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Category: Also in TR

  • Where’s the Parade?

    Where’s the Parade?

    Photo: TRITOOTH

    Record-low youth smoking rates get no respect.

    By Cheryl K. Olson

    Back in 2009, when planning its 10-year public health objectives, the U.S. Department of Health and Human Services (DHHS) set an ambitious goal for reducing youth smoking. At the time, said government data, one in five teens (19.5 percent) had lit up in the past month. The Healthy People 2020 target was 16 percent.

    These targets aren’t meant to be slam-dunks. In 2020, a third of the 985 trackable Healthy People objectives were met; the rest improved some, stayed the same or got worse. So what happened with high school smoking?

    It plummeted. After passing the goal in 2013 (15.7 percent), teen cigarette use kept on falling. At the ten-year mark, in 2019, it hit 6 percent.

    The Healthy People 2030 youth smoking target is 3.4 percent. The newest national figures suggest we’ve already left that number in the dust. The 2022 National Youth Tobacco Survey (NYTS) pegged high school cigarette use at an astonishingly low 2.0 percent. That’s even just a puff in the past 30 days, not daily use.

    Dave Dobbins

    “We’re crushing it, right? It’s great news,” says Dave Dobbins, former chief operating officer at the Truth Initiative who is now a consultant for Altria. “For many years, I never thought we’d get youth smoking under 5 percent; I thought the job would be done around seven or eight. And we’re beating the heck out of that.”

    Did I miss the champagne cork-pop celebration? Why aren’t we talking about this? 

    There’s a clue in the title of this 2016 DHHS press release: “Cigarette smoking among U.S. high school students at an all-time low, but e-cigarette use a concern.”

    In the 2022 NYTS, past-month e-cigarette use was 14.1 percent. The answer may be that we’d have to give e-cigarettes some credit for choking off youth smoking. And we have decidedly mixed feelings about that.

    In the Rearview Mirror

    The article in the New York Times Magazine was provocatively titled “If It’s Good for Philip Morris, Can It Also Be Good for Public Health?” It included an interview with Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

    “The challenge to me is not to eliminate smoking but the death and disease from smoking,” Myers said in 2006. “That should be the end goal. If you had a product that addicted 45 million people and killed none of them, I would take that deal. Then you’d have coffee! I have to believe that if the marketplace incentives were such that over time someone could devise a product that would give the same satisfaction as tobacco but didn’t kill them, people would flock to it.”

    In that first decade of our century, the future of youth smoking looked gloomy. This 2010 DHHS press release title summed up the mood: “Little Progress Being Made in Reducing Smoking Among High School Students.” It noted that cigarettes’ rate of decline had slowed.

    Kathleen Sebelius, then secretary of health and human services, wrote an introduction to the 2012 Surgeon General’s report Preventing Tobacco Use Among Youth and Young Adults. “Despite the well-known health risks, youth and adult smoking rates that had been dropping for many years have stalled,” she stated.

    Michael Pesko

    The surprise decline in teen smoking that followed isn’t fully explained by tobacco control policies or changing demographics, experts say. Michael Pesko, an associate professor of economics at Georgia State University, has published over 20 papers on e-cigarette policies and their effects.

    “Something unexpected clearly happened between 2012 through 2019 that caused this exceeding of the smoking reduction goal by 400 percent,” he says.

    “Tobacco 21 happened, and research suggests this had an impact in the later part of the decade. But the other big thing that happened was wider availability of e-cigarettes.”

    The Pivot to E-Cigarettes

    Rather than celebrating minuscule smoking rates, anti-tobacco organizations pivoted to e-cigarettes and nicotine addiction. Consider a recent Campaign for Tobacco-Free Kids press release on the 2022 Monitoring the Future survey findings. In his statement, Myers relegated smoking’s decline—“a remarkable public health success story that will save lives for generations to come”—to the third paragraph. He led with youth e-cigarette use and a call for the Food and Drug Administration to eliminate “the flavored products driving this youth addiction crisis.”

    The Healthy People website today describes tobacco use in teens as “getting worse.” Reducing past-month tobacco use is a 2030 target. The new focus is on “cigarettes, e-cigarettes, cigars, smokeless tobacco, hookah, pipe tobacco and/or bidis.”

    “I understand the reasoning of people who are skeptical of reduced-risk products,” says Dobbins. “There’s a fear that people who otherwise would not have used nicotine will use them and then be more likely to transition to cigarettes if they continue to exist in the market.”

    “However, this has yet to be reflected in population data,” he continues. “Instead, the data suggest a transition to less harmful products. I think we have done a better job at educating people of all ages about the dangers of smoking than I gave credit.”

    Is Vaping Displacing Smoking?

    Pesko and colleagues have been analyzing the natural experiments created by variations in state policies regarding sales of e-cigarettes. He points out the remarkable consistency across a large body of research, none of it industry funded. In short, when governments regulate e-cigarettes—including taxes, minimum legal sales ages and advertising restrictions—it reduces e-cigarette sales to and use by both youth and adults.

    “And it also increases combustible cigarette use, again across all populations,” Pesko says.

    “The laws operate as intended in terms of reducing e-cigarette use but with the large unintended effect of increasing combustible use.”

    Vaping appears to be displacing smoking. Set aside the moral panic over vaping and legitimate fears of this new unknown; what’s left looks like a public health success story.

    “That’s what I believe is happening: a remarkable public health achievement,” says Pesko. He applauds advocates for passing Tobacco 21 but says nicotine companies also deserve credit. “Sometimes there is overlap between profit incentive and public health. The adoption of e-cigarettes may have been one of those things.”

    Nicotine Gut Check

    How should we feel about nicotine once it’s separated from combustible cigarettes? If, as Myers speculated about in 2006, we have appealing but addictive products with health risks similar to coffee … is that OK? This is a massive cultural adjustment that may take years to process.

    Social scientists Kirsten Bell and Helen Keane described our confused emotions in an article critiquing the gateway theory. “The nicotine in NRT [nicotine-replacement therapy] products is ‘good’ because it weans smokers off the ‘bad’ nicotine in cigarettes and ideally nicotine itself,” they wrote. “The nicotine in e-cigarettes is ‘bad’ because it facilitates addiction to nicotine, which, in turn, drives the user to seek it in ‘harder’ or more dangerous forms.”

    “My belief is that there will be an ongoing persistent demand for nicotine,” says Dobbins. “And if I’m right, it’s important that that demand be met with products that don’t subject the user to disease and death.”

    Another new objective for Healthy People 2030 is “Eliminate cigarette smoking initiation in adolescents and youth adults.” In 2018, four percent of youth aged 12 to 25 first picked up a cigarette. The 2030 target: zero percent. Does this trajectory suggest that zero youth use of nicotine should be the next goal?

    Pesko is not a fan of that approach. He uses the analogy of the Environmental Protection Agency’s regulation of water. They generally don’t use a zero standard for even nasty things like lead.

    “It’s so expensive to go from that trace level to zero, and the benefit is so small,” he notes. “It’s a reasonable goal to try to get use very low and with as safe a nicotine product as possible. But to go to zero nicotine use by kids, I can’t imagine the types of aggressive regulation and extra policing we’d need to do that. And even then, we wouldn’t achieve the goal, as we’ve seen with the war on drugs.”

    More Productive Policies

    Given limited resources, where might policymakers and regulators most productively put their attention to reduce tobacco product risks to youth?

    First, if we accept that the demand for nicotine exists, steer it toward reduced harm. “In terms of policy, having lower regulation of e-cigarettes than cigarettes makes a lot of sense,” says Pesko. “We want to incentivize people to use safer products. We should be taxing proportional to risk.”

    He would also like to see lower regulatory hurdles for products like e-cigarettes and nicotine pouches and incorporation of studies like his into appropriate for the protection of public health calculations: “Natural experiments are a strong, consistent body of evidence that could be used to approve more PMTA [premarket tobacco product application] applications. I’d like the FDA to use this body of work more.”

    Another suggestion is to turn up the heat on those nicotine companies known to sell to youth. Journalists have reported on the FDA failing to police vape products with candy flavors and toy-like packaging. Reynolds American even submitted a citizen petition a to the FDA requesting ramped-up enforcement of disposable e-cigarettes like Puff Bar and Elf Bar.

    Dobbins understands the discomfort of many anti-tobacco advocates with this evolution in thinking.

    “The reduced-harm products option allows companies that make money off selling cigarettes to continue doing business, albeit with much less harmful products,” he says. “But I think the most likely alternative of restrictive policies will be a move to a gray market that won’t be accountable to regulatory systems or the law, the way large companies must operate in the present.”

    Recalling industry chiefs’ past staunch denials of tobacco harms, Dobbins adds, “We must acknowledge that we are nearly 30 years from 1994.”

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

    Exploring ‘Belated’ Mortality

    Photo: Nopphon

    How did the 1980–2020 fall in U.S. smoking incidence impact smoking-related deaths?

    By George Gay

    I have a question. What proportion of smokers die “belatedly,” a word I shall use to mean later than predicted or expected, the opposite of “prematurely”? What I am getting at is, if, as I am told, 50 percent of smokers die prematurely from smoking-related diseases and, as I assume, X percent of smokers die prematurely from nontobacco-related causes, unless X is equal to 50, there must be a proportion of smokers who either die on their allotted day or after their allotted day, either from a tobacco-related disease or other causes. But you rarely hear of these people outside of the odd sensational newspaper story that tells how Joan Naughtie has just celebrated her 105th birthday with a cigarette, a glass of whiskey and a bout of raunchy, unprotected sex.

