Category: Also in TR

also-in-tr.jpg

Key Takeaways

ITGA CEO Mercedes Vazquez
Tobacco growers reflect on the challenges and opportunities facing their business during the ITGA’s 2022 Americas and Africa Regional Meetings.
By Ivan Genov
In August 2022, after almost three years of Covid-19-related disruptions, the International Tobacco Growers’ Association (ITGA) organized two in-person meetings—one in Santiago de los Caballeros, Dominican Republic, for the Americas region and another in Lusaka, Zambia, for the Africa region. The much-awaited events brought together ITGA members, partners and key industry stakeholders to discuss the burning issues of the day and the appropriate ways to mitigate the negative effects of the current multi-vector crises.
Participants gathered from Argentina, Brazil, Colombia, the Dominican Republic and the U.S. as well as Malawi, Tanzania, Zambia and Zimbabwe, among other countries. Having already visited the Oriental region (Bulgaria and North Macedonia) earlier in the year, the ITGA is now preparing for its first physical annual general meeting, to take place in Castelo Branco, Portugal, since 2019.
Costs of Production—Drastic Growth in Most Markets
Although many topics were discussed during the Americas and Africa regional meetings, one stood out—the growing costs of tobacco production. In the U.S., growers continue to face challenges related to unavailability of labor and increasing costs of inputs. Local associations have reported that fertilizer costs alone exceed $1,000/ton. These factors are leading to the most expensive crop in the country’s history. In Brazil, current costs of production are also up significantly, between 27 percent and 29 percent for different tobacco types. In Zimbabwe, the growth is 25 percent against the 2021 crop. This is not an isolated event for the two regions. In Europe, the situation is no different. Tobacco growers in Verona, Italy, have revealed that energy costs have increased fivefold, gas has tripled and growers’ viability is once again in danger. Essentially, growers from nearly all ITGA member associations are afraid that if pricing does not adequately reflect the ongoing economic difficulties, the sector will be in serious long-term trouble.

Participants in ITGA’s African region meeting in Zambia (Photo: ITGA)
Leaf Updates—Production Decreases in Leading Tobacco Growing Countries
The global leaf situation was the other key point discussed by growers. Some of the biggest tobacco producing countries showed notable volume slowdowns during the year. In Brazil, the estimated 2022 crop is about 570 million kg, down from 628 million kg in 2021. The flue-cured Virginia (FCV) share of the totals is 92 percent. In the current season, around 40,000 fewer individuals were involved in the farming of the crop, or a total of just over 600,000 people. Nevertheless, pricing in the country is also up, firmly above the $3 mark for both FCV and burley.
In Argentina, the total production volumes are around 92 million kg, down from 101 million kgs in 2021. In the U.S., 2022 burley tobacco production is 2 million kg less, or 27 million kg, but dark air-cured tobacco planting area is on the rise. This is in part driven by stable consumer demand for smokeless tobacco products, limited substitutes for U.S. quality dark air-cured tobacco and greater profitability for local growers. In the U.S., popular agricultural commodity prices have sharply risen since 2020, providing viable alternatives to local growers.
In Zimbabwe, the total quantity of tobacco sold in 2022 is around 205 million kg against 212 million kg in 2021. Average pricing has improved but at a slower rate compared to production costs. The total number of growers is also down 14 percent to around 136,000 people. One of the leading burley producers in the world, Malawi produced 83 million kg of the tobacco variety, or a yearly decrease of 21 percent. In Zambia, production of FCV is up around 2 million kg to 32 million kg, but burley is down 2 million kg to 3 million kg. In Zambia, while production costs have nearly trebled, pricing has only moved up from around 7 percent to 10 percent for different tobacco types.

Delegates at the ITGA Americas region meeting in the Dominican Republic (Photo: ITGA)
Regulations—ITGA to Get Growers Back in Discussions
ITGA CEO Mercedes Vazquez focused on the World Health Organization Framework Convention on Tobacco Control (FCTC) Article 5.3, regarding industry interference, and Article 17, covering the need to promote economically viable alternatives to tobacco production to prevent possible adverse social and economic impacts on populations whose livelihoods depend on the crop. Unfortunately, Article 17 has been highly underestimated. Implementation at country level is poor or simply nonexistent. The WHO FCTC has not provided significant technical nor financial support to growers. The 15-year efforts of tobacco growers demanding inclusion at the FCTC Conferences of the Parties (COP) and how Article 5.3 was misused to prevent growers and their legitimate representatives from attending meetings was also discussed. Tobacco growers will, from now on, put high pressure to ensure their participation and will do their utmost to guarantee their legitimate representation at the future COP. The next one will take place in Panama in 2022.
