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  • Fruitful Cooperation

    Fruitful Cooperation

    Photos: Alliance One International

    By partnering with Bayer Crop Science, Alliance One International improves farmer livelihoods.

    By Stefanie Rossel

    Ending poverty is the first of the United Nations’ 17 sustainable development goals, which are supposed to be achieved by 2030. According to the U.N. Food and Agriculture Organization (FAO), the battle to end hunger and poverty must be principally fought in rural areas, which is where almost 80 percent of the world’s hungry and poor live. Success requires investment in “agents of change,” according to the FAO—smallholders, family farmers and other vulnerable groups. To feed more people with less water, farmland and biodiversity, better management and improved techniques in agriculture will be needed.

    Agriculture is central to all activities in smallholder communities. In economic terms, most activities in these communities revolve around being able to develop a system that provides food security and improves the health of its members. The work of smallholders is an economic driver, creating prosperity for the community.

    Keen to enhance farmers’ incomes, Alliance One International recently embarked on a new project. In June 2021, the company announced that its Alliance One Brazil (AOB) subsidiary was partnering with Bayer Crop Science to provide quality maize seeds and agronomic support to smallholder tobacco farmers in Brazil. AOB’s goal is to help its contracted farmers diversify their income by strengthening the quality and yield of a crop that is cultivated complementary to tobacco in the country.

    “For AOI, improving farmer livelihoods is a top priority, and we are committed to maximizing all farmers’ income potential by 2030 through appropriate training in good agricultural practices and the opportunity for crop diversification,” explains AOI President Alex Strohschoen. “Through this partnership, we are making strides to achieve this goal and have already seen positive impacts for growers and their communities.”

    During the 2020 growing season, AOB implemented a pilot project in which 2,300 of its contracted Brazilian smallholder tobacco farmers received a high-quality agronomic package for maize. “While many of our contracted growers in Brazil already grow maize in addition to tobacco, they lacked access to high-quality crop inputs such as seed, fertilizer and agronomic support,” says Strohschoen. “This prevented them from scaling up their production and limited their financial return. This agronomic package provides our contracted growers with access to Bayer’s maize seed varieties as well as fertilizer and hands-on guidance from our agronomists and field technicians, helping improve crop quality and yield, in turn, increasing the farmer’s bottom line.”

    Globally, AOI employs approximately 1,000 trained agronomists and field technicians that conduct more than 1 million farm visits annually. “These individuals regularly share their expertise to support our contracted growers and are key to this partnership,” says Strohschoen.

    Alex Strohschoen

    Research Required

    Bayer Crop Science offers a range of maize varieties with enhanced features. For instance, a maize variety can be more water efficient, high yielding or resistant to typical maize pests than other varieties.  

    In the case of AOI’s contracted Brazilian growers, use of Bayer maize varieties, grown using high-quality fertilizer and agronomic support from AOI, made a difference. “Prior to this project’s implementation, our Brazilian tobacco farmers that also cultivate maize produced on average less than 5,500 kg/ha,” says Strohschoen. “The agronomic package that we provide gives growers access to some of the most advanced technology available on the market, potentially increasing yields to over 10,000 kg/ha.”

    As part two of the initiative, AOB offered the opportunity to participate in the program across its grower base during the 2021 growing season. Following the season’s completion, Strohschoen said, participating farmers saw a 15 percent increase in maize yield compared to the 2020 growing season, increasing a farmer’s income by $270 per hectare on average. “This additional income supplements the livelihood of our contracted growers and is an important piece of addressing other concerns, such as child labor, deforestation, etc.”

    Similar to Africa, where climate change appears to be a big challenge for farmers, extreme weather patterns are impacting crop production in Brazil. Less and less predictable weather patterns make it difficult for growers to determine the right time to plant whereas the worsening precipitation deficit as well as increased frequency and severity of droughts are becoming more prevalent and more concerning. “Food insecurity is a global issue driven by various factors, including increased demand, war and conflict, climate change, and economic slowdowns and downturns exacerbated by Covid-19,” says Strohschoen.

    An AOB leaf instructor (left) and a contracted farmer

    Expansion Envisaged

    Over the next three years, AOB intends to expand the project to include other crops—and other countries. AOI works with nearly 300,000 farmers in 20 countries across five continents, and it is the company’s aim to provide all of its contracted growers with the opportunity to diversify their income and increase their bottom line, says Strohschoen. “To do this, we must evaluate a number of factors to ensure we are implementing projects in the appropriate regions with crops that offer our contracted growers the greatest potential return. For example, we began this project in Brazil because approximately 75 percent of our contracted Brazilian farmers produce maize in addition to tobacco. Since these farmers were already growing maize, many had the infrastructure necessary to produce the crop prior to implementing the project.” 

    Following the success of the project’s first two phases in Brazil, it makes sense to expand it to a country with a similar climate and where growers have a seminal relationship with maize. “As we enter the 2022 growing season, we plan to introduce the program to our contracted farmers in Argentina, where a significant portion of our grower base could benefit from improving the quality and yield of their maize crops,” says Strohschoen.  

    In addition to the maize project in Brazil, AOI is also working on other projects around the globe. “For example, in Malawi, we have commercialized new groundnut and soya seed varieties,” says Strohschoen. “We provide interested tobacco growers with inputs, including agronomic expertise, helping them diversify their crop portfolios and produce high-quality crops for domestic, regional and international markets.”

    With tobacco accounting for 54 percent of merchandise exports in 2019 and about 15 percent of GDP, the landlocked Southeastern African country is one of the world’s most economically tobacco-dependent nations. Not only in Malawi does food security remain an issue; it’s also a global problem that is being exacerbated by various factors, including increased demand, war and conflict, and economic slowdowns and downturns aggravated by Covid-19. Currently, Russia’s war against Ukraine is severely jeopardizing food security around the world.

    “AOI is committed to doing whatever we can to transform people’s lives so that together we can grow a better world,” Strohschoen says. “This starts within our immediate network. To do our part to address global crises, we must first look at what improvements can be made within our supply chain. This begins with providing our contracted farmers with the tools they need to diversify their income and create additional food sources in their communities.”

    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.
  • Fighting for Farmers

    Fighting for Farmers

    Photo: BAT

    ITGA’s past and present CEOs, Antonio Abrunhosa and Mercedes Vazquez, reflect on the prospects for tobacco farmers in a rapidly changing business environment.

    By Stefanie Rossel

    In November 2021, Mercedes Vazquez took over as CEO of the International Growers’ Association (ITGA). She succeeded Antonio Abrunhosa, who announced his retirement after serving in the position since 1998. In a three-way conversation with Tobacco Reporter, the tobacco industry veterans shared their views on the past, present and future of tobacco farming.

    Tobacco Reporter: Mr. Abrunhosa, in your 22 years at the helm of the ITGA, how has the leaf growing sector changed?

    Antonio Abrunhosa: The main changes I witnessed in my tenure were the moves to decrease production in high-cost countries and move it to developing or underdeveloped countries, with much lower costs of production, especially salaries, which are the main [cost] component in many producing countries. Production went down by almost 1,200 million kg in the USA, Canada and the European Union in 30 years, and it increased by a similar amount in Brazil, Zimbabwe and Malawi, Tanzania and Zambia in the same period. Sales also switched from the auctions system, which prevailed in the U.S., Canada, Zimbabwe and Malawi, to contract growing—the Brazilian system. All this meant a substantial decrease in the [significance] of commercial, large-scale farmers—especially in Zimbabwe after land reform—and a radical loss of bargaining power of millions of growers all over the world [who were] facing seven main buyers with an oligopolistic power seldom seen in other sectors.

    Then there was the invasion of tobacco regulation into all aspects of common life, in almost all countries, at different speeds and with different impacts, but [it] translated into the almost total absence of smoking in any public areas anywhere outside of China, and the disappearance of tobacco advertising from almost all media and sponsorship of public events. A visual example of this change can be seen by watching the difference between the Mad Men series and any recent movie of people in offices today.

    That regulation got a totally different scale with the creation of the Framework Convention on Tobacco Control (the FCTC) by the United Nations, the first world treaty of the World Health Organization, which turned many dispersed local anti-tobacco initiatives into international law and created an enormous, rich and global anti-tobacco industry with thousands of NGOs [nongovernmental organizations] and companies, funded by public money, covering the whole world.

    Furthermore, the technical revolution started by electronic cigarettes, vaporizers and heated-tobacco has deeply changed the consumers’ market and will continue to do so.

    In the past years, the world has become much more aware of the dangers of reckless economic development based on the depletion of vital natural resources and the impact of such economic models on the planet’s capacity to sustain a population that has increased more in the past 30 years than it had in all the [previous] centuries. This awareness is impacting all kinds of businesses, especially in agriculture and, thus, in tobacco growing. That attention has pushed tobacco companies to request more and more stringent conditions of production from growers, especially in sensitive areas like labor conditions and child labor, deforestation, use of chemicals and water management.

    These four changes have created a completely different tobacco sector compared to the one we had 20 years ago.

    Antonio Aburnhosa (Photos: ITGA)

    What has the ITGA done to help its members cope with these challenges?

    Abrunhosa: Those changes impacted ITGA heavily, as some of its founder members lost thousands of growers and volume of production. 

