Blog - Tobacco Reporter

Burgeoning Botanicals

Tobacco manufacturers see potential in the herbal heat sticks market.

By Stefanie Rossel

Only months after the newly emerged, highly fragmented niche of herbal heated products (HHPs) was deemed important enough to be covered by market analysts, Big Tobacco entered the scene. As it did with vaping, its arrival is expected to change the market significantly.

At the InterTabac exhibition in September, BAT introduced Veo sticks. The tobacco-free consumables, compatible with the company’s Glo Hyper Series induction heating device, are based on processed rooibos tea substrate that contains 1.6 percent nicotine. They come in five flavor variants, among them two minty and three fruity tastes. The flavor is released through a capsule in the filter. According to BAT, the sticks generate 90 percent less harmful substances than a standard reference cigarette. Veo sticks were first launched in nine European countries, among them Czechia, Germany and Italy. The company plans to roll out the product worldwide.

Also in September, Philip Morris International CEO Jacez Olczak presented his company’s new Levia product. Levia uses cellulose as its carrier material, a natural plant fiber that is also found in tobacco leaves. As Gizelle Baker, PMI’s vice president of global scientific engagement, explained in an interview, the product does not contain tobacco but contains nicotine and propylene glycol, thus creating an aerosolized nicotine similar to e-cigarettes. PMI claims that Levia emits on average 99 percent fewer harmful chemicals than combustible cigarettes—less even than e-cigarettes, which are said to be 95 percent less harmful than traditional smokes. The product has been designed for use with IQOS Iluma, a heated-tobacco device that uses induction technology to heat tobacco-based Terea consumables. Baker said that after an update of its firmware, the device is able to recognize the consumable used and adjust the settings to give users the best experience for that product. She added that the company would start to conduct “people usage” studies once Levia was put on the market.

According to eliquids.ie, Levia was introduced in the Czech Republic in November, with a retail price of €4.90 ($5.32) per pack—the same price as Terea. The product was initially available only in online shops and dedicated IQOS stores. It is marketed in two flavor variants in Czechia—“Electro Rouge,” a combination of blueberries, flower and menthol, and “Island Beat,” which the website describes as a creamy menthol and peppermint taste.

In November, Imperial Brands launched iSenzia heat sticks, which are formulated from Oolong and green tea leaves infused with nicotine and have been developed for the company’s Pulze 2.0 heating device. The product, which also features capsule technology, was introduced to the Czech market in four fruity flavors and one menthol flavor at a price of €4.30 per pack, according to Tobacco Insider.

Preserving Flavor Options

HHPs gained momentum ahead of the EU’s Oct. 23, 2023, ban on flavored heated-tobacco products (HTPs) (see “Teatime,” Tobacco Reporter, August 2023). Many observers expected the market to be short-lived. The entry of the leading tobacco companies surprised some, given the lengthy and costly process of product development that went into HTPs, says Eva Antal, director of market analysis at Tamarind Intelligence, parent of market research firm TobaccoIntelligence, which in November launched an Herbal Heated Sticks Tracker. “We don’t have information on how long these products were in the pipeline, but it is surprising how little information has been shared at launch about the scientific background of health impacts of HHPs,” she says. “Manufacturers’ motivation was to continue their offer of flavored products.”

Before the product launches by BAT, PMI and IB, all HHPs were targeting non-Iluma IQOS users and therefore were also compatible with KT&G’s Lil and IB’s Pulze devices. “No HHPs targeted Glo devices, as IQOS had and still has the highest market share in EU markets,” says Antal. “At that time, our estimate was that between 1 percent and 9 percent of heated-tobacco users were regularly using such products—mostly along with other tobacco-containing sticks—which was relatively low still. We observed an increasing offer in nicotine-containing HHPs in the past year as products not containing nicotine had been the main shortcoming of the category. With the main players launching their HHPs, this segment is bound for fast growth mainly driven by the fact that only these consumables will be able to have flavors and large companies’ distribution advantage to make these products widely available in their regular HTP sales channels.”

While many EU countries are starting to regulate the category, plenty of opportunity remains. “Eastern European markets with strong HTP markets are attractive due to a lower price point and consumers’ predilection of flavors,” says Antal. “Asia, where herbal smoking products have a long history, is strong, especially Japan.”

Amended Tax Laws

HHPs became popular not only due to their flavors but also because they initially avoided the taxes levied on their tobacco-containing counterparts. In the meantime, however, several countries have expanded their fiscal definitions to include HHPs. In December 2023, Greece changed its laws to fiscally equate tobacco-free electrically heated products with tobacco products. In Germany, tobacco-free Veo sticks are sold with a tax stamp stating, “heated tobacco” because it is being taxed as such.

Its price hasn’t changed, though. Since its introduction in Germany, a pack of Veo sticks has retailed for €5.80, the same price as BAT’s tobacco-based Neo sticks. “Large companies’ HHPs were launched on the same price as their tobacco-containing counterparts even in countries where they were not taxed,” explains Antal. “This was probably to avoid the cannibalization of tobacco sticks of the company. The price differential may not solely come from the tax. Price of raw materials, manufacturing costs and other margins may play into it as well, which is probably why we still see smaller companies’ HHPs being cheaper than HTPs even in countries with tax.”