Growers were briefed about incoming initiatives, including the regulatory push in the U.S. to prohibit menthol as a characterizing flavor in cigarettes and all characterizing flavors other than tobacco in cigars. As a reference, menthol accounts for around a third of the U.S. cigarette market. The U.S. administration is also considering requiring tobacco manufacturers to lower the nicotine in all cigarettes to levels that are no longer addictive. If enacted, these policies are likely to radically change the industry dynamics in one of the most profitable tobacco markets in the world. The other important regional initiative—the European Union’s €4 billion ($4 billion) Beating Cancer Plan, based on a goal of creating a tobacco-free generation by 2040, is also likely to shape up legislative changes in a variety of markets and affect the supply chain.
Other Key Discussions—from Cannabis to Climate Change
Among the other topics discussed was hemp as a potential alternative to tobacco in the U.S. However, initial euphoria led to massive overproduction and a corresponding price crash. Although small-scale projects for crops, including cannabis, are being carried out in both the Americas and Africa, the consensus opinion is that regulatory clarity is still lacking.
Some markets, including Malawi, Zimbabwe, Argentina and Colombia, among others, have taken steps in their respective local regulatory frameworks regarding cannabis production. However, any meaningful opportunities are nowhere near the opportunities provided by tobacco in these regions at the moment.
Another topic that was discussed is related to abnormal climate events impacting the crops. In Zambia alone, over the course of the past three decades, the impact of floods and droughts have been estimated to cost the country around $13.8 billion. Small-scale projects have made inroads to support farmers, not only in tobacco, but it is feared that much more trouble is coming—something that no one is adequately prepared for.
Persistent Issues and Growers’ Resilience
Tobacco growing, much like all agricultural activities, remains a difficult calling. While many businesses could afford to keep their workforces at home during the Covid-19 pandemic, growers had no other choice but to remain on the fields. The sector proved to be more resilient than many anticipated, and high-quality tobacco leaf continues to be delivered.
In the past couple of years, tobacco and nicotine consumption has remained stable. The principal category for the entire industry, cigarettes, is even growing in some of the main global markets. Growers are aware that they only take a small fraction of the total industry value while their fundamental role is being constantly undermined. For the industry to survive, prices will have to catch up with the growing costs of production.
At the same time, the war in Ukraine is putting severe pressure on key agricultural commodities. Many countries, especially in Africa, rely heavily on such imports from Russia and Ukraine. The countries that have the capacity to produce the scarce products could find easier diversification options. However, the growing inflation and general economic uncertainty will keep the international situation tense. Growers have proven their resilience, but their legitimate demands cannot be ignored anymore.
Ivan Genov is ITGA’s manager of tobacco industry analysis.

October 1, 2022
Thank You!

Photo: lucky-photo
The GTNF 2022, scheduled for Sept. 27–29 in Washington, D.C., is made possible by the generous support of these sponsors. For more information about the event, please visit gtnf.org.
TR Staff Report
22nd Century Group is a leading plant biotechnology company focused on technologies that alter the level of nicotine in tobacco plants and the level of cannabinoids in hemp/cannabis plants through genetic engineering, gene editing and modern plant breeding.
The company’s primary mission in tobacco is to reduce the harm caused by smoking by bringing our reduced-nicotine content tobacco cigarettes—containing 95 percent less nicotine than conventional cigarettes—to adult smokers in the U.S. and international markets. 22nd Century Group’s mission in hemp/cannabis is to develop and commercialize proprietary hemp/cannabis plants with valuable cannabinoid profiles and desirable agronomic traits.
VLN cigarettes are made with 22nd Century Group’s U.S. grown tobacco, specially developed to contain 95 percent less nicotine. VLN King and VLN Menthol King cigarettes are the world’s first and only combustible cigarettes to receive modified-risk tobacco product (MRTP) authorization from the U.S. Food and Drug Administration.
