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  • An Italian Flavor

    An Italian Flavor

    Photos: TTI

    From its new subsidiary in Umbria, TTI can supply its global customers more efficiently and cost-effectively.

    By Stefanie Rossel

    The tree-covered rolling hills of central Italy’s Umbria region provide the backdrop for the European subsidiary of U.S.-headquartered flavor house TTI. Here, in the plain at the foot of the hill of Assisi, a charming medieval town halfway between Florence and Rome, the company has set up a state-of-the-art production facility and warehouse.

    Establishing the new flavor factory has been a long journey, relates Jeremy Davis, TTI’s sales marketing manager, who leads the project and is the sister of TTI CEO George Cassels-Smith. The family business specializes in flavors with aroma chemicals, many of which have complex profiles to generate unique taste experiences. It develops high-quality flavors for shisha, cigars, snus, cigarettes, modern oral pouches, e-liquids and cannabinoids. Casings are also part of its portfolio.

    “We tried to put a warehouse in Dubai many years ago, but due to some high-rise fires in the city, the government wouldn’t allow chemical storage in free trade zones any longer. TTI then thought of Turkiye, but at that time, Trump and Erdogan were on difficult terms,” says Davis, referring to the former U.S. president and the current Turkish one. “Just as we were about to sign a contract for an existing factory, Erdogan wouldn’t allow Americans into Turkiye.”

    Europe turned out to be a good option. “We opted for Italy because the tobacco industry has always had a strong presence here, and [we opted] for Assisi because there are other tobacco entities right here,” Davis said. Universal’s affiliate Deltafina subsidiary, for instance, is located in neighboring Bastia Umbra. “Logically, maybe Milan would have made more sense because it’s a center of chemical manufacturing, but George wanted to be close to the tobacco industry.”

    What was supposed to start with a warehouse quickly evolved into a full manufacturing facility, according to Davis. Built during the Covid pandemic and opened about a year ago, the 6,000 square-meter facility currently manufactures about 100 flavors for tobacco products using 700 different raw materials. New flavors and raw materials are being added weekly. The facility that produces such a multitude of flavors is surprisingly sparse: A corner of the spacious shop floor hosts two huge, shiny 18,000-liter casing tanks. They are complemented by two 200-liter tanks to mix smaller volumes.

    On the wall opposite that corner is the warehousing space. Quality control is rigorous: All incoming raw materials must pass an internal check before being used to manufacture flavors. The finished flavors undergo a similarly strict quality assessment procedure before delivery to the customer. Traceability of both raw material and finished product is a basic procedure for TTI. Flavors are validated at both the Italian facility and TTI’s U.S. facility.

    Faster and Less Costly Delivery

    The Italian factory features a “plug and play” concept throughout the production department and the laboratory. It also includes space to construct a clean room for the manufacture of e-liquids, which is scheduled to start by 2024. TTI intends for the Italian factory to eventually produce exactly the same portfolio as its U.S. mother plant, where the company creates novel aromas in a newly developed R&D center.

    The goal of replicating its U.S. process abroad is to lower transport cost and facilitate the logistics process. Many of TTI’s clients are based in Europe and the Middle East whereas many suppliers of raw materials are in Europe. This means that producing in the U.S. requires a lot of shipping across the Atlantic.

    “When we started to produce flavors for these markets in the U.S., transport was already expensive and took a long time,” Davis says. “Now with the changed situation due to the Covid pandemic and Russia’s invasion of Ukraine, it is much more expensive and takes even longer. It’s very burdensome to our customers to be paying all of that and waiting the times they have to today. We just want to make it easier for them and more cost-effective.” TTI’s production for Europe and the Middle East, which is currently carried out at both the U.S. and the European sites, is planned to be eventually shifted largely to Assisi.

    TTI caters to many players but, like other flavor manufacturers, doesn’t always know in which end products their flavors are used. When the company is dealing with customers who are looking for a specific flavor profile, TTI conducts panel testing to find that profile. “Customers pretty much tell you what they want,” says David. “Different customers have different requirements.”

    The appropriate flavor profile also depends on the region and cultures in which the end product will be consumed. “Shisha in the Middle East is more traditional flavors, but they’re growing into what we call fusion flavors,” says Davis. “In Europe, fruits are big. Minty flavors are sought after but restricted in an increasing number of markets.”

    Davis observes increasing demand for TTI products in Europe from the growing modern oral nicotine category. “Geographically, we are growing a lot in the Middle East and Africa. We focus on Asia; we have a successful Chinese sales office, but we’re presently putting more work into south [Asia] and Southeast Asia.”

