Author: Marissa Dean

  • To Boldly Go

    To Boldly Go

    Photo: sharafmaksumov

    Tobacco veteran Murray Prince is setting up tobacco operations in the Democratic Republic of the Congo.

    By George Gay

    Shortly after I had been asked to write a piece about leaf tobacco operations in Uganda and the Democratic Republic of the Congo (DRC), my daily newspaper carried, on the same page, a story on each of these countries. The stories focused on conflicts of various kinds and therefore appeared generally negative, which is not unusual for the coverage many British people would see of these two countries and, in fact, of many other African nations. There is no doubt that, seen from the outside by the person in the street, and, for some marginalized citizens, seen from the inside, the DRC and Uganda have their problems—some of them grievous and seemingly self-imposed.

    But, with a few obvious exceptions, businesspeople tend to see things differently. Countries, wherever they are in the world, are seen basically as producers or markets that are more or less attractive than other countries. Conflicts comprise a negative factor when appraising a country, but they are not seen as barriers, providing those conflicts do not impinge directly and oppressively on business interests.

    Such an approach can seem to be unethical, but, in one way at least, it can be seen to be the exact opposite. Shifting the focus back to Africa, businesses working within the leaf tobacco industry have been generally good at taking a practical approach and building operations, including, importantly, livelihoods, in places where others might fear to tread.

    And so it is that Murray Prince, an experienced Africa-tobacco hand, is in the process of setting up and registering Market Link Services, through which he aims to coordinate various leaf operations in East Africa and the DRC, where he is working with Idi Taban, a businessman based in Kampala, Uganda, whose interests include a tobacco procurement and trading operation in the DRC: GGLC. Taban’s Uganda-based company, KKT, has interests, too, in transport, property and regional trading, and the plan, still being finalized, would see Taban retain overall control of his tobacco business in the DRC while handing over operational control and the day-to-day running of it to Prince.

    In this role, Prince would manage all stages of GGLC’s DRC tobacco operations, including leaf production and procurement; he would oversee operations in Uganda, where the DRC tobacco would be processed and packed before being exported; and he would be responsible for marketing, sales and communications.

    The Formula

    Businesses in the leaf tobacco industry have been generally good at building operations and livelihoods in places where others might fear to tread. | Photo: Francesca Volpi

    The systems necessary to make all this transparent and workable have been put in place during the past 12 months, but, even still, Prince has no illusions about the challenges involved in operating in the DRC and, indeed, readily admits that his previous time there as a trader involved in production and procurement, from 2009 to 2012, was not easy and ultimately ended in failure. Nevertheless, failure is a form of experience that can be turned around, and he is up for the challenge, telling me that part of his role would require him to anticipate the risks and disruptions that, without early interventions, could cause operational challenges.

    On the positive side, he has long experience in various African countries, which means, he says, that he is familiar with the strengths, weaknesses and sensitivities of these markets and that he has a “formula” for what needs to be done—by all participating parties—to make a success of the entire operation. His expertise, however, is in two broad areas, one of which encompasses sales, marketing and exports while the other comprises the skills, including those in specialized project development, management and supporting roles, required to set up new projects.

    Originally from Zimbabwe, Prince started in the leaf trade in Malawi with Limbe Leaf, which later became part of Universal, before returning to Zimbabwe to work with Standard Commercial and, later, Zimbabwe Tobacco Brokers. He was then involved in or instrumental in three startups: Tobacco Handlers Zimbabwe, which also operated in Malawi, Leaf Buyers Zimbabwe and Southern Leaf Brokers. Since 2013, he has lived in the U.K. from where he has operated a tobacco consultancy and become involved in other trade-related interests.

    Building Relationships

    So, what are GGLC’s aims? Well, Prince says the first aim is to maintain the stable and sustainable production and procurement system and infrastructure that, for the past 15 years, have operated to the advantage of the company, its employees and the regional community, including tobacco farmers, their employees and families, who have also benefited from additional support services. And using that production and procurement system as a base, the next aim is to establish GGLC as the reliable leaf exporting company operating in the DRC, building long-term, trusted and mutually beneficial relations with international players that recognize the potential of the country’s niche market.

    That’s it in a nutshell, but the devil will be in the details. Maintaining the production and procurement system will require ensuring the smooth operation of farmer registrations, agronomy support, input availability, storage and dispersal; and leaf buying, grading and baling. Then, Prince says, to avoid disruption as the tobacco is moved to Uganda for processing, close attention will be paid to logistics, compliance and documentation appropriate for meeting obligations for both the DRC and Uganda as well as internationally.