In granting the designation, the agency established that VLN cigarettes—which smoke, taste and smell like a conventional cigarette—“help reduce exposure to and consumption of nicotine for smokers who use them.”
With the FDA’s MRTP authorization, 22nd Century Group can now communicate the key features of VLN cigarettes to adult smokers: helps you smoke less; 95 percent less nicotine; helps reduce your nicotine consumption; and greatly reduces your nicotine consumption. These features are critically important because nicotine has long been known as the primary addictive chemical in cigarettes.
Visit the company’s website at www.xxiicentury.com.
Founded in 2009 and headquartered in Shenzhen, China, ALD Group Limited is an innovation-driven enterprise specializing in a full range of next-generation products, including electronic nicotine-delivery systems, CBD vaporizers and heated-tobacco devices.
As one of the leading vape manufacturers, ALD is capitalizing on years of R&D know-how and manufacturing experience to provide global one-stop service. With a powerful intellectual property system, high-quality assurance, fast delivery service and a strong commitment to social responsibility, ALD serves worldwide clients with the most cutting-edge products. Visit the company’s website at www.aldgroup.com.
Alliance One International (AOI) is a leading independent leaf tobacco supplier. Working with tobacco farmers in 20 countries, AOI is recognized for producing sustainable and traceable leaf tobacco. The company purchases tobacco on five continents and ships to customers globally. Through direct contracts, it is able to provide agronomic expertise and technical guidance to help growers improve the quality and yield of their crops.
AOI is dedicated to supporting efforts to address human rights concerns in the tobacco supply chain by using on-farm good agricultural practices assessments to evaluate contracted farmers’ compliance with labor practices.
Additionally, the company establishes contract terms and conditions with tobacco farmers related to issues such as forced and child labor, and it conducts social compliance due diligence throughout its tobacco-growing regions.
AOI’s SENTRI ”track-and-trace” platform provides transparency into the lifecycle of agricultural products by monitoring information and obtaining data related to the growth, cultivation, harvest, processing, formulation, testing and release of individual batches of products. By obtaining data on products at each stage of the supply chain, SENTRI permits proactive decision-making for both the company and its customers.
AOI believes that everything it does is to transform people’s lives in order to grow a better world. The company’s global ESG strategy was built off its strong sustainability legacy and achievements throughout the years. For AOI, sustainability is about balance—finding the balance between what the company does and how it does it. Balance between adding value in the communities where it operates and achieving the long-term success for its company, and doing its part to contribute to the success of the United Nations Sustainable Development Goals.
Visit the company’s website at www.aointl.com.
Altria Group’s tobacco companies have a long history of leading the industry. Today, adult tobacco consumers are increasingly seeking new options, including those that reduce risk, and their preferences are evolving rapidly. In fact, almost a third of adult smokers aged 21 and up have tried smoke-free products.
“Our vision is to responsibly lead the transition of adult smokers to a smoke-free future,” writes Altria. “Importantly, we will work within the framework that government, public health and regulatory bodies have established to communicate about reduced-harm choices. And for any tobacco consumer who wants to quit, offers access to a breadth of information from experts on how to do so successfully.
“The actions that we are taking will create a different Altria—and a different landscape that we believe will benefit today’s adult tobacco consumers, our business and the thousands we employ.
“That’s why we’re focused on moving beyond smoking by providing more potentially reduced-harm alternatives.”
Learn more at www.altria.com.
ANDS’ vision is to put the safest and most credible nicotine-delivery systems within reach of the 144 million adult smokers across the Middle East and Africa. Its mission is to deliver the best-in-class brand distribution, staging and communication while respecting local regulations—and to continuously adapt to the latest consumer trends and technologies in its field.
ANDS believes that alternative nicotine-delivery solutions should be sold and used only by adult smokers who wish to quit smoking and that minors and nonsmokers should be protected from being exposed to these products. The company has offices in the United Arab Emirates, Kuwait, Saudi Arabia, Jordan and Egypt and is expanding soon to the U.K., the U.S. and the EU.
Visit the company’s website at www.ands.com.
BAT is a leading consumer-centric, multi-category consumer goods company that provides tobacco and nicotine products to millions of adult consumers around the world.