    The widespread move to contract growing also meant a much more dependent relationship between growers and buyers, requiring a more intervenient role of ITGA in those relations and in the relations between growers and their governments.

    ITGA’s role was also radically modified due to the inclusion into the FCTC of articles conditioning the ways in which growers could produce tobacco in the future or even aimed at ending tobacco production altogether. This required a much stronger presence of ITGA in international fora and a continuous participation in all kinds of members’ initiatives related with national or international issues affecting their businesses.

    How much has actual tobacco farming changed during your tenure?

    Abrunhosa: The pressure from the public and the published opinion about environmental and business sustainability, especially in a sector as controversial as ours, prompted the main buyers to [implement] radical measures in the management of their supply chains.

    As it happens often in corporate praxis, research was done, plans were designed and screaming orders came down the corporate ladder, with little attention given to the opinions of the final and central recipients of those orders—the growers.

    The typical case is GAP [good agricultural practices], about which I have said in many meetings that it threatens growers with the big stick of contract suppression in case they disrespect the unending list of mandatory rules for their production but seldom, if ever, shows the carrot of better prices to cover the increased costs that those rules imply.

    Child labor is a typical case. Moving production to a country like Malawi requires acknowledging the fact that local infrastructures for childcare are limited or nonexistent. This means that parents have nowhere to leave their children while working—in environments with wild animals. And, in recent years, particularly now, significant increases in the costs of production have not been followed by correspondent increases in tobacco prices. That means additional difficulties for growers to hire workers.

    Acknowledging these problems, ITGA, together with IUF, the main worldwide trade union for agriculture workers and almost all the important tobacco companies, except Indian and Chinese ones, created an international foundation, the ECLT, based in Geneva, which, for more than a decade now has been implementing projects in tobacco areas all over the world to address the problem.

    What achievements are you most proud of?

    Abrunhosa: I am most proud of having established ITGA as the world brand for tobacco growers in spite of the increasingly difficult regulatory, structural and financial conditions of the sector; of our members and of ITGA’s office, which always had between two and four officers. This was particularly relevant when the anti-tobacco lobby, much reinforced by the FCTC, aimed at legally banning tobacco production. 

    I am also proud of having been able to pass this heritage to the highly capable hands of my successor, Mercedes Vazquez.

    Ms. Vazquez, what, in your view, are the most pressing issues for farmers now and in the midterm?

    Mercedes Vazquez: Pricing and sustainability, which are intrinsically linked. Sustainability includes all social and environmental challenges but also—and most importantly from farmers’ point[s] of view—the economic survival of their businesses. Without it, other sustainability issues become irrelevant. For years, we have been trying to make this message get through, especially during the prolonged period of stagnation in prices combined with rises in costs of production everywhere.

    Now, considering the unprecedented times we are living in, after two years of the pandemic and still comprehending the realities of the war in Ukraine, “long-term” in tobacco production is 12 months. Consequently, in some countries, growers are moving to more profitable crops. If we consider the generational problem in agriculture where youngsters do not feel attracted to follow their family businesses plus this demoralizing scenario, in countries not too dependent on tobacco, companies will face a gap to fulfill their demand for clean, good-quality crop.

    For highly dependent countries, there is not a cent that has not been squeezed to the limit. Unless substantial changes are made—mainly in poverty alleviation to grant margins that will allow growers to be in compliance with good agriculture practices—sustainability of the sector will be ever more at stake. Changes will only happen with all main players involved, and ITGA will do its part on behalf of our growers’ associations and tobacco growers in general.

    Mercedes Vasquez

    What are your plans to help ITGA members to cope with these challenges?

    Vazquez: ITGA is at the core of the tobacco conversation. We have been around for almost 40 years. Our experience and global network capacity make us a pivotal player in all discussions related to tobacco around the world. More than ever, we need to work as the vehicle to spread growers’ messages and to promote dialogue among key players in the sector. Outside the sector, ITGA is liaising with agriculture agencies and entities to make sure tobacco growers are taken into account in the global sustainability agenda. With this, we also mean to normalize our sector in the global context, getting rid of the negative connotation we have carried all these years.

    Our main concerns are related to those developing countries that are very reliant on tobacco production. There is no transition plan for the near future. To a certain extent, this is due to the lack of collective work done in this regard. After two years of pandemic with limited access or none to our growers’ gatherings, ITGA is committing its time and resources this year to meet them, to bring them together and make their voices be heard. We feel that there is momentum to raise this united collective voice, and growers are responding to this call.

    This shouldn’t require a special mention in the 21st century anymore, but you are the first female CEO in the ITGA’s history and one of only a few women at the top of a tobacco-related organization. What is it like?

    Vazquez: It seems pretty normal to me because during my more than 10 years of work in ITGA, I have never had reason to think that this could not be possible at some point if I made my work meaningful to our members. I never worked thinking about becoming the CEO, though, and this was important, too, because it did not get me distracted and allowed me to focus on my duties and in making my work worthwhile. The process was very natural, but I think the turning point was my personal investment, going to visit all members’ associations and getting to know their boards and staff. Now I can say—and I think my members would agree—we have built a personal relationship, and I am very close to most of them.

    Are we going to see a stronger ITGA focus on gender equality and the issues facing women in the tobacco cultivating sector?

    Vazquez: I will do everything in my powers to advance this agenda. Before becoming the CEO, I have always done my best to shed light on women working in the tobacco sector and more specifically those involved in tobacco production. I introduced this item into ITGA’s key priorities with no objection [from others]. The current edition of our flagship publication, The Tobacco Courier, pays tribute to women in tobacco, and we managed to interview many of them from various parts of the globe. I highly recommend the reading of these interviews to learn about their realities. What got my attention was to see that regardless of their specificities, they all agree about the need of education and capacity building. They all want to improve and become more relevant in business decision-making. I have met many of them, and they are all a source of inspiration.

    What are the ITGA’s goals for the future?

    Vazquez: The future has never been as uncertain as it is now. ITGA must keep advancing the growers’ legitimate and independent agenda. Tobacco production has dramatically changed over the years, diminishing growers’ control over their product. Twenty years ago, the scenario was very different with auctions operating at a higher rate than contracts. ITGA is here to assess the impact of these changes, to help growers make informed decisions through market analysis and [to improve] our tools to provide accurate information. We aim to bring the sector together and expand our network to run efficient advocacy. At this moment, we need to put pressure in the pricing improvement as a paramount issue, and growers are telling us that this is the time to act and to speak out, so we will be up to these expectations.

    Provided the challenges for the tobacco growing sector, such as the continuous global decline of cigarette consumption, will persist, where do you see the ITGA and its members 22 years from now?

    Vazquez: In 22 years from now, I honestly believe that unfortunately some, not to say many, tobacco farmers and ITGA members will be out of this business. This can happen overnight, as we witnessed with the case of Colombia. Only the ones with the ability to absorb the increasing demands and with a diversified portfolio will remain. Some will be forced to disappear; some others will simply move out.

    Tobacco growers’ associations are rare these days. Those remaining are ITGA members. Unless their governments reinforce their role and make sure they are included in every conversation taking place about tobacco, its contribution, its future, its sustainability … at some point, they will be made redundant by companies, taking over their part with the direct contract system.

    As for ITGA, we will stick to our commitment even after that. If there is no tobacco production the way we see it now, there will have to be a transition for those vulnerable growers forced to quit. Consumption is declining at a fair pace to permit the changes needed for this sector to adapt. The problem is that farmers are getting ambiguous messages that stimulate productions in some regions while depreciating it in others, and that situation continuously changes. Our partners should be more consistent in that regard because this uncertainty is certainly harming this industry.

    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.
  • African Ambition

    African Ambition

    Adam Molai (Photo: Pacific Cigarette Co.)

    The Pacific Cigarette Co. continues to gain momentum.

    By Daisy Jeremani

    The Pacific Cigarette Co. of Zimbabwe has made significant progress toward becoming one of Africa’s No. 2 cigarette makers as it now produces more than 3 billion sticks per year, according to company founder and chairman Adam Molai.

    In a recent interview with Tobacco Reporter, Molai said Pacific was on track to becoming the largest indigenous African cigarette manufacturer by 2020 and the second-largest cigarette manufacturer on the continent, but its growth was disrupted by the Covid-19 outbreak.

    “Significant gains have been made toward this objective, growing from inception to over 3 billion sticks per annum. However, the Covid-19 pandemic merely delayed—it did not destroy or disrupt—our ultimate goal. Our vision for global success through value addition and tobacco beneficiation remains undeterred, and we continue to strive to create value for the African economy and enhance the lives of Africans,” he said.

    Born into an entrepreneurial family, Molai attended some of southern Africa’s most prestigious schools, including Peterhouse Boys, northeast of Harare. He worked at Ernst and Young in Zimbabwe and proceeded to the University of Buckingham in the U.K. where he graduated with a business degree in August 1992. Four years later, he left Lakehead University in Canada with a first-class commerce degree.