    A Company with Tradition

    The Cassels-Smith family has a long history in the tobacco industry. It started more than 150 years ago with exports of U.S. tobacco leaf under the name Gieski and Neiman. In 1975, Davis’ father left the company to set up the flavor house TTI. Unlike many competitors who make aromas for other industries, TTI has always dedicated its service exclusively to the tobacco industry. Recently, the company expanded with the creation of eLiquiTech, which specializes in e-liquid. In late 2020, eLiquiTech introduced SyNic, a high-purity (typically 99.9 percent) synthetic nicotine (S-nicotine) that is neither obtained from tobacco nor derived from a synthetic racemic mixture.

    At the time when the Assisi site was built, TTI ventured into cannabinoids by establishing Emerald Green Technology. This subsidiary creates fresh terpene blends, tinctures and edibles as well as casings and distinctive flavors for hemp, hemp shisha, cannabis cigarettes, oral CBD and THC pouches. The company plans to transfer its expertise to TTI Assisi to cater to the cannabis market that is expected to develop in Europe. Germany’s government, for instance, recently announced that it would legalize cannabis during the current legislative period.

    “Typically, we find trends start in the U.S., move to Europe, and then they go beyond Europe,” says Davis. “We are seeing growth of interest in cannabis here, so I think the EU will be going down the same road as the U.S.”

    Davis is excited about the outlook for the tobacco industry. “It has its challenges, but we are working hard to find other avenues within the industry, such as working with synthetic nicotine to develop safer products, e-liquids, CBD and hemp. There are opportunities out there where there’s growth in the industry—it is just evolving.”

    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.
  • Step by Step

    Step by Step

    SWM has published a manual to help regional manufacturers quickly launch tobacco-heating products.

    By George Gay

    Bruno Stefani

    Bruno Stefani told me recently that his company’s aim was to help other companies develop, manufacture and market heated-tobacco products (HTPs). This came as no surprise, in fact; he is, after all, the HTP manager of SWM’s Reduced-Risk Products division, so what he said was more or less a statement of the division’s raison d’etre. But he went on to explain that the division’s focus was on regional cigarette manufacturers that had previously not entered the HTP market and that the aim was to have them launch products within 18 months to 24 months while continuing to operate in much the same way as they do when manufacturing combustible cigarettes. Each step of the process seems to have been designed with simplicity in mind and with the focus on targeting HTP products aligned with individual manufacturers’ brand profiles. Now, given the history of HTPs, which overall and until recently comprised about 30 years of market tests and failures, news of such a straightforward, rapid and all-encompassing offer did come as something of a surprise.

    When the first commercially successful HTP products started to appear on the market, there was a veil of secrecy around them that most of us could penetrate only dimly. Of course, the veil started to lift as these products came under the scrutiny of those who were more qualified than most of us to figure out why they had been designed as they had been and how they performed as they did. And it started to lift further as the interests of those manufacturing these reduced-risk products were aligning with the release of information that was likely to increase their marketability in the eyes of consumers and, potentially, regulatory authorities.

    It is not surprising, therefore, that now, much information about HTPs can be gleaned from the internet, though, I would suggest, it is surprising that it is possible to visit a website that outlines the way in which anybody interested in these once obscure products and with the necessary financial backing can be guided, from concept to marketplace, through the steps needed to become a manufacturer and supplier of such products. But, in fact, SWM, which has much expertise in the components that come together to make up an HTP, provides on its website a white paper that does just that.

    The white paper, which is clear and concise, includes, in addition to an introduction and executive summary, chapters on what companies need to know before launching an HTP and dealing with an overview of the HTP market; eight reasons to make the leap into HTPs; overcoming obstacles; designing the heating device; designing the stick; building a blend; risks and regulations; and HTPs and the environment. There is also a chapter on expert solutions, and it is worth mentioning that SWM has invested €12 million ($12.88 million) in heat-not-burn R&D since 2013, as part of which it has assessed more than 40 different single tobacco grades under aerosol conditions. It has developed a unique puff-per-puff aerosol analyzer; it has presented at Coresta three scientific studies on HTPs; and, overall, it has more than eight years of HTP scientific and manufacturing expertise behind it.

    Stefani told me during a telephone interview in early March that SWM offers a four-step process for developing and marketing an HTP from scratch. At its heart, the process involves providing a customer with know-how and access to ready-made components while avoiding tricky patent issues. The first step, discovery, is the one in which SWM demonstrates to a potential customer the workings and benefits of a number of HTP products. The second step, validation, involves a proof of concept in which characteristics, such as the taste profile and nicotine delivery level, are finalized in respect of a prototype.

    The third step, industrialization, deals with how to manufacture and maintain the quality of the consumable sticks using the assets already available to the manufacturer. And the fourth step, the future, concerns preparing, immediately after launch of the first HTPs, the next generation of such products, which need to be placed on the market about every six months to keep the product portfolio looking fresh but which might involve only minor brand extensions.