Its purpose is to build “A Better Tomorrow.” It will achieve this by reducing the health impact of its business through a multi-category portfolio of noncombustible products tailored to meet the preferences of adult consumers.
BAT continues to build on its portfolio of reduced-risk tobacco and nicotine products alongside its traditional tobacco business—including vapor products, tobacco-heating products and modern oral products, which are collectively termed New Categories, as well as traditional oral products.
The company employs more than 52,000 people, operates in more than 175 markets and has 75 owned manufacturing facilities worldwide. In 2021, the BAT Group generated revenue of £25.7 billion ($30.24 billion) and profit from operations of over £10 billion.
Visit BAT’s website at www.bat.com.
BMJ is the world’s No. 1 partner for specialty paper and packaging materials in the cigarette industry. BMJ produces cigarette paper, plugwrap paper, base tipping paper and printed tipping paper with standard weights of 18 g to 40 g per square meter. As a printing packaging company, BMJ represents high-quality packaging utilizing both rotogravure and offset.
Visit BMJ’s website at www.bmjpaperpack.com.
Boegli-Gravures designs, develops and manufactures state-of-the-art embossing tools and solutions for an exacting worldwide clientele. The company’s combination of artistic vision and engineering excellence has brought it recognition as a world leader in high-precision embossing and as an original equipment manufacturer supplier. The secret of Boegli-Gravures’ success lies in the company’s vision and passion for innovation.
Visit www.boegli.ch for more information.
Broughton is an independent global contract research organization (CRO) offering fully integrated end-to-end services to deliver U.S. premarket tobacco product applications, EU medicinal product applications and EU Tobacco Products Directive notifications for next-generation nicotine products including EVPs, MOPs and heated-tobacco products.
Its in-house laboratories are equipped with high-end analytical instruments to evaluate the chemistry of next-generation nicotine products and facilitate batch release testing ensuring product integrity. The company continues to invest in new science and innovations aligned with global regulatory requirements, and having been granted a U.K. controlled drug license, it also offers a range of services for medicinal cannabis and CBD.
By partnering with Broughton, clients will know they have access to some of the most experienced consultants in the world with deep industry knowledge combined with regulatory-compliant CRO laboratory facilities. Broughton is committed to supporting clients in the development of safer nicotine products for a smoke-free future.
Visit the company’s website at www.broughton-group.com.
Chemular employs a world-class team of tobacco-specific toxicologists, chemists and clinical trial experts in addition to project managers and other various subject matter experts to assist customers with their regulatory needs in the tobacco industry. Chemular offers complete or partial assistance with premarket tobacco product application submissions, EU Tobacco Product Directive fillings, Prevent All Cigarette Trafficking Act compliance, SDS sheet creations, regulatory consulting advice and more.
Founded in 2015 by experts in tobacco, pharma and U.S. Food and Drug Administration compliance, Chemular’s core team combines 50-plus years of expertise in tobacco, medical, pharma, food and cosmetics and has a successful track history with the FDA. Although focused on North America, the company has established a global footprint, including Europe and Asia, enabling it to support clients at all levels, including ingredients, design, software, manufacturing and distribution.
Visit the company’s website at www.chemular.com.
EAS Consulting Group is a global leader in regulatory solutions for industries regulated by the U.S. Food and Drug Administration, the U.S. Department of Agriculture and other related federal and state agencies. The EAS mission is to provide quality regulatory advice and service and to represent the best interests of its clients in an ethical, timely and cost-efficient manner.
The company’s network of over 180 independent consultants enables EAS to provide comprehensive consulting, training and auditing services, ensuring proactive regulatory compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp and CBD companies.
EAS Consulting Group is part of the Certified family of companies, which recently merged with Food Safety Net Services. The merger has created a leading U.S. testing and regulatory consulting platform.
Visit EAS Consulting Group’s website at https://easconsultinggroup.com.
FEELM is a high-end atomization technology brand belonging to Smoore, a world leader in atomization. Focused on cutting-edge atomization technology research, FEELM specializes in the development and manufacturing of high-quality atomization devices driven by the FEELM ceramic coil.
As the research engine of the global electronic atomization industry, FEELM delivers premium experience. Ever since the successful development of the FEELM black ceramic coil in 2016, FEELM has a significant impact on the research and manufacturing of closed vaping products, changing the whole competitive landscape.