    There are probably a number of reasons why you rarely hear about these people, one of which is that they are an embarrassment, especially in the case of the Joan Naughties of this world who have clearly been having too much fun.

    But firstly, it is necessary to be clear what we mean by a smoker dying prematurely, on time or belatedly. Although it is difficult to impossible to prove a negative, experience tells me that none of us comes into this world tattooed or otherwise marked with a use-by date, so the day on which we are “supposed” to die must be predicted in some way by people who dabble in necromancy, I assume on the basis of past years’ age-related death statistics. I don’t know how sophisticated longevity figures are, but what I see usually are nationwide figures, stated separately for men and women. I trust the breakdown is more intricate than this, however, because, in a country such as the U.K., for instance, where inequality is rife, longevity varies hugely by region, so judging whether a smoker died prematurely against a national average would lead to overestimations.

    Given such concerns, I think that, in the cause of balance, the percentage of smokers who die belatedly should from now on always be stated whenever the percentage of smokers who die prematurely of smoking-related diseases is given.

    I wrote above that the number of smokers who died on their allotted day or after was an embarrassment, and one reason is that they, especially those who die not of a smoking-related disease, give the lie to the general statement that “smoking kills.” Smoking might be the indirect cause eventually of the deaths of a proportion—even a high proportion—of smokers, but, if I am correct in my assumptions above, given that people smoke and live beyond their allotted lives, it cannot be stated, without caveat, that smoking kills.

    One other embarrassment concerns whether, given that it is claimed that smokers who die before their allotted time die because of their smoking unless there is clear evidence to the contrary (they were hit by a bus, perhaps), it can be said that smokers who die after their allotted time live longer because of their smoking, unless there is clear evidence to the contrary (they were genetically modified, perhaps).

    Cause and Effect

    I started to think about such things after reading what struck me as a strange story in The Hill titled “Despite drop in popularity, cigarette smoking continues to be a leading cause of U.S. cancer deaths.” The story was based around some figures from the oddly named U.S. Centers for Disease Control and Prevention (CDC) and new research from the American Cancer Society. The CDC input was that the cigarette smoking rate in the U.S. dropped from 33 percent in 1980 to a little above 12 percent in 2020.

    The story followed up these figures by saying, in part: “But new research from the American Cancer Society shows smoking is still taking a huge toll on American life expectancy and the economy. According to a new study published in the International Journal of Cancer, nearly 123,000 U.S. cancer deaths were caused by cigarette smoking in 2019, making up close to 30 percent of all cancer deaths for that year. Cancers associated with smoking included cancers of the oral cavity, pharynx, esophagus, stomach, lungs and bronchus, among others.”

    This is interesting as far as it goes, but it was what was not revealed that I found frustrating and interesting. Nowhere in the story does it say whether the fall in the incidence in smoking between 1980 and 2020 was mirrored by a fall in smoking-related deaths. Clearly, this is the critical point because if the fall in the incidence of smoking-related deaths has mirrored or closely followed, at a certain time remove, the fall in the incidence of smoking, then many of the claims and assumptions that have been made surrounding smoking and its effects will have been confirmed. However, if there is a largish variation, then questions need to be asked. We certainly need to know if the fall in the incidence of smoking-related deaths in the U.S.—I take it there has been one, though you wouldn’t know from the story—has fallen behind or raced ahead of the fall in the incidence of smoking. And, in either case, we need to know why what has occurred has occurred. Could it be, perhaps, that smoking between 1980 and 2020 became more or less dangerous?

    It might be an uncomfortable truth for politicians and those who refuse to cut back on car journeys, but if the fall in the incidence of “smoking-related” deaths has not kept up with the fall in the incidence of smoking, it would be fairly obvious where to start investigating—the incidence of pollution exposure. I am not a medical person, but some of the smoking-related cancers listed above could seemingly be caused wholly or partly by pollution.

    None of this is meant to support tobacco smoking. On the contrary, it is meant to help us understand what the facts—rather than the myths—are surrounding “smoking-related” deaths and in this way lessen those deaths.

    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.
  • Cleaner Better Greener

    Cleaner Better Greener

    Photo: SPI

    Suppliers of adhesives and glue application systems prepare to accommodate new product requirements.

    By Stefanie Rossel

    In cigarette construction, adhesives are an invisible but indispensable ingredient. Even though adhesives often make up only a small percentage of the final product, they can have a major impact on the product life usage and consumer experience, explains Selda Akbasli, global business manager for rolled paper and tips at adhesives manufacturer H.B. Fuller. “Adhesives play a critical role as an enabler and a must-have technology that makes the products work. Due to its innovation, versatility and flexibility—not only in selecting technologies and raw materials—the industry now has many options that contribute positively to the way products are conceived and manufactured, reused or recycled.”

    Efficiency, sustainability and cleaner application: These trends currently dominate the market for adhesives and glue application systems. Akbasli says that as markets are in constant evolution and manufacturers are under pressure to control costs and improve customer service, efficiency is a top priority for her customers. Tobacco companies seek to improve production processes and improve their machinery’s performance while using fewer resources and producing less waste.

    Selda Akbasli

    “In some cases, it is not a matter of preferring a lower priced grade but looking for good value for money and quality,” she says. “For instance, often a high performance, higher priced adhesive can enable the user to apply less [adhesive], and the cost in use of the more expensive product will actually be lower. Additionally, customers are aiming to optimize their business complexity and reduce SKUs, for instance.”

    To meet these requirements, H.B. Fuller has developed Ipacoll 2606, which provides robust performance on both high-speed tipping and filter applications, according to the company. Excellent initial wet tack and clean application performance enables superior mileage optimization with no impact on bond strength, the manufacturer claims.

    On the application equipment side, there is also interest in enhanced efficiency, according to Danielle Roxborough, business development manager at SPI Developments, which in 2018 joined the Tembo Group, a holding company that also includes tobacco machinery manufacturer ITM. “Customers want application systems to run as smoothly as possible and without interruptions—and without the engineers being involved with the machine,” she says.

    SPI recently launched a new multi-line applicator, a small plate that is available with three holes to 15 holes, creating very thin lines of glue. “The innovation for this came from our paper straw-making machine,” says Roxborough. “We were developing a glue system that we were selling to our sister company to create multi-lines to make the paper straw. We then saw this could be transferred into the tobacco industry. We have now moved on from our previous triple line applicator to this cleaner, more accurate, more flexible application.”

    Sustainable is the Way

    Environmental considerations have gained prominence throughout the nicotine industry, including in adhesives. In Europe, the Single-Use Plastics Directive is forcing cigarette manufacturers to rethink their use of cellulose acetate filters. This has given rise to more sustainable solutions, such as filters made from crimped paper. Interestingly, adhesives are exempt from the directive.

    “Everyone would love to be more sustainable, but sometimes this comes at the cost of something else,” says Roxborough. “If you’re using paper filters as being better for the environment, you shouldn’t be using a plastic glue. The question is, how do you move away from such things as PVA glue—which is not sustainable but plastic—or hotmelt, which is thermoplastic?

    Danielle Roxborough

    “We are seeing some requests about creating applicators that could do starch-based glues. This is almost going full cycle; in the 1970s, starch-based adhesive was used to create cigarettes on a filter. Today the science is better, though. We believe that glue manufacturers will drive this development rather than SPI, which will follow with the respective application system.”

    According to Roxborough, gluing paper filters to a cigarette involves only minor tweaks to existing technologies, such as adjusting the angle of the applicator’s nozzle. “The interest from SPI’s point of view actually is in terms of flavoring because that’s a different challenge altogether,” says Roxborough. “From gluing, it’s the same principle, but how do you make a paper filter taste and feel like a normal filter?”

    “Sustainability is getting higher and higher on the agenda,” notes Jean Pierre de Smet, global tobacco adhesives business manager at adhesives supplier Henkel. “Paper-based filter products may need different adhesives. We develop them case by case and customer dependent.” In the short term, he states, adhesives have a role as carbon footprint (LCA) reduction enablers. “In the longer run—and if supported by the cigarette manufacturers—we might think about LCA reduction of the adhesive itself.”

    Wanted: Automated Cleaning

    H.B. Fuller can draw on a strong track record in adhesives to bond paper substrates for packaging. “We are continuously investing resources and capabilities to develop customized products for very specific applications such as coated paper or crimped paper as the market evolves to answer the new consumer needs.” She is seeing a rise in interest in “greener” products as regulations around the handling of chemicals become tighter and governments are introducing stricter laws. “In Europe, companies need to continue complying with the latest legislation driven by the Green Deal, like the tendency to remove aluminum. And we at H.B. Fuller have solutions to eliminate aluminum paper from the package to make it simple and easy to recycle in established wastepaper and board recycling streams. Net sustainability is a mega-trend, and the most substantial contributions adhesive producers make in the realm of sustainability are through product innovation, reducing the environmental impact of production processes and improving the sustainable performance of tobacco through their formulations.”