    The plan, he says, is to have, as now, the DRC tobacco processed ahead of export at a facility in Jinja, Uganda, which is run by the Nilus Group, a partnership between Premium Tobacco and Uganda Tobacco Services that between them promote Ugandan Burley and dark-fired tobacco. Once processed, the tobacco will be moved for shipping from Jinja to Mombasa, Kenya, by an independent logistics group, Agrivest Shipping.

    Straightening the Hassles

    To the layman, this can start to look like a lot of effort for possibly not enough reward. So why do it? After all, even the GGLC DRC target of 10 million kg green weight is a drop in the ocean set against what can be grown in Zimbabwe, where, because of the importance of the tobacco crop, the infrastructure and systems, albeit probably not perfect, have been in place and functioning for years.

    So let me see if I can get this right. It is worth the effort if the tobacco fits well into a final buyer’s cigarette blend in respect of both sensory factors and cost. Therefore, once a tobacco has been found to be a right fit, and the generally flavorful tobaccos produced in Africa have been highly prized by manufacturers for decades, it all comes down to price. But there are two prices in play here: the dollar price and the hassle price. Some big players have tried their hands in the DRC and Uganda and left, some having found that the hassle price was too high. The idea is that a smaller, more flexible player with experience in negotiating the inevitable business, industry and political chicanes can straighten out those hassles, which, as mentioned above, is why Prince is getting on board.

    Much of what can be said about the DRC also applies to Uganda, where tobacco has been grown since at least the 1920s when BAT was active there but where, since the departure of that company’s stabilizing influence, flue-cured operations are currently said to lack a stable and balanced market. But therein lies an opportunity. Although BAT is no longer directly involved in the Ugandan leaf tobacco market, vestiges of the production expertise it left behind are still present, and so Taban and Prince believe the time is right to grasp the opportunity of entering the market for flue-cured tobacco. Prince told me there was a circularity, almost a natural rhythm to the way that smaller producers came into and went out of operation and that he believed the time was right in the region to take advantage of the moment and engage with grower communities and government departments that were now well disposed to such an initiative.

    This seems as though it could be a good assessment of the situation. According to an October 2021 story by Gilbert Mwijuke that was published in the East African newspaper, leaf tobacco production in Uganda peaked at 18 million kg in 2013, when more than 75,000 farmers were said to be engaged in the industry. Since then, however, things have fallen apart somewhat, and by 2020, less than 10 million kg was produced, apparently at least partly because of grower prices. Geoffrey Ozuma, a crop scientist at the National Agricultural Research Organization in Hoima and a former tobacco farmer, was quoted in the story as saying that many farmers had been discouraged by declining prices. When certain companies came into the market, he said, prices dropped because those companies started providing farmers with inputs but then set low prices for leaf tobacco produced with it. “That uncertainty, coupled with rising costs of production due to increasing scarcity of essential inputs such as firewood, forced many farmers to give up,” he said.

    How accurate these figures are is not known, and Prince treats most of the figures available with some skepticism. FAO figures tend to suggest that—presumably total—tobacco production in Uganda has been remarkably constant in recent years: 31.688 million kg in 2017, 32.762 million kg in 2018, 31.992 million kg in 2019, 32.277 million kg in 2020 and 32.563 million kg in 2021. Meanwhile, FAO figures for the DRC have been similarly constant: 3.774 million kg in 2017, 3.655 million kg in 2018, 3.562 million kg in 2019, 3.694 million kg in 2020 and 3.667 million kg in 2021.

    But I guess that historical data is perhaps not important, providing as it is only a guide to what was possible in the past under the conditions and in the environment that then pertained. What is possible in the future will depend on any number of factors that are not necessarily easy to identify at present. That’s probably why it’s necessary to have people such as Prince and Taban in place. They’ve been there before and seen the changes wrought by business, industry and political upheavals.

    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.
  • Seeking Substitutes

    Seeking Substitutes

    Dholakia Tobacco is offering Indian smokeless tobacco products that are less hazardous than the country’s most commonly used varieties. Photos: Dholakia Tobacco

    Modern oral nicotine products could help Indian consumers abandon deadly local smokeless tobacco products.

    By Stefanie Rossel

    When it comes to tobacco, India holds several records: It is the world’s second-largest consumer, third-largest producer and fifth-largest exporter. Its consumption pattern is also remarkable. According to the 2016–2017 Global Adult Tobacco Survey, 266.8 million adult Indians—28.6 percent of the country’s population—use tobacco in some form.