Distribution and Scale

She predicts further growth in nicotine-containing HHPs, a category that started from zero nicotine options only, as well as a widening flavor offer. “PMI only launched HHP for IIuma, which is probably forward thinking as PMI is replacing heritage models with Iluma in an increasing number of markets,” she says. “But there are still a lot of users of heritage models that use Heets, which in the short term could be an opportunity for smaller companies. Imperial Brands’ Pulze HHP iSenzia is compatible with IQOS. Will there be a HHP launched for Fiit, which is the Lil consumable? PMI has a distribution relationship with KT&G, and their consumables are compatible with their devices. A Lil-compatible HHP may cannibalize PMI’s tobacco-containing Heets consumables, so this probably is not likely to be favored by PMI.”

The question, according to Antal, is whether these large company HHPs will remain in EU Tobacco Products Directive (TPD) markets or whether they will become part of a larger strategic change in direction away from tobacco.

Small players could be more agile to develop new products and respond quicker to consumer feedback. “However, they are not likely to have a huge advantage, as distribution and scale is key where larger players are better positioned,” says Antal. “Probably not a lot of questions will be asked by consumers if an HHP is made by the same company they know from their tobacco-containing consumables is displayed in the same place as their old product and has a flavor they like or are used to.”

She thinks that the Big Tobacco takeovers that happened in the vapor business are unlikely to occur in the HHP category. “As the HHP phenomenon started with zero nicotine, it has not become very popular before large companies launched, and smaller manufacturers did not have enough time to build significant market share. There is not a large amount of technical IP going into these products; they are easy to manufacture, and there currently is no brand with significant market share or brand strength, so I don’t see any acquisitions unfolding in this space.”

Observers agree that it is only a matter of time before governments start regulating HHPs. “The basis of such regulation could be that these products are used in a similar way or for a similar purpose to a tobacco product, hence they imitate the consumption of tobacco products or replace tobacco products, but this is subject to the existing definitions of individual countries,” says Antal. “HHPs are expected to be part of the revised TPD3, if not before.”

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

Civil Money Penalties for 21 Vape Shops

The U.S. Food and Drug Administration has issued complaints for civil money penalties (CMPs) against 21 brick-and-mortar retailers for selling unauthorized Esco Bars e-cigarettes.

In a press release, the agency stated that it had previously issued each retailer a warning letter for their sale of unauthorized tobacco products. However, follow-up inspections revealed that the retailers had failed to correct the violations.

The agency now seeks the maximum penalty of $20,678 from each retailer.

The complaints announced today represent the first set of CMPs FDA has filed for the sale of unauthorized Esco Bars e-cigarettes. “These retailers were duly warned of what could happen if they continued selling these unauthorized e-cigarettes,” said Brian King, director of the FDA’s Center for Tobacco Products (CTP). “They should have acted responsibly to correct the violations, but they chose not to do so and now must face the consequences of that decision. FDA won’t sit back and tolerate inaction to comply with the law.”

Currently, $20,678 is the maximum civil money penalty amount FDA can seek for a single violation from each retailer, consistent with similar CMPs sought against retailers for the sale of unauthorized Elf Bar products in Sept., Nov., and Dec. of 2023.

The retailers can pay the penalty, enter into a settlement agreement based on mitigation factors, request an extension of time to file an answer to the complaint, or file an answer and request a hearing. Retailers that do not take action within 30 days after receiving a complaint risk a default order imposing the full penalty amount, according to the release.

“Today’s CMP actions are just the latest in the continued, comprehensive push by FDA to take action across the supply chain to remove unauthorized e-cigarettes, particularly those that are popular among youth, from the marketplace,” the release states. “As of Jan. 30, 2024, FDA has issued more than 440 warning letters and 88 CMPs to retailers, including brick and mortar and online retailers, for selling unauthorized tobacco products.

“In addition to actions involving retailers, FDA has issued more than 660 warning letters to firms for illegally manufacturing and/or distributing unauthorized new tobacco products, including e-cigarettes.

“The agency has also filed civil money penalty complaints against 48 e-cigarette firms for manufacturing unauthorized products and sought injunctions in coordination with the U.S. Department of Justice against seven manufacturers of unauthorized e-cigarette products.”

January 30, 2024

A Persistent Problem

The combination of substantial potential profits and low risk that has fueled the illicit cigarette trade is now also driving criminals’ interest in new nicotine products.

By Stefanie Rossel

Globally, the illicit cigarette trade is a growing problem. Recently, criminals have expanded into contraband novel nicotine products as well. Tobacco Reporter spoke about this topic with Julian Cheung, who is anti-illicit trade operations director for Japan Tobacco International’s Asia-Pacific region. Before working with JTI, Cheung worked for the Independent Commission Against Corruption in Hong Kong, bringing much experience to the subject of anti-illicit trade. JTI works closely with law enforcement agencies to stop illicit trade, according to Cheung.

Tobacco Reporter: Could you please provide an overview of the current illicit cigarette market in the Asia-Pacific region? What are the hot spots, and which shifts have you recently observed?