    The choice of an adhesive impacts tobacco production’s carbon footprint in a variety of ways, explains Akbasli. “We have ongoing projects for bio-based raw materials and products, and customers can already purchase our adhesives in bulk returnable and reusable containers to eliminate packaging waste, through to using our operator training packages to optimize the adhesive application ensuring maximum efficiencies. Whichever combination of options are selected, the adhesive is a small percentage of any tobacco product, and improvements in the overall carbon footprint of the production facility will be in the corresponding proportion.”

    Applying glue to cigarettes can be a messy business, and demand is growing to make the process cleaner. Roxborough says that “autonomation”—that is, intelligent automation—is becoming a big thing among customers. “The glue is very messy, and it’s very difficult to keep applicators clean. Currently, it’s a very old-fashioned way of wiping the nozzles at the end of the shift. What we see now are requests for nozzles that clean themselves. For years, we have had what we called positive shut-off, so when the machine stops, the needle closes the hole, pushes all the excess glue out, and that prevents leakage while the machine is not running. But the excess glue needs to be removed.” SPI is working with certain customers to create self-cleaning solutions for glue applicators. This technology may ultimately find its way into the general tobacco industry market.

    Novel Products, Novel Needs

    For a decade now, suppliers of adhesives and glue application systems have had to contend with a shrinking global cigarette market. The new smoking alternatives make up for just part of that reduction as many don’t use adhesives. “Only heated-tobacco products require adhesives and compensate for the decline of combustible cigarettes,” says de Smet. “Adhesives for HTPs have higher quality requirements.”

    As a leader in both traditional and HTP markets, H.B. Fuller does not expect any disruption to its business, with HTPs gaining traction and growing. “One of the biggest challenges we see for HTPs is the heat resistance of adhesives to ensure product integrity during use. At H.B. Fuller, we have recently developed Ipacoll 2364, a superior performance product that addresses the temperature resistance needs,” says Akbasli.

    Jean Pierre de Smet

    “Another [challenge] is related to the fact that the HTP industry is highly technical, regulated and always under high security. To closely monitor what is evolving in this segment and keep track on the latest developments, H.B. Fuller collaborates and develops strong relationships with its customers, paper vendors, machine manufacturers and other suppliers throughout the value chain. Working together and being part of the solution design from the beginning make it easier to develop adhesive solutions that meet the needed requirements valued by the market, even under short time pressures.”

    Roxborough notes increasing interest in the company’s multi-line application system from HTP manufacturers as the production process involves connecting different materials, such as foil, metal, reconstituted tobacco, paper and acetate filters.

    Understanding the Full Lifecycle

    As is the case in other industry, the supply chain, impacted by Covid-19, Brexit and the war in Ukraine, among other factors, remains a major issue for adhesive suppliers. In the current environment, small components normally considered insignificant can stop machinery from being shipped, according to Roxborough. Electronic supplies are particularly difficult to obtain. “SPI was fortunate to have enough on the shelf, so delivery was only a bit delayed,” says Roxborough. “But we’re getting to the point now where we will have to think of redesign allowing for alternatives. This is pushing costs up. We have seen a massive increase in costs from suppliers, from services through energy supplies. We try not to pass the higher costs on to customers, but we had to do it due to the economic climate we’re in.”

    De Smet says that like everyone in Europe, his company has been suffering from disruptions and an unstable supply chain. “Thanks to the leverage of Henkel in the adhesive industry, we have been able to supply all our customers in line with their needs,” he says. “More contingency and security of supplies was given by a strategic combination of our footprint and our product portfolio.”

    Meanwhile, dynamics have shifted, with many countries moving toward recession, demand across raw material markets decreasing and transoceanic shipping prices dropping to pre-Covid levels. “Yet many key input costs, such as energy, are expected to remain high through 2023 versus historical level,” says Akbasli. “As economies move forward, companies need to maintain a keen eye on fundamental consumer demand and focus on increasing agility. For instance, the move to on[-shore] or near-shore high demand/highly volatile goods will continue as organizations seek to be more reactive to demand changes and control logistics costs. Supply is currently balanced while pressure on margins up and down the supply chains is expected to increase. With this, and for most companies, cost containment will be the top priority this year, and supply chains will be under intense scrutiny to keep costs under control.”

    In 2023, cigarette consumption will be affected by economic crisis, inflation and excessive taxes, especially in developing countries, according to Akbasli.

    “This tends to promote hard-to-control illicit trade that poses many challenges across all industries,” she says. “At H.B. Fuller, we have the advantage of a robust, global and secure supply chain, making us a trusted partner. […] When considering the development of next-generation adhesive solutions, the goal is that adhesive manufacturers understand the full product lifecycle, including recyclability, bonding and de-bonding on demand, alternative cure processes and use of renewable or bio-based raw materials to name a few.”

    De Smet confirms that the supply chain is normalizing, and raw material cost is moving slowly but steadily to historical levels. “The challenge may be that we’re still in a potentially fast-changing environment. Opportunities may be found in a close cooperation between tobacco industry and its suppliers to manage costs keeping the holistic view in mind.”

    Despite all the challenges, SPI can reflect on a strong 2022, and, with a full order book, look forward to a good 2023. While tobacco remains its main focus, the company is collaborating with ITM and other Tembo Group members on projects for nontobacco industries, such as the homecare and paper businesses. To accommodate its growing team, the company will move to new premises this year.

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Surfing while Juggling

    Surfing while Juggling

    photo: Anna Berdink

    Five types of innovation

    By Clive Bates

    Where does innovation in the tobacco and nicotine field come from? Is it the far-sighted senior executive assessing the needs of the evolving market and committing R&D budgets to realize the corporate vision? Or is it the genius scientists and engineers toiling 24/7 in the labs to invent the wonder product that will become The Next Big Thing?

    Both are caricatures, of course, but neither explains how innovation really works.

    In his brilliant book, How Innovation Works, author Matt Ridley points out that “Innovation is not an individual phenomenon but a collective, incremental and messy network phenomenon.” For those involved, I would say it is more like surfing while juggling than a straightforward path from idea to implementation. To see why, let’s look at five types of innovation in the tobacco and nicotine market.

    First, disruptive innovation. The most prominent recent case of disruptive innovation in the tobacco and nicotine field is the rise of electrical heating as an alternative to tobacco combustion to create an inhalable nicotine-bearing aerosol. Though the Chinese inventor Hon Lik is usually credited with inventing the e-cigarette, the truly disruptive innovation came before and from outside the tobacco and nicotine industry. It is what makes the e-cigarette and modern heated-tobacco products possible. The critical disruptive innovation was the lithium-ion battery. By the 2000s, battery technology had steadily progressed to achieve a sufficiently high power and energy density, allowing rapid heating and an adequately long life between recharges within a compact form factor. Developments in battery technology were driven by the demands of the giant and ultra-competitive markets for mobile devices like smartphones and tablets.

    For decades, the intense heat, complex reactions and chemical cocktail generated by the combustion of tobacco leaf at 900 degrees Celsius in the burning coal of a cigarette were unmatched and unmatchable as a means of delivering nicotine to the lungs. The combination of electrically heated coil and e-liquid to generate an aerosol is now competitive. The disruption of the dominance of the cigarette, currently underway and likely to last two decades to three decades, is driven by a fundamental energy transition that degrades the advantage of combustion.

    I refer to the second type as system innovation. This is the consequential economic, regulatory and public health reaction to the initial disruption and may involve hundreds of innovative responses. For example, the emergence of e-cigarettes triggered a creative response in the Stop Smoking Service in the city of Leicester, U.K. Under the leadership of its manager, Louise Ross, the service changed its practice to embrace vaping as a low-risk alternative to smoking that could appeal to many smokers who had previously been beyond the service’s reach. Through the power of example, that experience led to further innovation at the National Centre for Smoking Cessation and Training and with the government’s support to guidance on e-cigarettes issued by the National Health Service.

    But this innovation did not happen linearly, driven only by personal inspiration. It is best seen as “emergent,” arising from a wide range of concurrent changes and influences triggered within the public health ecosystem. The disruptive innovation also led to system innovations in regulation, such as the 2014 European Union Tobacco Products Directive. In 2016, the U.S. Food and Drug Administration’s deeming rule brought vaping products into the definition of tobacco products and under the jurisdiction of the Tobacco Control Act. The initial disruptive innovation also led to innovation in the business models of tobacco companies, but also in the tactics of their traditional adversaries. Tobacco companies started moving their business toward a future in noncombustible nicotine products, and the anti-tobacco groups shifted their focus from preventing disease to fighting nicotine addiction.

    For tobacco and nicotine companies, the disruptive innovation and the system responses it triggers are like a “big wave,” both prized and feared by top surfers. Like a wave, the companies didn’t create it and can’t control it, but their challenge is to catch it, ride it well and not wipe out. The case of Kodak and its destruction under the breaking wave of digital photography is probably the most cited case of an innovation wipeout. But it doesn’t have to be a technology shift. In the 1970s, deregulation in the aviation sector enabled the emergence of the innovative low-cost airline business model. It wasn’t long before major airline incumbents were going under as that big wave gathered pace.

    The disruptive and systems innovations generate a changing paradigm: a big wave of opportunity or destruction that businesses must learn to surf. But why does innovation feel like juggling while surfing? The juggling reflects the frenetic activity of keeping a company moving, in financial balance and ahead of its rivals while it navigates a radically changing context. This brings us to three further types of innovation: the innovation occurring within the changing paradigm.