    Molai returned home and ran some small businesses, but his biggest break came at 31 years old when he, together with Nick Havercroft, founded Savanna Tobacco, later renamed Pacific Cigarette Co. They launched it in 2002 as a threshing enterprise in Africa’s No. 1 tobacco growing country. This entailed buying tobacco stems from farmers, processing them and exporting them. They did not immediately have the resources to import a cigarette manufacturing plant, but investing in threshing and starting to export were the first serious steps that propelled Pacific to be the brand it is now.

    Molai and Havercroft recognized the opportunity that lay in processing tobacco into cigarettes, and through innovative financing structures to raise foreign currency in a market plagued by foreign currency shortages, they were able to import the required equipment and became the first indigenously owned cigarette maker in Zimbabwe. In addition to the challenge presented by the foreign currency shortage, they also had to overcome the difficulties presented by the then poor relations between Zimbabwe and Germany, which is home to some of the world’s leading tobacco equipment manufacturers. At that time, Europe and the U.S. were sanctioning Harare over the land acquisition program and human rights issues. Despite this, Molai was still able to pay for the company’s first cigarette maker and packer to start producing Pacific Blue cigarettes for export in 2004

    While this represented a big break at a personal level, breaking into a market that had been dominated by established brands for decades presented a considerable challenge, according to Molai. Competitors tried to derail and sabotage the newcomer in a variety of ways, at times using underhanded methods, he says.

    Nonetheless, Molai persisted. “Although it was challenging competing with established global multinationals with infinite resources, we used this as a learning experience,” he said.

    “Our competition provided us with the best education on business. They triggered the tenacity, resilience and boldness which has facilitated our growth and expansion into the region.”

    A few years later, Molai turned the company’s focus to tobacco contract farming. He won government approval to establish contract farming in a country still dominated by auction sales. Critics labeled him an economic saboteur who wanted to use contracting to help white farmers, most of whom just had been evicted from their farms under the land acquisition program, externalize funds. But he was not deterred, having realized that the new, resettled farmers lacked the technical know-how, inputs and financing to seriously grow tobacco.

    After two years of lobbying and hard work, the company was finally licensed to contract but with extremely stringent conditions that gave it no recourse against any defaulting farmers. This first contract scheme was called Zimbabwe Tobacco Growing Co., later rebranded to Northern Tobacco.

    “I believe our foremost contribution to the tobacco industry is not cigarette manufacturing,” says Molai. “The most important contribution we made was fighting for permission to introduce contract farming of tobacco in Zimbabwe.”

    Other companies launched their contract schemes later, and today, more than 100,000 farmers produce some 95 percent of the local crop under contracts.

    Four years ago, Pacific partnered with China Tobacco Shaanxi Industrial Corp. (CTSIC), in an effort to serve the Chinese market. In January 2022, Pacific invested $9.5 million to relaunch two of its brands, Pegasus and Branson, to ensure that they would be able to not only cater to the premium segment but also offer world-class quality cigarettes at an affordable price. The Branson brand family was expanded with Branson flame, toasted and mint varieties while Pegasus now comes in a toasted flavor and a Chinese blend named Hong Ma. 

    Molai recognizes that the Chinese blends are still in their infancy but says the company is working to ensure that it is able to grow that market given that China has the world’s largest population, which is getting increasingly affluent and traveling or settling in other countries.

    “As a disruptor and a trendsetter, Pacific will continue innovating to keep ahead of the competition,” he says. “The relaunch of some of our brands was not only driven by our Chinese partnership but also part of our DNA to ensure we satisfy our customers.”

    Pacific’s deal with CTSIC, he said, was the first of its kind, where Chinese brands got licensed to an African entity. The partnership, which is in line with Zimbabwe’s “Look East” investment policy, remains a key part of the strategy to build Pacific’s market share, considering that China has the world’s highest number of smokers and there are an estimated 10,000 Chinese living in Zimbabwe.

    It takes time to establish and grow a brand, says Molai, so Pacific is working tirelessly to gain the trust and loyalty of consumers.

    “Our aspiration was to get African cigarettes into the Chinese market,” he says. “Africa is the only continent without a quota to supply cigarettes into China, and with Zimbabwe being the largest tobacco player on the continent, it was therefore my responsibility, on behalf of our continent, to make this happen.”

    Pacific is also making inroads into neighboring South Africa, and they recently launched their Acacia brand and intend to continue expanding. As Covid-19 hit in March 2020, Pacific had to innovate and began a campaign centered on its mission that “People are the recipe for maximizing stakeholder value,” so they have been cementing and capitalizing on the relationships that they have on the market to ensure that they get the desired product placement and sales traction.

    Speaking on the prospects for the African economy, Molai said the economy can only grow when businesses identify opportunities for beneficiation and increase their levels of domestic value addition, creating employment and industrializing while enhancing and developing its people. Value addition is especially imperative for Zimbabwe, which exports 98 percent of its tobacco raw and processes just two percent of local production into cigarettes.

    “My personal objective was to democratize the tobacco industry from a highly racialized industry to one whose participation mirrors the continental demographics. This has been largely achieved with indigenous Zimbabweans now major players from growing to cigarette manufacturing.

    “It is our responsibility, and as Pacific, we remain committed to the well-being and long-term sustainability of Zimbabwe’s golden crop by manufacturing and distributing products of international quality,” he said.

    The businessman said his personal ambition has now expanded beyond tobacco and is now also focusing on the industrialization of Africa and beneficiation of other value chains so that the continent becomes an alternative supply chain to the world. Covid-19, he added, has exposed the risk concentration of current supply chains, thus Africa has a phenomenal opportunity to industrialize and create opportunities for it’s very young and unemployed youth.

    In November 2020, his self-titled foundation launched JUA Kickstarter, a $1 million initiative to support startups on the continent. With support from partners, the fund was doubled in January 2021. Announcing the development, Molai recalled the grueling journey he traveled to launch a successful brand and felt the need for him to assist startups.

    “With 65 percent of our population below 35 years of age, this population represents a significant threat or opportunity for our continent,” he told Tobacco Reporter.

  • Inching Closer

    Inching Closer

    Photo: New Africa

    The FDA has taken a major step toward banning menthol cigarettes in the U.S., but there’s still a long way to go.

    TR Staff Report

    It’s hard to overstate the significance of the U.S. Food and Drug Administration’s plan, announced on April 28, to ban menthol cigarettes in the United States. While authorities have banned menthol cigarettes in other jurisdictions, such as Brazil (2012), Canada (2017) and the European Union (2020), the impact of those measures was less severe because relatively small shares of smokers preferred menthol cigarettes in those markets. In the U.S., by contrast, menthol products accounted for a whopping 37 percent of all cigarette sales in 2020, according to Statista.

    Public health advocates dislike menthol because it reduces the irritation and harshness of smoking, which makes it easier for consumers to take up the habit. According to the FDA, menthol also interacts with nicotine in the brain to enhance nicotine’s addictive effects. “The combination of menthol’s flavor, sensory effects and interaction with nicotine in the brain increases the likelihood that youth who start using menthol cigarettes will progress to regular use,” the agency writes on its website. “Menthol also makes it more difficult for people to quit smoking.”

    Unlike in other markets, the debate about menthol cigarettes in the U.S. is also about racial disparities. According to the FDA, nearly 85 percent of African Americans smoke menthol cigarettes compared to 30 percent of white smokers who smoke menthols—a situation industry critics attribute to decades of “predatory marketing” of menthol cigarettes to Black communities.

    “By issuing proposed rules today to prohibit menthol cigarettes and all flavored cigars, the FDA is taking historic and long-overdue action to protect our nation’s kids, advance health equity and save lives, especially among Black Americans and other populations that have been targeted by the tobacco industry and suffered enormous harm from the predatory marketing of these products,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

    The FDA expects its menthol ban to reduce the appeal of cigarettes and reduce deaths and disease among current menthol smokers by decreasing cigarette consumption and increasing the likelihood of cessation. “Published modeling studies have estimated a 15 percent reduction in smoking within 40 years if menthol cigarettes were no longer available in the United States,” the agency writes. “These studies also estimate that 324,000 to 654,000 smoking attributable deaths overall (92,000 to 238,000 among African Americans) would be avoided over the course of 40 years.”

    Not everybody is convinced a menthol ban would achieve the desired health effects, however. “We strongly believe that there are more effective routes to deliver tobacco harm reduction than banning menthol in cigarettes,” said BAT Chief Marketing Officer Kingsley Wheaton in a statement. “Evidence from other markets, including Canada and the EU where similar bans have been imposed, demonstrates little impact on overall cigarette consumption.

    “The scientific evidence shows no difference in the health risks associated with menthol cigarettes compared to nonmenthol cigarettes, nor does it support that menthol cigarettes adversely affect initiation, dependence or cessation. As a result, we do not believe the published science supports regulating menthol cigarettes differently from nonmenthol cigarettes,” said Wheaton.

    Guy Bentley, director of consumer freedom at the Reason Foundation, says supporters of menthol prohibition have been disappointed by lackluster results in other jurisdictions that have banned the products. “The most common result of menthol prohibition has been for the majority of menthol smokers to switch to equally dangerous nonmenthol cigarettes, continue to buy illicit menthol or use devices to flavor nonmenthol cigarettes,” Bentley wrote on the Reason Foundation’s website.