    However, with 199.4 million consumers, the most used tobacco product is smokeless (SLT). Only 99.5 million Indians consume tobacco by smoking it. Of these, only 37.5 million smoke cigarettes. Most smokers prefer bidis—cheap, unfiltered cigarettes made of tobacco flakes wrapped in a tendu or temburni leaf that are even more hazardous to health than factory-made cigarettes.

    India has the world’s largest number of SLT users. Unfortunately, the type of SLT that prevails here does not reside on the low end of the risk continuum like other smokeless products such as Swedish snus do. A pasteurized oral tobacco with limited negative health effects, snus has helped Sweden achieve the world’s lowest smoking prevalence. Indian SLTs, by contrasts, are considered “uniquely deadly” by experts.

    Indian SLTs come in a large variety. The most commonly used variants are khaini, a mixture of tobacco and lime, and gutkha, which comprises tobacco, slaked lime, paraffin wax as well as catechu, an extract of acacia trees and crushed areca (betel) nut. Other local forms of SLTs contain mixtures of betel quid or paan masala. All are highly addictive and full of carcinogens. In addition to the typical ingredients, they can be laced with thousands of chemicals. Available for a few rupees, these SLTs are affordable for low-income groups. Like bidis, they are predominantly consumed in rural areas, where almost 70 percent of the country’s population lives. SLTs are responsible for an estimated 350,000 premature deaths annually in India.

    In line with its national health policy, India aims to reduce the number of tobacco users by 30 percent by 2025. The country closely adheres to the World Health Organization’s abolitionist guidelines, but its tobacco control measures are often contradictory. Attempts to curb tobacco use have remained limited to tax hikes on cigarettes rather than bidis and a ban on e-cigarettes and heated-tobacco products. In 2012, all states banned the manufacture, sale and distribution—but not the public use—of pre-packaged gutkha under laws that defined the product as a food. Some states extended this ban to other oral tobacco products, such as paan masala. Enforcement of these bans has been weak, however.

    In an interview with The Free Press Journal, Kiran Melkote of AHER, a harm reduction group, outlined the reasons for India’s ineffective tobacco control policy. “Many arms of the government work at cross purposes and implement policies that even on paper are in direct conflict with the WHO Framework Convention on Tobacco Control. The health ministry tries to implement awareness campaigns and maintain zero industry contact norms for its employees while the commerce ministry provides loans and support for tobacco cultivation and the finance ministry bans e-cigarettes and incentivizes bidi manufacturers. All of them generally ignore oral tobacco. The answer therefore lies in understanding that the strategies used in the developed world where the predominant form of tobacco is the cigarette may not really impact tobacco use in India. Here we have a larger population with different problems and an admitted inability to implement existing laws.”

    The success of modern oral products in Pakistan is welcome proof that they can replace the deadlier local oral tobacco.

    Samrat Chowdhery, director of the Council for Harm Reduced Alternatives

    Potential Solution

    Perhaps a look across the border might be useful. India’s neighbor Pakistan has a tobacco consumption profile similar to that of India. An estimated 10 million people use SLT, which represents more than 40 percent of the country’s total tobacco market. Recently, Pakistan has seen a remarkable development: In December, BAT announced that its modern oral nicotine brand Velo had achieved a monthly volume of more than 40 million pouches in the country, making it BAT’s third-largest market for nicotine pouches. Modern oral nicotine products consist of pre-portioned bags comprising nicotine applied to a carrier material. They are considered to be a more advanced, cleaner version of Swedish snus.

    Could Pakistan’s experience in substituting hazardous SLT products with less harmful varieties serve as a blueprint for India? “The tobacco use patterns in both nations are similar,” says Samrat Chowdhery, director of the Council for Harm Reduced Alternatives, referring to the high share of oral tobacco use. “Nicotine pouches have not been sold on scale before in the South Asian region, hence their substitution potential for the region’s tobacco users, especially the SLT users, was not known. Their success in Pakistan is welcome proof that they can replace the deadlier local oral tobacco—though whether that is indeed happening needs to be better understood.”

    Nihar Dholakia, director of next-generation products at Dholakia Tobacco, an SLT company based in Gujarat, India, has been closely monitoring the rise of the modern oral category in Pakistan. “Given that both Pakistan and India have a similar culture of using SLT products, we believe that the success of nicotine pouches in Pakistan could be replicated in India but on a much larger scale.”

    In light of the Indian government’s abolitionist strategy and the competitive structure of the local SLT segment, in which two leading companies jointly hold around 40 percent of the market, less hazardous oral products in India could encounter major hurdles, according to Chowdhery. “Nicotine pouches and snus could face opposition from the SLT lobby unless they can be made to see the business potential,” he says. “It would be a major setback if the government banned safer oral nicotine products too.”