    So, the third type of innovation is evolutionary. It resembles the Darwinist process of evolution in nature. Here, the consumer provides what evolutionary biologists call selection pressure, and innovation emerges from incremental improvement through trial and error, mirroring what biologists recognize as mutation and natural selection. It will usually be incremental, but its impact will not always be gradual. Evolutionary innovation can make radical inroads into a market by solving a particular problem or exploiting an opportunity.

    A good example is pod-based vaping products using nicotine salts. Salts change how nicotine is absorbed in the airways and allow users to consume smaller volumes of higher strength liquids. The effect of the salts is to allow high-strength nicotine liquids to be used without undue harshness with a smaller battery and tank, enabling a compact and convenient device. This addressed the challenge of providing a convenient and discreet product with effective nicotine delivery. It was wildly successful—at least where regulators allowed it.

    I have seen much handwringing about the recent rise of disposable vaping products. But this is another case of evolutionary innovation. The disposables solve the problem of finding a quick and convenient way into vaping for smokers in the early or tentative stages of switching away from smoking. They are simple to use, low cost and convenient. They don’t require an upfront investment in a device, so they lower the cost of consumer trial and experimentation. Like many innovations, these products have downsides, such as the waste generated. But this is manageable and must be set against the potential benefits and in context with other waste material flows.

    The fourth type of innovation is adaptive. This is a variation of evolutionary innovation, but it arises in response to regulation. Ultimately, it is driven by meeting consumer preferences, but it is triggered by regulatory interventions that would otherwise compromise the consumer experience—ether by design or as an unintended consequence. One example is the mentholation cards that emerged after the European Union ban on menthol-flavored cigarettes. These are inserted into cigarette packs to infuse nonmenthol cigarettes with menthol flavor. Another case is the “shortfill” e-liquid containers that became popular as a workaround to overcome the European Union ban on e-liquid containers of more than 10 mL volume. Much larger containers of nicotine-free vaping liquid are sold only partially filled, allowing the nicotine to be added later—often from nicotine liquids stronger than permitted in the EU.

    As the FDA imposed ever more burdensome regulation on nicotine vapes, small companies introduced synthetic nicotine products because the law confined FDA jurisdiction to nicotine derived from tobacco. This example also illustrates the arms race fought between adaptive innovators and responsive regulators. By March 2022, the FDA had prompted Congress to amend the Tobacco Control Act to apply to nicotine derived from any source, not just tobacco. Adaptive innovations can come with novel risks. For example, regulated bans on flavored e-liquids may lead to consumers adding food or aromatherapy flavoring agents not necessarily intended for vaping.

    The fifth type of innovation is user-driven. The early vaping enthusiasts were hybrid producer-consumers, interacting on user forums with a strong problem-solving ethos and a hands-on approach to product design and construction. Users created innovations like “squonkers” or “squonk mods” to facilitate dripping, a niche style of vaping, by incorporating a flexible liquid bottle into the design of the vaping device. But the most impressive innovations from the user side have been social and community in nature. The vaping forums and vape meets created an elaborate technical and moral support infrastructure. This online community blossomed into vape shops as centers of expertise, personalization and encouragement. The vape shops are now de facto cutting-edge stop-smoking services but with a very different offer to the more clinical settings of traditional services. Even the biggest corporate beasts benefit and learn from user innovation. They should take care not to crush it.

    Innovation is a fluid and dynamic business phenomenon with many simultaneously moving parts embedded in an unpredictably evolving, threatening or promising context. Surfing while juggling is hard and risky, but it is no longer a choice in the tobacco and nicotine business.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • A Good News Story

    A Good News Story

    Photo: Teo

    Tobacco harm reduction has made more progress than is often assumed.

    By Patrick Basham

    The good news about tobacco harm reduction is the bad news is wrong. The tobacco harm reduction experience is actually a positive story.

    It is true that the preponderance of influential and well-funded public health institutions and stakeholders are rabidly anti-tobacco harm reduction (THR). The World Health Organization is the most clear-cut example, with billionaire philanthropists funding global campaigns that, in concert with the WHO, incentivize national governments and their public health agencies either to ignore or to disparage THR’s demonstrated ability to improve public health.

    It is also true that most politicians who talk about THR-related reduced-risk products (RRPs) are critical of the technology and its marketing and are subsequently prohibitionist with regard to e-cigarettes, heated-tobacco products (HTPs), oral smokeless tobacco, etc. It is also true that the tone and substance of the vast majority of media coverage is highly negative.

    Such a choreographed chorus of naysaying has most everyone with even a passing interest in THR assuming that the political, institutional and media criticism is, first, representative of a global consensus among stakeholders that THR is a bad idea and second, that THR policies fail whenever and wherever they are introduced. Consequently, when surveyed, the public is at best ambivalent about RRPs’ comparative benefits vis-a-vis combustible cigarettes.

    All of the above may be true, but it is not the entire truth about tobacco harm reduction and reduced-risk products.

    The Other Side of the Coin

    My recent THR report pushes back against the criticisms—and against the broader skepticism they engender. The report does not attempt to catalogue THR’s critics and their mostly ill-informed critiques. The case against THR is readily available, easily accessible and delivered ad nauseam. Instead, this report seeks only to inform the reader that there is actually another, distinctive and very positive side to the THR coin.

    To that end, my report addresses overlooked and underappreciated elements of this policy conundrum. The report discusses the public opinion hurdle that must be surmounted by THR proponents in order for their political representatives to adopt more progressive and enlightened positions on this crucial aspect of public health policymaking. A summary is also provided of RRPs’ successful, yet largely unknown and therefore unappreciated, track records since their adoption in many parts of the world.

    There is an accounting of the many pro-THR governments who have adopted sophisticated strategies and policy prescriptions; there is also recognition of influential public health stakeholder endorsements since THR products became a commercial reality more than a decade ago. The report concludes by drawing lessons from the THR story so far, so that open-minded political and regulatory decision-makers may be better guided on their policymaking journey.

    Consumers worldwide are, on average, either uninformed or ill-informed about the concept of tobacco harm reduction and the specific reduced-risk products central to its implementation. Such ignorance is understandable as the THR paradigm is a comparatively new concept beyond public health circles and RRPs are innovative new technologies that only recently delivered commercially viable options for consumers.

    Such ignorance is nonetheless frustrating because respective prohibitionist politicians, philanthropists, regulators, public health organizations, academics and consumer groups have consciously erected the central barriers to better consumer understanding of, and appreciation for, THR and RRPs.

    The aforementioned anti-THR actors are seemingly dedicated to the proposition that tobacco and nicotine products scientifically proven to be less harmful than combustible cigarettes should not be readily available for use either by current smokers seeking less (often far less) toxic sources of tobacco and nicotine or even by smokers seeking to quit smoking altogether.

    Layered upon the anti-THR and anti-RRP campaigns are unhidden, viscerally anti-industry agendas that reflexively oppose any innovative technology or business model that may preserve, let alone enhance, the profitability of the tobacco and nicotine industries.

    A great many countries, international institutions and public health organizations are employing, and advocating for, THR policies and strategies to reduce cigarette consumption. To date, nearly 70 countries have adopted regulatory frameworks on reduced-risk products.

    An enormous number and variety of electronic nicotine-delivery products are in the marketplace, with nearly 16,000 flavors available and global sales rising to $15 billion in 2019. HTPs were also available in over 50 markets worldwide in 2020. Only one Western democracy (Australia) still requires its citizens to acquire a nicotine prescription in order to vape.

    Snus can be legally bought in 81 countries. RRPs are already being used by 112 million people worldwide, with approximately 82 million using nicotine vaping devices, 20 million using heated-tobacco products and 10 million using smokeless tobacco.

    Contributing to Cessation

    The evidence in favor of THR as a complementary intervention to help drive down death and disease from smoking is robust. For example, we now have evidence of the impact vaping has had on smoking. Vaping is today widely considered to be the world’s most effective smoking cessation tool.

    Extensive international evidence supports the conclusion that vaping plays a major role in smoking cessation. All of the nearly 70 countries that have adopted regulatory frameworks on safer nicotine products subsequently report a decline, often a dramatic one, in smoking prevalence. Countries that embrace vaping have witnessed a decrease in smoking rates that is twice as fast as the global average.

    Snus’ extensive contribution to improvements in Swedish public health is well documented. When Norway allowed snus products to be more widely available, cigarette smoking fell by half in just 10 years.

    Japanese tobacco harm reduction is the story of HTP-driven success.

    Japan’s policies have led to a remarkable drop in cigarette smoking. In October 2020, in the world’s largest heated-tobacco market, the smoking rate dropped to a record low of 16.7 percent, down 1.1 percent on the previous year. Between 2016 and 2021, domestic combustible cigarette sales declined 43 percent.

    This decline is directly attributable to the availability of noncombustible RRPs, mainly HTPs. HTP popularity caused cigarette sales to plummet five times faster than before HTPs were available.

    Tobacco harm reduction is a refreshingly good news story, as detailed in the preceding sections. That is the reason governments around the world are increasingly placing THR at the heart of their tobacco control strategies.

    Pro-THR policymakers are legalizing RRPs for widespread consumer use as regulators in these countries construct regulatory frameworks that harness the products’ potential to reduce tobacco-related harm while restricting their availability to adult consumers exclusively.

