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Study: Smoking Outside Still Harms Kids

Image: Larysa | Adobe Stock

A new study out of Israel shows that even when adults smoke outside, six out of 10 kids are at risk from tobacco smoke harm, according to The Jerusalem Post.
Researchers from Tel Aviv University tested for the presence of nicotine in the hair of children whose parents smoke. Data analysis showed that among smoking families who restricted smoking to porches or outdoors, 62 percent of children were exposed to tobacco smoke.
The first stage of the study, published two years ago, showed that 70 percent of children in smoking families, regardless of smoking location, had measurable hair nicotine content, but now the researchers have examined the data by location.
“Smoking should be avoided within a range of at least 10 meters from the house—and in open areas, smoking should be kept to a distance of at least 10 meters away from children,” the researchers wrote in the International Journal of Environmental Research and Public Health.
“The Israeli situation is of great concern because in many cases, porches in Israel are directly adjacent to the living areas and may even be partially open some of the time; the proximity allows smoke to drift from those areas to the interior of the house,” said Leah (Laura) Rosen, head researcher and professor at the School of Public Health in Tel Aviv University’s Sackler Faculty of Medicine. “The parents mistakenly believe that the porch offers a ‘safe’ place to smoke. In fact, the children are likely to be directly exposed when they come out to the porch and someone is smoking or when smoke drifts into the house.
“Once in the home, the smoke is absorbed into the environment, for example, into the furniture or walls or rugs, and is then gradually discharged into the air over weeks or months. Further, this residual smoke, known as thirdhand smoke, can be absorbed into the body from the environment via swallowing or through the skin, especially among infants and small children. In addition, smoking parents transmit the toxins from the tobacco smoke on their skin, on their hands, in their hair and on their clothing, so it is recommended to brush teeth, wash hands and change clothes after smoking before making contact with children.”
“The results of this study show that among smoking families, restricting smoking to the porch does not protect most children from exposure to tobacco smoke,” Rosen said. “Therefore, the health ministry’s approach, which opposes protection for individuals from smoke incursion into their own homes in order to protect the smokers’ children, does not protect the children of smokers, and in addition, it can cause substantial harm to neighbors and the children of neighbors.
“We ask the health ministry to reconsider its stand in light of these findings. Israel must make the reduction of parental smoking a national goal and invest the appropriate resources in this issue. Unfortunately, there are many misconceptions regarding when and how the exposure occurs. Eighty-five percent of tobacco smoke is invisible, and our sense of smell is not reliable, so many parents mistakenly believe that they are protecting their children while in fact they are exposing them to substantial health risks. As a society, we must safeguard citizens and distance everyone from the risks of tobacco smoke exposure, especially infants and children, pregnant women and all vulnerable populations.”

April 4, 2023
Singapore Officials Seize Vaping Products

Image: Zerophoto | Adobe Stock

Authorities in Singapore seized more than 85,000 vaping products in a warehouse raid conducted by Singapore’s Health Sciences Authority (HSA), reports Channel News Asia.
This is the largest seizure of e-cigarettes and other vaping products by HSA, surpassing a haul in 2021 where more than SGD2.2 million ($3 million) worth of products were confiscated, said HSA and the Singapore police in a joint press release. The latest seizure has an estimated value of more than $5 million.
The raid was the result of HSA following up on leads from investigating a group of people suspected of selling illegal vaping products.
On March 28, six individuals were detained by the police at a multi-story car park at Block 592 Montreal Link. “The driver of a van was allegedly found to be distributing parcels containing e-vaporizers to five persons purportedly assisting in the delivery to buyers,” said the authorities.
Under the Tobacco (Control of Advertisements and Sale) Act, it is an offense to import, sell or distribute vape products.
Those found guilty for the first time can be fined up to SGD10,000, jailed for up to six months or both.
Subsequent offenses double the penalties to a fine of up to SGD20,000, a jail term of up to a year or both.
Vaping is illegal in Singapore. The purchase, use and possession of all vaping products are also prohibited.

April 3, 2023
Vape Manufacturers Must Register

Image: chrisdorney | Adobe Stock

Following the removal of nicotine e-liquid or gel from the Poisons Act 1952 to allow for e-cigarettes and vaping products to be taxed in Malaysia, local manufacturers producing e-liquid or gel products containing nicotine must register their manufacturing activities with the Customs Department by April 30, according to the Ministry of Finance (MOF), reports The Edge Markets and Free Malaysia Today.
“Early registration within this prescribed period may prevent manufacturers from being charged a compound for the offense of late registration. This early registration will ensure comprehensive industry compliance and smooth tax collection by May 2023,” the MOF said in a statement.
This follows the imposition of an excise tax of 40 sen ($0.004) per milliliter on nicotine e-liquids or gels.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the government’s plan to impose an excise tax on liquid or gel products containing nicotine when he re-tabled Budget 2023 in February.
The previous government under Datuk Seri Ismail Sabri Yaakob’s administration also proposed to extend tax collection from gel or liquid products containing nicotine for vapes and e-cigarettes in the tabling of Budget 2022 by imposing a tax of RM1.20 per milliliter. However, the plan was postponed because nicotine vape liquid was still classified as a Class C poison under the Poisons Act.
The new excise duty, the MOF said, would enable the government to tax the vape industry, which is estimated to be worth over RM2 billion ($454 million), and at the same time help discourage the use of vapes.
It will also help improve rules and control of excise duty goods by customs to avoid leakage of national income, according to media reports.

April 3, 2023
Nicotine E-Liquid Taken Off Poisons List

Malaysia’s government has removed e-liquid containing nicotine used in e-cigarettes and other vaping products from the country’s Poisons List of controlled substances. The move enables taxation on e-liquids.

Media reports claim the removal effectively legalizes e-cigarettes with nicotine without any regulations in place, as the current Control of Tobacco Products Regulations 2004 under the Food Act 1983 only cover conventional cigarettes and other tobacco products.

The Control of Tobacco Product and Smoking Bill 2022 – which seeks to regulate both tobacco and vape products, besides a ban on these products for anyone born from 2007 – has yet to be tabled in the current 15th Parliament, reports Code Blue.

Health Minister Zaliha Mustafa gazetted an order Friday to exempt nicotine “preparation of a kind used for smoking through electronic cigarette and electric vaporizing device, in the form of liquid or gel” from the Poisons List under the Poisons Act 1952 – overriding the Poisons Board that unanimously rejected the proposal last Wednesday.

The Excise Duties (Amendment) Order 2023 – which subjects e-liquid or gel containing nicotine to excise duty of 40 sen ($0.004 cents) per milliliter – gazetted by Finance Minister Anwar Ibrahim, who is also the prime minister, was dated last March 29, the same day as the Poisons Board meeting.

The tax on e-liquids with nicotine went into effect on April 1.

CodeBlue reported that the Poisons Board, an independent body formed under the Poisons Act, wholly objected to the government’s proposal to exclude nicotine-containing e-liquid from the Poisons List on the basis that the harm of allowing e-cigarettes to be sold to anyone, including children, outweighed the benefit of tax revenue from such products containing nicotine, a highly addictive substance.

