Author: Taco Tuinstra

John Miller Joins 22nd Century Group

John Milller
John J. Miller has joined 22nd Century Group to help the company achieve the full potential of its reduced-nicotine business.
Miller has more than 35 years of experience in the tobacco and consumer packaged goods industries. He will work directly with Jim Mish, CEO, and with Michael Zercher, chief operating officer of 22nd Century Group.
“We are absolutely delighted to welcome John Miller to our team,” said Mish. “His significant hands-on expertise and insight in strategic planning, assessing and implementing strategic partnership opportunities, and leading sales and marketing efforts will be instrumental in accelerating revenue, profit and market share growth for the company. We look forward to John’s contributions to the success of the company’s launch of VLN, our reduced nicotine cigarettes with 95 percent less nicotine than conventional cigarettes, which is the first and only modified-risk tobacco product approved by the FDA.”
“I am extremely impressed with the team of outstanding professionals at 22nd Century Group and their commitment to product innovation,” said Miller in a statement. “I am very enthusiastic to be joining the company at this pivotal time in its history and leading the VLN initiative on the heels of the product’s successful pilot launch. VLN is a transformative brand with tremendous market potential. I am incredibly optimistic about the meaningful difference it could make in the lives of people to help them smoke less.”
Most recently, Miller was the president and CEO of Swisher International, a 160-year-old leading lifestyle brands company that is the largest manufacturer and exporter of cigars and smokeless tobacco products in America. Miller joined Swisher in November 2012 as senior vice president of sales and marketing, was promoted to president in 2017 and was named CEO in March 2021.
Miller’s experience also includes more than 20 years in various management positions at U.S. Smokeless Tobacco Co. As regional vice president, he had direct oversight and responsibility for all sales, planning and operations for key brands in the Western United States. U.S. Smokeless Tobacco Co. was acquired by Altria in 2009.
Miller holds a Bachelor of Science degree in finance from the University of Nevada, Las Vegas and a Master of Business Administration degree from the George L. Graziadio School of Business Management at Pepperdine University.
May 24, 2022
Lucy Submits PMTAs for Modern Oral Products

Photo: Lucy Goods
Lucy Goods has submitted premarket tobacco product applications (PMTAs) to the U.S. Food and Drug Administration seeking marketing authorization of 42 of its modern oral nicotine products, including its innovative line of capsule pouches.
Lucy is a developer, marketer and distributor of next-generation nicotine products that offer adult tobacco consumers alternatives to conventional tobacco. One of the key product innovations described in Lucy’s recently submitted PMTAs is its use of nontobacco nicotine.
The nontobacco nicotine in Lucy products is manufactured using principles of green chemistry but is otherwise chemically identical to tobacco-derived nicotine in other modern oral products on the market, according to Lucy Goods. The low-waste manufacturing process does not require arable land or pesticides used in the cultivation of tobacco for tobacco-derived nicotine.
Lucy’s recent filings represent the second round of FDA applications from the company. In 2020, Lucy submitted PMTAs for its modern oral nicotine products containing tobacco-derived nicotine, which are currently under review by the FDA. Even before the FDA was granted regulatory authority over nontobacco nicotine products, the company had been engaged in serious efforts to prepare PMTAs for its suite of nontobacco nicotine products.
Willie McKinney
“Lucy’s commitment to working with the FDA is essential to its goal of delivering innovative nicotine products for switching adult smokers,” said Willie McKinney, CEO of McKinney Regulatory Science Advisors and a regulatory advisor to Lucy, in a statement. “These PMTAs for Lucy’s NTN [nontobacco nicotine] modern oral products demonstrate the company’s ability to drive such innovation responsibly.”
“Submitting PMTAs for our nontobacco nicotine products is a key milestone for us as we continue to create the highest quality and most innovative products in the industry,” stated David Renteln, CEO of Lucy. “We are proud of the evidence we have provided to the FDA in these PMTAs, and we look forward to working with the agency as the process moves forward.”
Lucy is an independently owned and operated nicotine alternative company formed with the mission of reducing tobacco-related harm to zero.
May 24, 2022
RLX Results Impacted by Pandemic
RLX Technology reported net revenues of CNY1,71 billion ($270.4 million) for the first quarter ended March 31, 2022, compared with RMB2.4 billion in the same period of 2021. Gross margin was 38.3 percent, down from 46 percent in the same period of 2021. U.S. GAAP net income was RMB687.1 million, compared with a U.S. GAAP net loss of RMB267 million in the same period of 2021. Non-GAAP net income was RMB361.8 million, compared with RMB610.5 million in the same period of 2021.
“During the first quarter of 2022, we continued to focus on our core strategy and maintain our leading position in the industry while preparing for the anticipated regulatory changes,” said Ying (“Kate”) Wang, co-founder, chairperson and CEO of RLX Technology, in a statement.
“As the new regulatory framework has come into effect and detailed implementation measures have been released, we are proactively adapting our business to the new market environment by applying for the relevant licenses and developing qualified products that meet the requirements of the most recent national standards. We believe that, by leveraging our leading research and development abilities, we are able to launch market-leading products that conform to the national standards and satisfy our users’ needs.
RLX Technology attributed the decline in net revenues to the impact of the Covid-19 pandemic on its factory in Shenzhen, which limited the company’s production and shipment volumes.
“Our cash position remains solid, which will support us as we navigate the market dynamics and agilely adjust our business to the fluctuating macro environment,” said Chao Lu, chief financial officer of RLX Technology. “Looking ahead, we will remain focused on the business elements under our control, such as product innovation, cost optimization and operating efficiency, to reinforce our fundamentals and position ourselves to seize future opportunities. As always, we are committed to delivering sustainable growth for our shareholders in the long run.”
May 21, 2022
Steady Footfall on First Day of WT Europe