    That said, certain governments and regulatory agencies have disproportionate influence on the global stage. The governments of many smaller and medium-sized nations, in particular, look to the likes of the U.S. Food and Drug Administration, the European Union and the Chinese government for case studies, regulatory models, bureaucratic signals and political cover regarding THR’s innate veracity, as well as the applicability and suitability of specific RRPs to public health in general and the consumer marketplace specifically.

    Some of the steps taken by governments and public health bodies with outsized influence have empowered THR while other steps have retarded its progress. My report’s accounting and cataloging of THR successes and adoptions provides these institutional actors, and those influenced by them, with numerous lessons concerning the best way forward should public health be the overriding concern.

    Ten policymaking lessons stand out:

    • Tobacco harm reduction should be the principal driving force behind a nation’s tobacco control strategy.
    • Legalize the import, export, sale, possession and use of reduced-risk products. These products should be as widely available as tobacco products and available without a prescription.
    • The debate is not legalization versus prohibition. The latter approach is empirically unsound, unenforceable and counterproductive. Hence, it is crucial that specific regulations and tax policies are THR-friendly, too.
    • Employ the “weighting principle,” that is, employ concepts such as absolute risk, relative risk, and usage patterns in order to calculate the net public health effect of RRPs, and utilize that data to guide the adopted regulation.
    • RRPs are most suitably regulated as consumer products rather than as medicines or tobacco products.
    • Apply the “continuum of risk” approach across tobacco and nicotine products. Regulation should reflect the lower toxicity levels of RRPs and, therefore, regulations and taxes should correspond to the level of harm caused by a given product, hence the need for the differential taxation of RRPs.
    • Lower rates of taxation for RRPs than for cigarettes help to ensure the affordability of RRPs for low-income consumers, who smoke disproportionately, and incentivize smokers to switch from combustible products.
    • Smokers have the right to accurate information on RRPs; therefore, governments should underwrite health education messages about the comparative risks of RRPs. A pragmatic regulatory approach furthermore recognizes the utility in fewer restrictions on RRP advertising than on cigarettes, hence reduced-risk claims for RRPs should be permitted in advertising.
    • Providing a choice of flavors to adult consumers encourages them to switch from combustibles to less harmful products.
    • Traditional cessation approaches are not the only tools available to help people transition away from smoking cigarettes. Vaping is the world’s most effective smoking cessation tool.

    The greater the number of governments that learn and apply these lessons, the greater will be the public health benefit that the world experiences from tobacco harm reduction’s focus upon the reduced-risk potential of innovative tobacco and nicotine products.

    Patrick Basham directs the Democracy Institute, a politically independent think tank. Basham was previously a Cato Institute senior fellow and taught tobacco regulation at Johns Hopkins University. Prior to Cato, he led tobacco policy research at Canada’s Fraser Institute. In 2016, he was the only pollster to predict both Brexit and Donald Trump’s Electoral College victory. A prolific author, Bahsam recently published “Covid-19: WHO is to blame?”
  • Lifting the Fog

    Lifting the Fog

    Photo: Andrii

    An official acknowledgement of nicotine pouches’ comparatively low risk clears the way for appropriate regulation in Germany.

    By Stefanie Rossel

    The news was a minor sensation given German authorities’ reluctance to acknowledge the reduced harm potential of novel tobacco products. On Oct. 7, 2022, the Federal Institute for Risk Assessment (BfR), a scientific institution of the German government, published a statement in which it confirmed that tobacco-free nicotine pouches could reduce the health risks compared to smoking.

    Jan Muecke | Photo: German Association of the Tobacco Industry and Novel Products

    The risk profile of modern oral nicotine products, as they are also called, is comparable to that of medical nicotine-replacement products such as nicotine patches, the institute wrote in its evaluation, which was published in several scientific journals, including Tobacco Control. Carried out by BfR scientists in August 2022, they study showed that aside from nicotine, the pouches contain no substances that present health concerns. In some samples, researchers detected traces of tobacco-specific nitrosamines, which are also found in medical nicotine-replacement products. According to Jan Muecke, chief executive of the German Association of the Tobacco Industry and Novel Products, this problem is solvable, however.

    To protect consumers, the BfR recommended regulation of the manufacture, presentation and sale of nicotine pouches. Tobacco harm reduction advocates hope the findings will prompt German authorities to finally regulate modern oral nicotine products as tobacco products.

    Nicotine pouches comprise small sachets with a mixture of cellulose fibers, flavorings, water, humidifying and gelling agents along with preservatives and artificial sweeteners. Since their introduction in Germany, they have existed in a regulatory gray area. Because the products contain nicotine, authorities decided that sales require monitoring. However, since the products are tobacco-free, the German tobacco product law does not apply.

    Following several assessments and court rulings, German regulators classified modern oral nicotine products as food, making it subject to European food law. However, the European Union prohibits the use of nicotine as a food, food ingredient, food additive or food flavor, which means nicotine pouches classified as food may not be sold in the trade bloc. In March 2021, the administrative court in Hamburg confirmed that the sale of modern oral nicotine products was illegal. Other German courts have followed suit.

    According to Muecke, the classification of nicotine pouches as food has been problematic because it misleadingly implies that the products are being eaten. “This is nonsense,” he says. “The products are consumed by putting the pouch between the upper lip and gum and leaving it there while the nicotine and taste is being released. After use, the complete pouch is disposed of. This makes them comparable to toothpaste or floss—no one would think of declaring these products as food.”

    Regulation Protects Consumers

    By classifying nicotine pouches as food, Germany is an outlier. In the 16 EU member states where modern oral products are available, they are regulated either as tobacco or as a consumer product. Demark and the Czech Republic have even created a new product category for nicotine pouches, defining them as tobacco surrogates and allowing the sale to adults.

    Muecke welcomes the opportunity that the BfR assessment offers Germany to change its classification. “The BfR statement contains all data that are required for appropriate regulation of nicotine pouches,” he says. “Scientific studies have confirmed that if nicotine content is limited to a maximum of 20 mg per pouch, nicotine blood levels will not be higher than when smoking a combustible cigarette. We therefore hope that the government will take the request of the consumer protection conference of the federal states seriously who in 2021 had called for regulation of nicotine pouches under tobacco law.

    “In the current state of legal uncertainty, modern oral nicotine is nevertheless on the German market—consumers buy their nicotine pouches online from abroad. These products often do not stick to nicotine limits, and child and youth protection cannot be efficiently controlled. Adequate regulation of nicotine pouches as tobacco products would hence protect consumers and youths.”

    A chance for a change is already in sight: Under a delegated directive from the European Commission, the German government has until July 2023 to revise the country’s rules for heated-tobacco products (HTPs). “HTPs will be more strictly regulated in Germany in the future,” Muecke explains. “Therefore, it would make sense to find legal regulation for nicotine pouches during the same legislative process, which for HTPs will have to be concluded in the first half of 2023. To wait for a new version of the EU Tobacco Products Directive (TPD) that won’t be translated into national law until 2025 or 2026 would be wrong as unregulated online purchases of modern oral nicotine products with excessive levels of nicotine would continue to endanger consumers.”

    The European Commission intends to publish a draft of the revised TPD in 2024. While the wording is still unknown, the public has an opportunity to share its views through a consultation. Muecke encourages all stakeholders to take part, for example through the German-language website dein-ding.de.

    While it would technically be possible to regulate nicotine under the revised TPD, this is not Muecke’s preferred solution. “The products are on the market right now and available in 16 EU member states, especially in most of our neighboring countries, hence Germany shouldn’t be an island of prohibition,” he says. Muecke suggests regulators use the TPD’s e-cigarette regulations as guidelines for modern oral nicotine products.

    Muecke is confident that appropriate regulation for the novel oral nicotine products will be implemented in Germany. “A ban of nicotine pouches would not be in accordance with the principle of risk minimization,” he says. “The government must create a possibility for consumers to buy such reduced-risk products at retailers—it’s an absolute necessity.”

    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.
  • Losing the Plot

    Losing the Plot

    Image: Adobe Stock

    When it comes to tobacco, the European Commission should abandon its overly complex ideas and embrace some fresh thinking.

    By George Gay

    The people of England and Wales were advised by health chiefs not to get drunk on Dec. 21—and I think it is worth pausing for a moment to take in the enormity of the implications of that advice …

    But, moving on, the reason for the advice’s having been given specifically for Dec. 21 was that ambulance drivers were due to go out on strike that day, which meant it was going to be more challenging than usual to deliver to hospitals those people, drunks and their victims, injured by drunken behavior.

    No such advice had to be given in respect of the consumption of tobacco. Those seeking enjoyment through the consumption of nicotine rather than alcohol do not over-consume, and, importantly, do not, as a result of their smoking, lose their faculties for thinking clearly and, like drinkers, start acting in silly, violent and otherwise bizarre ways.

    Given this, I feel moved to ask, not for the first time, why it is that, in most parts of the world, and certainly in Europe, about which this story is concerned, tobacco and tobacco consumers are regarded as society’s pariahs while alcohol and alcohol consumers are regarded as being part of the normal social milieu—hail fellow, well met! Why is it that we take seriously people who, while drinking alcohol and becoming increasingly muddled in their thinking, pontificate on, among other things, the evils of tobacco and smoking?

    It seems totally illogical, but one answer, I guess, could be that so many people drink alcohol that, collectively, we have passed the tipping point of population-level befuddledness and, consequently, are no longer able to summon the level of critical faculties necessary to see through the inconsistencies and hypocrisies that drive our lives. On the whole, unlikely.