Julian Cheung: Over the past decade, the Asia-Pacific region has experienced remarkable economic growth. In parallel, there has been growth in illicit trade. Illicit consumption of tobacco products is primarily fueled by a surge in illicit whites,^[1] which are mass-produced in countries like Indonesia, Vietnam, China and the United Arab Emirates. These illicit whites often bear well-known brand names within their regions but remain absent from legal retail channels.

Smuggling networks use these leaky borders to transport illicit tobacco. The Thailand-Cambodia, Vietnam-China, and Eastern Malaysia-Indonesia borders are typical examples of areas where smugglers skillfully evade checkpoints or capitalize on remote and unmonitored regions for their unlawful activities.

How does the current illicit cigarette market in the region compare to 10 years ago, and which developments do you anticipate in the near future?

The market for counterfeit products in Southeast Asia is worth approximately $35 billion annually, with $3.3 billion in tax revenue lost annually from smuggled cigarettes, according to a 2020 report by the EU-ASEAN Business Council and the Transnational Alliance to Combat Illicit Trade.²

The reality is that criminal organizations see tobacco as a high-profit, low-risk source of revenue. The criminal groups are incredibly adaptable and highly motivated. In Europe, they are moving counterfeit cigarette production closer to high-value markets such as France and the U.K. Another example of how quickly criminals adapt their operations to a changing environment is a steep increase in online sales of illicit cigarettes after pandemic-related restrictions were introduced. Despite the restrictions no longer in place, this shift toward online commerce remains, making it hard for consumers to tell the difference between genuine and counterfeit products.

The high taxes imposed on tobacco products and then evaded by criminals allow them to gain massive profits at the expense of nations and their citizens. Unfortunately, we do not expect illicit trade issues to be solved completely in a mid-term perspective. However, through innovative strategies, cooperation with international and national law enforcement agencies and a focus on disrupting the financial foundations of these criminal networks, we can curtail the illegal tobacco trade and safeguard our communities and economies.

What can legislators do to prevent illicit trade?

Evidence shows that higher taxes drive consumers to seek cheaper alternative products, such as those sold through illegal trade. We warn governments about the consequences of steep and sudden tax increases.

For example, in Malaysia in 2015, an excise tax hike drove prices up by 42 percent compared with the previous year. The hike immediately pushed the illegal cigarette market share to 52 percent in 2016 from 37 percent in 2015. The long-term impact was that illegal products constituted almost 60 percent of cigarettes consumed in 2022, and Malaysia remains one of the countries with the highest level of illicit cigarette consumption worldwide.

At the GTNF last September, you called for greater cooperation between the industry, governments and law enforcement agencies. What could such cooperation look like?

Illegal trade cannot be dealt with in isolation. We work with governments, regulators, police and customs to crack down on illegal trade and criminality by sharing information and developing specific programs. We do this to protect our customers, businesses and brands.

Better intelligence sharing between public and private partnerships, including the tobacco industry and law enforcement agencies (LEAs), is critical to tackling illegal trade.

JTI engages with, and provides information to, law enforcement and other government agencies globally. For example, we have built a good working relationship with the European Anti-Fraud Office and law enforcement agencies across Europe to share industry expertise and information on all aspects of the illegal trade: criminal operations, locations and trends.

We also provide various LEAs globally with anti-illicit trade awareness sessions, including counterfeit recognition training, information on evolving trends, modus operandi and actionable information on multiple aspects of illegal trade.

In August [2023 to] September 2023, my team supported law enforcement in Malaysia and the Philippines, who seized 37 million illicit cigarettes in successful enforcement actions.

In how far would closer collaboration between individual tobacco companies operating in the region be helpful?

While tobacco companies in the region already work together, we recognize that we need a more unified approach and cohesive voice so we can make a more significant impact in supporting authorities in the fight against illegal trade.

One example of the industry’s collaborative efforts is the Empty Pack survey. This survey, conducted quarterly or annually in selected countries across the Asia-Pacific, helps assess illicit cigarette prevalence in overall tobacco consumption. By evaluating the effectiveness of anti-illicit measures based on facts and evidence, authorities can adopt and fine-tune appropriate regulations to protect consumers and society from criminal groups that deprive state budgets of tax revenues.

We are also involved in cooperation platforms like the Tobacco Association, which engages with authorities, advocating for protecting rights of legitimates businesses, particularly regarding tobacco-related policies and regulations. Using this platform, we also work with other tobacco companies to exchange information, experiences and best practices to share with authorities to help curb illegal trade.

At the GTNF, you said that in order to eliminate the illicit cigarette trade, it’s important to follow the money. What would be an effective strategy to tackle the problem?

The main driver of all illegal trade, but especially the illegal tobacco trade, is the ability of crime groups and individuals to generate huge illegal profits with very little deterrent. Across the globe, there is an increase in enforcement activity focusing on confiscating the proceeds of crime. However, more needs to be done; criminals especially do not like it when “they are hit in the pocket.” There is a very low imprisonment rate for people charged with tobacco-related smuggling offences—and even if they do receive jail time, it is taken as an occupational hazard. So, it is very important for LEAs and other government agencies to follow the money and infiltrate the complex world of money laundering and other criminal activities linked to these groups. Investigating these connections is essential to disrupt their criminal operations.