    Issues are also likely to come up in terms of cultural heritage and consumer education. “Tobacco use, especially oral, has long been part of India’s cultural milieu, just like alcohol is in western nations,” says Chowdhery. “SLT is also available for cheap, and varieties vary across regions. While the social stigma around smoking is beginning to develop, none exists for oral products as there is no secondary harm. Educating users can be challenging given the number of users, with different cultural norms and languages such that it is difficult to design communications.”

    “In India, the avenues available for broadly educating consumers about THR and more specifically finessing that message to SLT users may be very limited,” says Dholakia. “The process seems to be largely organic, with consumers themselves becoming aware of the harmful effects and seeking alternatives. This often involved researching THR and exploring a range of reduced-risk products available. Online resources and word of mouth play a significant role in the education process. However, to make a more substantial impact, we require greater consumer advocacy as well as government initiatives to generally raise awareness.”

    We believe that the success of nicotine pouches in Pakistan could be replicated in India—but on a much larger scale.

    Nihar Dholakia, director of next-generation products at Dholakia Tobacco

    Treading New Paths

    Despite the government’s reluctance to admit safer substitutes, not all is lost for THR in India. Dholakia and other manufacturers are beginning to look at snus and nicotine pouches. With the Paz brand, his business recently launched the first Swedish-style tobacco snus brands in India. “In fact, we operate India’s first online platform for snus,” says Dholakia. “However, we face regulatory challenges, such as the requirements of an 85 percent pictorial warning of product packaging, high taxes and restrictions on advertisement and promotion. Nevertheless, despite these obstacles, we have observed a growing trend among consumers who are actively seeking reduced-risk products as a better alternative.”

    Dholakia Tobacco caters primarily to the premium SLT category. “However, considering the fact that India has over 220 million smokeless tobacco users who lack access to harm-reduced alternatives, we aspire to make our products more accessible and available to any SLT user. Therefore, we are determined to expand our reach to a broader audience in the domestic market as well through the right forms of direct-to-consumer education and word-of-mouth product awareness.”

    Indian consumers have responded positively to Dholakia’s snus products, particularly after switching from traditional chewing tobacco, cigarettes or khaini. “Many customers have reported experiencing a positive change firsthand, indicating their acceptance and awareness of the harm-reduced properties of snus products,” says Dholakia. “These are some of our future ambassadors for risk-reduced products, who will quite naturally be out there to talk with other consumers about their experiences with these new products.”

    The company also manufactures a filtered khaini brand, which has become popular in many Indian states recently. Filtered khaini is a modern version of khaini chewing tobacco that resembles western-style, portion pouch-packed snus but has a significantly different toxicological profile. “Traditional filter khaini available on the market is not less harmful than regular khaini,” clarifies Dholakia. “In fact, it can be thought of as a pulverized moist version of khaini packed in an oral pouch.”

    Dholakia’s filtered khaini brand is not the same, he insists. “The filter tobacco products we offer are different in composition when compared to traditional filter khaini and commercially available products in India currently. It can be said it is less harmful than other filter products due to the use of low-impact base ingredients, the type of quality tobacco and the novel processes as well as our advanced approach to product integrity and testing infrastructure. As far as affordability and availability is concerned, these filter products are comparable to regular chewing tobacco and khaini products. They are available in a few states and are perceived by khaini consumers as a more sophisticated version of a mainstay khaini product.”

    Dholakia Tobacco has also ventured into modern oral nicotine pouches. It was the first company in India to venture into this category. “As pioneers of modern oral nicotine pouches from India, our products are currently available only in the global markets we cater to and have not yet been launched domestically,” Dholakia says.

    “However, we are considering and working toward introducing them in India as we firmly believe that they can have a positive impact on public health in the country. We are confident that Indian consumers are ready for such a product. Accessibility, awareness, the right information, a fair regulatory framework and quality control are key factors that need to be addressed for the category. Given that India is in dire need of multiple harm-reduced products, we are committed to making them available in India.”

    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.
  • Safety Valve

    Safety Valve

    Photo: Tobacco Reporter archive

    Within a sensible tax regime, fine-cut tobacco works as a fender between factory-made cigarettes and the black tobacco market.

    By Stefanie Rossel

    In the nicotine ecosystem, fine-cut tobacco (FCT) fulfils an important function: More affordable than higher taxed factory-made cigarettes (FMC), it serves as a buffer between the latter and illicit smokes. For the past decade, however, sales of FCT have declined in line with those of FMC.