Bulgaria’s deputy minister of agriculture, Momchil Nekov, opened the WT Europe exhibition in Sofia this morning. Describing the economic importance of tobacco to Bulgaria, along with the challenges and opportunities facing the business, Nekov stressed his government’s commitment to an orderly development of the sector.
The event appeared to be well attended, with considerable crowds lining up to register when the Inter Expo and Congress Center opened its doors this morning. With more than 50 exhibitors, WT Europe is the first tobacco event to take place in Europe as the Covid-19 pandemic recedes, and many visitors said they relished the opportunity to meet people in person again following two years of lockdowns and video conferences.
Show organizer Quartz Business Media said it was elated with the interest in its event. “We have experienced steady footfall all morning and look forward to two days of productive networking,” said Sales Director Colin Case. Several visitors commented on the high quality of attendees, a factor they said made attending the show more than worth their while.
In addition to the exhibition, Quartz Business Media had put together an engaging conference with expert speakers from Euromonitor, the International Tobacco Growers Association and Universal Leaf Tobacco Co., among other prominent organizations.
May 18, 2022
Altria Buys Poda’s Assets and Properties

Photo: Poda Holdings
Altria Client Services will pay $100.5 million for assets and properties used in Poda Holdings’ business of developing, manufacturing and marketing multisubstrate heated capsule technology, according to a Poda press release. The deal includes the owners’ associated patents and the company’s license of certain of those patents pursuant to an amended and restated royalties agreement dated April 12, 2019.
“This agreement represents a significant milestone for Poda and its employees,” said Ryan Selby, Poda’s CEO, director and chairman of the company’s board of directors. “Our teams have worked diligently on this technology since the company’s inception, and we believe these agreements maximize its value for the company and its shareholders.”
Poda’s multisubstrate heated capsule technology uses proprietary biodegradable single-use capsules. The design of the technology prevents cross-contamination between the heating devices and the capsules, which eliminates cleaning requirements and provides users with a convenient and enjoyable experience, according to Poda Holdings.

This agreement represents a significant milestone for Poda and its employees.
Ryan Selby, CEO, director and chairman, Poda Holdings
Poda’s technology is fully patented in Canada and is patent pending in over 60 additional countries, covering almost 70 percent of the global population.
Tobacco Reporter profiled Poda Holdings in January 2022 (see “Making its Mark”).
Altria Client Services’ parent company, Altria Group, currently holds a license to distribute Philip Morris International’s IQOS HnB product in the United States. That product, however, has been subject to an import ban in the wake of an intellectual property dispute with BAT.
Analysts have also speculated on the likelihood of the IQOS distribution deal being renewed when it expires in 2024. PMI and Altria currently disagree about whether Altria has thus far met the milestones to earn the renewal option for an additional five-year deal.
May 16, 2022
WHO Accuses Industry of ‘Greenwashing’