For example, in July 2023, Malaysia’s Multi-Agency Task Force launched a major investigation into a prominent businessman with ties to local politicians and celebrities using these very methods. The arrested businessman, identified as the mastermind behind various criminal activities including cigarette smuggling operations, was apprehended during a series of well-coordinated raids.

This high-profile and complex case was investigated, with authorities employing the Anti-Money Laundering and Anti-Terrorism Financing Act and the more conventional Anti-Smuggling Act.

Do you have examples of instances where a government successfully curbed illicit cigarette trade? What could we learn from those examples?

Intelligence and research show that the main drivers for illegal trade are steep and sudden tax increases, making legal tobacco products less affordable and pushing consumers to seek cheaper alternatives. That is why balanced, reasonable and predictable taxation are prerequisites to curbing illicit trade.

The illegal tobacco trade is, by nature, a transborder crime, with illegal cigarettes smuggled into a country and quite often with legitimately declared transit goods. While countries like Taiwan, Malaysia or Singapore recognize the economic benefits of being a transshipment hub, criminal groups exploit these hubs for their illicit activities. The following are a few examples of where government action was successful:

Taiwan: Illegal tobacco smuggling often takes place through containers, utilizing a carousel-like approach to evade detection by law enforcement authorities. The Taiwan government has taken significant measures in this regard and has successfully intercepted containers suspected of carrying cigarettes with incorrect declarations while transiting through Taiwanese ports.
Malaysia: Starting in January 2021, the Malaysian government took action to address the widespread diversion of illegal cigarettes within the country. As part of this effort, a policy was implemented to restrict the transshipment of cigarettes to five designated ports in Malaysia. This policy successfully reduced smuggling activities at these ports by strengthening control and monitoring measures related to the illicit tobacco trade. By doing so, the government aimed to safeguard its revenue and protect against losses.
Singapore: Being the world’s second-busiest container port and largest transshipment hub, Singapore’s strategic position also attracts criminal activities. Starting from 2024, the Singapore government will implement a new licensing regime in phases and enhance the enforcement powers of customs officials. These measures aim to prevent smugglers from exploiting the free trade zones and ensure the security and integrity of these areas from illegal activities.

Criminals have also started targeting reduced-risk nicotine products (RRPs). Can you please describe your findings in this regard?

Currently, national regulations on RRPs vary from market to market and are even nonexistent in many countries, leaving room for illegal trade to operate in a gray area. For example, Taiwan has banned the sale of e-cigarettes but allows the sale of heat-not-burn sticks and devices. There are a lot of relatively new products, such as disposable vapes, coming into markets, and it is often not clear to enforcement officers what is legal and what is not. So apart from better regulation, there is an education factor often required for the officers charged with enforcing the law. Unfortunately, organized crime groups are exploiting either the lack of clear regulation or legislation or the confusion within enforcement authorities regarding the various products.

Since RRPs are a relatively new category, illegal product distribution through online channels—including websites and instant messengers—gained significant popularity and widespread adoption, especially in the wake of the Covid-19 pandemic.

The increase in online sales presents a challenge for law enforcement officials because of cross-border distribution and the ability to conceal the IP host. This makes it difficult to identify and track the source of the products. These challenges are even more pronounced due to the limited resources available to many governments.

Australia is probably a special case: Its strict regulation of tobacco products has contributed to the emergence of a black market for cigarettes. Now it has adopted a tough stance on vaping products too. What is this doing to illicit trade in the country?

The less affordable legal cigarettes are, the higher the demand [is] for illegal products from consumers. The cost of a pack of cigarettes in the country is well over AUD40 ($26) and can be twice as much as an illegal pack, making it a lucrative market for criminal tobacco operations.

To safeguard tax revenue and combat the negative impact of illegal trade, the Australian government has taken several measures. The Australia Border Force—custom—established the Illicit Tobacco Taskforce, which collaborates closely with industry stakeholders and ASEAN’s customs. Through information sharing and best practice exchanges, they target tobacco smuggling and protect Australia’s interests.

However, cracking illegal operations takes a lot of time and effort as criminal groups have constantly changed tactics. For example, smugglers have recently started breaking down consignments into smaller units to make detection and enforcement more challenging.

As for the government’s position on a regulation on reduced-risk products, effective January 2024, Australia has implemented a ban on importing disposable vapes. However, history shows that such bans always have dangerous side effects, as seen in South Africa, where the illicit market boomed in 2020 following a temporary ban on cigarettes. An effective ban on disposable vapes will potentially create an illegal or black market that organized crime groups could exploit. This situation poses risks to consumers who may unknowingly purchase counterfeit or substandard products.

¹ “Illicit whites” are cigarettes manufactured by legitimate businesses that are smuggled to the markets outside the jurisdiction where they are produced and then traded illegally without any relevant duties being paid, causing a loss of revenue to governments and legitimate retailers.

² www.tracit.org/uploads/1/0/2/2/102238034/illicit_trade_paper_final_final.pdf

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

A Momentous Occasion

Godioli & Bellanti celebrates its 100th anniversary.

By George Gay

If you are ever due to visit the historic town of Citta di Castello, before you head off, you might like to take some time to read up on Italian artist and physician Alberto Burri, who was born there in 1915 and some of whose later works are on display at a venue repurposed from former Kentucky tobacco curing barns.