April 2, 2023
Innovation Hub

Photo: Stefanie Rossel

Northern Italy provides the perfect business environment for pioneering tobacco companies and their suppliers.

By Stefanie Rossel

Sale et tabacchi, the inscription on the logo of Italian tobacconist shops, still speaks of tobacco’s long history on the peninsula. It calls to mind the country’s monopoly on salt and tobacco in colonial times. Today, Italy is the European Union’s largest producer of leaf tobacco, with an annual production of 50 million kg, representing a market share of 27 percent.
Statista values the country’s tobacco products market at almost $25 billion. Italy is also one of the few countries in the Western world where the tobacco business is expected to grow, albeit only slightly, over the next few years. Novel nicotine-delivery products play an increasingly important role: In Europe, the heated-tobacco products (HTP) category is expected to expand at a compound annual growth rate of 24.9 percent until 2025, according to Research and Markets. With sales of 9 billion heated-tobacco units, Italy ranked third among the world’s HTP markets in 2021, behind Japan and Russia, according to Euromonitor International.
After transforming from an agricultural economy into one of the world’s most advanced industrial nations after the second World War, Italy today has the third-highest GDP in the EU and the 10th highest in the world, as estimated by World Economics at $2.57 trillion at the end of 2022.
The country’s economic powerhouse in the north is home not only to leaf tobacco cultivation but also to leading cigarette companies’ and suppliers’ manufacturing sites—and for a good reason: The industrial core of the region, one of Europe’s richest, is the industrial triangle between Lombardy, Veneto and Emilia-Romagna.
The area is home to a vast engineering sector that develops process innovations for a variety of industries. The regional capital, Bologna, which will host this year’s TabExpo, May 10–11, houses many producers of machinery for the production of food, pharmaceuticals and tobacco along with a large concentration of suppliers for electronics and mechanics that cater to these industries.
The area is also renowned for its automotive industry—exclusive brands like Ferrari, Lamborghini, Maserati and Ducati are among the many trade names that come from Emilia-Romagna, and they have attracted to the region a large number of suppliers linked to the production of engines. Food processing equipment is an important economic pillar in the region that is world famous for its prosciutto di Parma ham and its equally well-known hard cheese parmigiano.
Research laboratories specialized in strategic technological areas, such as design, prototyping and testing, are another part of this high-tech regional network, where constant exploration of new technological solutions has become ingrained in the local work ethic. It’s an ecosystem that sparks innovation—the perfect place for players in the tobacco industry seeking to drive transformation.
In the runup to TabExpo, Tobacco Reporter’s Stefanie Rossel visited several of these pioneers. On the following pages, she reports from Philip Morris International’s state-of-the-art tobacco-heating factory, BAT’s innovation hub, Montrade’s expanding operations and Tobacco Technology Inc.’s regional flavorings lab.

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.

April 1, 2023
Fighting the Dip Mentality

Photo: Andrey Popov

What will it take for women who smoke to consider smokeless?

By Cheryl K. Olson

When Brittney Niquette first tried smokeless tobacco two years ago, it was from a sense of obligation. She runs customer support for Lucy Goods, a maker of nicotine pouches, gums and lozenges.
“I like to know what our products taste like, so that I have a genuine opinion and feedback to give customers,” she explains. “They’re just not marketed to women. So I honestly didn’t know what a nicotine pouch was. I was thinking tobacco, like, brown in a pouch.”
Niquette started smoking at 15, repeatedly quitting and restarting. She now uses tobacco-free pouches every day. “My favorite is the berry citrus. And I like espresso flavor with coffee in the morning.”
In Scandinavian countries, widespread use of smokeless tobacco products has driven smoking rates to astonishing lows. In his recent article “Can alternative nicotine put the final nail in the smoking coffin?,”Karl Fagerstrom writes, “The availability and use of snus has contributed to Sweden’s record-low prevalence of smoking and the lowest level of tobacco-related mortality among men in Europe. This phenomenon is sometimes referred to as the ‘Swedish experience.’”
Public health modeling that factors in that experience and the low-harm chemical constituents of modern products suggest that a huge number of deaths could be averted if more people switched, as Niquette did, from cigarettes to smokeless. But so far, most of those switching, even to the newest smokeless alternatives, have been men.
“Of all adult smokers, about 45 percent are women, and 55 percent are men,” says Allison Bolyard, vice president for innovative nicotine products strategy at Altria. “But if you look at lifetime smokers who have successfully switched, only about one-third are women. We see a big opportunity in providing alternatives for women that they can enjoy and can be successful in switching, because they’re falling behind.”
In recent behavioral studies on smokeless products that I’ve conducted for industry, women described negative stereotypes about smokeless users. One said, “You kinda have to fight the dip mentality. Marketing needs to be classy and discreet. Not a country boy dip and spit.”
What innovations and approaches might get women who don’t want to quit nicotine to consider a smokeless alternative? To better understand this, I talked with people in industry working to provide appealing options for women. I also collaborated with the Consumer Advocates for Smoke-Free Alternatives Association (CASAA) on a survey of its female members about their smokeless tobacco perceptions and experiences.

Deadly Misperceptions

Surveys consistently find that smokeless products are wrongly seen as more risky than e-cigarettes and often as more risky than smoking. A recent analysis of the nationally representative Population Assessment of Tobacco and Health Study found that a higher percentage of Americans believe smokeless tobacco products are more harmful than cigarettes than believe the (actual) reverse to be true. What’s more, “the study demonstrates that harm perceptions not only predict future product uptake in nonproduct users but also predict continued product use among existing users.”
Unfortunately, these misperceptions are even more widespread among women. Previous researchfound that among people in the U.S. and Canada who smoke, women were significantly less likely than men to agree with a statement that some types of smokeless tobacco are less harmful than cigarettes.

Daunting Barriers

Along with exaggerated fears of health risks, there are psychological and practical barriers to female interest in smokeless products. (More on these below.) One is outdated perceptions of smokeless products. Discreet modern products, such as tobacco-free nicotine pouches, do not involve what one CASAA member labeled “the nasty habit of spitting out the juice.” As Niquette’s story above implies, these small, white pouches bear little resemblance to the stereotype of a wet, brown wad of chew.
Another barrier is the unfamiliar mode of delivery. Bolyard previously oversaw Altria’s On! tobacco-free nicotine pouch line. She notes that users of traditional moist smokeless tobacco (MST) are about 95 percent male: “As opposed to men, women who smoke cigarettes aren’t used to putting, and parking, a product in their mouth.”
A third barrier is fear of being associated with negative stereotypes of smokeless tobacco users. In my previous research, smokeless users were perceived as being mostly men, “biker guys and baseball players.” There were mentions of “gross people” with brown or black teeth.
Based on this, women were reluctant to be observed using smokeless. One said, “Folks were noticing it [the round pouch tin] in my pocket and expecting me to spit somewhere.”
Unfamiliar, uncomfortable mouth sensations are a fourth barrier that may turn off women. In the CASAA survey, a number of women referred to “burn” or irritation as a reason for stopping smokeless use or avoiding certain brands.
“The familiar stinging/burning sensation on the gum when trying either snus or nicotine pouches is a huge deterrent to switch to smokeless oral products, especially for women,” says Bengt Wiberg, a Swedish economist turned snus advocate and innovator. His startup company, Sting Free, markets nicotine pouches with a patented shield technology that provides flavor and nicotine sans discomfort. “I think the U.S. expression ‘You only have one chance to make a first impression’ applies very much to this issue,” he says.
Wiberg also notes that today’s smaller, slimmer pouch products fit more comfortably in women’s mouths. Niquette seconded this, saying, “I could be talking to somebody, and you won’t know I have one in.”
Bolyard noted that Altria’s On! product was designed to minimize some of these barriers. The can is a square shape instead of an MST-like circle and includes 20 small pouches to match the typical cigarette pack size.