    Morgan Stanley expects most American smokers to switch to nonmenthol cigarettes, obtain their mentholated cigarettes illicitly or switch to mentholated vapor products in the wake of a menthol ban. In addition, the investment bank predicts that consumers may “self-mentholate.” This practice would be legal, and menthol is readily available for purchase online on platforms such as Amazon.

    According to Morgan Stanley, menthol bans in Europe and Canada did not have a measurable impact on the cigarette market, though the category was significantly smaller. “The impact in Europe was moderate because it was less aggressive in enforcing menthol rules, had loophole clauses (e.g., menthol filters), a low menthol smoker population (about 5 percent), and [it] did not skew toward a certain demographic group like it does in the U.S.,” the bank wrote in a note to investors. “The most significant impact was in Poland (about 25 percent menthol [smokers]), which saw a rise in illicit trade from neighboring countries.”

    However, a study of Canada’s experience, published in Tobacco Control, noted that among daily smokers, menthol cigarette smokers were more likely than nonmenthol smokers to have quit smoking in the wake of that country’s menthol ban. If the United States’ experience mirrors that of Canada after it banned menthol cigarettes, 1.3 million people would quit smoking, and potentially hundreds of thousands of premature deaths could be averted, Geoffrey Fong, principal investigator of the International Tobacco Control Policy Evaluation Project, was quoted as saying by The New York Times.

    Regardless of its impact on public health, a U.S. menthol ban would considerably impact the operations of tobacco manufacturers operating in that country. According to Morgan Stanley, BAT is most exposed to the category, with menthol cigarettes representing 55 percent of U.S. volumes and 60 percent of U.S. profits (and about 30 percent of group profits). The investment bank estimates that menthol represents 19.5 percent of volumes and 15 percent of profits for Altria group.

    While the FDA’s April 28 announcement is significant, Goldman Sachs notes that there is still a long way to go for the plan to become reality. The agency must still take multiple steps before it can issue and implement a final rule, starting with a 60-day public comment period, which ends on July 5. After that, the Office of Management and Budget must review the proposed rule to ensure the FDA adequately addresses all public concerns, including unintended consequences, followed by a statutory delay of between one year and two years before implementation. Legal challenges could delay the ban even further. “Ultimately, it is a complex and lengthy process that, based on precedent, could likely take several years to be successfully implemented, if at all,” wrote Goldman Sachs in a note to investors.

    Expect tobacco companies to generously share their views during the comment period. “We are reviewing the details of the proposed regulations and will continue to actively participate in the rulemaking process by submitting science-based comments to FDA,” said Wheaton.

  • Not a Bot

    Not a Bot

    Photo: UVA

    Consumer advocates are for real.

    By Cheryl K. Olson

    “My initial reaction is that I’m surprised. That’s not a sentiment I’ve heard from industry before,” said Danielle Jones, president of the board of the Consumer Advocates for Smoke-Free Alternatives Association (CASAA). I was passing on what I’d been told by industry sources: that consumer advocates should take the lead in correcting widespread public perceptions about nicotine harm reduction.

    “From a personal standpoint, it’s a little disheartening,” she added. “Because that’s a lot of responsibility to put on underfunded nonprofit advocacy groups.” However, unlike industry, “we can’t get in trouble for saying whatever we want.”

    Who are these harm reduction consumer advocates­: Are they grassroots voices or artificial turf? What are they doing to change the narrative and to help individual smokers? What else could they be doing—and what is fair or reasonable to ask of them?

    Not a ‘Smokers’ Rights’ Repeat

    My first exposure to the CASAA was an email from its member coordinator, Kristin Noll-Marsh, in response to a Tobacco Reporter column. She asked me to join a “live YouTube advocacy show” as a guest that weekend. I was wary of lending my credibility to a consumer advocacy group that might turn out to be a corporate public relations facade. Although faux “astroturf” organizations are not unique to the tobacco industry, public health people remember well Big Tobacco’s late 20th century global strategy of founding “smokers’ rights” groups to fight the spread of smoke-free policies.  

    Happily, the CASAA turned out to be the real thing: a 501(c)(4) nonprofit advocacy organization dedicated (as its website says) to ensuring “the availability of a variety of effective, affordable, reduced-harm alternatives to smoking.” Founded in 2009, it sprang from an online forum for vaping enthusiasts stunned by attacks from anti-tobacco organizations on a product that had (by plan and by accident) turned them into nonsmokers. They were advocating for vaping as harm reduction years ahead of the legacy tobacco companies.

    After our invigorating podcast conversation, I reviewed the CASAA’s impressive collection of online resources and got to know Danielle Jones, who helms the CASAA’s all-volunteer board of directors. (She’s a graphic designer by profession.) I’ve often said that most people in public health and politics don’t know smokers; it’s easy to treat them as abstractions instead of fellow humans. The CASAA puts faces on those smokers, collects their stories and seeks to amplify their voices. I’m embarrassed it took me so long to notice. 

    “Our approach, which is limited by funding,” Jones said, “is all about organically bringing people into the tobacco harm reduction conversation.” The CASAA works largely through social media (Facebook, Twitter and Instagram), including scheduled podcasts recapping news and events. The group also works to raise the profile of research and opinions from other sources.  

    The CASAA sells apparel, noted Jones, “so advocates can wear messages that provoke conversations out in the wild.” Projects in its pipeline include creating information pages about vaping geared toward the needs of physicians and researchers.

    I asked Jones what the CASAA doesn’t do. It doesn’t endorse vaping products or companies. It also avoids engaging with youth, she said, “even to correct misinformation or help with school projects—we get a lot of those requests—as we would almost instantly be accused of trying to market or promote vaping to kids.”

    ‘I Want a Good Face for Vaping’

    Alongside consumer groups such as the CASAA, there is an ecosystem of individuals influencing nicotine product opinions and behavior via social media. Jones referred me to Nicholas “Grimm” Green, a YouTuber and harm reduction advocate.

    Back in 2009, Green was looking for something to cut back on but not to quit smoking. He enjoyed “the ritual of it, inhaling, exhaling, the smoke, everything about it.” 

    He stumbled across an online review by “this charming old bald man who had discovered vaping.” Soon, with the right device and flavor (root beer), “it was almost effortless to switch completely,” Green said. “And I knew I just had to tell other smokers about it.”

    His mission to change the public perception of vaping involves a portfolio of activities. He reviews products on multiple social media channels, trying to “cater toward smokers” to help them find the approach that works for them, whether they become vapor hobbyists or want something more cigarette-like. He does a weekly YouTube livestream covering vaping news and opportunities to advocate (such as phoning politicians about particular legislation), often coordinating with the CASAA.

    Green strives to respond effectively to misinformation on Twitter and Facebook, “engaging people as often as possible” through polite sharing of stories and research studies. “When you see [anti-vaping organizations] tweeting stuff about vaping causing brain damage, there’s a gut reaction to want to just yell at that person and call them names and tell them how wrong they are,” Green admitted. “But that’s not something that changes minds.”

    He also works to amplify voices that others are likely to heed. “You retweet the more credible voices,” he said. “It means more if there’s a pro-vaping article or stance coming from the University of Michigan or any of these professors than a guy on YouTube with a throat tattoo.” Green is a fan of body art.

    “I know what I look like,” he said. “So I try not to put myself out there so much. I want a good face for vaping in the United States of America.”

    I mentioned that 2018 AP file photo, shown repeatedly next to news and opinion articles about vaping: a blond teen with acne and peeling black nail polish, sucking on a vape device. “That’s how they want to portray vaping,” said Green. “They don’t want to show you the 65-year-old grandmother who smoked her entire life who now loves strawberry cheesecake e-liquid.”

    ‘Not a Bot’

    A 2021 academic paper, “#FlavorsSaveLives: An Analysis of Twitter Posts Opposing Flavored E-cigarette Bans,” illustrates the divide between academics and advocates. The authors tracked patterns of tweets pertaining to vaping, including flavor bans and safety fears, in 2019 to 2020. They noted that the state of California and the U.S. Congress “have investigated the role that social bots play in driving online discussions about e-cigarettes.” The spike in posts containing “not a bot,” they said, were “most likely to note that the backlash against e-cigarette regulation is not coming from automated accounts but instead real-life people who can vote.” Although the paper is not anti-vaping, its tone suggests that the authors never met any of those real-life folks whose tweets they analyzed.

    Green was one of them. He recalled that, largely in response to e-cigarette or vaping use-associated lung injury misinformation, “we more or less mobilized a pretty large army of vapers to get on Twitter and make their voices heard. And when they saw this enormous spike in actual people getting on Twitter, those news reports came out that we weren’t real people. We got called bots.”

    “That stings,” he said. “All we were doing was trying to defend our choice to not smoke cigarettes. So all these vapers started changing their Twitter handles to their real name plus ‘not a bot.’”

    This throws some cold water on the idea that consumer advocates have inherent credibility. The emotions and history associated with nicotine complicate changing minds. Although organizations like the CASAA will accept funding from anyone, industry ties and control are often assumed. “People commenting online get called bots, paid shills, all the time,” affirmed Jones. “Our opinions as users of the products are constantly dismissed and trampled on as having some tie to Big Tobacco.”