The tobacco connection need come as no surprise. Citta di Castello, located in the province of Perugia, Northern Umbria, is the home of Godioli & Bellanti, which was founded in 1923 by Gino Godioli and Angelo Bellanti as an engineering company providing agricultural equipment, much of it to a thriving local tobacco-growing community. One hundred years on, Godioli & Bellanti has evolved and expanded into a company that is known to those working in the global tobacco sector for supplying machinery and equipment for complete leaf and primary processing lines, though it supplies, too, machinery and processing lines for medicinal herbs, other plants and food products.

I would suggest that part of the reason why the company was able in October 2023 to celebrate 100 years of continuous business, during which it has become an important player in the global tobacco industry, is that it had, and has maintained, solid local, family and extended-family roots. Lorenzo Curina, a company veteran who really needs no introduction, told Tobacco Reporter earlier this year that its centenary celebrations were held in premises that had been, in 1923, the company’s headquarters but that had been donated to an educational and training institution when the company needed more space and moved to an industrial area in 1963 under its second-generation leadership.

The institution, the Scuola Operaia Giovanni Ottavio Bufalini, was where Curina’s grandfather had taught and where students are now trained in, among other things, the culinary arts. Appropriately, the formal celebrations, which went hand in hand with a factory and city tour, were held on the ground floor of the institution, where the Godioli & Bellanti workshop had once been but where the institution now runs a typical Italian restaurant for the benefit of its students and customers.

The event was addressed by speakers representing the political, ecclesiastical and academic life of Citta di Castello and attended by 140 guests, including Godioli & Bellanti’s Italian-based tobacco customers, its international agents and its employees, past and present. One of the guests was Elise Rasmussen, the executive director of The GTNF Trust and publisher of Tobacco Reporter, who said it had been an honor to attend the 100th anniversary celebrations and to be asked to propose the congratulatory toast on behalf of the assembled guests. “But it was an honor wrapped in pleasure—the pleasure of catching up with long-standing friends and meeting new ones as we came together from around the world in celebration of that momentous occasion,” she added.

“In my work with Tobacco Reporter magazine, which this year is also celebrating a major anniversary, I have for a long time had the honor of working with the Godioli & Bellanti team, particularly Lorenzo Curina, who is a valued customer and treasured friend, so I took much pleasure in congratulating them all on reaching this milestone and look forward to working with them in the future as this dynamic engineering company forges ahead.”

The Ability to Evolve

The reference to a “momentous occasion” was not overwrought. In a changing world, more latterly, a rapidly changing world, it is not easy for a business, particularly, perhaps, a family business, to prosper through 100 years. And Curina, who has been with Godioli & Bellanti for 47 years and who is a shareholder and vice president, was well placed and not afraid to make this point when he spoke at the start of the event, in part thanking all the company’s customers, agents and employees for their various roles in ensuring Godioli & Bellanti’s success. “It wasn’t all rosy,” he admitted. While there were many good times and exciting moments, he said, each generation had faced difficult times during which they had had to draw on all their strengths just to continue in business.

But this reference to the difficult times was brief, and Curina demonstrated his confidence in the company’s future when he talked of the high professional standards that had underpinned its performance during “these first 100 years.” And this commitment to the future was a theme taken up by the company’s managing director, Angelo Benedetti, who represents the family’s fourth generation and who, in his address, promised to carry forward and build upon the successes achieved by previous generations.

Meanwhile, Curina, who knew both the company’s founders, one of whom was his grandfather, and who was mentored by the second-generation partners, spoke with pride of the work carried out by Godioli & Bellanti from the 1920s to the 1950s, when the company’s workshop was engaged in manufacturing products that few were capable of making—products that demonstrated, too, the flexibility of the company and its ability to evolve. For instance, during that time, the company provided equipment that pumped water from the Shebelle River to irrigate fields in Ethiopia and Somalia. And during the economic boom of the post-war era, the company was able to turn its hand to the construction of civil and industrial heating systems for a widening circle of customers.

Then, in the 1960s, came the mechanization of tobacco processing in which Godioli & Bellanti became a significant player, in part because of the relationships built up with two Italian companies, Deltafina and Fattoria Autonoma Tabacchi—relationships that allowed Godioli & Bellanti to grow. Giorgio Marchetti, vice president and production director at Deltafina, on being asked to comment on the anniversary, said Godioli & Bellanti had actively served the tobacco industry with passion and professionalism over the years. “This blend has allowed a family company to achieve 100 years without showing ‘gray hairs’ but still looking young and dynamic,” he said in an email exchange. “The cooperation and experiences gained over the decades working with Deltafina have been beneficial for the growth of both companies.”

Devotion and Passion

And from its solid Italian base, the company expanded, offering its machinery to companies around the world—wherever tobacco was being processed. One such country is Bangladesh, where Godioli & Bellanti operates through a local agent headed by Shahroze Kabir, though the word “agent” does not do justice to the close relationship. Shahroze told TR in an email exchange that he had returned to Bangladesh from Australia, where he had been working as an accountant following the sudden death in 2018 of his father, Mohammed Jahangir Kabir, who had run the agency and who, incidentally, was a former head of marketing for BAT. Shahroze readily admits that, at that time, he had no experience working as an agent and had never been inside a tobacco factory but was offered the role on the basis of an agreement made between his father and Curina, for whom he said, “a promise is a promise.” ‘‘I suppose they adopted me as a part of the Godioli & Bellanti family and taught me everything I know about the business,” he said.