Unexpected Benefits

As women get better acquainted with smokeless products, they may discover unexpected benefits over other nicotine-delivery methods. Niquette appreciates the hands-free convenience of smokeless tobacco. “Women do so much stuff: We’re busy people—we cook, clean, raise kids. Sometimes your hands are full,” she points out. “So vaping or smoking is not an option.”
“I have three computer screens; I’m typing all day,” she adds. “And I don’t have to break. I can just grab a pouch out of the can, put [it] in my mouth and keep going.”
To ease the transition, Niquette suggests that women start with a smokeless alternative that comes in flavors they enjoy in other products, such as fruity or minty gum.

“Not Messy or Gross Like I Thought They Would Be”
Here is a selection of comments from 260 female members of the Consumer Advocates for Smoke-Free Alternatives Association on what makes women who smoke decide to try or reject smokeless tobacco products.
We defined “smokeless tobacco” as including nicotine pouches, snus, dip and chew. However, we learned that unfamiliarity with these products extends to the terminology. One wrote, “I’m confused; I thought vaping was smokeless tobacco?”
What would make women consider a smokeless product? The most common response was “nothing.” This included variations such as “threat of death,” “a million dollars,” or less hyperbolically, “a vaping ban.” However, a few respondents were open-minded: “I have no idea what it is, but this email was enough to have me interested. I currently vape.”
Factors listed that might make smokeless products appealing included: not having to spit, smaller size, “a bigger spectrum of flavors,” “cleaner,” “nonstaining” and “not noticeable to others.”
Few who had tried traditional moist smokeless tobacco found it appealing. One said, “It was convenient, and there was no annoying smoke, but it irritated my mouth a bit, and I worried about my teeth or developing cancer.” “The smell and the taste [were] overpowering, the ‘juice’ burned my mouth, spitting was gross, but swallowing was even worse,” said another.
But tobacco-free pouches, and to a lesser extent snus, found some favor. A user of both said they are “not messy or gross like I thought they would be and are advertised in the media.” Reasons for trying these products among those who use(d) them include not being able to smoke or vape at work or while traveling; wanting to quit vaping (“to give my lungs a break”), ease of access (“Vaping products became less available online … pouches were available at our convenience store”), ease of use, and curiosity.
Other positive comments included “Liked that it was discreet and just nicotine”; “It works just as well as the smoking of something, and it’s easy to just spit it out when you have enough”; “Use to get through the day at work without having to take a break. I liked how they curb cravings; the flavors and the size of the pouch makes it easy to be discreet”; and “Can do them anywhere. Try these pouches!! No smoke, but satisfaction given.”
Women who tried and stopped using pouches gave a variety of reasons. Some missed the “hand-to-mouth action—still wanted to smoke.” Others complained of hiccups, nausea or irritation: “I’m not a big fan of pouches because they burn the inside of my cheeks.” A few mentioned other sources of discomfort, such as “uncomfortable material that hurts my gums/mouth” or too much bulk. There was also just difficulty getting used to this type of product: “Flavors were good, but it was weird having something in my mouth that I wasn’t supposed to be chewing.” Some disliked the taste.
Because “smokeless” received various interpretations, many women left comments on other nicotine products, including gums, lozenges, tablets or sprays. These received a similar range of positive comments and complaints. This supports the idea that women seeking alternatives to cigarettes may have to try a variety of products and brands to find their fit. As one wrote, “Try it if it will benefit your health and you’re OK with it. To each their own.”
In short, it’s clear that many women hold strong, perhaps outdated stereotypes of smokeless tobacco. Many will never try it. However, there appears to be an untapped demand for the benefits some women report from modern oral nicotine products: a discreet product to use where no smoke or vapor is allowed or a hands-free product that gives nicotine and flavor without effort. –C.K.O

Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Advisors. She spent 15 years on the faculty of Harvard Medical School.

April 1, 2023
Poised for Growth

Antonella Giannini (left) and Alberto Monzon
(Photos: Montrade)

Montrade is expanding its portfolio and manufacturing facilities.

By Stefanie Rossel

There are clear signs that Montrade is continuing its remarkable growth: In the corner of the tobacco equipment manufacturer’s bright conference room, there are samples of tiles, wall coverings and other construction materials. The Bologna-based company is about to build new premises. About 200 meters from its current 4,000-square-meter site, it will construct an additional 7,000-square-meter shop floor, which is supposed to be finalized by the beginning of next year.
“It will become our main company building with offices,” explains Alberto Monzoni, Montrade’s managing director. Together with his wife, Antonella Giannini, who serves as the company’s sales director, he founded Montrade in 2004. “The assembly workshop in the new building will have a bigger dimension because we’re growing also in terms of our portfolio as we are adding new machine models, and it will be fully dedicated to the assembly of our machines,” says Monzoni.
The current site, built in 2010 when the company had outgrown its original rented offices, will in the future accommodate a warehouse and tooling capacity. It already hosts the company’s spare parts manufacturing center, which is equipped with a CNC machine and will become a preferred sub-supplier for Montrade machinery after the expansion. The building is also home to a startup company, with a team dedicated to the development of special sensors, mainly for the inline quality control of filters that Montrade installs in its machines or sells as part of retrofit kits for its equipment. “The team will get more space with the option to increase capability. Inline control is important as high speed requires high quality.”
Monzoni says it’s essential that Montrade, which exclusively supplies the tobacco industry, enlarges its footprint. “Multinational companies have become an essential part of our customer base, and they require a certain capacity.”
With 120 employees, the company presently manufactures about 30 lines per year. Montrade offers a wide range of equipment ranging from filter-making to packaging for combustible cigarettes and heated-tobacco products (HTPs). “It’s vital for us to meet the new market requirement of flexibility,” says Giannini. “Due to the increasing amount of products, the complexity of the tobacco industry is intensifying. Montrade covers everything from roll-your-own [RYO]/make-your-own [MYO] to packing lines, always with a view to sustainability.”
Environmentally friendly filter solutions, Giannini and Monzoni believe, will be the next big thing in the industry. Discarded cigarette filters, 98 percent of which presently consist of cellulose acetate (CA), a bio-based polymer that takes years to disintegrate, are the world’s most littered items. They pollute the environment with microplastics. In July 2021, the European Union banned plastic items such as plates, cutlery, straws or cotton bud sticks but exempted cigarette filters. Instead, tobacco manufacturers will be required to cover the costs of consumer awareness-raising campaigns and extended producer responsibility schemes starting in December. There are rumors, though, that the EU might ban CA filters in the future. Giannini considers it more likely that the EU will raise taxes on polluting items instead. The tobacco industry is taking the issue seriously by developing paper filters, a trend that Montrade has seen reflected in the demand for corresponding machinery.