    “Vapers are so desperate for any recognition or public mouthpiece that we get susceptible to astroturfing,” said Green. “I don’t want to name names, but organizations have come in that have been associated with other, not-so-great organizations and tried to get vapers to do things or sign things or text things.” (The World Vapers’ Alliance and The 95 Percent were most recently outed as astroturf.) However, Green is optimistic that a steady drip of genuine engagement will pay off. “There is no magic bullet that will suddenly change the course of history for vaping. It has to be a slow, grassroots, honest consumer-based initiative.”

    The Consumer Perspective

    I asked Danielle Jones what the CASAA might do if it had more funding. Her wish list included “PR campaigns in print, digital and television, hold events and potentially hir[ing] a lobbying firm to help educate legislators.” They could expand their paid staff beyond one-and-a-half employees. Funding of research studies, by others and by the CASAA, are also on her list. She noted that researchers have recruited subjects through the CASAA’s lists but did not seek to involve the CASAA in their work.

    The consumer perspective is newly prominent in health research. For example, the Patient-Centered Outcomes Research Institute (PCORI) has received millions of dollars from the U.S. Congress for effectiveness studies that give weight to patient circumstances and preferences. The nicotine user’s perspective surely deserves the same courtesy.

    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 Associates. She spent 15 years on the faculty of Harvard Medical School.
  • Plain in Vain

    Plain in Vain

    Photo: Taco Tuinstra

    Standardized cigarette packaging is not the miracle cure for reducing smoking prevalence, studies indicate.

    By Stefanie Rossel

    December 2022 will mark the 10th anniversary of the introduction of plain cigarette packaging in Australia, which was the first country to require tobacco manufacturers to market their products in generic unbranded packs. By lowering the appeal of tobacco products to consumers, legislators hoped standardized packaging would help reduce smoking prevalence.

    Since then, more than 20 countries and territories have followed suit, including France and the U.K. (both 2017), Saudi Arabia and Turkey (both 2019), and Hungary and Myanmar (both 2022), according to a report released by the Canadian Cancer Society (CCS) in conjunction with the ninth session of the Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control (FCTC) last November. CCS Senior Policy Analyst Rob Cunningham said there was a “strong, unstoppable global trend for countries to implement plain packaging.” Noting that the pace of implementation was accelerating, he concluded, “These developments are very encouraging as plain packaging is a key measure to protect youth and to reduce tobacco use.”

    But is it really? Above all, plain packaging is an inexpensive measure that can be implemented more easily than other FCTC tobacco control measures, such as establishing a national tobacco cessation system. But how successful has plain packaging been in the past decade in achieving its goal? If standardized packaging is the lifesaving measure that organizations such as Tobacco-Free Kids make it out to be, surely its impact should be measurable?

    Lack of Unambiguous Evidence

    There is abundant scientific research on the effect of standardized packaging, but study outcomes remain inconclusive or even contradictory. Often, study design is limited and does not take external factors into account, thus distorting the results.

    A 2016 study commissioned by the Australian Department of Health and authored by Tasneem Chipty, for example, concluded that the combination of plain packaging and updated and enlarged graphic health warnings is succeeding in reducing smoking prevalence. Chipty estimated that plain packaging policy contributed approximately 0.55 percent of the 2.2 percent decline in smoking prevalence over the 34 months following implementation. What the author did not consider, however, was a hefty increase in tobacco excise introduced at approximately the same time as standardized packaging.

    Similarly, researchers of the Tobacco Control Research Group in 2020 found that the underlying rate of decline in tobacco sales almost doubled after the U.K. started requiring plain packaging in May 2017. According to the study, monthly sales declined from 3.29 billion cigarettes in May 2015 to 3.16 billion cigarettes in April 2018. According to the U.K. Office for National Statistics, however, smoking prevalence had fallen significantly more in the years before the introduction of generic packaging as many smokers had switched to reduced-risk alternatives.

    Weak Designs

    A July 2021 study by Luiss Business School, Luis Guido Carli University and Deloitte Financial Advisory commissioned by BAT, which looks at the efficacy of plain packaging in the U.K. and France, sums up the weaknesses of many studies in this field.

    Claims about the success of generic packaging, the authors say, are often based on survey data that measure the impact of the measure on downstream psychosocial variables or “intermediate outcomes,” such as perceptions relating to the appeal and harm of tobacco products and attention to health warnings, and self-reported beliefs and intentions regarding future smoking behaviors. Whether these variables impact behaviors in due course is left unexamined.

    In addition, the authors claim, proponents of standardized packaging often refer to continuing reductions in smoking rates and consumption-related data that has not undergone any econometric analysis. Without accounting for potentially confounding factors, such as price increases, seasonal trends and preexisting consumption trends, it is impossible to draw firm conclusions from such data alone.

    According to the authors, econometric analysis is also required to assess research suggesting that plain packaging, contrary to its objective, increased tobacco use. Several studies concluded that generic packaging reduced brand loyalty, prompting smokers to move from premium to discount brands, which in turn allowed them to purchase more cigarettes for the same amount of money. However, such studies omit confounding factors, such as tax increases, according to the Luiss Business School researchers.

    The Holistic View

    To generate more useful data, the Luiss Business School study takes a broader view. It is also the first study to investigate consumption data for more than three years of generic packaging in each of the two countries examined, which is a longer time frame than that studied in previous analyses and thus allows for more robust conclusions on the initial impacts of plain packaging, according to the authors.

    Unlike previous studies on the situation in France and the U.K., the Luiss Business School report performed a set of different econometric models, including a structural break analysis to understand whether the implementation of generic packaging in the two countries caused a real change in the cigarette consumption trend. The authors say they found no such structural break as a result of plain packaging.

    Additionally, the researchers ran a regression model estimation where cigarette consumption is regressed on a set of covariates including plain packaging. After controlling for alternative explanations, such as price, generic packaging had no statistically significant impact on cigarette consumption in the U.K. and France, according to the researchers.

    The authors also compared cigarette consumption trends in France and the U.K. with those in Italy and Germany, which still allow branded tobacco packaging. Again, the estimated effect of plain packaging was indistinguishable from zero. In France, however, the measure was associated with a statistically significant—and unintended—increase in per capita cigarette consumption of 5 percent (relative to the counterfactuals and up to October 2020, the end of the investigated time series).

    Altogether, the study authors conclude, there is no evidence that standardized packaging has reduced cigarette consumption in the two investigated countries after more than three years of full implementation in each jurisdiction. They also point out that their analysis doesn’t include shifts to the consumption of reduced-risk products.

    Eurobarometer data shows that the share of e-cigarette users rose from 2 percent in 2017 to 6 percent in France in 2020 and from 2 percent to 4 percent in the U.K. over the same period. Both countries also had a share of 1 percent of current heated-tobacco product users in 2020. According to the survey, stopping or reducing tobacco consumption was the most frequently cited reason for taking up e-cigarettes.

    This data suggests that the impact of reduced-risk products might have also contributed to the decline in cigarette consumption in the U.K. and France. Not including the shift to these products would likely bias the analysis in favor of finding an effect of standardized packaging, according to the study.

    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.
  • Coming Clean

    Coming Clean

    Photo: Yakiv

    Stakeholders debate the challenges presented by cigarette litter.

    By Stefanie Rossel

    Cigarette butts are the most littered item on earth. The World Health Organization estimates that two-thirds of all smoked cigarettes are discarded into the environment. For 2021 when consumers smoked 5.21 trillion cigarettes, according to Euromonitor International, this corresponds to approximately 3.47 trillion littered cigarette butts.

    Made of cellulose acetate (CA), a polymer that is slow to degrade in the environment, cigarette filters take up to 18 years to disintegrate. In addition, used cigarette filters are full of toxins, such as nicotine, formaldehyde, arsenic and ammonia, which can leach into the ground and damage living organisms that come into contact with them.

    With regulatory pressure on single-use plastic (SUP) consumer goods increasing globally, tobacco companies hence face a new challenge: In a world where CA is still considered the gold standard for filters as far as smoking chemistry is concerned, they will have to find a way to make their products more sustainable. During a webinar staged in late April by Schweitzer-Mauduit International (SWM) and Essentra Filters, participants explored this and other challenges relating to cigarette filters.

    Shane McGuill

    Shane MacGuill, head of nicotine and cannabis at Euromonitor, said environmental sustainability was a double-edged sword for the tobacco industry, presenting both threat and opportunity and driven by a potent combination of consumer, investor and regulatory demand. According to his company’s research, 66 percent of consumers try to have a positive impact on the climate through day-to-day actions whereas 46 percent expect to be more worried about climate change in the future.

    MacGuill predicted that more investors will look at sustainability in tobacco; presently, around 40 percent of MSCI ESG (environmental, social and governance) indexes exclude tobacco. Between 2016 and 2018, he noted a 30 percent compound annual growth rate of ESG integration.

    In the tobacco and nicotine industries, product waste is one of the key drivers of sustainability legislation. The EU’s SUP Directive, introduced in 2021, emerged from a desire by European regulators to significantly reduce waste from cigarette butts by 2030.

    It places extended producer responsibility (EPR), a reinforced application of “the polluter pays” principle, on cigarette manufacturers to mitigate the impact of discarded cigarette butts. The regulation, MacGuill pointed out, was likely to be replicated in other regions.

