains recently, according to Moreau. With a retail volume of 15.4 million units and a value share of 11 percent in 2022, Altria’s On! Brand ranks second behind the market leader, followed by Swisher International Group’s Rogue nicotine pouches, with 7.9 million units sold during that period.
The “attractive category dynamics” in the highly competitive U.S. nicotine pouch market also holds potential for new players. In June 2023, ITG Brands acquired a range of nicotine pouches from Canada-based TJP Labs in order to facilitate its entry into the U.S. modern oral market. Following further consumer testing, ITG Brands plans to launch 14 pouch product variants in 2024.
“The category still is very young, so there is no strong brand loyalty, and consumers are likely to try new brands,” comments Moreau. “This makes the market attractive to new entrants. And there’s quite a lot of room for them, as the category is growing very fast.”
Regulation Required
Except for the Nordic countries, where consumers have been familiar with snus for two centuries, the modern oral category is still underdeveloped in the rest of the world.
Japan Tobacco International, present in the segment with its brand Nordic Spirit, sees vast untapped potential. Nordic Spirit was developed in Sweden and has rapidly grown since its launch in 2018. The product is available in the U.K., Ireland, the Philippines and Switzerland. “While the tobacco-free nicotine pouches category is still in its infancy, we already see that many adult tobacco and nicotine consumers globally will be interested in trying the product, helping the new category to grow significantly over the coming years,” says a JTI spokesperson. “For example, smoke-free nicotine pouches have become increasingly popular in the U.K. Responding to this growing trend, the Nordic Spirit brand has witnessed growth and increased its market share to around 45 percent.”
According to Euromonitor, U.K. consumers bought 92.1 million nicotine pouches in 2022. In 2023, the category there grew 54.6 percent.
Pakistan, however, was the country with the largest year-on-year growth rate, with sales in 2023 expected to be 70.7 percent, up from the 127.8 million units sold in 2022. In Pakistan, an estimated 10 million people use smokeless tobacco, which corresponds to more than 40 percent of the country’s total tobacco market. In December 2022, BAT announced that its modern oral nicotine brand Velo, which it had launched in Pakistan in early 2020, had achieved a monthly volume of more than 40 million pouches in the country, making it the company’s third-largest market for nicotine pouches.
Most growth in the category will come from Asia-Pacific and Eastern Europe, according to Moreau. In Poland, for instance, the category increased by 69.5 percent in 2023. “The Czech Republic is also interesting because it had quite strong demand in 2022 and 2023,” Moreau says. “This is likely to stay [this way], particularly since nicotine pouches are regulated in the country now.”
In May 2023, Czechia’s Ministry of Health issued a decree, modeled on tobacco and e-cigarette legislation, which regulates the composition, appearance, quality and characteristics of nicotine sachets. It also defines the legal age for sale and requires manufacturers and importers of nicotine sachets to register their products with the Ministry of Health. The legislation entered into force on July 1, 2023.
Other countries, by contrast, have been less accommodating, with the Netherlands and Belgium banning modern oral products in April 2023 and October 2023, respectively. The European Commission, too, is reportedly mulling a ban on nicotine pouches for the common market. The products are also prohibited in Australia and New Zealand.
“History has repeatedly shown that bans of legal products often do not lead to their intended goals and instead encourage criminal gangs to increase supply of illegal products to make up for the shortfalls,” warns JTI’s spokesperson. “Instead of an outright ban, we should aim for an evidence-based regulatory framework that acknowledges the potential of nicotine pouches to reduce the risks associated with smoking. At the same time, we must ensure that oral nicotine products aren’t marketed or sold to minors under any circumstances.”
In Germany, modern oral tobacco continues to operate in a regulatory gray area. Nicotine pouches are classified as food in the country, which makes them subject to European food law. Because the EU has not approved nicotine as a food or food ingredient, this means that nicotine pouches cannot be legally traded in Germany.
Despite the German Federal Institute for Risk Assessment’s October 2022 acknowledgement that tobacco-free nicotine pouches could reduce the health risks compared to smoking, the products’ legal status remains unchanged. “It will only change after a decision at EU level,” says Moreau. “Germany is a typical case where an uncertain or hostile landscape and a lack of familiarity with the products are two negative factors that are feeding each other. Whenever the legal status is unclear, not exactly defined or restrictive, retailers will basically avoid selling them. Therefore, consumers will not be aware of the products, and they will not trust them. In Germany, nicotine pouches are still available online, but the products are obviously now not as widespread as [they would have been] if they were sold in stores.”