Efficient Paper Crimping

One of Montrade’s bestsellers is a new version of a paper crimper that was originally developed in 2010. Paper is crimped with a pair of rollers that penetrate the paper band without cutting the fibers. The goal of the process is to get the maximum volume so that when the rod is made, the filter doesn’t have any holes; it should look as much as possible like a filter made from CA.
Driven by customer requests, Montrade recently redesigned the crimping head of its machine to enable the manufacture of paper filters with similar properties to CA filters. “With our new technology, we have achieved excellent results,” Monzoni says. “We save 15 [percent] to 20 percent of paper compared to traditional crimpers, which means that we create a very homogeneous and stable filter with no variation in pressure drop and superb quality. Not only does this reduce cost; there is also an advantage for taste. The retention of paper is much higher than that of CA, which means that tar and nicotine will be reduced. If you use less paper, you will get less of the typical taste of a paper filter. For better machinability in the downstream process, we have increased the hardness.”
Importantly, Montrade’s machine works at the same speed as filter makers for acetate tow, splicing automatically and never reducing the speed of production, according to Giannini.
As an alternative to the paper crimper, the company offers the standalone crimping module as a retrofit package. Within 15 minutes, it turns a conventional CA filter maker into a paper filter maker. “If CA filters get banned, it doesn’t make sense economically to waste so many machines and replace them with new ones as the rod forming basically does the same job no matter whether there’s CA tow or crimped paper at the backend,” says Giannini. “The crimping module breathes new life into the existing rod forming, just giving it a new material feeding. We are getting a lot of positive response from our customers; you can see that this is the direction they will go. Many brands are making trials and have set up smoking panels with this new material.”
While demand for paper filter makers is increasing, Monzoni emphasizes that the trend is still at an early stage. “Paper filters are currently used for brand variants that appeal to consumers with a more ecological orientation,” he says. “The big brands are not ready yet. One [company] is prepared to start with one brand; others are still studying the subject.”
The situation is different in the smaller RYO/MYO category, which has become a forerunner in paper filter tips. “Sustainable filters are common, and the consumer likes them,” says Giannini. “In cigarettes, we’re still a bit behind. But the few brands with sustainable filters presently available are growing.”

Sustainable Solutions

Montrade’s portfolio reflects the tobacco industry’s current transformation that not only involves reduced-risk products but also non-nicotine offerings. For the rapidly growing cannabis market, Montrade is developing several products, including a cone-making machine.
The company is also exploring the potential of paper beyond common solid filter plug production. In partnership with a big tobacco firm, the machinery manufacturer has created a new packaging line capable of producing soft packs without plastic film. The humidity in the pack is preserved through an innovative seaming technology that reduced both cost and environmental impact.
Furthermore, the company uses the crimped paper to manufacture a hollow tube that is equivalent to hollow acetate filters. “Turning crimped paper into a hollow tube filter has long been the dream of filter designers,” notes Giannini. “Our customer wanted to change from CA filters to paper to have a full sustainable portfolio of paper filters. We have made it possible by offering paper tubes and hard paper filters. Our hollow paper tubes have a wall thickness of 0.6 mm to 1.5 mm, and they are very similar to CA filter tubes.” Montrade also has a machine that allows it to produce charcoal paper filters, which are also known as Dalmatians.
Used in combustible cigarettes, hollow filters make elegant mouthpieces. In HTPs, they are highly functional, serving as either a flow restrictor or an expansion chamber and playing a fundamental role in aerosol cooling and accelerating. “The performance of HTPs is driven by tubes,” Giannini says.
Drawing from its experience with crimped paper filter rod manufacture, Montrade has developed a rod-forming machine for the tobacco element in HTP consumables. The cast leaf that is used in the sticks presents a challenge in processing, says Monzoni. “It’s fragile and tends to be sticky, so it needs to be treated in a special way,” he says. The underlying concept of our rod maker, however, works for all bobbins or webs—you just need to adapt the technology to treat different materials.”
More design possibilities for HTPs arise with Montrade’s coaxial flexible platform, which represents a new way of making filters. “Instead of a single process, our machine has two garnitures and is capable of making one filter or tube inside of the other,” says Giannini. “It’s highly performing and super flexible, allowing for a continuous process or a combination of individual filter segments inside and a wrapping with a continuous material, such as paper or CA, outside, in one go.”
Customers’ biggest investments these days are in HTPs, according to Giannini. “There is still a lot to be discovered on the production side of HTPs. Coaxial technology is one opportunity to open the scenario to different production designs. HTPs are the future. We strongly believe that they will make up the majority of nicotine consumption in the future.”

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.

April 1, 2023
Designing the Future

An exclusive tour of PMI’s state-of-the-art heated-tobacco units plant in Bologna

By Stefanie Rossel

Photos: PMI

A traditional cigarette factory gone sci-fi—that’s the impression Philip Morris International’s manufacturing site in Crespellano, near Bologna, is likely to leave on new visitors. Philip Morris Manufacturing and Technology Bologna (PMMTB), which is the company’s first factory dedicated exclusively to mass producing reduced-risk products (RRPs), provides a glimpse into the future of nicotine-delivery systems manufacturing. Presently, the facility focuses on consumables for the company’s IQOS heated-tobacco product (HTP).
From the outside, the elongated structure with its glass facade and fountains framing the entrance, which was built in only 33 months and began production in 2016, could double as a modern congress facility. Measuring 110,000 square meters, the building hosts production, logistics, quality control and administration facilities, however. It has also been designed as an agreeable place to work. In addition to offices and a conference center, the building features a kitchen with a free-flow restaurant, modern changing rooms and a gym.
To visitors, the site may seem more like a pharmaceutical facility than a traditional factory. To prevent contamination, no one is allowed to enter the shop floor without protective gear. A visitor center showcases the product ingredients and details the specifications of various IQOS consumables. Heets, the consumables of IQOS Original, comprise a tobacco plug, a hollow acetate tube, a polymer-film filter and a cellulose-acetate mouthpiece filter. In addition, there are outer papers and mouth-end papers.
The tobacco part, visible at the end of each Heets, is made from fine tobacco powder mixed with fibers, such as cotton, glycerin and guar gum, and then cast into a sheet and rolled onto bobbins. The tobacco rods are manufactured by crimping the tobacco cast leaf in a patented process, which enables the heating blade to be inserted into the consumables.
Terea Sticks, the consumables for IQOS Iluma, use Smartcore Induction System technology. Iluma, which does not need to be cleaned, is an induction heated device, hence the Terea sticks are equipped with a metal heating element, a thin solid metal thread that is coated with stainless steel and heats the tobacco from within. While with 4.5 cm it is as long as a Heets stick, the Terea consumable contains a fifth component: a front plug at the end of the stick behind the tobacco element to prevent contamination of the device. According to a PMMTB employee, the most challenging part in the production process is to put the metal stick into the center of the tobacco rod and allow eleven holes of filtration in the right place.