    To ensure a fast HTP development phase, SWM’s process is built around an already designed device and consumable stick. The device, which has been designed and would be manufactured by a third party with which SWM has worked and to which it would provide introductions, uses an “external” or oven system to heat the aerosol-generating material rather than an “internal” blade or pin. Choosing the external rather than the internal heating system reduces hugely the investment required because, whereas in the case of the latter, a greenfield plant must be constructed, the former allows a manufacturer to use, perhaps with minor modifications, its existing machinery. The third-party device supplier owns the patent to the device and ordinarily would be responsible for the after-sales obligations that attach to the supply of such electronic equipment.

    At the same time, SWM can provide introductions to a filters company and to a machinery company in the case that modifications must be made to equipment while it is able to supply the consumable stick’s reconstituted tobacco for which it holds the patents.

    But, in the end, it is down to the customer to mix into its primary department the reconstituted tobaccos specifically designed for HTP applications and other materials to produce personalized blends, much as it would do when making combustible cigarettes: adding other components, such as casings and flavors and even other reconstituted botanicals that, again, are designed specifically for HTP applications and that can be supplied by SWM. And it is, of course, down to the customer to sign off on the sensory experiences provided by the product.

    Staying Competitive

    Although the process sounds straightforward, the question arises, I suppose, as to why regional players should become involved in HTPs and if they should become involved, why, in general, they haven’t so far, even though, in conversations with Stefani, many have expressed considerable interest. There are at least three answers to the second question, one of which has to do with the disruptions caused by the Covid pandemic. Another reason has to do with some manufacturers already being involved in other projects that have left them for the time being without the resources necessary to embrace HTPs. And for some, there is no sense of urgency in moving to HTPs because, with the major manufacturers concentrating on new-generation products, the regional players are performing well on the market for combustible cigarettes and have not felt the chill wind of decline.

    But it seems likely that if these regional players are to stay competitive in a world where combustible cigarettes are giving way to new-generation products of various kinds, they will need to get on board with HTPs and probably sooner rather than later. SWM says the combustible cigarette market is suffering a steady attrition that amounted to an estimated compound annual growth rate (CAGR) of about minus-4 percent between 2016 and 2022. Over the same period, HnB products enjoyed an estimated CAGR of about 70 percent, and, in some countries, the market share of HTPs was above 10 percent by the end of 2022. Within the EU, where most but not all of the target regional manufacturers operate, the cigarette/HnB transfer rate between 2016 and 2020 was plus-35 percent, meaning that for every 100 cigarette sales lost, HTP sales grew by 35 sticks.

    Further, SWM estimates that the overall HTP CAGR between 2021 and 2027 is likely to be 15 percent to 20 percent while the CAGR for HTPs using external heating systems will be about 20 percent to 25 percent given that they are starting from a lower volume base.

    Of course, confidence in the future for these devices is provided by the fact that, in many markets, they stand at a tax discount to combustible cigarettes, providing a potential retail price advantage that, in the case of HTPs with external heating systems especially, is bolstered by the relatively low cost of manufacturing disposable sticks. Such confidence must also be seen in the context of the investments that have been made in them and that is continuing to be made in them by the major players. And it is likely, too, that the entry into this market segment of regional players will build product exposure and market momentum.

    The case for HTPs can be argued from a negative perspective as well. If a consumer of a regional player’s combustible cigarettes decides she wants to move to a less risky product, she will move to the product of a competitor if the regional manufacturer doesn’t offer a suitable product. And this would be an avoidable loss for the manufacturer in question. While it is not possible for a manufacturer to develop HTPs that exactly mimic the characteristics of its combustible brands, it can get close enough to present devices as new formats offering fresh experiences. This product/brand continuity, if you like, is important because while a consumer might be looking to move to a less risky product, she probably wants, too, to move to one manufactured by a company she already trusts.

    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.
  • Beyond Tobacco Harm Reduction

    Beyond Tobacco Harm Reduction

    To see clearly into the decades ahead, we need to rethink nicotine.

    By Clive Bates

    There is no doubt that tobacco harm reduction is a powerful and effective public health strategy. It takes the widely understood public health concept of harm reduction (see drugs, alcohol, HIV and so on) and applies it to the enormous burden of harm created by smoking. We already have enough science and experience to know that this strategy works. Two conditions must be met: (1) The new noncombustible nicotine products must be much less risky than smoked products; (2) these low-risk products must displace the high-risk combustible products. Let us briefly consider these two questions.

    Are the noncombustible products much less risky? We know from biomarker data and considerable additional supportive evidence that noncombustible nicotine products are, beyond reasonable doubt, much less dangerous than smoking. There should be no serious dispute about this. Though some activists stress long-term uncertainties in risk, those are as likely to turn out to be negligible as to turn up unwelcome surprises. The simpler and more controllable chemistry of the smoke-free products will allow for regulation and product modifications if risks do ultimately emerge. Though there are studies showing various effects on the body, there is little to suggest that these amount to material risks. The human body is not defenseless: World-famous epidemiology shows that regular smokers who quit before age 40 avoid nearly all the long-term mortality impacts. That is not intended as a recommendation to smoke for 25 years but to apply some perspective to the much lower exposure from noncombustible products.