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.

January 30, 2024
Not For The Birds

Will the 5th Circuit’s recent ruling allow manufacturers of flavored e-cigarettes to secure their hitherto elusive market authorizations? | Photo: Dean Collins
The impact of the 5th Circuit’s recent ruling against the FDA on tobacco harm reduction
By Cheryl K. Olson
Willie McKinney
“Over several years, the Food and Drug Administration sent manufacturers of flavored e-cigarette products on a wild goose chase.” So reads the first line in this long-awaited Jan. 3 en banc decision by the U.S. Court of Appeals for the 5th Circuit. We can infer that the judges’ sympathies do not lie with the FDA.
The entire decision makes for entertaining and informative reading. In exhaustive detail, the court covers the history of the 2009 Tobacco Control Act and the evolution of the FDA’s approach to premarket tobacco product applications (PMTAs). It then states: “Never in this long, winding and byzantine regulatory process of meetings, PowerPoint decks, proposed rules, comment periods, guidance documents and enforcement priorities did FDA ever say that it was contemplating an across-the-board ban on flavored products.”
In short, the court ruled against the FDA and its reasons for rejecting the flavored e-liquids of Wages and White Lion Investments (dba Triton Distribution).
“These judges confirmed what so many nicotine product manufacturers have been saying: ‘We’re not being treated fairly,’” says Willie McKinney of McKinney Regulatory Science Advisors. “The FDA has been moving the target and putting people out of business.”
For those of us driven to help people find lifesaving alternatives to cigarettes, what does this 10-6 legal decision mean? Does the FDA have to do anything different?
What happens next on the legal side? Might this go to the Supreme Court? Most importantly, what can we do during this period of ongoing uncertainty?
Below, legal and regulatory experts share their impressions and best guesses.
‘Surprise Switcheroo’
If you thought the 5th Circuit had ruled on this case already, you’re correct. That court has had three bites at this apple. Here’s a rapid refresher.
As required, Triton submitted PMTAs for its existing products to the FDA before the September 2020 deadline. When the FDA issued marketing denial orders (MDOs), Triton petitioned the 5th Circuit for review. In October 2021, a three-judge panel unanimously granted a stay. This was the famous “surprise switcheroo” ruling.
In July 2022, a separate panel, not unanimous, upheld the FDA’s rejectionof Triton. In January 2023, to resolve differences in rulings by this and other courts, the en banc 5th Circuit (all the judges together) agreed to hear the case.
Bryan Haynes
What led up to this? “The FDA in 2021 came up with this new standard for flavored ENDS [electronic nicotine-delivery systems] that effectively had two components,” says Bryan M. Haynes, a partner at the Troutman Pepper law firm. For one, contrary to previous guidance, the FDA now required expensive studies: randomized controlled trials or longitudinal cohort studies.
“Two, what was even more surprising: The outcome of those studies had to show that the flavored ENDS had reduced smoking at a greater rate than a tobacco[-flavored] variant,” adds Haynes. “There was nothing like that in any FDA guidance.”
Unsurprisingly, multiple companies sued. All of the cases had effectively the same issue: Was it appropriate for the FDA to do this?
Some courts of appeal had sided with the FDA, showing what Haynes called extreme deference to the FDA’s decision-making. “The 5th Circuit is the first one to substantively, quite emphatically, rule that FDA’s standard was unlawful for a variety of reasons.”
A 2022 decision by the 11th Circuit Court of Appeals in favor of Bidi Vapor and five other companies ruled that the FDA’s behavior was arbitrary and capricious. However, Haynes notes, “This ruling focused on a fairly narrow issue: The FDA had suggested that companies show that their marketing plans would deter youth use, and then refused to consider those plans.”
By contrast, “The en banc decision in Wages and White Lion was much broader. It attacked head-on FDA’s so-called ‘fatal flaw’ standard requiring comparative smoking cessation or reduction.”
‘Calvinball’
Importantly, administrative agencies can’t make statements that people will rely on, then pull a surprise switcheroo. As this latest ruling says,“All that matters here is that the agency unquestionably changed its position and then pretended otherwise.”
David Dobbins
“This court’s not going to let the FDA play Calvinball,” says Dave Dobbins, an independent consultant working with Altria and former chief operating officer of the Legacy Foundation/Truth Initiative. As described in the classic comic strip “Calvin and Hobbes,” that sport’s only rule is that the rules always change.