    Across the European Union, home to some of the world’s leading markets for roll-your-own and make-your-own products, FCT consumption stood at 78,638 tons in 2021, down from 80,986 tons in 2020, according to the EU Commission. Germany led the European FCT market with a volume of 25,727 tons in 2021 compared with 26,328 tons in the previous year. Other major markets in 2021 were France (7,288 tons), Spain (6,219 tons), Italy (5,303 tons) and Belgium (5,036 tons). Each of them witnessed declines compared to 2020.

    Due to the heterogeneous nature of the EU hand-rolling tobacco market, it is difficult to identify a unionwide FCT trend, according to Peter van der Mark, secretary general of the European Smoking Tobacco Association (ESTA). “The fine-cut tobacco market in Europe is characterized by a variety of very different markets, each with its specificities and level of maturity,” he told Tobacco Reporter in a recent conversation. “If one should, however, try and capture a general trend, I believe best is to say that FCT has been unstable with more ups and downs since we last talked than during the past 10 years during which the trend was a slow but steady decline.”

    The ESTA observed that in mature FCT markets, such as the Netherlands, Germany, Belgium or France, the decline was sharper than elsewhere. Although recent economic conditions may have temporarily slowed down this decline, there is reason to believe the accelerated downward trend will continue in those markets, according to the trade group.

    Van der Mark doubts that recent developments, such as the introduction of novel products such as nicotine pouches, has significantly changed the tobacco market in Europe. Meanwhile, the impact of Covid and the sanitary or economic measures to counter the pandemic depended heavily on the price levels of tobacco products.

    “For example, we witnessed in many markets that FCT fully fulfilled its buffer function, especially following border closures,” says van der Mark. “In France, for instance, consumers could no longer access cheaper cross-border cigarettes or illicit ones. As a result, FCT sales went up significantly during that period, capturing consumers that otherwise do not source their tobacco on the French legal market. This, however, was very conjunctural as sales immediately reverted to ‘normal’ levels when travel restrictions were lifted. It was also not a phenomenon occurring in all member states but one linked to where an extensive parallel market existed—the higher [the typical sales in the parallel market], the more sudden was the shift toward FCT.”

    Observations also confirm the buffer function of FCT in the economic crisis brought about by Russia’s invasion of Ukraine, according to van der Mark. “The downturn and inflationary period already put—and continues doing so—consumers’ disposable incomes under pressure to varying extents from one country to another,” he says. “When faced with higher budgetary constraints—and provided that FCT is taxed appropriately—consumers are more likely to switch to FCT. The alternative is that outpriced consumers source their tobacco outside of the legal domestic market. Our forecast therefore is that FCT sales will continue to slightly grow in countries where FCT taxation is not prohibitively high in comparison to cigarettes and that in other cases, consumption of nonduty-paid cigarettes will rise.”

    Unintended Consequences

    France provided a case study of what happens when the buffer of fine-cut tobacco is removed. A major tax hike in 2020 caused the fiscal burden on FCT to rise far more than that of cigarettes, providing a significant boost to the country’s illicit cigarette market. According to KPMG, France remains the EU’s largest illicit cigarette market, with illegal sales of 15.1 billion sticks, or 29 percent of total domestic consumption, in 2021.

    “The differential is not large enough anymore to ensure FCT can be seen as a valuable legal alternative for outpriced consumers, hence the ‘new heights’ in illicit trade,” says van der Mark. “As a result, French authorities have been grappling recently with illicit factories producing cigarettes on the French territory whilst this phenomenon was initially limited to eastern and central Europe. Last year, it was reported that about 100 illicit factories were dismantled throughout the union in 2021 alone, with most of their production, cigarettes, being destined to markets such as France or the U.K.”

    Encouragingly, there are signs that French authorities are starting to appreciate how their fiscal policy is impacting revenues and disrupting health objectives. “After the experience of Covid, the French Assembly made a report on the size of the parallel market,” says van der Mark. “Interestingly, the report describes nothing else but the FCT buffer function, but it has a hard time acknowledging it.”

    Van der Mark expects to see a similar rise of illicit cigarettes in the U.K. The country, which is no longer an EU member, remains an important market for fine-cut tobacco. Under the cost-of-living crisis the U.K. is currently experiencing, RYO products have come to account for 46 percent of the country’s tobacco market. In mid-March 2023, the U.K. raised cigarette taxes by 10.1 percent in line with the retail price index plus an additional 2 percent, bumping the price of a pack of 20 cigarettes to more than £14 ($17.39). Duty on hand-rolling tobacco was increased by 10.1 percent plus an additional 6 percent.