“I work with many leading European machinery companies, but Godioli and Bellanti are special. They build their machines not just with engineering perfection but with love, devotion and passion …. We have supplied so much tobacco machinery in Bangladesh that it has upgraded the quality of processed tobacco in the country to very high global standards.”

The reference to passion came up again when Mohammed Abob, who was Godioli & Bellanti’s agent in Ethiopia from 2010 to 2019, who is still in touch with the company and who, indeed, attended the anniversary celebrations, replied to a request for comment. Abob said his impression of Lorenzo and his brother Cesare was that they were dedicated and passionate about their work and proud of their company and their city. The company was important to them beyond the business and financial aspects of it. It represented a proud heritage that they were committed to now and in the future.

And the devotion to engineering perfection mentioned by Shahroze was also alluded to by Curina in his opening speech when he said that Godioli & Bellanti had never made mass-produced products. With each project, the company committed to identifying the technical solution that the particular customer and the particular situation required. Each project was a new project, he said.

Like Swiss Watches

Away from the celebrations, TR had an opportunity to ask Curina a few questions, focused mainly on the way that the market for primary processing machinery and equipment had changed and is changing. The first asked how the primary processing facilities of the average factory that Godioli & Bellanti currently served differed from how those facilities were set up 25 years to 30 years ago. Not surprisingly, Curina’s answer focused on technology. Nowadays, the primary departments in which Godioli & Bellanti worked, he said, were characterized by high levels of technology, which meant that, in turn, the operations of those primaries were characterized by high standards of automation, synchronization and cleanliness. They were like Swiss watches, he added.

And asked what would have been the most in-demand pieces of primary processing machinery and equipment 25 years to 30 years ago and what were the most in-demand pieces now, Curina replied that whereas in the past, his company made many lines for Burley toasting, comprising equipment for toasting, casing and top-flavoring, nowadays demand tended to favor lines for producing low-nicotine cut rag. Demand was relatively high, also, for automatic feeding lines, with equipment for de-cartoning tobacco, slicers, direct conditioning cylinders and direct conditioning and casing cylinders.

Turning to the question of whether demand for primary processing machinery and equipment was increasing or decreasing, Curina described the situation as stable, which he found unsurprising since investing in a primary required broad financial shoulders and an intimate knowledge of the tobacco business.

Finally, in answer to another question about demand, Curina said he had noticed that the world of green leaf threshing had moved massively toward the Far East and that the world of primaries was moving in the same direction, though more slowly.

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.

January 30, 2024

Growers Worried About South African Tobacco Bill

Small-scale tobacco growers in South Africa raised concerns about the impact of proposed legislation during public hearings in the Eastern Cape province.

To strengthen public health protection measures, lawmakers are considering a bill that would ban smoking in all indoor public places and certain outdoor areas; prohibit cigarettes sales in vending machines; require standardized tobacco packaging and ban the display of tobacco product at points of sale. The bill would also regulate electronic nicotine delivery systems and non-nicotine delivery systems.

During the Eastern Cape gathering, tobacco growers described the relative wealth that tobacco cultivation had afforded them in an area suffering from unemployment and poverty.

“When we were producing vegetables, me and my family were staying in a one-roomed mud house but immediately when we started producing tobacco leaf, I was able to build myself a beautiful six-roomed house, Nomfusi Kotsele, a member of the Katala cooperative in Butterworth, was quoted as saying in a report by South Africa’s Parliament. “I was also able to take my children to school so that they can have a better future than I had.”

Participants in the meeting also cautioned against the unintended consequences of overregulation. They pointed to South Africa’s thriving illicit cigarette trade, which exploded in the wake of a Covid-19 prohibition on tobacco sales and has remained above pre-pandemic levels long after the ban ended.

The hearings are part of a nationwide public participation process to garner citizens’ views on the bill. Similar consultations have already taken place in North West, Mpumalanga, Limpopo, Free State and Gauteng.

January 30, 2024

COP Urged to Implement Harm Reduction

Consumer advocacy group Quit for Good asked the World Health Organization Framework Convention on Tobacco Control (FCTC) to consider the lives of more than a billion smokers when it convenes the 10th Conference of the Parties in Panama next week.

Lorenzo Mata Jr., president of Quit for Good, said the WHO should implement FCTC Article 1 (d) on harm reduction strategies to help smokers. The treaty defines tobacco control as “a range of supply, demand and harm reduction strategies.”

“Offering safer nicotine products to millions of adult smokers who want to reduce their exposure to toxic substances from smoke is common sense. This is what tobacco harm reduction (THR) is all about, which the WHO FCTC refuses to implement despite being part of the global treaty,” Mata said.

Representatives from countries that are signatories to the FCTC will meet in Panama for the 10th Conference of the Parties this year, after the meeting was canceled in November 2023, to tackle major topics such as how to treat “novel and emerging tobacco and nicotine products.”

The Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA) said blocking the use of products that can help save smokers’ lives is against the mission of the FCTC—a global treaty endorsed by most countries.

“People who smoke should have the right to access less harmful alternatives to smoking, and the WHO FCTC should focus on helping them. We need a pragmatic campaign to reduce the harm caused by smoking, rather than a dogmatic, deceptive, ineffective campaign to compel abstinence,” CAPHRA executive coordinator Nancy Loucas said.

Loucas said the annual reviews of the Office for Health Improvement and Disparities, formerly Public Health England, have consistently shown that vaping carries a fraction of the risks of smoking. “Despite the overwhelming scientific evidence supporting vaping products as less harmful alternatives to smoking, the WHO has consistently disregarded the positive role that vaping can play in tobacco control,” she said.

“It is time for the WHO FCTC and its member states to listen to the voice of the people that they are supposed to fight for and not against—the over 1 billion smokers whose lives are in danger if they continue to smoke,” she said.

Loucas’ views were echoed by Jay Jazul, lead convener of the Harm Reduction Alliance of the Philippines (HARAP). “E-cigarettes do not threaten public health but provide smokers with an exit from smoking, which is the real problem,” he said. “The WHO’s failure to substantiate its claims against e-cigarettes and labeling these innovative products an emerging threat to public health is worrisome.”

“The nicotine was not the problem, it was the delivery system that was the problem. We’ve known that for 50 years,” said David Sweanor of the University of Ottawa at a recent conference in Korea.

“The best example of how products that don’t burn tobacco can benefit public health comes from Sweden, which has the lowest smoking prevalence among men in the European Union and consequently the lowest tobacco-related mortality,” said Lars M. Ramström, the principal investigator at the Institute for Tobacco Studies, which recently published a paper on the topic. Ramström served as a WHO expert and as secretary general of the 4^th World Conference on Smoking and Health.

“The meeting of the world’s health leaders in Panama, the COP10, represents a unique opportunity to take a fresh look at the most recent evidence with an open mind. After all, if Sweden had followed WHO’s advice from 20 years ago and banned snus, tobacco-related deaths in Sweden would have been much higher and the only unintended beneficiary profiting from such advice would be the cigarette industry,” said Ramström.

In the runup to COP10, industry representatives have raised concerns about the exclusion of stakeholders from the discussions.

January 30, 2024

Senior Appointments at RAI

Reynolds American Inc. (RAI), has appointed two senior leaders within its operating companies, effective Feb. 1, 2024.

Christy Canary-Garner, currently vice president, marketing, will be promoted to senior vice president, marketing. in this role, Canary-Garner will lead R.J. Reynolds Tobacco Co.’s combustible portfolio. Canary-Garner began her career with the organization in 1992 as a territory manager with Brown & Williamson. Throughout her career, she has held leadership roles in brand marketing, consumer experience, human resources, and regulatory engagement. Canary-Garner’s industry knowledge and extensive experience spans the combustibles brand portfolio and transformative new categories with Vuse and Velo.

Valerie Mras, currently vice president, vapor marketing commercialization, will be promoted to senior vice president, vapor. Mras joined the organization in 2008 as a territory manager in trade marketing and during her 16-year tenure has held a number of leadership roles, building teams and driving business delivery. In 2012, she joined the consumer marketing division, working across several brand marketing roles, including Camel, VUSE, Grizzly, Newport and Pall Mall.

In 2020, she was promoted and began an international assignment at BAT’s headquarters in London as the head of new categories platform development, where she was instrumental in developing and executing the global product and pipeline strategy. In 2023, Mras returned to Winston-Salem, North Carolina, USA, to lead R.J. Reynolds Vapor Co.’s commercial business.

January 30, 2024

Universal Buys Virtual Power

Universal Corp. has entered into a virtual power purchase agreement (VPPA) with Clearway Energy Group for energy produced by a new solar project in Texas. Universal’s contracted portion of the project is intended to address emissions from 100 percent of Universal’s annual purchased electricity demand in the United States.

“This is a meaningful step toward meeting our science-based environmental target to reduce operational greenhouse gases emissions by 30 percent by 2030,” said George C. Freeman III, Universal’s chairman, president and CEO, in a statement.

“When the solar project is operational, we expect to hit this target for our U.S. operations ahead of schedule. Universal is proud of the steps we are taking to promote the sustainability of our operations and contribute to global sustainability goals, including supporting this project that will bring additional renewable energy to the electricity grid.”

The project, which will start construction later this year and begin delivering under the VPPA in 2026, will create an estimated 350 construction jobs and produce significant new tax revenue for the local community over the life of its operations.

Universal has made a long-term commitment through the VPPA to purchase a portion of the renewable power delivered to the grid by the large-scale solar facility while also receiving the associated renewable energy certificates.

Universal’s agreement equates to around 70,000 MWh of renewable electricity per year and is expected to reduce greenhouse gas emissions by approximately 15,000 metric tons, which is 45 percent of Universal’s Scope 1 and 2 emissions in the United States. GreenFront Energy Partners provided strategic and financial advisory services to Universal throughout the procurement process.