    Do the low-risk smoke-free products displace the high-risk combustible products? There is now a wealth of triangulating evidence from multiple sources showing that noncombustible products can and do displace combustibles. The most persuasive evidence is the experience of snus in Scandinavia. In Sweden and Norway, smoking has become marginalized on average and has dwindled to very low levels among younger age groups. Nicotine use, however, remains typical of other European countries. The Cochrane review assessed 78 studies, including 40 randomized controlled trials, and concluded in November 2022, “There is high‐certainty evidence that [e-cigarettes] with nicotine increase quit rates compared to NRT [nicotine-replacement therapy].” Population trend data shows an accelerated decline in smoking coinciding with the rise of vaping. Quasi-experimental studies compare the effects of price and regulatory differences to show that e-cigarettes function as economic substitutes for cigarettes.

    In one sense, we are advancing well on tobacco harm reduction; we know it works, and there is potential to avoid millions of premature deaths. But we could be doing much better. The main barrier to deeper and faster worldwide progress is dogmatic resistance from misguided tobacco control activists, reflexive hostility from public health agencies and regulators, pervasive misinformation about risks and a blizzard of negative media coverage driving a moral panic about adolescent vaping. As I have argued, many tobacco control interests need tobacco or nicotine use to be harmful or they lose their purpose, prestige and money. If there is no harm to address or abusive corporations to thwart, there is little point in their work. Tobacco harm reduction directly threatens their interests, and they have responded accordingly.

    So why do we need to move “beyond harm reduction,” as I suggest in the title above? Why do we need to “rethink nicotine”? The answer is that tobacco harm reduction is an unsatisfactory and incomplete framework for understanding the direction and destination of the consumer nicotine market. Without a rethink of nicotine, the rancorous arguments will continue.

    Harm reduction implies that there must be harm to reduce. It suggests that reducing harm is the underlying justification for allowing the availability of reduced-risk nicotine products. That tends to focus attention on the benefits of the product-switching choices of existing smokers. But also, it classifies the uptake of nicotine products by current nonusers, whether adults or adolescents, as problematic and a basis for justifying restrictions or prohibitions designed to curtail use. The United States Tobacco Control Act embodies this idea through its public health standard: New nicotine products seeking premarket tobacco authorization must be evaluated as “appropriate for the protection of public health” (see Section 910(c)(4)).

    Implicit in this view is that no one wants to use nicotine, and new smoke-free products should function as a souped-up smoking cessation aid for which there would be little justification without smoking.

    But no one thinks of other common psychoactive substances in this way. At the launch of a new craft beer, does anyone ask, “is this appropriate for the protection of public health?” Of course they don’t—it’s beer! We do not agonize over routine and perhaps compulsive morning caffeine consumption because we are not concerned about dying from coffee-related diseases. Increasingly, legislators recognize that cannabinoids are widely used and that society would be better off if these were regulated and taxed rather than outlawed.

    The critical concept in rethinking nicotine and going beyond tobacco harm reduction is the demand for nicotine. Is this demand really involuntary and just driven by addiction? Or do people experience real or perceived benefits that create the demand? Nicotine has been found to improve certain cognitive functions, including attention, memory and processing speed. It can temporarily increase alertness and focus, making users feel more mentally sharp. Nicotine stimulates the release of neurotransmitters, which can help regulate mood, helping users feel more relaxed, feel less anxious or experience an improved sense of well-being. Some evidence suggests that nicotine may have potential therapeutic benefits for conditions such as Parkinson’s disease, attention deficit hyperactivity disorder, schizophrenia and other conditions. For those seeking scientific citations, a fully sourced list is available via the Safer Nicotine Wiki, an outstanding living library curated by tireless citizen scientists. 

    How does our approach change if we accept that, at least for some people, nicotine provides functional benefits or even just a pleasurable sensation that they enjoy? If we look beyond the harm reduction approach to smoking, we must address the consumer demand for nicotine as a recreational stimulant. Once we recognize a demand for the product, we need to have a mature conversation about how this demand will be met in the future. The attempt to control demand by prohibiting supply has never been a conspicuous success. There are many reasons why lawful and regulated products are better for consumers and wider society than nurturing an informal or criminal supply chain via prohibitions.

    The future of the nicotine market is becoming much clearer now: Consumer nicotine will be available through a range of noncombustible nicotine products, including vapes, oral nicotine and heated or smokeless tobacco. The regulatory challenge shifts from harm reduction to making nicotine products available that may have minor risks but fall within the normal societal tolerance for risk. Instead of asking, “is this appropriate for the protection of public health?,” in the future, we would ask, “are the risks associated with this product acceptable for recreational nicotine use?” Our approach to adolescent nicotine use would more closely resemble our approach to alcohol: measures to discourage use and restrict sales, but not a moral panic.