    Supply chain integrity is another factor driving sustainability regulation; leaf cultivation is linked to environmental impacts such as deforestation, lack of crop diversity, chemical use and water utilization. Highlighted in the WHO’s 2017 report, these issues will likely attract increased scrutiny, MacGuill forecast.

    The most environmentally damaging stage of the cigarette production process is manufacturing and supply, for which legislation thus far has been limited. MacGuill noted that major tobacco companies have significantly stepped up self-regulation and focused on reducing their carbon and energy use, aiming, for instance, to achieve net-zero carbon emissions from their value chains by 2050. Product waste ambitions, however, currently remain largely limited to packaging.

    Increasing Awareness

    Alice Jassaud

    As end users, smokers play an important role in promoting sustainable cigarette consumption. A survey in Canada, Brazil, Germany, South Korea and France commissioned by SWM and Essentra Filters found that smokers generally are interested in sustainability, but only half of them know that filters contain plastic. Plastic content was overestimated in Germany while South Koreans underestimated it. Half of the smokers had a correct perception of the time needed for a plastic filter to decompose whereas South Koreans tended to overestimate it. According to the survey, filters were mostly dispensed in the trash or ashtrays in the countries investigated. Most smokers said they were willing to accept changes in the visual appearance of filters with accelerated biodegradability features. “There is a great opportunity for the industry to change tobacco products’ perception and their impact on the environment,” said Alice Jaussaud, product manager for filtering media solutions at SWM.

    Hugo Azinheira

    Hugo Azinheira, global innovation and marketing director at Essentra Filters, compared the biodegradability of various existing filters. In recent years, the industry has focused its R&D efforts on developing filters made of sustainable alternative materials. The sustainable filters used in the comparison, Azinheira said, were biodegradable while at the same time offering similar levels of performance and filtration as traditional materials.

    Carried out according to ISO 14855-1, a protocol to evaluate biodegradability of plastics under controlled composting conditions, the test compared biodegradation to reference cellulose after 105 days. While 100 percent of the reference cellulose had decomposed after this period, only 8.7 percent of CA had disintegrated. The latter item was the only one still visible at the end of the test. The four samples made of alternative material all reached a biodegradation above 90 percent after 105 days.

    Stricter Rules to Come

    Frédérique Martinache

    Regulation trends in the EU and beyond indicate that there is a strong political will on sustainability issues, said Frederique Martinache, product compliance senior specialist at SWM. Since 2014, the U.N. Environmental Assembly (UNEA) has been calling on states to address the environmental impact of marine plastic litter and pollution of SUP products. Regulatory approaches include imposing SUP bans, implementing taxes and/or economic incentives for sustainable alternatives, introducing EPR schemes and setting product standards and labeling requirements.

    In March 2022, UNEA member states agreed to propose by 2024 a legally binding treaty to end plastic pollution on land and in the water. Cigarette butts are the most common plastic litter on beaches. They represent a major hazard for marine life as animals can ingest the trash, exposing them to harmful chemicals. These can also make their way up through the food chain, threatening human health on a global scale.

    To promote the development of regulatory strategies that specifically address the impact of cigarettes on human health and the environment, the U.N. Environment Program has launched the Clean Seas campaign in which it partners with the Secretariat of the WHO Framework Convention on Tobacco Control (FCTC). Article 18 of the FCTC addresses protection of the environment and the health of persons in relation to the environment. This year’s WHO World No Tobacco Day focused on the adverse impact of tobacco cultivation and cigarette production and use on the environment, encouraging regulators to step up legislation, including implementing and strengthening existing schemes to make producers responsible for the environmental and economic costs of dealing with tobacco waste products.

    In the EU, tobacco filters have been required since July 2021 to bear labels informing consumers about the presence of plastic in the products, means of inappropriate waste disposal and the negative impact of littering. By Jan. 5, member states must have set up EPR schemes to fund litter cleanup initiatives, awareness campaigns and data gathering and reporting projects. Innovation and product development to provide viable alternatives to filters containing plastics are encouraged. By July 3, 2027, the European Commission shall propose binding measures to reduce the post-consumption waste of plastic filters.

    For the time being, the greatest regulatory pressure on filters comes from the EU and Norway, which has also implemented the SUP directive. But other jurisdictions are mulling measures as well. The U.K. Department for Environment, Food and Rural Affairs, for example, is considering the adoption of an EPR scheme. In the U.S., the Break Free from Plastic Pollution Act of 2021 intends to phase out throwaway plastics made from fossil fuel, hold the plastic industry responsible for its waste and pause construction on any new plastic-making plants. Apart from this federal legislation, there are a number of state initiatives. While Canada is contemplating regulation, the Australian government in 2021 launched the National Plastics Plan, which calls for an industry-led cross-sectoral stewardship taskforce to reduce cigarette butt litter in Australia.

    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.
  • Out of the Box

    Out of the Box

    Photo: 3dsculpto

    Roya Ghafele believes the industry should think more creatively about intellectual property.

    By George Gay

    Having spoken with Roya Ghafele, I cannot imagine her giving a PowerPoint presentation, though I could imagine her giving two or three separate presentations simultaneously on the same subject with each delivering different, cogent arguments and plausible conclusions. This is not to say she is uncommitted. When it comes to the big picture, she is almost unbending. She believes in the efficacy of, among other things, capitalism, markets and private property, including intellectual property (IP), on all of which she is fully qualified to comment. But, encouragingly to my way of thinking, she is not afraid of embracing contradictions. She clearly understands that the devil is in the details and that people and companies have to make choices when considering questions about, for example, IP management strategies.

    The good news is that Ghafele has an encouraging message for the tobacco industry. Because the industry, at least the product manufacturing sector of the industry, is relatively new to patents, it has, she says, an opportunity, indeed, a responsibility, to use them to advantage—to the advantage of the companies involved and the public at large. But there’s a snag. Ghafele believes that realizing this opportunity and fulfilling this responsibility won’t be easy. It will involve avoiding pitfalls set by some deeply ingrained but unhelpful thinking around patents—thinking that could slow the industry’s transition at a time when progress toward less risky products, the main subject of patents within the tobacco and nicotine manufacturing sector, needs to be fast.

    Ghafele’s academic and professional credentials are too numerous to list here but suffice to say her doctorate was awarded the Theodor Koerner Research Prize by the president of Austria, and she previously worked for both the Organization for Economic Co-operation and Development and the U.N.’s World Intellectual Property Organization. She is the founder and managing director of the law and economics consultancy OxFirst, which has won a number of prestigious awards for its work on IP.

    Roya Ghafele believes the nicotine industry should move away from the current disputative approach to patents and toward a collaborative approach, citing the example of Austria’s Empress Maria Theresa. Instead of indulging in the sorts of wars beloved of most people obsessed with empire building, Maria Theresa in the 18th century created strategic marriages for her children, thus ensuring the prosperity and expansion of Austria within a relatively peaceable Europe.

    One of the first points Ghafele made during a telephone chat in April was that, particularly in the tobacco industry, there needed to be a change in how those involved in such matters thought about IP. Not that current thinking was necessarily wrong, it was just that it wasn’t out of the box. She wants people to be creative about their IP and innovative in the way they think about patents. But what they had largely done so far, she said, was to follow the precise wording of the IP and patent rules set in stone since time immemorial. Companies had hired top law firms, and, given that litigating over patents was a lucrative business for lawyers, the result had been inevitable.

    This was not the place the industry needed to be, according to Ghafele. Tobacco companies currently sold toxic combustible cigarettes, a business model without a future, so the only chance these companies had to survive largely in their present form rested on changing the business model by using innovation to produce better, less risky products and innovation required, or at least was greatly assisted by, the creative use of patents. Litigation over patents would merely slow the transition to better products, which was not in the best interests of either the companies concerned or consumers.

    It is important to note, though, that this is not some pipe dream where companies turn into charitable trusts and markets turn into love-ins. Patents could be used as building blocks and instruments of change in order to grow businesses and make them better, Ghafele said. They could be used constructively to gain market share and trust and to fulfil the public health responsibilities companies have by providing as many consumers as possible with technologically better, less risky products and in the fastest time possible.

    If some of this sounds lacking in specifics, it’s not surprising, I think. The opportunities on offer are wide ranging, and they could be applied only in accordance with a number of variables that would apply uniquely to the business model of the company concerned, the products in question, the potential for technological development of those products, the company’s consumer profile and the public interest, to name just a few.

    But one problem with much of the above is that it seems difficult to understand how a company could use patents without at times litigating against those who infringe them, and Ghafele is well aware of this, admitting that what she was advocating sounded like the peaceful use of weapons—a contradiction. It was true that patents provided exclusivity in the market and a 20-year monopoly, but there were other ways of looking at things, especially if the field were opened up to the thinking of people from outside the usual IP establishment, even people with crazy ideas.

    Ghafele, an Austrian, made the point that she thought we needed to move away from the current disputative approach to patents and toward a collaborative approach. And she gave as an example of what she meant the case of Empress Maria Theresa of Austria, who, in the 18th century, instead of indulging in the sorts of wars beloved of most people obsessed with empire building, created strategic marriages for her children, thus ensuring the prosperity and expansion of Austria within a relatively peaceable Europe.