Photo: nito
The World Health Organization is urging governments worldwide to ban tobacco industry “greenwashing”—the touting of sustainability credentials as a way to distract from the health and environmental impacts of smoking.
In a new report, the health groups detail efforts by the tobacco industry to improve its image.
“This kind of activity gives the impression that the tobacco industry is socially and environmentally responsible,” the report’s authors warn. “Yet this industry is causing an incalculable toll on health to smokers, non-smokers and farmers. And not only is tobacco harming humans, it is also damaging the environment.”
Tobacco companies frequently tout their environmental credentials, and their efforts have been recognized by independent organizations. Most multinationals feature prominently on CDP’s prestigious A list, for example. CDP is a not-for-profit charity that runs a global disclosure system for investors, companies, cities and regions to manage their environmental impacts. Its process is acknowledged as the gold standard of corporate environmental transparency.
Tobacco companies also rank highly on the Dow Jones Sustainability Indices, a global sustainability benchmark that tracks the stock performance of the world’s leading companies in terms of economic, environmental and social criteria.
Critics contend that ESG rankings and accreditations rarely consider a company’s end-product or service, in this case, ignoring the fact that tobacco products are harmful to human health, according to the report.
The report says there are more than 600 different ways to assess corporate ESG activity and there are no global, standardized disclosure requirements for companies to follow, which means businesses can edit sustainability data to promote a favorable outcome.
The authors of the greenwashing reports urge organizations to avoid partnerships with cigarette companies engaged in environmental activities that could promote the industry as an environmental partner.
The WHO/STOP report also highlights the ecological impact of the tobacco industry. Annually, 32 million tons of tobacco leaf is grown globally to produce 6 trillion cigarettes, according to its authors. It takes about 22 billion tons of water to grow the global crop, often in places where water is limited, they argue.
The report estimates that nearly 1.5 billion acres of global forest have been lost to tobacco farming since the 1970s. Electronic cigarettes, meanwhile, introduce plastic, nicotine salts, heavy metals, lead, mercury and lithium-ion batteries into the environment.
May 16, 2022
22nd Century Acquires GVB Biopharma

Photo: cendeced
22nd Century Group has acquired GVB Biopharma. As a contract development and manufacturing organization, GVB is believed to be one of the largest providers of hemp-derived active ingredients for the pharmaceutical and consumer goods industries worldwide based on total tonnage.
GVB’s strengths complement 22nd Century’s existing upstream and downstream value chains, which includes expertise in cannabinoid receptor science with CannaMetrix, plant research and proprietary genetics through its KeyGene partnership, breeding expertise with Extractas, and cultivation capabilities at Needle Rock Farms.
GVB expects 2022 revenue of approximately $48 million, a 58 percent increase year-over-year, gross margin in excess of 44 percent and positive cash flow. Upon closing, the transaction is expected to more than double 22nd Century’s revenue, be immediately accretive to adjusted EBITDA, and generate positive cash flow from the acquired assets in the near term.
“GVB represents a transformational acquisition for 22nd Century that will enable us to rapidly grow our hemp/cannabis franchise,” said James A. Mish, chief executive officer of 22nd Century Group, in a statement.
“GVB is one of the largest CBD suppliers globally, possessing innovative, vertically integrated cannabinoid product manufacturing technologies driving industry leading scale and cost efficiency. In addition to immediately expanding our hemp/cannabis franchise capabilities, GVB represents an opportunity to double our revenue and internalize a comprehensive contract manufacturing and extraction platform which can be used to directly and exclusively monetize our differentiated and proprietary hemp/cannabis plant genetics and intellectual property. We are enthusiastic to begin working with the highly regarded and very experienced management team at GVB.”
“We are excited to combine with 22nd Century group, pairing our production and manufacturing capabilities together with the best hemp/cannabis plant science in the world,” said Phillip Swindells, chief executive officer at GVB. “Since 2017, we have built a loyal customer base and continue to add new, rapidly growing customers as demand in our industry accelerates. We sold more than five billion doses of CBD in 2021, and we look forward to further scaling our business as a part of 22nd Century’s comprehensive platform.”
GVB operates three U.S. manufacturing facilities in Oregon and Nevada, including a 30,000-square-feet hemp ingredient manufacturing facility in Central Oregon, a 40,000 square-feet white-label, finished product manufacturing facility in Las Vegas, and an industrial-scale hemp extraction facility in Prineville, Oregon.
May 16, 2022
KT&G Posts Strong Results in First Quarter