    The evolving demand curve for nicotine is complicated by both the harms of smoking and the dependence-forming properties of nicotine. The great harms of smoking and the pressures of the policies, such as taxation, to reduce smoking have suppressed the demand for nicotine. That is changing. When nicotine can be used with minimal risk, then it is likely that latent demand will be released. People who would have otherwise been deterred from using nicotine by the harms and stigma of smoking may be inclined to try nicotine in much safer forms.

    In formal definitions, such as the Addiction Ontology’s, a dependence becomes an addiction only when there is “serious net harm.” Addiction is defined as “A mental disposition toward repeated episodes of abnormally high levels of motivation to engage in a behavior, acquired as a result of engaging in the behavior, where the behavior results in risk or occurrence of serious net harm.”

    The inclusion of serious net harm is to limit the definition to conditions “that merit a treatment and public health response.” But what if there is no serious net harm? It follows that there should be far less public health concern about nicotine use.

    To move beyond harm reduction, we need to recognize that the demand for nicotine runs deeper than the demand for smoking and will outlive cigarettes. Then the challenge is to develop a regime that allows for nicotine products with acceptable risk and to be lawfully available to those who wish to use them. Despite the dogmatic rear-guard action of tobacco control activists, traditional tobacco control is being steadily overtaken by the strategy of tobacco harm reduction. But tobacco harm reduction is an interim stage in the evolution toward a full rethink of the place of nicotine in society. To see the pathway to the future of nicotine, it is essential to look out toward the destination.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • In Memoriam: Dayton Matlick

    In Memoriam: Dayton Matlick

    Dayton Harris Matlick, who devoted more than 80 years of his life to working in tobacco, passed away in February at the age of 88. Dayton founded a publishing company in Raleigh, North Carolina, that produced Tobacco Reporter for nearly 40 years. His company also published Vapor Voice, Tobacconist, Flue-Cured Tobacco Farmer, Tobacco Farm Quarterly, Tobacco Science, Burley Farmer and Pipes and Tobaccos. Other topics his company’s magazines covered included golf, firefighting, emergency rescue, truck driving and a support magazine for those dealing with cancer.

    Dayton was raised in Louisville, Kentucky, on a burley tobacco and beef farm. His most reliable (and favorite) mode of transportation to get to town was by foot—his running talent helped him gain a spot on the track team at the University of Kentucky, where he earned his bachelor’s degree in journalism. He then earned a master’s degree in communications from Michigan State University, where he also taught.

    Dayton’s father, J.O. Matlick, who had little formal education, became a local extension agent and then commissioner of Natural Resources for the Commonwealth of Kentucky. Along the way, he began distributing regular newsletters that eventually turned into magazines. Dayton began writing and editing for his father’s Kentucky Farmer’s Home Journal in 1959. When J.O. suffered serious health problems, the magazines were sold to Harvest Publishing in Michigan. Dayton moved with the publications and became an award-winning journalist.

    In 1981, Harvest decided to divest its agricultural division, which Dayton bought and moved to North Carolina under the name Specialized Agricultural Communications, which eventually got shortened to SpecComm. Tobacco Reporter was a natural fit to the existing titles and was added to the company’s catalog.

    As chairman of SpecComm, Dayton traveled the world and made friends on virtually all continents. He had a particular affinity for the art of pipemaking and thanks to his travels (and the magazine he created dedicated to the hobby) was able to amass one of the greatest pipe collections in the world. He was a tobacco Renaissance man, friends with important tobacco people around the world and interested in every detail about the leaf that captivates so many. In 1994, Dayton set up TabExpo, the most respected global exposition for tobacco manufacturers that continues to this day, which also led to the creation of the GTNF. In 2019, Dayton sold SpecComm to TMA.

    Dayton mentored far too many people in the publishing industry to count and created a legacy that will continue to endure. Dayton was a 10th-degree black belt in Taekwondo and continued to practice the art well into his 70s. He was also a voracious reader, loved science fiction and named several of his beloved dogs after characters from Star Wars.

  • Shaping Tomorrow

    Shaping Tomorrow

    The future envisioned by BAT will partially be created at the company’s new innovation hub in Trieste.

    By Stefanie Rossel

    Photo: BAT

    As its corporate slogan suggests, BAT is working to create a future in which its products offer consumers pleasure at a lower risk than that presented by the cigarettes from its legacy business. Part of that “Better Tomorrow” will be created in the northernmost part of the high Adriatic in Italy, where the company is currently building a new innovation hub.