    At a fundamental level, Ghafele is concerned about the way businesses approach the whole process of patent management. To her way of thinking, business cases need to be aggressively thought out before new technologies and patents are devised and sought, whereas, too often, patents are created before it is figured out whether the underlying technology would ever be needed by the company. This could be done way better by, from day one, expending energy on examining the business proposition. How is this technology and how are these patents going to help us gain market share; how are they going to help us expand into new markets; how are they going to help us gain more friends …?

    You can see this idea coming through in her wider thinking about IP, a term she prefers to intellectual property rights because the former puts the business center-stage while the latter tends to put the spotlight on the law. Ghafele sees IP and patents not mainly as rights but as assets, as presenting an “amazing economic opportunity” because private property, including knowledge, could be handled in many different ways. It could be used in trade, she said; it could be taken to another country; it could be used to better communicate a company’s value and thereby to attract investors; it could be used to communicate a public health interest and how it is doing good; it could even be used as a donation. To use such assets only as rights and to litigate was to undervalue them massively.

    Although Ghafele is committed to considering new ways of looking at patents, she is not in the business of doubting whether patents should have a place within a free market. Concepts around private property were essentially down to political choices, she said, and it was her take that having in place private property rights was a way of structuring markets. She made the point that research had shown that, in the absence of private property rights, markets, in developing countries for instance, didn’t work. And she added that she tended to the opinion that, historically, positive economic growth rates had shown a direct relationship with the presence of property rights, something that held for IP rights. This was the area of Ghafele’s ideas that I found the least convincing, partly because I fail to see how research into the economic benefits of the patents system could produce valid outcomes, and I did manage to extract something of a concession here. “On the other hand, does an economy have to grow?” she mused out loud. “Would we all not be more happy and less stressed out without chasing growth rates all the time?”

    But this was a short interruption to her flow, and she went on to say that innovation drove growth, so it was important to examine the whole spectrum of how to innovate, which included the management of patents but went beyond patents into areas such as open access innovation, a subject too vast to look at here. But again, she doubled back by saying that while growth was important, it had to comprise equitable economic growth. And that was why public interest considerations had to be built into patents management. There was nothing inherently good or bad in patents. It was how people managed patents that counted. And, inevitably, there was a lot of debate currently about where the consumer stood in all of this.

    Finally, Ghafele said it should be remembered above all that IP was an asset, an economic opportunity, and it needed to be traded in a way that this economic opportunity could help people. Behind all the jargon, the message, to the tobacco industry at least, was very simple: If you have property rights over your technology, you should use them in a responsible way—to save lives.

    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.
  • In the CatBird Seat

    In the CatBird Seat

    Photo: 22nd Century Group

    A pioneer in nicotine reduction technology, 22nd Century Group is well-positioned as the FDA mulls a mandate for minimally addictive cigarettes.

    By Taco Tuinstra

    22nd Century Group appears to be a company whose time has come. With a fresh modified-risk tobacco product (MRTP) marketing order for its VLN (very-low-nicotine) cigarettes—the only such authorization granted to a combustible tobacco product to date—and a profound understanding of nicotine reduction technologies, the company is well positioned to benefit from the U.S. Food and Drug Administration’s plan to require tobacco companies to reduce the nicotine in their cigarettes to minimally addictive levels.

    22nd Century Group’s hemp/cannabis business, too, has been on a roll, boosted by spreading legalization of the product and new acquisitions. Tobacco Reporter spoke with John Pritchard, 22nd Century Group’s vice president of regulatory science, about the MRTP process, the company’s plans for VLN cigarettes and the company’s views on tobacco harm reduction.

    Congratulations on the MRTP marketing orders for your VLN cigarettes. What steps have you taken to commercialize the product since December? Please comment on your plans for the United States and South Korea. Why did you choose South Korea as your first foreign market? And what have you learned from your pilots in the U.S. and South Korea thus far?

    Since April 2022, we have launched our VLN cigarettes in 159 Circle K stores as part of a pilot program. Here, we can test our marketing mix to understand what the most effective way to reach adult smokers with our authorized product claims. Based upon the results of the pilot market here in the United States, we will be working closely with Circle K, our launch partner in the convenience channel, to further develop how to take the brand nationally and best appropriately service the 68 percent of adult smokers who want to smoke less.

    I am happy to report that some early learnings include: 1) A measurable percentage of VLN purchases are in the carton format, even within a high tax state. We believe this is because adult smokers who are committed to smoking less are believing in the brand proposition, understand the claims the FDA authorized VLN with and how the product can help them. 2) For many years, mainstream news publications have typically not or desired not to cover tobacco and nicotine products in their publications. However, given the unique proposition of VLN, it has received widespread coverage in the Chicago Tribune, Crain’s Chicago Business, Fox 32 Chicago, WBEZ and many other local publications. We were even acknowledged by the Chicago Medical Society’s president as a product that due to the FDA’s authorization and review of our materials is something doctors should be taking seriously with their patients.

    Our introduction to the South Korean market was centered around a variety of commercial and demographic criteria where one in three adult men are smokers. This market is in its early phases, and I look forward to providing detail as we move ahead.

    What other markets are you considering internationally? For example, are you eyeing New Zealand, which plans to mandate lower nicotine levels in cigarettes?

    We have currently launched VLN in South Korea. We absolutely commend the progress of the New Zealand government and their plans to reduce the harm caused by smoking as well as the wider initiatives they are pursuing. While no cigarette is a safe cigarette, VLN contains 95 percent less nicotine, the addictive component of cigarettes, and our proprietary tobacco genetics ultimately make possible New Zealand’s forward-thinking approach to harm reduction as well as compliance with such product standards there or elsewhere.

    That said, we are taking an iterative approach to our commercial expansion and [remain] focused on the importance of the U.S. pilot. Beyond that, we have identified numerous international markets that we are continuing to evaluate; at this point, we will not comment in detail about them just yet. We will, however, be attending the Intertabac Tradeshow in Dortmund, Germany, this fall and are looking forward to meeting with specialty tobacco distributors in attendance who would like to diversify their portfolio of products with a product authorized by the United States FDA to help adult smokers smoke less.

    You had been anticipating MRTP designation for some time. What actions did you take in the run-up to authorization to prepare for increased production and sales? Please comment on the expansion of your low-nicotine, tobacco growing operations, the installation of new testing equipment, partnerships with retailers and your move to a new headquarters.

    We were always highly confident that we would secure an FDA authorization, given the comprehensive scientific evidence base that has been established, both from our own research and the decades-long interest and clinical studies by health agencies and public health researchers. Moreover, we have established a strong regulatory and compliance function that has been fully supported by our executive team and board.

    Drawing closer to the final marketing granted orders, we built out our commercial team, bringing on board highly experienced individuals with a unique blend of knowledge of the tobacco sector and emphatic support for how the product could help adult smokers. These hires include industry experts and disrupters for our commercialization team, including John J. Miller, previously with Swisher International and UST; John Ellegate, previously of Kretek International and R.J. Reynolds; and Sam Morales, previously [of] Cannadips, Swisher International and Drew Estate.

    On the operations side, we’ve planted a record crop acreage this year to be able to support our national launch plans. We have also made substantial investments elsewhere in our manufacturing base. Our factory, for example, utilizes state-of-the-art manufacturing equipment, robust manufacturing processes and quality measures to be able to produce VLN reduced-nicotine tobacco cigarettes at the same speed and scale as conventional high-nicotine cigarettes.

    Please describe your experience going through the MRTP process. What was good about it, and what parts need improvement? What would you advise other players considering an MRTP application?

    Well, it wasn’t particularly easy—a classic British understatement—as those whom I worked with on the MRTP project know only too well. The modified-risk tobacco product application process is certainly the most rigorous and scientific process I’ve ever been a part of in my tobacco career. While it is a long and multistep process, we acknowledge that FDA had a vast amount of scientific literature to review—much of which was done whilst FDA managed the needs and disruption caused by Covid. This attention to detail and thorough review is essential because it allows the industry, the trade and—with product introduction—the adult consumer to have confidence and trust in the statements authorized by the FDA and how we describe our product.

    Since launching, we’ve seen numerous points of view published by the trade in regard to our product and its proposition to adult smokers—the rigor of the MRTP application process is incredibly important because it allows the FDA to have the loudest voice in the room, so to speak, and helps trade partners and adult smokers receive and understand messages which are truly based in science. I particularly enjoyed working with a range of subject matter experts and seeing their shared enthusiasm for what we were working to achieve. The profound public health impact of cigarette addiction in the U.S. and elsewhere was and remains a significant motivation for me and for the team.

    As for advice to other companies, I remain fully committed to reducing the harm caused by smoking, and [I] encourage all companies with appropriate products to utilize the MRTP application pathway. We are not a large company when compared to most U.S. tobacco interests and yet were able to navigate the complexities and challenges to bring something new and needed to adult smokers. Adults need access to and choice of alternative products that are supported by a robust evidence base, and we believe that having more MRTP-authorized products in the market will enable the industry to more rapidly move adult smokers to smoking less or to switch to using less harmful products [and] thus ultimately help end cigarette addiction.

    What, if anything, did you learn from the experiences of PMI and Swedish Match in the wake of their IQOS and General Snus MRTP authorizations? Will you market your product differently?