Share the Learnings

The highly automated shop floor comprises a series of halls that are arranged on both sides of a long corridor aptly called “the spine.” Among other things, they house the primary with the cast sheet production and the secondary with the filter-making division. The latter is divided into so-called cells, production lines that each comprise a crimper for turning the leaf sheets into the sticks’ tobacco elements, a filter combiner that assembles the consumables’ components and a packer. A web of buffer systems below the hall ceiling supplies individual cells with filter segments.
Each part of the secondary has been designed to respond quickly to changing consumer needs and allow for future expansion. For instance, several of the cells that used to be dedicated to making Heets are currently being converted to manufacture Terea sticks, which Crespellano started producing in 2021. The cells’ new configuration reduces the space required for each production line from 1,200 square meters to 900 square meters. As it gained experience, PMMTB has been able to carry out such conversions quicker. While it took the company more than a year to refurbish the first line, it completed the fourth in four months.
With more than 1,700 employees, the Crespellano site exports its products to about 40 countries where IQOS is presently marketed. In terms of value, the factory exports exceed Italy’s exports of olive oil and parmigiano cheese. To date, PMI has invested more than €1 billion ($1.06 billion) in PMMTB, which has become the company’s center of excellence for staff training, prototyping and large-scale production of smoke-free tobacco products.
The plant is the largest factory in Italy to be built from scratch in 20 years and has made PMI one of the largest investors in the country. It is also the biggest facility dedicated to smoke-free products within PMI. PMMTB establishes the manufacturing processes for PMI’s HTP products worldwide. The learnings gathered in Bologna are then exported to PMI’s 38 manufacturing affiliates in 28 countries. Over the past five years, PMI has transformed several of its combustible cigarette factories into heat stick production facilities, including in Aspropyrgos in Greece, where it invested €300 million, Otopeni (Romania, €490 million) and Yangsan (South Korea, €420 million). Today, the company has seven smoke-free product manufacturing plants.
In addition to the consumables manufacturing facility, the Crespellano site also houses PMI’s new Center for Industrial Excellence, which was inaugurated in the autumn of 2021 and is the largest within the company for industrialization, process innovation, engineering and sustainability. The center is part of a plan to invest approximately €600 million in smoke-free products in Italy over three years. The project is anticipated to create 8,000 direct and indirect jobs.
The most recent addition to PMMTB has been the Institute for Manufacturing Competences (IMC), which opened in 2022. The company’s aims are to create a skills development center for continuous training and technology transfer, with a focus on manufacturing digital, sustainability, talent development and managerial competences. PMI wants the IMC to benefit not only employees but also suppliers and other stakeholders. The academy, which also finances scholarships, carries out applied research projects with the University of Bologna, the Polytech of Bari and various competence centers.
In designing PMMTB, PMI paid considerable attention to its ecological footprint. The facility purchases 100 percent certified renewable electricity and features a photovoltaic system, avoiding emissions of about 2,000 tons of carbon dioxide per year. Between 2017 and 2020, the site reduced its emissions by 17.1 percent. Those of its supply chain declined by 56 percent from 2012 to 2020. Built in accordance with sustainability standards, the IMC is completely self-sufficient in energy.

Longtime Player in Italy

Italy is an important market for PMI. Statista expects tobacco products revenue to reach $24.73 billion in 2023. The market is expected to expand at a compound annual growth rate of 0.57 percent between 2023 and 2027. While cigarettes still account for the lion’s share of the domestic market, sales of novel products are growing quickly. In 2021, Italy was the world’s third-largest market for HTPs, with 9 billion sticks sold, behind Japan (45 billion) and Russia (21.7 billion), according to Euromonitor. By February 2023, about 2 million Italian smokers had completely switched to IQOS and stopped smoking, according to PMI.
PMI has been in Italy for more than half a century. In 1963, the company set up Intertaba in Zola Predosa—a 10 minutes’ drive from Crespellano—to supply filters under license of the Italian tobacco monopoly ETI. In 2020, Intertaba became a reference point for the development of new technologies. In 2013, PMI finalized a high-tech filter production facility at the site, which then became the company’s Center of Excellence in Manufacturing and Technology for innovative filters and smoke-free products. With 20 standalone prototyping lines, Intertaba works as a vertical startup by developing new products from concept proof through technology verification. In 2020, the U.S. Food and Drug Administration authorized the marketing of the IQOS tobacco-heating system as a modified-risk tobacco product.
Opened in Rome in 2001, Philip Morris Italia is responsible for the sale and marketing of PMI brands in Italy. In 2020 and 2022, PMI established digital information service centers in Taranto and Marcianise, respectively.

Pipeline of Innovations

To date, PMI has invested more than $10 billion in its transition to smoke-free products. The company employs more than 980 people in R&D and has evolved into the EU’s 45th-largest patent filer. At the 2023 CAGNY Conference, Chief Financial Officer Emmanuel Babeau said PMI was on track to become a majority smoke-free company by 2025. Last year’s acquisition of Swedish Match provided a substantial boost to reaching this target. The smoke-free net revenues of the two companies combined amounted to about $12 billion in 2022, accounting for more than a third of total net revenues.
PMI’s smoke-free business has been profitable for several years. The Swedish Match deal provided the company not only with a strong position in Scandinavia but has also given PMI a rapidly growing modern oral nicotine brand, Zyn. Swedish Match’s nicotine pouch led the U.S. retail category with 75.7 percent in the fourth quarter of 2022.
IQOS continues to grow too. PMI’s shipments of heated-tobacco units grew 14.9 percent in 2022. In the fourth quarter of 2022, 24.9 million smokers worldwide used IQOS. Seventy percent of them had completely converted to the new product. In the fourth quarter of 2022, HTPs accounted for 8.8 percent of the EU market, up from 6.4 percent during the same period in 2021. Ninety percent of HTP users in Europe use IQOS. In Japan, growth of IQOS consumable sales has been driven by Iluma. In the fourth quarter of 2022, PMI’s HTPs had a market share of 24.5 percent.
The company has set ambitious targets for its smoke-free business. By 2025, PMI wants to have a user base of more than 40 million smokers who have switched to one of its smoke-free products and stopped smoking.
The company aims to have its smoke-free products available in 100 markets. More than $1 billion in net revenues is supposed to be generated by the company’s “beyond nicotine” business, which focuses on wellness and healthcare products.
To achieve these goals, PMI is expanding its RRP portfolio. On Jan. 30, 2022, the company turned its 2020 cooperation deal with KT&G into a 15-year contract. The agreement gives PMI exclusive access to KT&G’s smoke-free brands and innovation pipeline. In return, KT&G benefits from PMI’s global commercial infrastructure and experience in commercializing smoke-free products. As a result of the collaboration, KT&G’s Lil HTP, which is considered complementary to PMI’s smoke-free products, is present in 31 countries in Central America, Europe and Central Asia.
PMI aims to provide smokers in low-income and middle-income countries (LMICs) with less hazardous alternatives. About 80 percent of the world’s smokers live in LMICs and often have limited access to affordable RRPs. In November 2022, PMI launched a new HTP device—Bonds by IQOS. Based on IQOS Original’s blade heating technology, the product is marketed as “simple, convenient and affordable without compromising on a reduced-risk profile,” making it a relevant proposition for consumers in LMICs, according to Babeau. The product has shown promise during pilot launches in the Philippines. Further commercialization is anticipated during this year.