    Located in Bagnoli della Rosandra, part of Trieste’s free port terminal, the innovation hub spans 20,000 square meters and involves an investment of €500 million ($608.63 million) over five years. For BAT, the Trieste manufacturing plant is the first hub within the group that will focus on the production of reduced-risk products,*† including Velo nicotine pouches, Vuse vapor cigarettes and Neo sticks, the consumables for the company’s Glo heated-tobacco product (HTP).

    In addition to hosting a new manufacturing site, the Trieste factory will house a digital boutique, an innovation lab and a center of excellence for digital transformation and digital marketing. These aim to develop innovative projects relating to marketing, focusing on the personalization of the client experience—the increasingly direct relationship with the consumer, with the task of providing new services and marketing techniques, using advanced software and creating partnerships with international players and innovative startups.

    The project emphasizes BAT’s commitment to both its transformation strategy and Italy. “As consumer preferences and technology evolve rapidly, we rely heavily on our growing global network of advanced manufacturing hubs, innovation super centers and world-class R&D facilities,” said BAT Chief Growth Officer Kingsley Wheaton when announcing the establishment of the hub. By 2025, the company aims to generate £5 billion ($5.92 billion) in annual revenue from its new category products. By 2030, it anticipates having 50 million consumers using its noncombustible products. In February, the number of consumers using BAT’s noncombustible products stood at 22.5 million.

    Swift Realization

    Andrea di Paolo

    To find the perfect location for its hub, BAT commissioned a consultancy to study the options, taking into account considerations such as innovation, technology, research and logistics. Trieste emerged as an attractive choice, according to BAT Trieste Vice President Andrea Di Paolo.

    “It is the most important commercial port in Italy, with a trade volume of 62 million tons, and well connected with Europe and Italy,” he says. “Trieste also boasts the highest number of researchers of any European city; there are a lot of startup incubators in the area. Besides, there are the University of Trieste and other education and research centers of excellence. It’s the right place where a multinational company can set up an innovation hub because it enables us to work with local universities and research institutions.”

    BAT’s project is progressing at remarkable speed. After announcing the investment in September 2021, construction started in January 2022. In June 2022, the company celebrated the halfway mark, with construction 50 percent completed, and in December 2022, the facility started producing Velo modern oral products. The plant is expected to be fully operational in May 2023, and the official opening will take place one month later. “It’s a super-fast project,” says Di Paolo. “In less than one year, we managed to build the factory and start production.”

    The Trieste innovation hub will create 600 jobs directly and 2,100 jobs indirectly over the next five years, and the factory will host 12 production lines. Production will be exported to European countries and elsewhere. Up to four lines will produce Velo, helping BAT cater to a rapidly growing market. Nicotine pouches accounted for an estimated $2.38 billion, or 0.3 percent of the global retail market, in 2021. Toward the end of 2022, that value had increased to $5.86 billion, according to Market Reports World. The nicotine pouch market is forecast to expand at a compound annual growth rate of 31 percent until 2028. In 2021, Velo volumes grew by 328 percent compared to the previous year, according to Euromonitor International. Global volume sales amounted to 1.32 billion units in 2021.

    Digital Offensive

    In the second phase of its hub development, scheduled to be completed by 2025, BAT plans to install six manufacturing lines for new category products, such as HTPs and e-cigarettes. “However, the plan can change rapidly in the next few months depending on demand of products and the capacity we have in Europe,” Di Paolo says. The future aim of BAT is to expand the site beyond this.

    In addition to the innovation hub, the Trieste factory will also house BAT’s new digital boutique, an innovation center of excellence for digital transformation and digital marketing. It is the company’s third digital boutique in the world, having already established such sites in the United States (Silicon Valley) and China.

    The center will provide digital services—some of them based on artificial intelligence—for BAT’s European markets. “Consumers are increasingly connected and live in an ever-evolving digital ecosystem,” explains Di Paolo. “The objective of the digital boutique is to anticipate new consumer trends and turn them into memorable moments for our target audience in the new categories.”

    Carbon Neutral

    In line with BAT’s ambition to make its operations carbon neutral by 2030 and achieve “net-zero” greenhouse gas emissions across its value chain by 2050, sustainability has been a major factor in the design of the innovation hub. According to Di Paolo, the site will be carbon neutral from day one, using renewable energy sources and achieving high levels of energy efficiency through intelligent heat recovery, among other technologies.

    “The facility has been equipped with high-efficiency photovoltaic solar panels that produce over 1,200 megawatt hours (MWh) of electricity per year,” says Di Paolo. “In addition, a wind tree has been installed to make use of the fact that Trieste is a windy place. It generates the electricity for electric vehicle charging outside the factory.”

    Furthermore, an autonomous biomass-fueled power plant will produce over 1,900 MWh of heat. It will be supplemented by a 100 percent renewable electricity supply. The factory also features a strict water management system, which reduces water consumption by dry cooling and harvests rainwater. To minimize the environmental impact of logistics associated with product distribution, BAT is cooperating with the Trieste port authority to determine the optimal routes for shipping.