    In considering other MRTP applications, it was apparent that while there are statutory requirements that are cross-cutting for all applications, each individual product that has been authorized or that is currently under review by FDA raised different public health and scientific questions. To that end, it was important to recognize what FDA’s concerns were or could be and ensure that we responded earnest[ly] and fully to these with appropriate evidence.

    At the same time, we are grateful to the many researchers and experts within health agencies and academia for their meticulous work that contributed to the evidence base for our product, with many of such studies addressing key public health questions relating to reduced-nicotine content products.

    As I am sure you have seen recently, PMI has made an offer to acquire Swedish Match, including both the innovative modern oral ZYN brand and the heritage General Snus brand—this leaves 22nd Century Group as the only other company in the world with an MRTP authorization from the FDA. The opportunity between General Snus versus VLN is entirely different. General Snus provides an offramp for interested adult smokers to continue with their nicotine consumption but changes their form factor or modality greatly, thereby reducing their exposure to combustion.

    VLN provides a complete offramp from nicotine since each cigarette does not contain enough nicotine to create or sustain addiction, allowing the adult smoker to make the switch to VLN and to reduce their daily cigarette consumption. So in this regard, we do not see other MRTP products as direct competition so much as representing wider industry progress toward a future where cigarette addiction is no longer a public health disaster.

    Where do you see VLN in the constellation of reduced-risk products? How will VLN cigarettes help reduce the public health toll of smoking?

    It’s important to first understand that the industry has failed many adult smokers through its innovation to date. “But what about …?” I hear you say. Well, “one swallow does not a summer make,” and with over a billion smokers globally, there is clearly much to be done before the industry congratulates itself just yet.

    Moreover, much innovation is sold to wealthy countries and excludes poorer countries where some companies seem entirely content to aggressively market highly addictive cigarettes. While product innovations containing nicotine—including vapor, pouches, gum, lozenges—and other modern oral products have gone some way to reducing smoking, general mistrust of the industry, contradictory corporate activity as well as willful misrepresentation of the science by some well-known anti-tobacco groups all work against the consumer and by extension the public health interest.

    I am fully in favor of whatever means an adult smoker utilizes to help them reduce or cease their consumption of highly addictive combustible products. We should acknowledge that all responsible industry members share a similar end goal, but the path we take with our adult customers is demonstrably different; there is no “one size fits all.” I believe it is important that all product solutions that are backed by science and appropriately regulated must be made available to adult smokers to reduce the harm caused by cigarette addiction.

    Some tobacco harm reduction advocates contend that VLN’s MRTP diverts smokers from better choices, stating that “people smoke for the nicotine but die from the tar.” What is your response to such criticism?

    It’s always painful to see the industry as a whole posture and seek to create black and white narratives around an issue that is everything but binary. Nicotine gum was developed back in the 1970s and has doubtless helped many smokers even with the low efficacy of the product—and yet there are still more than $700 billion a year worth of cigarettes sold globally. The same can be said of vape technology, which has existed in multiple formats for over a decade. While millions have switched to vape, tens of millions of Americans still smoke highly addictive cigarettes.

    So for us, VLN addresses a unique adult smoker need, which is not asking the adult smoker to switch to a new form factor or modality in their journey but simply asking them to make a switch to [a] product that contains significantly less of the addictive substance in cigarettes. With over 50 clinical studies, and now the authorization by the FDA that VLN helps adult smokers smoke less, it is quite clear to me that the criticism is not based on the science of our product.

    Criticism of our product approach or other options by some industry voices or their familiars may play well with the gallery at conferences or other echo chambers but does not serve the interests of the individual smoker and so is ultimately self-defeating, despite their self-styled tobacco harm reduction approach. You know who you are.

    I would encourage all adult smokers to use whichever product or products they feel will best help them end their use of highly addictive cigarettes and, as always, people concerned about their cigarette addiction should speak with their healthcare providers – as they can provide access to a range of other Rx product options. Our goal is simple: to make VLN available as a choice to adult smokers alongside other appropriately regulated alternative products that make up the MRTP set; people want and deserve options not dogmatic opinions.

    22nd Century has repeatedly said it is willing to license its reduced-nicotine tobacco technology to other cigarette manufacturers. Has the industry expressed interest?

    You’ll appreciate that at this time, I will not be sharing specific details. What I can say is that since the FDA has announced its intention to ban menthol cigarettes along with flavors in other tobacco products, we have had an incredible amount of outreach from the industry and trade. It’s really exciting to see new participants, such as convenience chains, drug stores and grocery stores, from across the United States paying attention to the FDA, the FDA’s goals and ultimately products like ours that align with the FDA’s goals as well as their corporate ethos. We are committed, as ever, that when the United States and other countries bring in limits for nicotine content in cigarettes, we will license our tobacco genetics to the industry to enable their compliance with such requirements.

    After announcing its intention to reduce nicotine levels to minimally addictive levels in 2017 and again referring to the concept when it first announced plans to ban menthol in the spring of 2021, the FDA appears to have gone quiet on the plan again. Do you expect the FDA to enact a nicotine standard in the near future, and how important is such a standard to the success of VLN cigarettes?

    While I cannot speak directly or indirectly for the FDA, I believe the FDA is taking the appropriate steps by focusing its efforts on the ban of high-nicotine menthol cigarettes. While some parts of industry will doubtless challenge this, they should recall that their own actions have led to the need for such regulation to be considered in the first place.

    I believe the elimination from menthol in highly addictive cigarettes is an important step to reducing the attractiveness of highly addictive tobacco or nicotine to youth, a view which should be shared by industry participants as a key concern as it is for the FDA.

    I am confident that we will see a nicotine standard in the coming years as appropriately regulated alternative products become increasingly available as well as a shift in public health messaging relating to such products. At this juncture, we see that our genetics and intellectual property are uniquely able to support such forward-thinking and pioneering harm reduction effort, which will save millions of lives, and we are excited to play our part in this vast public health opportunity.

    In a press note dated April 29, 22nd Century Group said it expected its VLN Menthol King reduced-nicotine cigarette to be exempted from the FDA’s proposed ban on menthol cigarettes. Please explain why you expect this to happen.

    We expect that the FDA will allow for a reduced-nicotine menthol cigarette to stay on the market in order to provide an offramp for adult smokers who currently use menthol cigarettes. In authorizing our MRTP applications, FDA was clear that such products have a role to play in both menthol and nonmenthol product styles to reduce their consumption of nicotine-containing products. With so many individuals smoking menthol cigarettes, we think it is prudent for the FDA to allow those smokers more options and not less to help reduce their exposure to nicotine and products containing nicotine.

    Where do you see 22nd Century Group five years from now? What are the challenges that need to be overcome to achieve that vision?

    Most people know the company for its leadership in reduced-nicotine tobacco technology; however, this is only one part of our business. Recently, we acquired GVB Biopharma, a contract development and manufacturing organization. GVB is one of the largest providers of hemp-derived active ingredients for the pharmaceutical and consumer goods industries worldwide based on total tonnage. GVB’s strengths complement 22nd Century’s existing upstream and downstream value chains, which includes expertise in cannabinoid receptor science with CannaMetrix, plant research and proprietary genetics through its KeyGene partnership, breeding expertise with Extractas and cultivation capabilities at Needle Rock Farms. The combination with 22nd Century establishes a global one-of-a-kind company to serve the rapidly growing hemp/cannabis ingredient market.

    Taco Tuinstra is Tobacco Reporter’s editorial director. Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors. On his watch, Tobacco Reporter has won several awards for editorial excellence. Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.
  • Saudi Officials Trained to Fight Illicit Trade

    Saudi Officials Trained to Fight Illicit Trade

    Illustration: MyCreative

    RELX International concluded a training session with Saudi Customs Authority and Saudi Authority for Intellectual Property officials on May 25. The training aimed to complement Saudi officials’ efforts in fighting the illicit trade of contraband and counterfeit e-cigarettes in the kingdom.

    The training covered several key aspects: discerning legal products from illegal ones; raising awareness and educating people about the consequences of the illegal trade of e-cigarettes; sharing research and intelligence on identifying illegal trading activities; collaborating with government officials to track and confiscate counterfeit products; and developing and implementing product authentication, tracking and tracing technologies. To facilitate the effectiveness of the training, RELX International collaborated with leading intellectual property firm SABA IP.

    As part of RELX’s ongoing commitment to protecting the rights of legal e-cigarette users, and fighting the illicit trade if e-cigarettes under the Golden Shield Program, additional training sessions are planned in the United Arab Emirates, Egypt and Jordan.

    “As a responsible company, RELX frequently works with local authorities, investigation firms and e-commerce platforms to identify and remove contraband and counterfeit e-cigarette products from the market as part of the RELX Pledge,” said Robert Naouss, external affairs director, MENA & Europe at RELX International, in a statement.

    “We are pleased to have been able to complete an in-depth training session with relevant Saudi authorities and applaud their tireless commitment to ensuring consumers in Saudi Arabia have access to authentic and reliable e-cigarette products at fair prices.”

    RELX established the Golden Shield Program in August 2019 to help prevent the production and sale of the illicit goods. Since its establishment, the initiative has helped remove more than 550,000 fake products from the market, as well as over 77,000 websites.