    Nevertheless, something weird is going on that defies logical analysis. While the world at large has long been at war with tobacco consumption, the original, often well-meaning objectives seem to have been pushed to one side. The purported reason behind the tobacco conflict, as I understood it, was to reduce the death and disease caused by smoking, but the focus seems to have shifted elsewhere, in part to the defiance of the various methods being used in the conflict, and to a whole string of largely peripheral activities. We are told that there are 1 billion smokers worldwide, but there must now be another billion who owe their livings or part of their livings to anti-smoker activities and/or to devising ways of defending the wasteful expenditure of conflict funds.

    A Curious Leaflet

    In June last year, the European Commission issued a curious leaflet that included a table illustrating what, at first glance, seemed to be the overall level, EU-wide, of the implementation of a European Council recommendation on the enforcement of smoke-free and vapor-free environments. In fact, some of the smoking restrictions, including those to do with outdoor areas and private places, and the vapor restrictions, apparently fall outside the remit of the recommendation but presumably within rules in force within some EU states. The left column of the table listed 20 places where, technically, a person could smoke or vape, but, according to the rules, may or may not be allowed to do so. The table had three right-hand columns, one headed “Traditional products for smoking,” the second headed “E-cigarettes” and the third headed “Heated-tobacco products.” Against each of the 20 places, three colored circles appeared, one in each of the right-hand columns indicating whether enforcement was “very good” (dark green), “good” (light green), “moderate” (yellow), “low” (orange) or “very low” (red). So, for instance, enforcement in indoor workplaces, the first of the rows, was indicated to be very good (dark green) in the case of traditional smoking products but only moderate (yellow) in respect of e-cigarettes and heated-tobacco products.

    What struck me about the right-hand columns of the table, which, in total, included 60 colored circles, was that it looked like something designed by a child, whiling away a wet Sunday afternoon, innocently unaware that some people have difficulty distinguishing such colors. But, of course, this was something that had been produced by adults paid to do so. It had been funded presumably by the anti-tobacco, anti-smoker money tree, which spares no effort, no expense on even the most peripheral of exercises.

    The table seemed so far removed from the coalface of tobacco harm reduction (THR) that I couldn’t understand what purpose it served, but I felt certain that the money it cost could have been better spent. The needle of THR would have been shifted more if the funds needed to produce the table had instead been used to buy 100 or so e-cigarettes or packs of snus that were subsequently handed out to impoverished smokers.

    And there was a sinister side to the table. One of the places listed in the left-hand column was designated “private homes,” where enforcement was described as very low (red) in respect of all three products. This raises a worrying question. Does the commission believe that, at some stage in the future, it would be very good if the lights changed to green along this row, indicating that people were being monitored in their homes to determine whether they were smoking or vaping? This is not idle speculation. The commission says in the leaflet that “There is a gap in the legislation of exposure to smoking in multi-unit housing” while acknowledging that “Smoke-free measures are difficult to monitor in private places (for example, homes and cars).”

    Of course, the amount of money wasted on the leaflet is probably small, but I suspect there is an awful lot of such ephemera wafting through the halls of the commission, and a lot of small amounts of money can add up to … well, a lot of money. And more is planned, even in these straitened times. The commission says that the 2009 recommendation is limited and that, in part, “There is a need to increase financial and human resources available for monitoring and enforcing rules on smoke-free environments.”

    Collective Consumer Intelligence

    Nothing could be further from the truth. The commission should pause for thought. When e-cigarettes first became available, they quickly became popular through a system of what I would call collective consumer intelligence, a human version of swarm intelligence in which insects such as bees and ants work together to form efficient societies without the need for management. Early adopters of e-cigarettes went on to the internet and performed waggle dances to indicate where the best e-cigarettes were to be found, and things started to work well. It was only with the intervention of countless managers, including those at the commission, that THR started to slow down.

    In fact, one of the proofs of this argument lies with snus rather e-cigarettes. The EU must have spent millions of euros purportedly on trying to get smokers to quit, but it banned snus, except in Sweden. Banning snus has got to rate as one of dumbest policies ever devised, anywhere in the world, in respect of anything. It requires apparently sentient people ignoring the evidence staring them in the face—ignoring the fact that the proportion of smokers in Sweden, which is heading down toward 5 percent, is lower than in any other EU country.

    But perhaps it is me who is being dumb in believing that the EU wants to reduce the level of tobacco smoking within its territory. After all, this premise is based on self-reporting. If it is wrong that this is the aim, then its actions become perfectly logical.

    Chasing its Tail

    The idea that the commission and the EU have lost the plot is supported by the effort they have put, and are putting, into the establishment and operation of a traceability system for tobacco products. Although this effort is aligned with the Protocol to Eliminate Illicit Trade in Tobacco Products, which came into force in 2018 under the aegis of the World Health Organization Framework Convention on Tobacco Control, it is not a health initiative. It has nothing to do with seriously trying to stop people smoking but is aimed at providing, in the commission’s words, “member states and the commission with an effective tool that enables the tracking and tracing of tobacco products throughout the union and the identification of fraudulent activities that result in illicit products being available to consumers.” In other words, the huge effort that is being expended to put the system in place is aimed at increasing the sales of licit tobacco by reducing those of illicit tobacco. But you have to ask whether this is a proper use of the commission’s energies, especially in the straitened times we are suffering.

    It could be argued, of course, that it is in society’s interest to stop illegal trading no matter what products are involved, but I would counter that, in the case of cigarettes, such efforts merely show the commission to be chasing its own tail. The illegal trade in cigarettes in the EU is fueled by unfair levels of taxation applied to tobacco products by countries, in part at the behest of the commission, so the simple answer is to reduce taxes and do away with the need for a complex traceability system.

    And it is complex, as anybody will realize if they read through the commission’s Nov. 3 draft of recommended amendments to the 2018 traceability system Implementing Regulations, which weighs in at 17 pages with 23 pages of appendices. “The traceability system established in accordance with Implementing Regulation (EU) 2018/574 started collecting data on tobacco products’ movements and transactional data on 20 May 2019,” the draft says. “Experience in its implementation has further demonstrated the importance of high quality, accuracy, completeness and comparability of the data that need to be recorded and transmitted to the system in a timely manner.

    “In its report on the application of Directive 2014/40/EU of 20 May 2021, the commission stressed that the member states and the commission had considerable problems with the quality of traceability data …”

    You can imagine where this goes—into a haze of legalese covering the minutiae of tobacco product logistics. None of this helps smokers, but it helps to provide jobs for those in the burgeoning and lucrative trade of making miserable the lives of smokers.

    Who pays for this traceability rigmarole, you might ask. Well, according to the commission, it’s very simple. The costs of operating and maintaining the system, and of storing the data, is borne largely by tobacco manufacturers and importers. But you would have to be terribly naive to accept that at face value. The costs purportedly borne by manufacturers and importers will be passed onto smokers, which will increase the financial burden on them and make it more likely that they will turn to illicit products. The system, incomprehensibly, is designed to punish those who buy licit products for the sins of those who buy illicit products. Again, the commission is chasing its tail.

    What the commission needs right now is a good dose of simplicity. It should throw out the complexities of traceability, unban snus, stop agitating for a ban on nicotine pouches, stop interfering in the development of the sorts of e-cigarettes and heated-tobacco products capable of persuading smokers to quit their habit, and stop worrying about novel products that might or might not come along.

    The collective intelligence of smokers, aligned with the best interests of tobacco product and nicotine product manufacturers, clearly intent on converting the market, will do the heavy lifting. It is time to sweep away the musty, overly complex ideas of the past and let in some light and new thinking.

    Yeah, like that’s going to happen in the run-up to the EU’s Tobacco Products Directive III, with the huge number of anti-smoker jobs on the line.

    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.
  • Choppy Waters

    Choppy Waters

    Photo: Igor Groshev

    As the Covid pandemic ebbs, the tobacco shipping business faces new challenges in 2023.

    By Stefanie Rossel

    At the beginning of last year, forwarding businesses that specialized in the shipping and storage of tobacco were groaning under the burden Covid-19 had placed on their operations. The pandemic had severely disrupted the global supply chain, causing shortages of containers in places where they were needed and surpluses in places that had no use for them.

    As economic movements and production came to a halt, large numbers of containers accumulated in North America. In order to control costs, carriers lowered the number of vessels at sea, slowing imports and exports as empty containers were no longer picked up. When Covid eased and Asian traders became the first to resume business, retrieving containers turned out to be challenge. A reduction in container production during the pandemic, raw material shortages and Covid-related port closures contributed to the crisis, resulting in significant delays in turnaround times and an unprecedented increase in the costs of transporting goods by container ship.

    Since the beginning of 2020, shipping rates had risen between five times and seven times over the initial freight rates depending on the route. The price of shipping cargo to the U.S., for instance, increased 530 percent since the start of 2021.

    The good news is that toward the end of 2022, scarcity of containers was no longer an issue; on the contrary: global container depots, where empty containers are stored, are now filling up or are full. Freight rates have fallen accordingly. According to the December 2022 Drewry World Container Index, the average rate of a 40-foot container has dropped to $2,139, which is 79 percent below the peak of $10,377 reached in September 2021.