Photo: KT&G
KT&G’s sales and operating profit soared by 11.5 percent and 10 percent, respectively, to reach KRW844.8 billion ($665 million) and KRW272.6 billion in the first quarter of 2022, according to a company earnings release. Performance was driven by KT&G’s flourishing overseas business, with robust sales of its heat-not-burn (HNB) tobacco products.
“Our sales expansion of HNB products in both domestic and overseas markets, along with increasing export volume of our traditional tobacco products, led to the growth of the company’s total revenue,” a KT&G official was quoted as saying by The Korea Times.
KT&G sold about 9.54 billion cigarettes in Korea in the first quarter of this year, 0.9 percent less than in the same period last year. However, its market share increased by 1.2 percentage points to 65.7 percent. In the HNB sector, the company’s products accounted for 45.1 percent of the domestic market.
KT&G’s overseas volume of combustible cigarettes jumped 43.8 percent to 11.5 billion, thanks to strong sales in the Middle East and Asia Pacific regions.
May 14, 2022
Swedish Match Accepts PMI’s $16 Billion Offer

Photo: Swedish Match
Swedish Match’s board of directors has accepted Philip Morris International’s offer of SEK161.2 billion ($16.14 billion), according to The Wall Street Journal. The deal is subject to shareholder approval.
PMI hosted a live audio webcast today to discuss the offer. An archived copy of the webcast will be available at www.pmi.com/investors until 5 p.m. ET on June 9, 2022.
“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” said PMI CEO Jacek Olczak in a statement. “Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion—strengthened by complementary geographic footprints, commercial capabilities and product portfolios—and open up significant platforms for growth in the U.S. and internationally.
“Swedish Match’s dedicated employees and management have steadfastly pursued the company’s vision of a world without cigarettes while delivering very strong results. We look forward to building upon this success and joining forces to accelerate our shared smoke-free mission.”
In 2016, PMI announced its new mission to replace cigarettes with science-based, less harmful alternatives as soon as possible, and the company says it has made considerable progress toward that goal. While in 2015, essentially all of PMI’s net revenues came from cigarettes, last year nearly 30 percent came from smoke-free products. By 2025, PMI aims to be a predominantly smoke-free company, with more than half of its net revenues coming from such products. PMI says it has built world-class scientific assessment capabilities, notably in the areas of preclinical systems toxicology, clinical and behavioral research as well as postmarket studies.

Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion.
Jacek Olczak , CEO, PMI
Swedish Match embarked on its smoke-free journey two decades ago, starting with its decision to divest its cigarette business. PMI says it values how Swedish Match has relentlessly pursued tobacco harm reduction through its range of smoke-free products; received authorizations for its products via strict regulatory pathways in the U.S.; and reshaped the public health environment in countries such as Sweden and Norway.
“As PMI continues to evolve its business for the long term, it believes that the two companies would be a perfect pairing of strategic vision, culture and enterprise,” PMI wrote in a press note. “Together, the companies would be able to create a global, science-led smoke-free champion, combining expertise in heated tobacco and oral nicotine—including multiple MRTP [modified-risk tobacco product] authorizations—as well as PMI’s emerging presence in e-vapor products, to switch more adult smokers to better alternatives than the two could achieve as separate companies. Swedish Match would lead the combined company’s oral nicotine business.”
Financial analysts confirmed the deal has strategic merit, citing Swedish Match’s access to the lucrative U.S. market. Cigarette sales have been declining almost unabated for years because of the health hazards and the stigma attached to smoking. Meanwhile, “modern oral” products, such as nicotine pouches and lozenges, are driving growth in the oral tobacco category, which includes traditional chewing tobacco and moist snuff. Swedish Match’s Zyn pouch leads the U.S. modern oral category with a volume market share of 64 percent in 2021.
According to PMI, the combination would immediately enhance PMI’s already strong growth profile and support additional opportunities in the U.S. and internationally over time. It is also expected to be accretive to adjusted diluted earnings per share before any synergies and excluding transaction-related costs as well as the amortization of acquired intangibles. Swedish Match’s operating cash flow comprises meaningful U.S. dollar net income, thereby improving PMI’s currency profile.
From January through March 2022, Swedish Match’s sales and operating profit from product segments increased on the back of continued strong momentum for the U.S. smoke-free business, according to the company’s interim report.
Group sales increased by 10 percent to SEK4.89 billion ($492.05 million). In local currencies, sales increased by 2 percent for the first quarter.
Operating profit from product segments increased to SEK2.12 billion. In local currencies, operating profit from product segments decreased by 7 percent for the first quarter.
Profit after tax amounted to SEK1.49 billion.
PMI says it intends to preserve and develop Swedish Match’s operational presence in Sweden, where much of the company’s skills base is located, as well as in Richmond, Virginia, the site of the head office for Swedish Match’s U.S. Division. PMI has no plans to divest Swedish Match’s Lights business.
May 11, 2022
For the Long Haul
Photo: Taco Tuinstra
Experts share their views on sustainability during the In Focus webinar.
TR Staff Report
Patricia Kovacevic
Sustainability: We see and hear the word everywhere. But what does it mean for the tobacco and nicotine sectors? How are sustainable strategies meeting the needs of our businesses and stakeholders today while ensuring that future generations can also thrive?
On May 5, a group of experts convened virtually at the In Focus webinar to explore how tobacco and nicotine are transforming to protect the future of people and the planet. Among other topics, they discussed product stewardship and leadership.
The In Focus event series was launched in 2021 with the focus of the first event on tobacco harm reduction. The new series evolved from the prestigious Global Tobacco and Nicotine Forum and aims to explore vital themes in greater depth.
The May 5 event featured five keynote speakers and two panel discussions and was moderated by Patricia Kovacevic, global legal and regulatory strategist and principal of RegulationStrategy.com.
Pippa Bailey
Pippa Bailey, head of climate change and sustainability practice at Ipsos U.K., a global market research and public opinion specialist, set out the concerns, perceptions and attitudes of people around the world toward climate change and sustainability. According to Ipsos, 83 percent of citizens across the globe believe that the environment is heading toward disaster. This is felt most acutely in South America where the impact of climate change has been greatest. Concerns around waste packaging and single-use plastics rank ahead of climate change, likely because this topic is very visible through dramatic images of polluted oceans and coastlines.
Cigarette butts are the most littered product on the planet, and solving this problem will require both leadership and innovation, according to Bailey.
Ipsos research shows that global citizens feel that they have given governments and businesses a mandate to address the environment. Sixty-two percent of citizens believe the Covid-19 pandemic was caused in part by people’s misuse of the environment
Social and environmental concerns are becoming increasingly linked, and Bailey advised companies to avoid operating in environmental, social and governance (ESG) silos. Consumers do not think that way, she noted—so neither should companies. Instead, their approach should be more holistic.
One challenge in achieving sustainability goals is the “say-do” gap, according to Bailey. While most citizens say that they care about the environment, their actions don’t always reflect their ambitions. Ipsos found that people tend to overestimate the impact of the actions they take. Businesses and governments, she says, need to make it easier for people to understand what more they could do to effect change.
Behavioral change is a big part of getting consumers to recycle, according to Bailey. Citizens are not willing to pay extra to achieve that, however. They are willing to make the sustainable choice, but the financial and social benefits must be equal in their eyes.
Erik Bloomquist
Examining sustainability from a financial perspective, Erik Bloomquist, a global nicotine and tobacco investment consultant, noted that the main priority for investors is tobacco companies’ transition to harm reduction products that can drive returns in the future.
In anticipation of the Foundation for a Smoke Free World’s 2022 Tobacco Transformation Index, Bloomquist presented data from 2020 to examine how much progress individual companies have made in shifting their business from combustible cigarettes to less harmful nicotine-delivery products. Product sales, capital allocation and expenditure are key criteria to assess that transformation, according to Bloomquist.
He also presented data from the index showing how the companies’ price/earnings ratios compare with their Tobacco Transformation Index rating. Swedish Match, Philip Morris International and BAT topped the list.
Bloomquist insisted that engagement, not exclusion, is key to progress and that investors support this.