January 30, 2024

Bidi Vapor Appeals MDO of Tobacco Bidi Stick

Bidi Vapor will appeal the U.S. Food and Drug Administration’s January 2024 decision to deny the company’s premarket tobacco product application (PMTA) for Bidi Vapor’s “Classic” tobacco-flavored Bidi Stick electronic nicotine-delivery system.

Bidi Vapor has asked the U.S. Court of Appeals for the 11th Circuit to review the marketing denial order (MDO), which Bidi Vapor believes violates the Administrative Procedure Act. Bidi Vapor will also be seeking a stay of the MDO pending the outcome of the litigation.

“Bidi Vapor disagrees with the FDA’s decision and is taking immediate action accordingly,” said Bidi Vapor founder and CEO Niraj Patel in a statement. “In the meantime, it is important to note that the decision only affects the ‘Classic’ or tobacco-flavored Bidi Stick. The remaining ten Bidi Stick flavors are still under FDA scientific review and remain in distribution in the United States through Kaival Brands, subject to the FDA’s enforcement discretion.”

With its recent legal challenge, Bidi Vapor hopes to build on its record of successfully contesting adverse FDA decisions. In August 2022, the 11th Circuit set aside the original MDOs issued for its 10 nontobacco-flavored products. That ruling put the 10 PMTAs back into scientific review and allowed those flavors to remain available for sale pursuant to the FDA’s compliance policy for deemed tobacco products. During this evaluation period, the 10 nontobacco-flavored products are still under FDA enforcement discretion.

January 29, 2024

United Kingdom to Ban Disposable Vapes

The U.K. will ban disposable e-cigarettes, the government announced today.

According to the government, disposable vapes have been a key driver behind the rise in youth vaping, with the proportion of 11 to 17-year-old vapers using disposables increasing almost ninefold in the last two years.   

As part of the package, the government will also acquire new powers to regulate vape flavors, e-cigarette packaging and product presentation in stores to ensure that they don’t appeal to underage users. Additionally, the government will bring in new fines for shops in England and Wales that sell vapes illegally to children. Vaping alternatives, such as nicotine pouches, will also be outlawed for underage consumers.

In its announcement of the new measures, the government also reiterated its commitment to a generational tobacco ban. To help implement the new rules, government agencies such as the Border Force, Revenue and Customs and Trading Standers will receive £30 million ($38.1 million) in new funding a year.

 “As prime minister I have an obligation to do what I think is the right thing for our country in the long term. That is why I am taking bold action to ban disposable vapes—which have driven the rise in youth vaping—and bring forward new powers to restrict vape flavors, introduce plain packaging and change how vapes are displayed in shops,” said ,” said Prime Minister Rishi Sunak.

“Alongside our commitment to stop children who turn 15 this year or younger from ever legally being sold cigarettes, these changes will leave a lasting legacy by protecting our children’s health for the long term.”

While action to prevent youth access to vaping is critical, this move smacks more of a desperate attempt by the government to sacrifice vapers for votes ahead of the upcoming general election.

John Dunne, director-general, UKVIA

Public health officials welcomed the government’s decision. “We’re delighted that the Westminster government has heard our calls and is rightly prioritizing the health and well-being of our children and the planet,” said Mike McKean, vice president for policy at the Royal College of Pediatrics and Child Health. “Bold action was always needed to curb youth vaping and banning disposables is a meaningful step in the right direction. I’m also extremely pleased to see further much needed restrictions on flavors, packaging and marketing of vapes.”

Representatives of the vape industry, by contrast, were dismayed, pointing to significant role disposable vapes have played in bringing the U.K.’s smoking rates down to a record low.

“While action to prevent youth access to vaping is critical, this move smacks more of a desperate attempt by the government to sacrifice vapers for votes ahead of the upcoming general election,” said John Dunne, director general of the U.K. Vaping Industry Association (UKVIA), in a statement.

“If the government thinks banning disposables will help protect young people, they are completely misguided. This counterproductive legislation will sooner put children at greater risk by turbo-charging the black market and, in turn, making it easier for them to access illicit and noncompliant vapes.”

Pointing to recent research from University College London, the UKVIA said the answer to youth vaping doesn’t lie in counterproductive bans and restrictions, but rather in effective and proactive enforcement of the law which states that it is illegal for vapes to be sold to minors.

We can’t have a two-tier society in which some adults are permitted to buy tobacco and others are denied the same opportunity.

Simon Clark, director, Forest

The government’s continued commitment to a generational tobacco ban, meanwhile, prompted a strong response from smokers’ rights activists, who said the plan infantilizes adults.

A new poll for the smokers’ lobby group Forest found that almost two thirds (64 percent) of adults in Britain say that when people are 18 and legally an adult, they should be allowed to purchase cigarettes and other tobacco products.

“As soon as you are legally an adult you should be treated like one and allowed to buy tobacco, if that’s your choice,” said Simon Clark, director of Forest.

“We can’t have a two-tier society in which some adults are permitted to buy tobacco and others are denied the same opportunity.”

Urging Downing Street to step back from the policy, he added: “Law-abiding retailers will have the difficult job of enforcing this absurd policy that also drives a stake into the heart of traditional Conservative values such as freedom of choice and personal responsibility.”

January 29, 2024