    The falling prices should provide freight forwarders room to negotiate better rates with shipping lines in 2023, experts say, but margins for forwarders will also be tighter as they operate in a market that is anticipated to consolidate. They will have to optimize operational cost and carefully monitor demurrage and detention charges, such as insurance charges or claims, according to industry watchers.

    Slowing Trade

    In general, however, supply chain concerns are expected to persist in 2023 as new issues have come up. ING Think, the economic and financial analysis arm of ING Research, believes that the new year could prove to be even more challenging for global goods trade due to faltering consumer demand, returning oversupply and the mounting cost of energy as a result of the war in Ukraine. More than 80 percent of world trade is seaborne.

    While major ports, such as Los Angeles-Long Beach and Shanghai, have managed to work off the backlogs caused by the pandemic, global congestion of ports is far from over, analysts point out. Shipping times may have improved since their peak at the beginning of 2022, but they still amount to approximately double the pre-pandemic lead times of 80 days to 90 days. According to Sea Intelligence, schedule reliability stood at 46.2 percent in August, which is trending upward but still significantly lower than the 2018–2019 average of 74 percent. Some 7 percent of the global fleet, ING Think says, is still stuck in queues in ports around the world, and 11 percent of goods are sitting on waiting container ships.

    For 2023, analysts predict the moderation in the transportation sector to continue in light of recession scenarios and hesitant consumer demand. With energy prices expected to remain high, purchasing power continuing to erode and manufacturers struggling with labor and material shortages, ING Think forecasts that receding demand will meet oversupply. While trade in consumer products is expected to remain below growth average, decreasing new export orders and declining order books also indicate a slowdown on the industrial side, with Europe being hit particularly hard by the energy crisis.

    With minimal Russian gas flows, the 2023–2024 winter season will likely make it more difficult to build inventories. Further sanctions on Russian oil and refined products are anticipated to lead to a shift in global trade patterns; on Dec. 5, 2022, the European Union and the U.K. banned the seaborne imports of crude oil from Russia; from Feb. 5., 2023, they will also embargo Russian oil product imports.

    Labor shortages and material shortages will continue to challenge the transport sector in 2023. Strikes for higher wages and better working conditions took place in all parts of the world last year—a situation that could worsen with the war in Ukraine. At 10.5 percent and 4 percent, respectively, Russia and Ukraine supply significant shares of the world’s sailors. If Russia announces a full mobilization, the shortage of deckhands could intensify.

    According to ING Think, 2023 will see enhanced capacity management of container liners, increasing operational costs and larger capital investments in new, more environmentally friendly vessels and more expensive compliant biofuels as well as in wages. Global supply chains are still fragile and exposed to volatility. As the analysts observe, “Normality is still way off as we approach 2023.”

    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.
  • Growing Pressure

    Growing Pressure

    Photo: Prestige Leaf

    Inflation and competition from alternative crops are compounding the traditional challenges facing oriental tobacco.

    By Stefanie Rossel

    For more than 100 years, oriental tobacco has been used as a key ingredient in American blend cigarettes, but the history of this aromatic, small-leafed variety goes back much further. In the early 17th century, the Spanish introduced the tobacco plant to the Ottoman Empire. The Turks developed their own cultivation processes. It is assumed that oriental tobacco emerged as a mutation spawned by the growing countries’ climatic conditions, poor soil and the “starvation” method of cultivation in which the plants are placed very close to one another. Today, classical oriental tobacco is mainly grown in the countries of the eastern Mediterranean, with Turkiye and Greece being the biggest producers followed by North Macedonia and Bulgaria. Thailand, India, Albania, the CIS countries and China also cultivate oriental varieties.

    Compared to other tobaccos, oriental is a niche product. Due to the hot and arid conditions in which it is grown, the leaf contains significantly lower levels of nicotine than flue-cured Virginia or burley, and harvesting and curing methods are more pristine: The leaves are picked by hand and sun-dried for about a week, a process that enables the leaves to retain some of the natural sugars, which provide a hint of sweetness and a unique taste.

    While the authenticity of the cultivation practices may appeal to some, they also present a major challenge. The oriental tobacco sector is struggling to replace aging farmers and working hard to become more efficient and sustainable.

    Today, classical oriental tobacco is mainly grown in the countries of the eastern Mediterranean
    (Photo: Missirian)

    Smaller Crop Size

    The summer of 2022 was hot and dry, especially in southern Europe. In Turkiye, it was the second year that the growing season suffered from drought, according to Zafer Atici, owner and managing director of Prestige Leaf, a global leaf supplier based in Hong Kong. “Planting was delayed beyond the usual window,” he says. “Extreme hot weather in July and August also adversely affected the growth and consequently yield of plants in the field. In some areas, production dropped to half. As Turkish tobaccos are mostly sun-cured, the curing period was better without any rainfall.”

    Turkiye’s 2022 oriental crop was almost identical to the 2021 crop, which was one of the smallest in history, notes Atici. “While an increase was expected, the prevailing weather conditions that were similar all over Europe last summer took their toll on the yields,” he says. “The Izmir variety, which is the flag carrier, may result in a total of 42 million kg, with 35 million kg in the western part in the Aegean Region and 7 million kg in the eastern part of Turkiye, respectively.”

    In other regions, the crops were also smaller than in previous seasons while the quality was rated normal to good. “Quality has not been negatively affected by the dry summer,” says Dora Gleoudis, managing director of Greek leaf tobacco exporter Nikos Gleoudis Kavex. “In general, such weather conditions are affecting oriental tobaccos mainly in regard of reduced yields.”

    According to Nikos Tzoumas, managing director of Greek leaf merchant Missirian, the country’s oriental leaf production decreased from 11,500 tons in 2021 to 8,500 tons in 2022. Production of Basma amounted to 5,400 tons, and production of Katerini was 3,100 tons in 2022.

    In Bulgaria, 2022’s crop shrank by 18 percent to 4,500 tons compared to 2021. North Macedonia by contrast increased its crop from a record low of 18,700 tons in 2021 to 21,000 tons this season. “The weather conditions that prevailed in the Balkan areas were not extremely dry,” explains Tzoumas. “The temperatures were quite mild—close to the historical average—throughout the cultivation season and very favorable during the last part of the curing period with a lot of sunshine. The rainfalls were short in the first half of the season and at normal levels later. The farmer yields were kept at regular levels and were not affected by climate change.”

    Prior to this summer’s weather conditions, the sector confronted the challenges brought by the outbreak of Covid-19. Gleoudis says the pandemic had a minor impact on tobacco production in Greece and the Balkans. “However, there have been serious delays in the shipping schedules due to the lack of available containers, but this has been drastically improved lately,” she says.

    In 2021, Greek production was affected by a lack of external workers, mainly from Bulgaria and Albania, due to travel restrictions, according to Tzoumas. “The production of 2022 was scheduled to be at lower levels, with the Greek farmers being informed about the workers’ absence well in advance,” he says.

    Unsurprisingly, the war in Ukraine, which has created an energy crisis and driven inflation to new heights, has made life more difficult for oriental farmers. “Now, the challenge is to be able to produce agricultural products, including tobacco plants and leaf, under current economic conditions,” says Atici. “Increases in the oil prices have affected all crop inputs for the growers. In Turkiye, the gasoline price increased four times. With the war, wheat prices soared, and we also saw some areas switching production from tobacco to wheat. Less energy-dependent crops like oregano were also increasingly planted. The leaf price will increase due to increased costs.”

    In Greece, farmers’ production cost increased at an average of 25 percent in 2022, says Tzoumas. “The factory costs of supplies, such as transportation, energy and packing materials, have increased by 25 to 200 percent, depending on the category.”

    Gleoudis says that the combination of higher cost, higher inflation and reduced yields are forcing the dealers to pay growers better prices. In addition to covering the cost of production and offering farmers a modest standard of living, this helps secure the future production of oriental tobacco, which is increasingly facing competition from alternative crops, such as wheat, corn and sunflower, which demand less labor and currently attract high prices due to the Ukraine crisis.

    Oriental tobacco is a notoriously labor intensive and producers have struggled to mechanize the process. (Photo: Prestige Leaf)

    Changes Required

    So does it still pay for growers to cultivate oriental tobacco under the given circumstances? Speaking for Turkiye, Atici says one of the main concerns is the decrease in the rural population as many people migrate to the cities in search of better economic opportunities.

    “Oriental tobaccos could be viable to grow,” he notes. “However, some things need to change. For example, there should be less reliance on conventional energy and more use of renewables, along with smart mechanical tools instead of intensive labor usage, in particular in harvesting, as well as a better fertilizer regimen and financial improvement for crop input via cooperatives, private companies or government bodies. A good example is what Prestige Leaf does in India by providing fertilizers to growers as a financial help. The advantage of oriental growing is that it is an environmentally friendly crop. It requires very little irrigation and fertilizer and cures under the sun.”

    In recent years, stakeholders have attempted to improve the efficiency of harvesting in the oriental tobacco sector. In 2020, an oriental tobacco harvesting machine entered the market. For the time being, however, picking the crop remains a manual job for most growers. The harvesting machine did not create the desired impact, according to Atici, citing high startup costs and insufficient efficiency gains.

    For farmers with more than 10 ha of land, however, the harvesting machine ended up being a successful tool, says Tzoumas. “In 2020, it did not have the support it needed from the market, though, as the appearance of the final product could not match the one of a handpicked crop,” he says. “In other products, such as cotton, for example, this case was solved many years ago. Today, it is clear that even in oriental tobaccos, there is no future if it will not be fully mechanized, considering the lack of field workers and increase of wages.”