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.

April 1, 2023
Anticipating Growth

Image courtesy of SindiTabaco

Following last year’s record earnings, Brazil’s leaf tobacco sector expects a larger crop in 2023.

By Marissa Dean

As global markets ebb and flow with impacts of the Covid-19 pandemic, inflation and the Russia-Ukraine conflict, the tobacco sector has not been spared. Labor shortages, shipping issues and price inflation have all impacted tobacco growing and sales over the past few years. Through this, though, Brazil has come out in the positive in the last year and expects to see another good crop season in 2023.

Increased Earnings

Brazil’s 2022 tobacco leaf exports brought in the most earnings since 2014, when the country sold $2.3 billion worth of tobacco leaf internationally (see “The Way Forward,” Tobacco Reporter, February 2014). The $2.5 billion earned from leaf exports in 2022 reflected a 67.44 percent increase in value and a 25.93 percent increase in volume from 2021, with the negative impacts from the pandemic beginning to subside and logistical bottlenecks easing.
In 2021, Brazil exported 464,429 tons of tobacco leaf, amounting to $1.46 billion, according to the Interstate Tobacco Industry Union (SindiTabaco). In 2022, the country exported 584,861 tons of tobacco leaf, amounting to $2.45 billion.
The 2021/2022 crop fetched a price of brl17.02 ($3.28) per kilogram in southern Brazil versus brl10.54 per kilogram for the 2020/2021 crop, according to Afubra, the Tobacco Growers’ Association of Brazil.
The majority of exports last year were headed to Europe, with Belgium accounting for 26 percent of shipments. China bought 19 percent of Brazil’s tobacco while the United States purchased 6.3 percent.
While there were many factors that contributed to the substantial earnings last year, “The decisive factors that contributed to the higher-than-expected exports in 2022 were the 2021 unsold stocks, which were shipped abroad in early 2022, and the improvement to the shipping and container logistics in the second half of 2022,” said Iro Schunke, president of SindiTabaco.

What’s to Come in 2023?

Following the strong 2022 season, Brazil is expected to harvest a slightly larger crop this year. According to Afubra, the planted area in southern Brazil should yield an estimated 604,732 tons, 7.95 percent more than in 2022.
To reach these estimates, the growers’ organization uses the number of plants registered in the entity’s Mutual System, by type of tobacco, according to Benicio Albano Werner, Afubra’s president. “To these numbers, we add the number of plants on properties that are not registered in the system,” he said. “It is considered also the percentage that producers planted above or below the quantities registered. These three factors give us the planted area.”
“The Brazilian tobacco crop is expected to reach approximately 600,000 metric tons,” said Schunke. “The quality of the crop will be good enough to meet the requirements of the different clients.”
In the Rio Grande do Sul region, tobacco growers increased their planted area by 3.17 percent and production is estimated to be 3.8 percent higher. In Santa Catarina, planted area was increased by 10.22 percent and production is estimated to be 11.49 percent higher. In Parana, planted area was increased by 6.99 percent and production is estimated to be 10.93 percent higher.
When asked about how the expected increase in crop size would affect 2023 sales and earnings, Schunke said, “The Brazilian tobacco crop has remained around 600,000 metric tons over the past five years, and the average shipments abroad over the same period have remained little above 500,000 metric tons. Therefore, the current crop fits into this context.”
The increase in production area was expected, according to Werner. “The past crop was, for a large part of tobacco growers, very profitable, with high lucrativeness,” he said. “This encouraged some producers to increase their planted area.”

Hurdles

Globally, the past few years have been hard; beginning with the Covid-19 pandemic in 2020 and followed by supply chain issues, global labor shortages, global inflation and the conflict in Ukraine, many sectors have been impacted in some way. Tobacco farming is not exempt.
Brazil’s tobacco industry is dominated by small-scale farming, with a total of 142,190 producers, the majority of whom are in southern Brazil (128,448) followed by the northeast (13,390) and a marginal amount located elsewhere in the country (352). The overall number of producers has decreased from the 2020/2021 season, which counted 151,388 producers.
The Covid-19 pandemic exacerbated the problem of child labor around the world due to increases in poverty, school closures and labor shortages. The International Labor Organization and the United Nations Children’s Fund released a report showing that 160 million children and adolescents ages 5 to 17 were subjected to child labor in early 2020.
The tobacco industry in Brazil has made considerable headway in addressing the problem. The Growing Up Right Institute, which focuses on eliminating child labor, is an initiative of SindiTabaco and its associated companies, supported by Afubra, helping to keep teenagers and children of tobacco farmers out of the tobacco fields. Companies associated with the institute hire young apprentices and pay them a salary equal to 20 hours a week to attend a rural management and entrepreneurship course after regular school hours.
In July 2022, the Growing Up Right Institute held a seminar in Santa Cruz do Sul with associates and partners, discussing progress made in combatting child labor and the work that needs to be done going forward. “The institute was founded with the mission to fight child labor and generate opportunities for adolescents from the rural setting, especially in tobacco growing regions,” said Schunke, who is also president of the Growing Up Right Institute. “It is a complex task, but with good partnerships, we have achieved great results. We have already become known nationally and internationally for the innovative method of offering opportunities to adolescents from the countryside through the learning law.”
Additionally, “The increase in [cost of] farm inputs, along with higher international freight costs, were responsible for pushing up the production costs of all agricultural crops, including tobacco,” said Schunke. While, based on last year’s earnings and expectations for this year, Brazil’s tobacco income seems well positioned, the industry will still have to fight against global inflation and the remaining supply chain issues.
“It is worth emphasizing that Brazil has been the largest tobacco exporter for 30 years due to the quality and integrity of the crop whilst complying with ESG [environmental, social and governance] questions,” said Schunke. “It is important for the tobacco growers to continue in line with these principles, always acting in compliance with good agricultural practices.”