“You should have a priori rules that people can understand,” says Dobbins. He describes the FDA’s approach as, “We’ll authorize you if you have what we think is good science. And we’re not going to tell you what that is or which results would compel us to issue an authorization.”
Dobbins notes how drastically the FDA Center for Tobacco Products’ (CTP) approach differs from that of other regulators, such as the Environmental Protection Agency. “EPA has real interaction with companies. They have standards you can understand,” he says. “If you’re building a power plant, the EPA doesn’t say, ‘We don’t want it to pollute that much.’ Then show up and say you can’t use it after you’ve spent a bajillion dollars.”
In contrast to the PMTA process for new products, the CTP does have quantitative guidelines for its substantial equivalence approval pathway. Embarrassingly, the CTP does far better at approving sales of new cigarettes than of novel reduced-harm products. “Just 23 e-cigarettes have been authorized. And few are ones people actually use,” says Dobbins. “It’s nuts that it’s easier to authorize a cigarette.”
Topping off this unpredictable process is the CTP’s repeated failure to meet deadlines for product review. U.S. Senator Richard Durbin’s frustration is clear from the heading of his Jan. 16 letter to FDA Commissioner Robert Califf: “Another Durbin vaping letter for you to ignore.” He castigates the agency for being 28 months past the court-ordered deadline “to complete reviews of e-cigarettes with the largest market share and youth appeal.”
Where Next?
Might the Supreme Court weigh in? Haynes notes that the clear split among circuits, with the 5th and 11th evaluating the FDA’s actions differently from others, gives this case a good shot.
“That kind of situation is untenable for obvious reasons,” he says. “You shouldn’t have rules that fundamentally differ depending on where you are in the country.” He thinks the court might agree to hear the case this year, with a decision issued in 2025.
In the meantime, what to do if the FDA issues an MDO? For manufacturers who previously submitted PMTAs and meet guidelines for enforcement discretion, the path is now marked. Based on court precedents, Haynes says, “If a denied applicant could join forces with a retailer in the 5th Circuit who sells their products, they could get venue to challenge an MDO.”
Haynes sees no rapid end to the uncertainty. “I’m not so sure FDA is going to act on a lot of PMTAs, given the existing division between circuits.” He noted that the recent Smok decision did not involve a consumable product, only a device system. If the FDA continues to issue decisions based on the “fatal flaw” standard, “It’s highly likely the applicant goes to the 5th Circuit. If it’s on that narrow ground, the applicant is likely to find success.”
McKinney feels guardedly optimistic about the potential effects of the 5th Circuit decision. For clues to change, he suggests watching what the FDA does with products still in the review queue: those at the low end of the risk continuum, such as pouches and gums, that are not currently appealing to youth.
“If a lot of those products get refused-to-file or marketing denial orders, then nothing has changed at the agency,” he says. “If they start making it through, it suggests there are opportunities.”
To conserve resources, companies seeking to bring new reduced-risk nicotine products to the U.S. market might follow “a cautious, stepwise approach,” he advises. “Spend a little money to generate minimal data for an initial PMTA. But have plans and protocols on the shelf ready to execute” when greater clarity inevitably emerges and competition heats up.
What About APPH?
This frustration and confusion was not inevitable. The wording of the Tobacco Control Act provides a path for authorization of reduced-harm products that will be appropriate for the protection of public health (APPH). “It’s the agency’s obligation to give content to those words,” says Dobbins. “And they’ve never done it. And that is why this is off the rails. They’ve never given guidance on what APPH actually means to them.”
“If you look at the FDA’s recently issued five-year plan, there’s almost nothing said about encouraging innovation toward reduced-harm products,” says Agustin E. Rodriguez, a partner at Troutman Pepper. “There seems to be much more focus on outright quitting of products. I worry that this is unrealistic in terms of historical consumer approach to the tobacco and nicotine space.”
“There are a billion smokers worldwide,” Dobbins reminds us. “People want nicotine. Someone is going to deliver it.” Public health benefits from a regulated industry that works within the law to deliver the least harmful products possible.
“If FDA believes that what they’re doing will be upheld by the Supreme Court, they should be anxious to get its imprimatur. If they are wrong, they should be anxious to fix their processes, so they can administer the law in a way that will survive court review,” Dobbins concludes.
Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Advisors. She spent 15 years on the faculty of Harvard Medical School.

January 30, 2024