    “It is not the first time that U.K. authorities establish an ‘escalator’ policy like this, each time leading to increased illicit trade and increased tax gaps and usually leading to authorities halting that policy after a few years,” observes van der Mark, citing a study by London Economics commissioned by the ESTA. The country has some of the highest FCT duties in Europe. In 2004–2005, these contributed to FCT illicit trade levels of up to 62 percent, according to the report. Following increased enforcement activities and more moderate duty increases, the illicit trade in FCT dropped to 28 percent—a record low—in 2016–2017. “There is no reason to believe that this policy being a mistake in the past will not be another one now,” says van der Mark.

    By contrast, Germany’s tax model has reduced smoking prevalence while containing demand for illicit products, according to van der Mark. In January 2022, the country’s Tobacco Tax Modernization Act entered into force. It includes a four-stage tax increase between 2022 and 2026. Excise on fine-cut tobacco will increase between €0.13 and €0.16 per year whereas the average tax hike for a pack of 20 factory-made cigarettes will be €0.08. According to the German Federal Office of Statistics, the volume of duty-paid FCT rose by 0.9 percent in 2022 despite the tax hike compared to the previous year while sales of FMCs decreased by 6 billion units, or 8.3 percent, during the same period.

    “If we compare the tax increase on a 1 gram versus 1 stick basis, which is the approach enshrined in the excise directive, the tax differential is essentially maintained throughout the period, specifically to allow FCT to fulfill its buffer function,” says Van der Mark.

    FCT sales will continue to slightly grow in countries where fine-cut tobacco taxation is not prohibitively high in comparison to cigarettes. In other cases, consumption of nonduty-paid cigarettes will rise.

    Peter van der Mark, secretary general of the European Smoking Tobacco Association

    A Hurdle for Exports

    It remains unclear how the EU will tax FCT in the future. The European Commission failed to propose an expected update to the 2011 EU tobacco tax directive in December. Instead, leaked documents gave some indications of the commission’s intentions (see “A Blunt Tool,” Tobacco Reporter, February 2023).

    Rumors suggest that the commission’s proposal sought to align the FCT minimum tax rate with that of cigarettes and that these minimum rates would be adapted to each member state’s level of affordability. “Obviously, we believe such a proposal would have severely impacted the FCT markets considering it would have forced a number of countries to ignore a tax differential above the minimum rates, leading to increases of illicit trade as was experienced in the countries that adopted such an approach, such as France, the U.K., Netherlands, Greece or Ireland,” says van der Mark.

    Taxation aside, the FCT sector is still struggling with another issue: In line with the EU Tobacco Products Directive’s track-and-trace requirements, EU-made tobacco products must now carry an EU code regardless of the regulations and labeling obligations in the destination market. “If the destination market has a different and noninteroperable traceability system, this heavily disrupts production, increases cost, creates distribution hassles and as a result significantly disadvantages EU companies,” says van der Mark.

    “As of May 2024, the scope of the EU traceability regime will be extended to other (niche) tobacco products. Some of them, such as pipe tobacco products, are typically manufactured in Europe and exported all over the world. At the same time, the World Health Organization Framework Convention on Tobacco Control and anti-illicit trade protocol require all parties to adopt a traceability regime but does nothing to ensure these systems are interoperable. Therefore, we do expect this issue to become more and more prominent,” says van der Mark.

    In March 2023, the EU Commission published an implementation regulation amending the previous one for the functioning of the EU system. “This was obviously the opportunity to provide export products with more flexibility, but the commission refused to do so,” says van der Mark. “As you can imagine, this amended Implementing Act was developed by the commission without conducting a single evaluation before and without allowing for a discussion with the relevant stakeholders.

    “Interestingly, whilst the commission always claimed that track and trace was about stopping illicit trade, the commissioner recently replied to a parliamentary question by stating that ‘the system does not provide any information on the illicit trade of these products.’ To us, this shows that the system was adopted and designed based on the assumption that the industry itself was organizing illicit trade—that policy choices were made with complete disregard for the impacts on smaller companies.”

    The commission’s recent insistence that the system is not about illicit trade, says van der Mark, suggests it has realized its initial assumptions were wrong.

    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.
  • Veolia Launches Vape Collection Service

    Veolia Launches Vape Collection Service

    Photo: alexlmx

    Resource management company Veolia has launched a national vape collection service to help provide safe disposal and recycling routes for the 3 million vapes currently thrown away in the U.K. each week.

    Veolia states that it can now facilitate the collection and transport of vaping products from retailers to a recycling facility to extract the valuable materials, including lithium, cobalt, nickel and manganese, inside.