    Oriental crops currently struggle to meet the demand levels, he says. “Farmers receive the messages and react fast to the new facts. The viability of the crop, however, depends not only on the demand but also on the alternative crops’ income, which is mainly food, farmers receive.”

    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.
  • Adding Value

    Adding Value

    Photo: Taco Tuinstra

    Moving up the tobacco value chain requires a content and stable grower base.

    By George Gay

    Why is tobacco produced anywhere, given what is known about the risks of consuming it? I ask because it seems to me that if there is one thing that governments around the world agree on, it is that the consumption of tobacco comprises a serious negative, socially and economically, which suggests they ought, in unison, to ban production universally.

    Of course, all sorts of arguments can be put forward as to why this strategy couldn’t be made to work, but, thinking about it, I could not come up with one such argument that was irrefutable. So why isn’t production banned worldwide? Where’s the catch? I think it lies in the fact that many governments are happy to enjoy tobacco’s positive aspects but uncomfortable about admitting to them. It lies in the degree of negative consequences suffered by a country because of tobacco consumption and the degree to which these consequences are offset by the positive outcomes that can accrue to those countries that produce tobacco. Obviously, the desire to ban tobacco production would be much stronger in a country that doesn’t grow tobacco but has a large smoking population than it would be in a country that grows and exports tobacco but has a small smoking population. And this dial might shift further in the future in favor of some producer countries as they try to add to the value of their exports by empowering local merchants and manufacturers.

    I started thinking about such issues after reading a Dec. 1 story in The Star newspaper that described how the Kenya Tobacco Control Alliance had asked President William Ruto to reconsider his decision to sign a trade pact with South Korea aimed at increasing exports of, among other things, tobacco. The alliance was fearful that such increased trade would cause the expansion of tobacco production at a time when efforts were being made to encourage growers to switch to other crops and activities.

    Spiraling production cost, price stagnation, the impact of climate change… members of the International Tobacco Growers Association had plenty to discuss when they met in Portugal late last year. (Photo: ITGA)

    Perennial Issues

    A press release issued following the International Tobacco Growers’ Association (ITGA) 2022 annual general meeting held in Castelo Branco, Portugal, Oct. 26–29, stated that its members were calling for inclusion in the global-level, regional-level and country-level consultations shaping the present and future of the tobacco production sector.

    Particularly, the ITGA wants to be able to take part in the Conference of the Parties (COP) to the World Health Organization Framework Convention on Tobacco Control (FCTC), COP10, which is due to be held next year in Panama. “By preventing growers’ access to the ongoing discussions, the Framework Convention on Tobacco Control acts against the international institutions’ rules of procedures and therefore against its own,” the press note said. “Growers urge for closer and stronger engagement with partners to overcome the common challenges facing tobacco growing. Costs of production and price stagnation, in the face of rapid inflation, mean […] that growers need support from all industry stakeholders to fight pressing issues, including the effects of climate change, deforestation and child labor.”

    At least 400 ha of irrigated tobacco have been damaged in Zimbabwe after farmers applied counterfeit chemicals to their crop. (Photo: Taco Tuinstra)

    In fact, these are just a taste of the challenges confronting tobacco production. Running one’s eye over reports from around the world, it is also possible to pick up on perennial issues, such as the aging of the tobacco grower bases in some countries and labor shortages more generally. Then there are the not constant but all-too-frequent concerns surrounding unhelpful currency movements and severe weather events, such as hurricanes. As usual, government regulations come into the picture, either indirectly, through efforts to reduce product consumption, or directly, though it needs to be noted that not all such regulations are negative. Interestingly, there seems to be little immediate concern about moves in the U.S. to require very low levels of nicotine in tobacco, perhaps because many people see this as either a nonstarter or something that is way off in the future.

    Other issues are particular to these times: The Covid-19 pandemic is still posing risks and causing logistical problems while Russia’s invasion of Ukraine has pushed up the prices of energy and some agricultural chemicals and, according to one report at least, led to the use of counterfeit chemicals that have damaged crops. Perhaps Graham Boyd, executive vice president of the Tobacco Growers Association of North Carolina, summed the situation up best when, addressing the ITGA meeting, he said that the reward to risk ratio of producing tobacco in the U.S. was currently too low.

    Adding Value

    Pyxus International has been recognized for its efforts to promote responsible fuel production in Malawi. (Photo: Pyxus International)

    Few of these challenges are new, of course, but some of the responses to them are. At the Global Tobacco and Nicotine Forum in October, Pyxus International’s subsidiary, Pyxus Agriculture Malawi (PAM), received the Golden Leaf Award in the Best ESG (environmental, social and governance) Program category for its efforts to promote responsible fuel production in Malawi. These efforts have involved the company producing charcoal in what it describes as a responsible manner using residual wood from its preexisting forest plantation. PAM is able, using its parent company’s proprietary track-and-trace platform, to ensure that any lumber used in its charcoal manufacturing is sustainably sourced and can be replenished.

    PAM is clearly well regarded in Malawi, where it was last year given a platform to describe the strides it was making in diversification and value addition. The occasion was the opening on June 23 of the 34th Congress of the Tobacco Association of Malawi Farmers’ Trust by Malawi’s then minister of agriculture, Lobin Clarke Lowe.

    According to a story in The Nyasa Times, Lowe said tobacco growers needed to diversify and add value to their produce as they had in the past by lifting yields from 1,000 kg per hectare to 1,800 kg per hectare. This had been one step in the right direction because improving productivity allowed growers to maintain their tobacco production while freeing up land for growing other crops.

    “Recent global events are teaching us that we need to intensify on value addition and stop exporting crop commodities in raw form,” he said. “My ministry is working on an ‘agricultural and general crops act,’ which will see improvements in the conduct of markets for all crops and encourage investments in production and value addition.”

    The idea of value addition in the country of production has been around for a long time, which is an indication, I think, of how easy it is to imagine but how difficult it is to bring about. The Herald newspaper reported in the middle of last year that the Zimbabwe government was spearheading the Tobacco Value Chain Transformation Plan that aimed to transform the country’s tobacco value chain into a $5 billion industry by 2025. “The plan, which was … [announced] last year [2021], focuses on increasing primary production to 300 million kg by 2025, localizing financing for small-scale producers and increasing value addition from 2 percent of total tobacco produced to more than 30 percent,” the story said.

    Overcoming Challenges

    Value addition cannot come soon enough, according to an October story in The Sunday Mail newspaper, which said that while the country’s land reform program had led to the empowerment of the tobacco sector at the primary level, it had not translated into gains further down the value chain, where higher returns were being made by leaf merchants and cigarette manufacturers.

    With one or two exceptions, indigenous merchants had failed to penetrate the market due to formidable entry barriers, including limited access to low-cost funding and a lack of factory processing capacity, the story said. And, as a result, indigenous merchants had been condemned to trading as speculators at the sales floors. They engaged in surrogate buying on behalf of the big merchants, and they were involved in the management of contract growing schemes on behalf of the large merchants.

    Returns from all these activities comprised a pittance relative to the returns indigenous players could realize in export markets as leaf merchants or cigarette manufacturers, the story said. The indigenous tobacco merchant did not have a seat at the main table and was surviving on crumbs dropped by larger merchants.

    The industry in Zimbabwe clearly has some issues that need to be addressed, though whether the empowerment of indigenous merchants, clearly a good idea in itself, would address those issues is a moot point. In a report in The Independent newspaper, the president of the Tobacco Association of Zimbabwe, George Seremwe, said tobacco growers were expecting the Tobacco Industry and Marketing Board (TIMB) to iron out problems that had affected growers last season. Some contractors had failed to pay growers last year and still had not paid them, so those contractors should not be buying tobacco this season, he said.

    And Seremwe had more serious accusations to make. “We all know that this sector is regarded as one of … [those] heavily infected with cartels,” he said. “This should end. We want sanity in the tobacco industry, and I urge TIMB to make sure that all these things negating the industry are eliminated,” he said.

    Reading some of these Zimbabwe stories is like being transported back decades to India’s export leaf production industry when stories were rife of growers not being paid during the season in which they handed over their tobacco and perhaps not being paid at all in some cases. At the same time, rumors of cartels were similarly rife. But India got its act together in large part by switching from a contract system of buying tobacco to an auction system. I have not been to India for many years, and I’m sure that the industry has its challenges, but from what I can gather, the situation there is fairer and therefore more stable than it was.

    Of course, the arrival of the auction system did not account completely for the turnaround of the industry in India, and it is obvious that other countries manage to operate production industries using contract buying. Nevertheless, it is interesting to note comments reportedly made recently to The Herald by the CEO of the Zimbabwe Tobacco Association, Rodney Ambrose, who said there was a need to restore the viability of the auction system to insulate growers from “all kinds of abuse by the merchants.”

    “We need to return to a system where farmers self-finance themselves so that the auction system remains viable,” he was reported to have said. “We cannot have a situation where contractors determine the price of inputs, the price of extension services, the prices of the final product. This leaves farmers in debt. Besides, the contract system is not healthy in terms of foreign currency generation.”

    What it comes down to, I guess, is that a strategy of value addition is all well and good, but to make it work, you need tobacco and, therefore, a content and stable grower base.

    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.