FEELM won a Golden Leaf Award at GTNF 2018, the China Patent Excellence Award and the iF Design Award 2020. Vaping devices loaded with the FEELM atomizer have been exported to Europe, America, East Asia, Africa, Oceania and many other countries and regions. The company’s accumulated sales volume has surpassed 3 billion pieces, and its products continue to gain popularity among consumers worldwide.
Visit the company’s website at www.feelmtech.com.
The Foundation for a Smoke-Free World is an independent U.S. nonprofit grantmaking organization with the purpose of improving global health by ending smoking in this generation. The foundation funds research (and engages in direct charitable activities) that is nonduplicative and novel, focusing on scientific and regulatory gaps in furtherance of the purposes for which the foundation was formed. The foundation supports its mission through three broad categories of work: health and science research, agricultural diversification and industry transformation.
Funded by annual gifts from Philip Morris International Global Services, the foundation is independent from PMI and operates in a manner that ensures its independence from the influence of any commercial entity. Under the foundation’s Pledge Agreement with PMI and bylaws, PMI and the tobacco industry are precluded from having any control or influence over how the foundation spends its funds or focuses its activities.
For more information, please visit www.smokefreeworld.org.
As parent company of VOOPOO, ICCPP was established on Feb. 10, 2014, and is headquartered in Shenzhen, China, with branches in the U.S., the UK, France and many other places. The company’s vaping products and solutions have been applied in more than 70 countries, covering 100,000 offline outlets and serving more than 36 million consumers.
With electronic atomization technology development and related products as the core, ICCPP built a full industry chain ecosystem covering all aspects of atomization technology. In September 2021, ICCPP released its groundbreaking Gene Tree microcrystalline ceramic cores, adopting the powder-free concept and innovatively using new environmentally friendly mineral materials to reshape the microstructure of the grain boundary and improve the toughness of the ceramic.
Visit the company’s website at www.iccpp.com
Innokin was founded in 2011 with the goal of combining innovation, design and the highest standards of quality to create the best electronic cigarettes and advanced personal vaporizers in the world. Partnering with Aquios Labs U.K., Innokin made water-based vaping possible.
The company’s vision is to help, inspire and provide the best alternatives to those who want to live smoke-free. Its mission is to create effective alternatives to cigarettes through continuous research and development. The company wants to assist in reducing the world’s dependency on cigarettes and encourage others to find alternatives.
Innokin’s research and development center has been recognized as the leading vape technology center by local and international authorities. The company has won major international vaping industry awards from Ecigclick, Vaping360, The Vaping Post and several professional vape shows, among other institutions.
Innokin products are available in more than 80 countries, and the company’s products have changed more than 10 million lives.
Visit the company’s website at www.innokin.com.
Imperial Brands is a global consumer organization and the world’s fourth-largest international tobacco company. Its products include JPS, West and Davidoff cigarettes, Rizla rolling papers and the vapor brand blu. Imperial Brands operates in 120 markets, including the U.S. where its ITG Brands subsidiary offers a broad portfolio of cigarette and mass market cigar brands, including Winston and Backwoods.
Driven by insights and data, Imperial seeks to meet the expectations of adult smokers by putting the consumer at the center of everything it does. It is also refining its ways of working and its culture to foster a strong challenger mindset among its 27,000 employees worldwide.
Imperial is focused on leveraging its tobacco assets in its five priority markets and on building a successful and sustainable next-generation product (NGP) business. It has refocused its NGP strategy behind heated-tobacco and oral nicotine opportunities in Europe and in selective market opportunities in vapor.
Visit the company’s website at www.imperialbrandsplc.com.
Juul Labs’ mission is to transition the world’s billion adult smokers away from combustible cigarettes, eliminate their use and combat underage usage of its products. The company believes that vapor products can offer adult smokers an alternative to combustible cigarettes and, in so doing, reduce the harm associated with tobacco.
Nicotine is addictive and can potentially be harmful. Juul Labs believes that it would be best if no one used any nicotine product, that anyone who smokes should quit and that adult smokers who have not successfully quit should completely switch to potentially less harmful alternative nicotine products.