    The recycling of these items could save more than 10 tons of lithium that could be recycled into new products from the batteries, which would save up to 72 tons of carbon emissions compared to using raw materials as producing 1 ton of lithium from ore produces around 9 tons of carbon dioxide emissions, according to Scottish Local Retailer.

    Collections will be scheduled according to demand, and in order to store and transport these materials safely, Veolia will provide retailers with individual containers of vermiculite, a mineral that will minimize fire risks from the lithium-ion batteries contained within the vapes.

    “Two vapes are thrown away every second. They might be called disposable, but they can and should be recycled,” said Donald Macphail, chief operating officer of treatment at Veolia U.K. “Our new nationwide vape collection service will provide a safe recycling avenue to retailers who provide the mandatory takeback schemes for vapes and ensure that we can extract the valuable materials contained within and mitigate any fire and environmental risks.”

  • ‘FDA Ignoring Science on Vapor’

    ‘FDA Ignoring Science on Vapor’

    Image: Tobacco Reporter archive

    The government watchdog group Protect the Public’s Trust filed a complaint with the Department of Health and Human Services over what it says are scientific integrity violations involving the impact of vaping.

    The complaint states that the U.S. Food and Drug Administration is promoting public health messages on vaping that appear to be unsupported by its own research and scientific findings, according to Center Square.

    Protect the Public’s Trust stated that the FDA was making “scientifically unfounded statements about the vaping industry” contrary to its own research, adding that the agency’s own data appeared to contradict the FDA’s public stance on vaping products.

    Protect the Public’s Trust said an FDA report found that “only a subset” of the many harmful compounds found in cigarettes are found in vapes and “at much lower levels” than those in cigarette smoke. That FDA report found that menthol vapes were helping adult smokers quit cigarettes better than fruit flavors, candy flavors or traditional tobacco flavors.

    In the complaint, Protect the Public’s Trust stated that former FDA Commissioner Scott Gottlieb presented vaping as comparable to smoking traditional cigarettes because “several of the dangerous chemicals in tobacco smoke are also present in the aerosol of some [vaping] products.”

    But the FDA declared that “Vaping is not harmless. It carries real health and safety risks, including addiction and other negative health effects.”

    “Many studies suggest e-cigarettes and noncombustible tobacco products may be less harmful than combustible cigarettes. However, there is not yet enough evidence to support claims that e-cigarettes and other ENDS [electronic nicotine-delivery systems] are effective tools for quitting smoking,” the FDA stated on its website.

    Protect the Public’s Trust stated that there has been a pattern of the government not following “the science.” Protect the Public’s Trust also claimed in December 2022 that the Centers for Disease Control and Prevention failed to track side effects of taking the Covid-19 vaccine.

    “Once again, it appears that federal public health leadership has chosen to sacrifice scientific integrity and the public’s rapidly disappearing trust on the altar of political and special interest agendas,” said Michael Chamberlain, director of Protect the Public’s Trust, in an email to The Center Square. “While we were promised that health officials would follow the science, what we have observed instead is a disturbing trend of ignoring or disregarding scientific research and data that don’t fit their particular biases.”

  • Philippines Government Ends Illegal Online Sales

    Philippines Government Ends Illegal Online Sales

    Image: Tobacco Reporter archive

    The Philippines government is set to remove 15,000 more noncompliant electronic cigarette sellers in online marketplaces, reports The Philippine Star.

    “We have monitored almost 15,000 sellers online,” said Ruth Castelo, trade undersecretary. “We’ve advised platforms to remove almost 15,000 we observed that were noncompliant. These sellers all have cases already.”

    Unregistered vapor products are subject to the Vape Law, which came into effect Dec. 28, 2022, and prohibits flavors, colorful caricatures on packaging and selling products within 100 meters of schools, among other restrictions.

    “If online platforms would just strictly follow, there is no need to remove the sale of this product from them,” said Castelo. “It’s already indicated which products they can’t sell, but some still evade detection.”

  • Zimbabwe Farmers Happy with Shisha Sales

    Zimbabwe Farmers Happy with Shisha Sales

    Photo: Cavendish Lloyd

    The newly initiated shisha tobacco marketing season in Zimbabwe has been successful so far, with farmers selling 263 bales worth $97.9 million at an average price of $4.40 per kg and the highest price at $5.40 per kg, reports The Herald.  

    Some farmers have expressed that they will increase their hectarage next season based on the positive sales so far this season.

    “I recommend farmers to grow this type of tobacco; no curing using firewood,” said Victor Mariranyika, president of the Tobacco Farmers Union Trust. “Hence it is cheap to cure. Farmers need to maximize production since air is the major source of the drying energy. Shisha tobacco production is a welcome development.”