Adrian Payne

Sarah Bostwick

Liem Khe Fung

Karen Hall

Ronald Ngwira
The first In Focus panel discussion, moderated by Adrian Payne, a consultant on corporate social responsibility and tobacco harm reduction, focused on leadership in a sustainable world.
Sarah Bostwick, head of sustainability stakeholder engagement at PMI, described her company’s ambition to phase out cigarettes and build new businesses in healthcare and wellness. She said the company aims to generate substantial revenues from these segments.
In the company’s 2019 sustainability materiality report, PMI set out how it accounts for internal developments and stays abreast of external trends. The company found that it could make the biggest difference by reducing the health impact of its products and addressing climate change. While the fist finding was expected given the health toll of smoking, the second was somewhat surprising considering that PMI’s operations have a relatively small environmental footprint.
Bostwick also stressed PMI’s openness to stakeholders’ scrutiny and engagement.
Ronald Ngwira, managing director of Pyxus Agriculture Malawi (PAM), detailed his company’s efforts to help meet global ESG targets. Working closely with the likes of Imperial Brands and PMI, PAM has reduced water usage by 60 percent. He said that building sustainability into the farmer base has been critical. From 2004–2010, Pyxus provided farmers with seedlings to help reverse deforestation caused in part by tobacco curing but with limited success. To make greater headway, the company decided to create its own tree plantations. Since 1991, Pyxus has planted more than 250 million trees worldwide, and in Malawi, PAM plants approximately 8 million trees each year.
Ngwira said that Pyxus’ sustainability initiatives also cover actions to eliminate child labor and forced labor, with the company investing in education and product traceability, for example.
Pyxus is leveraging its strong agricultural expertise to advance progress on key issues. In Malawi, the company has not only become one of the country’s largest sustainable timber producers, but it has also invested in alternative crops, such as groundnuts, thus helping farmers diversify their income streams.
Karen Hall, director of sustainability at Universal Leaf Tobacco Co., spoke about the challenge of growing tobacco as climate and social expectations change and are becoming more complex. In the face of global change, Universal Leaf is currently reviewing the resilience of its origins, setting ambitious but achievable goals, creating data-driven action to meet those goals efficiently and effectively, and preparing to adjust strategies as new information becomes available, she said.
Liem Khe Fung, innovation director at cigarette paper manufacturer BMJ, pointed out that 99.9 percent of paper production relies on water and detailed his company’s plans to minimize water consumption without compromising product quality at a time when water is becoming scarce.
Nathan Eaton
Following the panel discussion, Nathan Eaton, executive director at NGIS, spoke about the potential of data and technology—particularly geospatial capabilities—to help address ESG challenges and commitments.
While significant advances have been made in the fight against child labor, progress has recently slowed for the first time in 20 years. What’s more, it has been uneven across regions, sectors and age groups. Further progress will require new approaches and insights, according to Eaton
Eaton described a collaboration with BAT to bring disparate data sources together. Showing a Google Map of southern Brazil—a major tobacco producing area—he demonstrated the ability to display variables such as distance to schools, access to safe drinking water and housing conditions—factors that may help identify at-risk communities and drive further progress in the fight against child labor.
Juliette Le Roux Audren
Juliette Le Roux Audren, environmental health safety product stewardship and sustainability manager for EMEA at Amphenol, argued that waste reduction requires a combination of regulation and innovation. Minerals such as tin, gold and cobalt are becoming scarcer, she noted, and the risk of scarcity is often underestimated. By redesigning and re-engineering products, the world can avoid scarcity. This will require companies to pivot from linear production cycles to circular production cycles. Le Roux Audren argued that companies need to navigate between risks and opportunities and that agile product stewardship will help them make more of their talents.