    “Even at this early stage, the Trieste Innovation Hub is an example to follow for BAT’s other factories,” says Di Paolo.

    *Based on the weight of evidence and assuming a complete switch from cigarette smoking. BAT states that these products are not risk-free and are addictive.
    † BAT notes that the products it sells in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to regulation by the Food and Drug Administration and that the company will make no reduced-risk claims relating to these products without agency clearance.
    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.
  • Qnovia Adds Zeller to Advisory Board

    Qnovia Adds Zeller to Advisory Board

    Mitch Zeller

    Mitch Zeller, the former head of the U.S. Food and Drug Administration’s Center for Tobacco Product, has joined the advisory board of a company developing a first-of-its-kind smoking cessation inhalation product.

    Zeller said Qnovia’s nicotine inhalation product, RespiRX, has the potential to be a “game changer” in lowering the use of combustible cigarettes.

    The former director of the Center for Tobacco Products (CTP) from March 2013 until his retirement in April 2022, Zeller is now providing policy and regulatory strategy consulting to Qnovia, Inc.

    The company is currently preparing an application to the FDA’s Center for Drug Evaluation and Research (CDER) for a cessation therapy which, if approved, will be the first inhaled prescription therapy to help tobacco smokers quit.

    Zeller’s addition to the company’s advisory board comes as the FDA aims to finalize proposed bans on menthol cigarettes and flavored cigars by August. The FDA also plans to propose a rule limiting nicotine levels in cigarettes and some other tobacco products.

    Zeller said access to Qnovia’s product can be one essential tool along with an administration-wide effort to provide support to those with nicotine addictions once those product standards take effect.

    “Some people will be able to quit cold turkey, but a whole bunch won’t, and they will be seeking nicotine elsewhere,” Zeller said in an interview, told Bloomberg Law.

    “The last thing that we want smokers to do if any of those policies go into effect is to simply switch to another tobacco product,” he added.

    Qnovia’s goal is for RespiRx to be the first inhaled prescription smoking cessation therapy product, according to Qnovia CEO Brian Quigley. Instead of using heat to create vapor, the RespiRx device uses an orientation-agnostic vibrating mesh nebulizer. The aerosolizing engine is nothing like a traditional e-cigarette that heats a coil to atomize nicotine based in PG and/or VG. 

    RespiRx is activated when a user inhales on the device. To aerosolize the nicotine, it sends an electrical current that causes the perforated piezo mesh to vibrate more than 100,000 times a second. “It’s that vibrating action of the mesh that then forces the liquid to the holes, creating an aerosol that appears vapor-like, allowing it to be inhaled,” says Quigley. That, he says, is fundamentally different from a traditional e-cigarette product, where the heating process can create undesired thermal byproducts.

    RespiRx uses proprietary software to deliver a precise dose of nicotine. Every time it’s activated, the device fires for three seconds and delivers a targeted dose of the drug. The base is reusable and serves as the housing for the battery and software. The RespiRx nebulizer sits within the pod that houses the nicotine drug product. 

    “The nebulizing unit (cartridge) gets replaced by the patient every one to two days. That interface means that the patient doesn’t have to clean the nebulizer,” explains Quigley. “The biggest challenge with other vibrating mesh products is that they require cleaning if used over an extended period. We’re mitigating that through the design of the interface. There is no cleaning required. We do believe that this will result in RespiRx having a very long use life.”

    Late last year, Qnovia raised $17 million to continue the development of its RespiRx nicotine replacement product.

    In June of 2020, the company appointed Quigley, a 16-year veteran of Altria Group, as its Chief Operating Officer. At Altria, Quigley served as CEO of its smokeless tobacco business from 2012 to 2018, a $2.3 billion business with over 800 employees,

  • U.K. Considers Banning Nontobacco Flavors

    U.K. Considers Banning Nontobacco Flavors

    Image: f11photo | Adobe Stock

    The U.K. government will consider banning fruit-flavored vapes in order to combat youth usage, reports ITV News.

    Public Health Minister Neil O’Brien is expected to make a speech next month calling for an investigation into the issue with the possibility of banning fruity flavors that have exploded in popularity in recent years.

    In the U.K., it is illegal to sell vapes to those under 18; there are also strict limits on nicotine content, refill bottle and tank sizes as well as restrictions on advertising and labeling.

    Justice Secretary Dominic Raab said the Department of Health and Social Care is exploring ways to tackle youth vaping in response to a question in the Commons.

    The government is still keen to promote vaping among adults as an alternative to smoking.

  • Belfast Considering Vaping Ban

    Belfast Considering Vaping Ban

    Image: muratart | Adobe Stock

    The Belfast Council in Northern Ireland is considering banning anyone under the age of 18 from vaping at its sites and premises around the city, according to Belfast Live.