    Special handling of shisha tobacco is required, however. “The tobacco needs very special attention because the plant or the leaf is very thin, so if you don’t carefully handle it, the leaf itself breaks,” said Jayson Scott, a Marondera farmer. “I have delivered 15 bales, and if everything goes well, I will increase hectarage.” 

    The Tobacco Industry and Marketing Board (TIMB) has licensed Cavendish Lloyd Tobacco to support shisha production in the country.  

    This season has been a chance to learn and develop a better shisha crop, according to Chelesani Tsarwe, a TIMB public affairs officer. Tsarwe said the target is to expand shisha production in slow-growing areas and to encourage more growers to produce shisha as it presents better opportunities.

    “Desirable shisha tobacco should have a clean leaf, but the produce from fast-growing regions tends to have spots,” Tsarwe said. “Growers in these areas should take agronomic advice seriously in order to improve leaf quality and fetch better prices. Good agronomic practices are key to quality and better productivity.”

  • Belgium Experts Call for EU-Wide Filter Ban

    Belgium Experts Call for EU-Wide Filter Ban

    Image: Tobacco Reporter archive

    Filtered cigarettes are equally as unhealthy as unfiltered cigarettes, a Superior Health Council analysis showed, according to The Brussels Times.

    The analysis also stated that filters cause a false sense of security and can cause more carcinogenic substances in cigarette smoke.

    “Filters in cigarettes do not actually reduce the harmful health effects of smoking. From a public health perspective, they do not offer any benefit while they pollute the environment,” said the report by the Superior Health Council.

    Banning filters could make smoking less attractive as well, as filters are said to have a more “pleasant” mouthfeel, reduce sensory irritation in the airways and prevent tobacco from entering the mouth.

    “Instead of protecting against lung cancer, the filters have mainly promoted a shift in lung cancer type over the years,” the Superior Health Council concluded, adding that filters are therefore a “false solution” to the health problem caused by smoking.

    The Superior Health Council is asking that filters be considered nondegradable single-use plastic products like disposable plastic bags. The council is also suggesting that a filter ban be implemented across the European Union to give it the best chance of success.

  • Tobacco Regulation Not Violation of Rights

    Tobacco Regulation Not Violation of Rights

    Image: Tobacco Reporter archive

    Malaysia’s anticipated tobacco control bill will not deprive citizens of personal liberties and equality, according to the Malaysian Council for Tobacco Control (MCTC), reports Malay Mail.

    The anti-smoking council found that the bill, which aims to end cigarette consumption for those born after 2007, is constitutional after former Chief Justice Tan Sri Zaki Azmi lobbied against the bill.  

    “Nicotine addiction is not distinguishable from addiction to other drugs,” the council said in a statement. “If the country can ban or regulate other drugs, it can also regulate nicotine. It must also be emphasized that nicotine is more addictive than opium; if we can stage a war on opium, why not on nicotine?

    “The main objection to the state initiative in this area is that the law will be difficult to enforce. That is indeed true. But admittedly, the challenges surrounding enforcement accompany all laws.”

    Azmi stated that the bill could infringe on constitutional freedoms, but the MCTC stated that Article 5(1) of the Constitution does not give an absolute right to liberty, which, according to the MCTC, can be deprived only in accordance with the law.  

    “As long as there is a valid law, and the executive acts under it, there is no unconstitutional violation of personal liberty,” the MCTC said after seeking advice from constitutional experts.

  • UKVIA Publishes ‘Greenprint’

    UKVIA Publishes ‘Greenprint’

    Image: Tobacco Reporter archive

    The U.K. Vaping Industry Association (UKVIA) has published a comprehensive “Greenprint for Sustainable Vaping” following an industry-wide consultation.

    The development of a green action plan was developed with input from leading players in the waste industry, regulators, the retail sector, vape manufacturers and experts in consumer behavior. It comes as the industry has faced increased scrutiny regarding the environmental impact of vapes, particularly single-use products known as disposables.

    “Whilst entry-level single-use devices are responsible for record numbers of adult smokers switching to vaping due [to] their ease of use and convenience, the industry realizes that much more must be done to safeguard against their impact on the environment,” said UKVIA CEO John Dunne. “The fact is that disposables have been around for a while but have become hugely popular in the last couple of years, particularly with those on low incomes who are amongst the most prevalent smokers.

    “The Greenprint aims to mobilize environmental action to support a sustainable vaping sector in the future. It covers the development of recycling infrastructure, which is fit for the vaping industry, new vape innovations that make products more recyclable and reusable as well as the support that needs to be put in place to encourage greater retailer and consumer participation in the environmentally conscious disposal of vape products.”