Kevin Peng

Jodie Clarke

Edward Butt

Gianmarco Guiduzzi
The second In Focus panel, moderated by Edward Butt, group head of environment, social and government at BAT, centered on sustainable products and stewardship.
Jodie Clarke, vice president of procurement and corporate security at Altria Client Services, explained that Altria is addressing societal and environmental concerns by engaging with all stakeholders. The company aims to create value not only for shareholders but also for society by driving responsibility through the value chain—for example, by reducing the harm to health associated with tobacco consumption; sourcing and distributing responsibly; striving for supplier diversity; supporting agricultural sustainability; promoting human rights; and ensuring ethics and compliance.
Gianmarco Guiduzzi, head of sales and aftersales for Cerulean, detailed how Cerulean is putting sustainability at the heart of its equipment. He urged the industry to avoid working in silos and stressed that success requires the participation of people both upstream and downstream in the production process.
For Guiduzzi, the challenge is how to replace existing raw materials for products such as cigarette filters with environmentally less harmful alternatives. For example, cellulose acetate—a critical component of cigarette filters—often ends up as litter on land and in water. Finding an alternative material with the same filtering characteristics is a challenge. Guiduzzi also challenged the industry to find an environmentally friendly replacement for polypropylene film in cigarette packs.
One potential problem, according to Guiduzzi, is that each tobacco manufacturer is developing its own solution to these issues, and each will try to protect the associated intellectual property. While it is tempting for the larger multinationals to retain the fruits of their research and development, Guiduzzi said that, in order to create a level playing field and maximize the benefits, these solutions should trickle down to the wider sector.
Guiduzzi also noted the rapidly growing popularity of nicotine pouches, which he said will present their own sustainability opportunities and challenges.
Kevin Peng, advanced technology scientist at ALD Group, presented eco-friendly solutions developed by ALD, which are made from Poly (1,4-butylene succinate) (PBS), which is a biodegradable, semi-crystalline thermoplastic polyester synthesized through polycondensation of succinic acid and 1-4-butanediol, and another thermoplastic polyester, Polylactic Acid (PLA).
Peng claimed ALD’s solution will reduce emissions as well as avoid/reduce waste. The device features a biodegradable shell and a long-life battery, and the lifecycle of the product is integrated into a holistic recycling system.
Kate Rebernak
Kate Rebernak, founder and CEO of FrameworkESG, urged nicotine companies to practice “radical transparency” in their operations, arguing that without such radicalism, revenues will decline, share prices will slide and investors will turn away.
She pointed to the historical trust deficit suffered by the tobacco industry and urged companies to close the “say-do gap” by making sure that their actions match their words. As an illustration of how not to go about this, she cited U.S. companies publicly articulating their support for LGBTQ+ rights while at the same time financially supporting politicians who oppose such rights. She also gave the example of HSBC, which was recently reprimanded by the U.K. Advertising Standards Authority for advertising action against climate change while continuing to invest in fossil fuels.
Rebernak suggested three ways for the tobacco industry to become radically transparent:
Public-private engagement. She emphasized that a company cannot bring about change if it “isn’t in the room.” While acknowledging the hurdle presented by the Framework Convention for Tobacco Control’s Article 5.3, which aims to protect tobacco control policies from the commercial and other vested interests of the tobacco industry, Rebernak said the industry could attempt to overcome this hurdle by being radically transparent on its progress in tobacco harm reduction.
Sharing business models, investments in R&D and marketing. The Foundation for a Smoke-Free World’s Tobacco Transformation Index, for example, calls for greater disclosure on each of the companies’ policy positions.
Consumer behavior. Companies would be more successful at moving smokers away from combustibles to reduced-risk products if they were radically transparent about the risks versus the benefits. Crucially, she insisted, they should stop marketing products to children.
Chris Greer
The In Focus event also included a “fireside chat” on sustainability between Chris Greer, the president and CEO of Tobacco Reporter’s parent company, TMA, and Vincent Li of Hengfeng Paper, which celebrates its 70th anniversary this year. With 21 paper production lines and an annual production capacity of 230,000 tons, Hengfeng is one of China’s leading paper suppliers. For the cigarette industry, the company manufactures cigarette paper, plug wrap tipping base paper and paper for next-generation tobacco products.
Vincent Li
Papermaking has a considerable environmental impact due to the raw materials used (wood and water) and its energy requirements. In 2021, Hengfeng paper declared corporate carbon emissions of 3,139,297,000 tons. Following China’s national strategy to achieve peak carbon dioxide emissions by 2030 and carbon neutrality by 2060, Hengfeng aims to slash its CO2 emissions by more than a third in eight years.
Because power generation and acquisition account for the lion’s share of Hengfeng’s global warming potential, it makes sense to focus mitigating measures there. The company plans to replace some of the coal it currently uses to generate power with energy sources that lead to less pollution. Among other initiatives, it intends to electrify parts of the papermaking process and build a 10 MW photovoltaic power station.
Product design, too, offers opportunities to improve sustainability. By designing stiffer plug wrap papers, for example, Hengfeng enables cigarette manufacturers to use less acetate tow in their filters, thus reducing the proportion of a material that does not readily degrade in the environment.
May 10, 2022