    UUP John Kyle has forwarded a motion to be debated by the full council next week, calling upon the Belfast City Council to convene a working group with other stakeholders considering measures to strengthen current legislation and enforcement in relation to vaping.

    The motion also calls for a ban on the use of vapes by all individuals under the age of 18 inside all council premises.

    At the recent meeting of the council’s Standards and Business Committee, Kyle said, “Part of the purpose of this motion is that people, particularly parents of young people, are unaware of the dangers of vaping. It has become such a common practice with kids at school.

    “Part of the purpose is to publicize the issue, make people aware of it, so I propose it is aired at full council before going for consideration to the committee to work it through. It would be beneficial if we as a council give some air space to what is a growing public health problem.”

  • Paper Addresses Harm Reduction of Pouches

    Paper Addresses Harm Reduction of Pouches

    Knowledge-Action-Change (KAC) has published the latest in a series of briefing papers as part of its Global State of Tobacco Harm Reduction (GSTHR) project.

    What are nicotine pouches? provides an overview of the latest information about the scientific evidence, market data, regulatory landscape and tobacco harm potential for this relatively new safer nicotine product, according to KAC.

    Nicotine pouches are thumbnail-sized sachets that are placed under the lip. They are made from vegetable fibers infused with nicotine and a range of flavors. Nicotine pouches are sometimes confused with Swedish snus, another safer nicotine product that was the subject of a previous GSTHR briefing paper. Both products are placed under the lip, but while Swedish snus contains tobacco, nicotine pouches do not contain any raw or processed tobacco leaves.

    As a new product category, the body of evidence examining their safety is still growing, but preliminary findings indicate that nicotine pouches offer people who use nicotine a significantly safer alternative to smoking.

    “This briefing paper aims to increase knowledge about, and awareness of, the tobacco harm reduction potential of nicotine pouches,” said Gerry Stimson, director of KAC and emeritus professor at Imperial College London. “Good quality information about the full range of different safer nicotine products is essential for consumers, policymakers and regulators.

    “Nicotine pouches could make a significant contribution to tobacco harm reduction. This is particularly the case for the more than 300 million people worldwide who use smokeless tobacco products, most of whom live in low-[income] and middle-income countries where health systems are less well-resourced to diagnose and treat noncommunicable diseases. High-risk oral tobacco products such as betel quid, paan or gutkha contain relatively high levels of carcinogenic and toxic compounds and increase the risk of oral, esophageal and pancreatic cancers. In contrast, nicotine pouches have been found to have a similar risk profile to nicotine replacement therapy.

    “Nicotine pouches may not yet be as widely used as nicotine vapes, but the global market for these products is already worth $1.5 billion. This provides good evidence that tobacco users find these products acceptable and will switch to them. In comparison to some other safer nicotine product categories, nicotine pouches are low cost and have minimal start-up and on-costs for consumers, meaning they offer significant hope to many low-[income] and middle-income countries where high-risk oral tobacco use is prevalent.”

  • Philippines President Blocks International Probe of Duterte

    Philippines President Blocks International Probe of Duterte

    Image: Tobacco Reporter archive

    Philippines President Ferdinand Marcos Jr. has shut the International Criminal Court (ICC) out of the country as it attempts to investigate former President Rodrigo Duterte’s War on Drugs, reports Filter, citing Reuters. “That ends all our involvement with the ICC …. At this point, we essentially are disengaging from any contact, any communication,” Marcos said.

    The ICC opened an investigation into drug war killings under Duterte’s leadership in September 2021, focusing on two periods: November 2011 to June 2016, when Duterte spearheaded a similar campaign as mayor of Davao City, and up to March 2019, after Duterte became president but before he withdrew the country from the Rome Statute, the founding international treaty that created the ICC.

    The ICC temporarily suspended the investigation in November 2021, stating that the Philippines was conducting its own investigation and that the court would decide how to proceed at a later point. The investigation was reopened in January 2023 after the ICC stated that the Philippines government was not conducting a serious investigation of its own. President Marcos appealed the decision, asking for another suspension, but that request was not granted.

    “We cannot cooperate with the ICC,” Marcos said, “considering the very serious questions about their jurisdiction and about what we consider to be interference and practically attacks on the sovereignty of the republic.”

    ICC rules dictate that it can investigate any crimes that happened in the country while it was still a treaty member.

    “As of 2021, we still hear from local activists that extrajudicial killings are taking place,” said Ajeng Larasati, human rights lead for Harm Reduction International. “The Philippines in the past few months is still debating reinstating the death penalty for drug offenses as well. It doesn’t seem Marcos has taken any steps to make its drug policy better and more respectful of human rights.”

    “Just the fact the ICC is reopening the case is already a good step,” said Larasati. “Although it may not end up in an investigation, it still gave the Philippines government a sense that the international community is watching.”