Juul Labs does not want any non-nicotine users, especially those underage, to try its products, as they exist only to transition adult smokers away from combustible cigarettes. Juul products are not intended to be used for smoking cessation or other therapeutic purposes.
Visit the company’s website at www.juullabs.com.
Kure currently operates over 130 retail locations across the United States and several more in Europe. It is a recognized leader in the vape industry. Kure’s e-liquid line and bar offers custom, bespoke liquids made with the highest quality ingredients to cater to the tastes of every guest. The company’s tailored in-store service is designed to provide the best support possible to transition from smoking to vaping. The company’s goal is to offer the latest and greatest hardware to ensure its guests receive only the best.
“Kure is proud to have submitted our thorough PMTA applications to the FDA,” the company writes. “These applications detail the high standards we adhere to in all aspects of our business. Moreover, we take our responsibility to our guests and the community we serve seriously and have thus designed and implemented measures to ensure our products never end up in the hands of minors. Kure uses tools such as electronic point-of-service age verification software, secret shopper programs and extensive employee training programs to keep this commitment.”
Visit Kure’s website at www.kurevapes.com.
Labstat is a leading nicotine-containing product testing laboratory specializing in analytical chemistry, in-vitro toxicology, microbiology and method development. The company serves clients from all over the world and sets the standard for quality of science, quality of service and the fastest turnaround times in the industry. This leadership role has now extended to cannabis.
Labstat has been testing nicotine-containing products since 1976. During this period, the company’s scientific personnel have acquired extensive technical experience spanning the entire product life cycle.
In addition to product stability testing, Labstat offers regulatory testing capabilities, quality management and regulatory consulting, among other services.
Visit the company’s website at https://labstat.com.
McKinney Regulatory Science Advisors is an experienced team of internationally recognized scientific, regulatory and business experts that deliver regulatory solutions that position clients for short-term and long-term success. Informed by years of direct experience working with regulatory agencies, its team of regulatory strategists and scientific experts guide clients through regulatory strategy development, product assessment and testing, regulatory application filing and response and postmarket reporting compliance.
Visit the company’s website at www.McKinneyRSA.com.
Philip Morris International is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector.
The company’s current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor and oral nicotine products, which are sold in markets outside the U.S.
Since 2008, PMI has invested more than $9 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes.
This includes the building of world-class scientific assessment capabilities, notably in the areas of preclinical systems toxicology and clinical and behavioral research as well as postmarket studies.
The U.S. Food and Drug Administration has authorized the marketing of versions of PMI’s IQOS Platform 1 devices and consumables as modified-risk tobacco products, finding that exposure modification orders for these products are appropriate to promote the public health.
As of June 30, 2022, excluding Russia and Ukraine, PMI’s smoke-free products were available for sale in 70 markets, and PMI estimates that approximately 13.2 million adults around the world had already switched to IQOS and stopped smoking.
With a strong foundation and significant expertise in life sciences, in February 2021, PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet consumer and patient needs.
For more information, please visit www.pmi.com and www.pmiscience.com.
Reynolds American Inc. (RAI) is a wholly owned subsidiary of the BAT Group and the U.S. parent company of R.J. Reynolds Tobacco Co., Santa Fe Natural Tobacco Co., American Snuff Co., R.J. Reynolds Vapor Co. and Modoral Brands.
RAI’s vision is to build “A Better Tomorrow” by reducing the health impact of its business through offering a greater choice of innovative products for adult tobacco consumers.
To learn more about RAI and its operating companies, please visit www.reynoldsamerican.com.
Global tobacco and nicotine companies are transforming rapidly. Often, the narrative around the why, what and how of such transformations may not be clearly articulated internally in the business as well as to external stakeholders.
Addressing these gaps within tobacco businesses and with external stakeholders requires a breadth and depth of knowledge and experience. The Global Health Consortium team offers bespoke 360-degree insights and advisory consultancy to enable industry leaders to embrace and implement tobacco harm reduction across multiple dimensions: consumer, science, policy, strategy and regulations.
Founded in 2006, SMOORE is a global leader in atomization technology solutions, covering reduced-risk products, medical, pharmaceutical and beauty atomization technologies.
With interdisciplinary atomization research and a diverse product portfolio, SMOORE is committed to becoming an advanced platform, aspiring to make life better.