A Rural Tradition
Image courtesy of Palheiros Paulistinha
Brazil is a prominent player in the global tobacco industry, known not only for its leaf tobacco but also for its cigarette manufacturers, including market leader BAT Brasil, which is perhaps better known as Souza Cruz. Within the larger commercial industry, however, lies a smaller, more rural niche of straw cigarette makers.
Palheiros Paulistinha is located in Bebedouro, Sao Paulo, Brazil, and specializes in the production of straw cigarettes, an artisanal product of Brazilian tobacco filler with a corn husk wrapper. The company was started in December 2004 with the aim of preserving the tradition of Brazilian straw cigarettes as well as adding value to the corn production process, making straw a high-scale raw material.
Palheiros Paulistinha produces about 168 million cigarettes per year, with the possibility of expanding local production to 300 million cigarettes annually. The company offers seven product lines, including flavored and nonflavored products.
Straw cigarettes are popular in the rural communities and among young adults, according to the company, partly because they lack chemical additives, with the exception of flavorings such as menthol. “We are experiencing a change of habits when it comes to tobacco customers in Brazil,” said Eduardo Pierini, export director of Palheiros Paulistinha. “While in the rest of the world, they are migrating to e-cigarettes and vapes, in Brazil, despite those products, they are more attracted to straw cigarettes because they are more natural and ‘stronger.’” This change has led to an increased market share for the company.
Each cigarette is handmade by trained individuals who prep the tobacco and corn leaves, cut the leaves, sterilize them and roll the cigarettes. Because of the handmade aspect, these products are more expensive than traditional cigarettes; however, the lack of chemical additives and “lack of smell,” according to the company, make them very popular as a “natural” cigarette alternative.
The company works with many small farms to procure corn husks “because the biggest suppliers sell the corn leaves to industries to produce animal feed,” according to Renata Grasseschi Dunck, export consultant for the company. They have eight suppliers, who buy corn leaves from different farms and from different states. The tobacco used in the cigarettes comes from Bahia in the northeast region of Brazil. Dunck went on to explain that Palheiros Paulistinha helps tobacco farmers buy “corn leaves for a higher value than the market. We also offer training, growth prospects, etc. [for the farmers].”
There’s a big focus on community within the company—“We also work in the rehab of prisoners, offering to them the opportunity to have a job,” said Dunck. “The prisoners have a lot of benefits working,” added Pierini. Prisoners are paid, and the work they do shaves down their sentences; “So if you are condemned for nine years in prison, you would serve six years of [the] sentence,” said Pierini. “So it’s good for all the society.” The company has manufacturing set up in prison workshops and works with signed contracts, following all rules and requirements of regulating organizations. More than 3,000 inmates work for the company.
While the company is looking to expand internationally, having recently registered with the U.S. Food and Drug Administration, Palheiros Paulistinha puts a lot of stock in sourcing locally and keeping the tradition in Brazilian straw cigarettes. –M.D.

Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor. Since that time, she has taken on additional responsibilities, including feature writing. Her skills span the publishing industry from layout and design to copy editing to content creation.

April 1, 2023
Returning to Cuba

The Cuban cigar industry is flourishing despite several challenges, including weather and factory staffing.

By Timothy S. Donahue

Photos: Timothy Donahue

It was going to be a two-hour to three-hour drive. The rented 16-seat passenger bus had problems the day before, but the driver insisted that the issues had been resolved. Taking the buses provided by Habanos, the manufacturing and distribution arm of Cuba’s state-controlled cigar industry, is more reliable, but the trip often takes more than 12 hours to complete because things move at a slower pace with the Festival del Habano crowd. A small group of colleagues and I decided to rent the private bus instead.
It didn’t turn out well. About 45 minutes into the trip to Pinar del Rio, Cuba’s tobacco growing region on the western side of the island, the bus began to fill with smoke. In typical Cuban fashion, the driver turned around in his seat and said, “Do not worry; this happens all the time.” It soon became too much, however, and the bus had to pull over along the side of the busy Havana highway during morning rush hour. The six passengers climbed down the steps to the side of the road. Smoke continued to billow from the engine.
An hour after being promised another bus would arrive in 15 minutes, we decided to call it a day. We then began the hour wait for two cabs to make the short trip from the city center to pick us up during what was now extremely heavy traffic. Cuba doesn’t have much gasoline, so everything runs on diesel, and the exhaust made the roadside nearly as toxic as riding in the damaged bus. We never made it to the farms. The bus driver assured us that the bus would be fixed by the next day. We never bothered to call to find out.
Maritza Carillo Gonzalez
Travel in Cuba can be complicated. For all of its troubles, however, the island is filled with a passion and love for everything Cuban, including its music, food and, of course, cigars. During the 23rd edition of the Habano Festival, which took place from Feb. 27 to March 3, more than 2,000 cigar aficionados from around the globe came together in Havana to celebrate the Cuban cigar after a two-year hiatus caused by the Covid-19 pandemic.
Habanos’ new co-president, Maritza Carrillo Gonzalez, said she has had the honor of attending numerous festivals and has seen for herself the passion with which Habanos enthusiasts enjoy and appreciate the event. She said she was excited for its return. “This year has a special flavor,” Gonzalez said. “This is a unique and long-awaited edition in which I take on a new position that I accept with great enthusiasm and responsibility.”

Rising from Ruin

Cuba’s tobacco farms are recovering from the damage sustained in September, when Hurricane Ian made landfall as a Category 3 storm. While Habanos brought festivalgoers to a smaller farm in Pinar del Rio, many media members wandered to other larger, more famous farms in the area. They found that the plants were still small, but farms seemed to be growing and curing plenty of tobacco leaf.
The industry intends to plant 9,500 hectares of tobacco, down from an initial plan of 15,000 ha, according to Enrique Blanco, agricultural director of Tabacuba, the agricultural arm of Cubatabaco, the state-owned tobacco conglomerate. An estimated 2,100 ha of premium shade-grown leaf will be cultivated, which Cuba hopes to use to meet its growing export demands.
In Cuba, the growing process starts in July and August, when the seedbeds are prepared, preferably on loose, well-drained soils. After 45 days of irrigation, the plants reach a height of 13 cm to 15 cm (5 inches to 6 inches) and are ready to be replanted in early October. The plants reach their full growth during the 45 days to 50 days following replanting, and after another 50 days they are ready for harvesting.
Private tobacco producers have been meeting with Cuban authorities over the past few months to secure the state’s help in settling debts and paying for materials to rebuild tobacco drying houses, according to Cubatabaco. Nicaragua and the Dominican Republic as well as other producers have also stepped in to help Cuba recuperate. Several farms have new curing barns, but many more are still needed.

Factory Floors

Entering a Cuban cigar factory can be overwhelming for the senses. The smell of cured leaf, cigar smoke and hard work can be intoxicating. During the visit to the factories this year, festival attendees had the opportunity to experience two of Cuba’s “Big Four” factories: La Corona, also once known as La Casa de Hierro, and the world-famous Real Fabrica de Tabacos Partagas. The other two major factories are H. Upmann and El Laguito. At La Corona, the factory produces Romeo y Julieta, Hoyo de Monterrey, Cuaba, Por Larranaga, Saint Luis Rey, San Cristobal de la Habana and some Montecristo. Habanos markets 27 premium brands. There are over 400 market names and an estimated 100 factory names.
La Corona’s manager said that daily production averages an estimated 25,000 cigars. Workers strip an estimated 1,200 leaf per day. During the peak of the Covid pandemic, those numbers plummeted by half. “We have returned to close to normal operations,” the manager said. “What is complicated is we had many experienced rollers leave the factory or even the country, and now we must train new rollers, and that takes time.” The manager also said that in 2022, farmers began testing a new variety of tobacco that was more resistant to fungus. “We like the results so far,” he said.
The quality control manager at La Corona claimed that the wrapper imparts little flavor to the cigar. This led to a contentious debate among festivalgoers, and the opinions varied greatly. However, when the manager insisted that the addictiveness of Cuban cigars was due not to their exquisite leaf but to the fact that their wrappers are sorted on the thighs of Cuban women, his statement went oddly uncontested.
At the Partagas factory, other brands are produced as well–everything from Partagas, Cohiba and Romeo y Julieta to Bolivar and Quai d’Orsay. The original factory closed for renovations in 2011; however, after a roof collapse in 2020, the original historic factory was shuttered for good, and all operations moved to the “new” historic building, which is still quite old.
Currently, Partagas has 200 rollers producing about 15,000 cigars a day. However, the tour guide said that on many days there are only 100 rollers or so because, like La Corona, many of them have left for other factories located closer to their homes or have left the country entirely. There is room for 240. Many rollers also switch between factories based on demand for cigars.
The exodus was evident throughout Cuba where even some well-known rollers have left the country. Reynaldo Gonzalez, for example, moved to Mexico, and the Hotel Conde de Villanueva where his La Casa del Habano (LCDH) was located is shuttered with green plywood over the entranceways. Alejandro Gonzalez Arias left the Hotel Comodoro to open a cigar lounge in California. The Comodoro store is now operated by two talented female rollers.

Robust Sales

In 2022, Habanos generated $545 million in revenue, nearly 2 percent more than in 2021. Habanos reported a turnover of $568 million in 2021 (Habanos did not define its 2022 turnover, only revenue), up 15 percent growth over the previous year. The company’s largest markets for cigar sales are Spain, France, Germany, China and Switzerland, consecutively.
The company also boosted its retail presence in 2022. Habanos now has 157 LCDH stores, 17 Cohiba Atmosphere locations, 1,264 Habanos Specialists, 2,744 Habanos Point designated stores and 587 Habanos Lounge and Habanos Terrace locations.
Last year, Habanos announced a new “global pricing standard,” which greatly increased the prices of Cuban cigars around the world. The company has already announced at least two additional price increases for 2023. The price increases have impacted the costs of Cuban cigars greatly. In 2018, for example, a box of 10 Cohiba Talisman Limited Edition 2017 cigars cost $600. Today, that same box can cost anywhere from $2,350 to $2,850—if they can be found. Cohiba Robustos were selling at multiple locations in Cuba for about $1,700 a box, meaning each cigar was selling for just under $70 each. In 2019, the box of 25 cigars was less than $300.
The company is confident in its pricing strategy, according to Jose Luis Lopez Inchaurbe, development vice president of Habanos. “The process of implementing the new price homogenization strategy takes time. As in every market, the procedures and the regulatory situations are different,” Lopez said. “So, the price increase has not been made at the same time in every market. Then we are now evaluating how the demand has been impacted by this step. In any case, it’s clear that some brands and references have responded better than others. But we see this as a normal situation of the compensation of the demand by market.”
Luis Sanchez-Harguinday, co-president of Habanos, said that the company has “big expectations” for the coming year, adding that two factors will make the most impact. “First of all, because we trust in the power of our initiatives that we have, product initiatives and other activities that we are planning for the year,” he said, “and this is a great weapon that we have, and it’s all the enthusiasm, the hard work, the spirit and passion devoted by all the participants in the value chain of our business, starting by the Cuban Tobacco Research Institute, going through the farmers, the tobacco growers, the Cuban industry, of course, the workers at Habanos, and finally, the unique and exclusive distribution network that we have.”

Evening Events

The most attended experiences during the Habano Festival are its three evening events, held on Monday, Wednesday and Friday. Each of the three evening events celebrates specific brands or releases, and the Monday opening night event commemorated the Montecristo Open line. It was held at Club Habana, a historic beach resort that opened in 1928. This year’s event featured a show with drones depicting scenes of farmers, cigar bands and cigar brand names. The event can most easily be described as a street festival on a boardwalk at the beach on the grounds of a historic resort.
Wednesday’s evening event is a little different from Monday’s event but has many of the same qualities. Held at the El Laguito Reception Hall, this experience was dedicated not only to the Bolivar marca but also to both Habanos Specialist and LCDH stores. The evening marked the release of Bolivar’s New Gold Medal cigars. This event is a giant, fancy pool party where everyone is dressed up and no one is swimming.
It was rumored that for the first time in the Habano Festival history, the company had an LCDH outlet at Monday’s evening event that was selling the newly released Open Slam. However, at the Wednesday event, participants witnessed firsthand the LCDH table selling boxes of 10 of the Bolivar New Gold Medal cigars for $250. It was a madhouse, and people waited the entire evening in some cases to buy a box of the new cigars at a seriously reduced price reserved for the festival. There is no timetable for when the cigar will be released to the public.
Friday’s gala dinner event is the premier event of the festival and is traditionally held at the Pabexpo Fairgrounds. This experience is a sight to behold. The 2023 evening paid tribute to the Partagas brand with the launch of the Linea Maestra, the brand’s most premium line. Only an estimated 1,200 people are permitted to attend. The gala was also honored by the attendance of Cuban President Miguel Diaz-Canel, who signed the Cohiba humidor for the festival’s humidor auction, bringing back an old tradition popularized by Fidel Castro during the first editions of the festival.
Castro last signed a festival humidor in 2006, when five humidors sold for a total of $725,000. It was also the final time Castro was able to attend the event. Famous for his ability to orate at length, Castro’s presence at the early events caused a mixture of awe and trepidation by some guests—awe at the opportunity to share a room with such a historical figure and apprehension about missing an early morning flight. Only a few journalists, including Tobacco Reporter, were allowed on the floor where the gala was taking place this year, as all the other journalists were relegated to platforms at the far ends of the room for nearly the entire evening.
The highlight of the closing event is the humidor auction, which has brought in record amounts of money for Cuba’s healthcare system the past few years. This year would be no different. The 2023 humidor auction generated a record $11.89 million in combined sales. This shattered the festival’s previous auction record of $4.71 million in 2020. This year, a Cohiba humidor was sold for $4.45 million, almost equaling the entire 2020 auction. It is the most expensive humidor ever sold at auction. According to sources, the buyer of the Cohiba humidor is one of the new Chinese partners of Allied Group, which owns 50 percent of Habanos.
It is impossible to truly know Cuba without visiting Cuba. For those in the cigar industry, there is no better time to travel to the country than during the Festival del Habano. For all its difficulties, it is still an amazing adventure. As one Cuban-American who has been in the tobacco industry for 35 years and was attending his first festival this year said, “It’s an amazing place. The people and the atmosphere are intoxicating. It’s also easy to see how a trip to Cuba could be going along great, and then suddenly, everything just falls apart.”

Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

April 1, 2023