Visit the company’s website at https://en.smooreholdings.com.
SWM is a leading global provider of highly engineered papers, films, nets and nonwovens for a variety of applications and industries. As an expert in manufacturing materials made from fibers, resin and polymers, the company provides critical components that enhance the performance of their end products.
The company’s engineered papers group has been serving the tobacco industry for decades with highly technical papers and reconstituted tobacco leaf. SWM continues to innovate, with a special focus on heat-not-burn products, using its advanced paper and reconstitution technologies to meet the demands of this emerging product category. SWM’s versatility and portfolio are designed to deliver satisfaction while meeting stringent specifications.
In recent years, SWM has diversified to include films, nets and nonwovens offered through its advanced materials and structures (AMS) segment. The AMS platform serves a variety of industries with the same focus on technical expertise, operational excellence and customer collaboration that have long been SWM’s hallmark traits.
SWM and its subsidiaries manufacture on four continents, conduct business in over 90 countries and employ approximately 5,000 people worldwide.
Visit the company’s website at www.swmintl.com.
Founded in 1975, Tobacco Technology Inc. (TTI) exclusively develops and manufactures customized flavors, including casings, for the global tobacco industry: cigarettes, cigars, water pipe, snuff, snus, chew, kretek, roll-your-own, pipe, hemp and dissolvables. TTI also offers consulting services to facilitate flavor, process and product development.
E-LiquiTech (ELT), a TTI subsidiary established in 2016, is dedicated to the development and manufacturing of the highest quality e-liquids in addition to offering both bottle and cartomizer filling services. ELT is also the exclusive global distributor to the tobacco industry for Zanoprima, a research-driven, innovation-led life sciences company, offering SyNic high-purity synthetic (S)-nicotine in pure, bitartrate and polacrilex resin form.
TTI Flavors, TTI’s manufacturing facility in Assisi, Italy, produces TTI flavors and casings to offer faster delivery to the company’s customers in Europe, the Middle East and Africa.
In 2022, TTI established Emerald Green Technology. With the rise of the emergent cannabinoid marketplace, Emerald Green Technology (EGT) was born as a natural extension of TTI’s family of flavor companies. It offers a vast array of cannabinoid flavor profiles for CBD and hemp products. Infinite cannabinoid possibilities—if you can imagine it, EGT can create it!
Visit TTI’s website at www.tobaccotech.com.
Turning Point Brands continues to grow and evolve to meet changing consumer preferences. Along with a tobacco portfolio that features iconic, historic brands, such as Zig-Zag and Stoker’s, the company has expanded into adjacent segments utilizing its innovative brands to target alternative markets. A highly effective sales force and distribution network ensure that consumers, retailers, partners and shareholders benefit from these products.
Visit www.turningpointbrands.com for more information.
For over 100 years, Universal Corp. has been finding innovative solutions to serve its customers and meet their agri-product needs. The company built a global presence, solidified long-term relationships with customers and suppliers, adapted to changing agricultural practices, embraced state-of-the-art technology and emerged as the recognized industry leader.
Today, Universal is a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents, that sources and processes leaf tobacco and plant-based ingredients. The company strives to be the supplier of choice for its customers by leveraging its farmer base, its commitment to a sustainable supply chain and its ability to provide high-quality, customized, traceable, value-added agri-products essential for its customers’ requirements.
Tobacco has been Universal’s principal focus since its founding in 1918, and the company is the leading global leaf tobacco supplier. Through its plant-based ingredients platform, it provides a variety of value-added manufacturing processes to produce high-quality, specialty vegetable-based and fruit-based ingredients as well as botanical extracts and flavorings for the food and beverage end markets.
Universal Corp. has a long history of operating with integrity, honesty and a focus on quality. The company is a vital link in the leaf tobacco supply chain, providing expertise in working with large numbers of farmers, efficiently selling various qualities of leaf to a broad global customer base, adapting to meet evolving customer needs and delivering products that meet stringent quality and regulatory specifications. Going forward, Universal will build on its history by seeking opportunities in both tobacco and plant-based ingredients to leverage its assets and expertise. It will continue its commitment to leadership in setting industry standards, operating with transparency, providing products that are responsibly sourced and investing in and strengthening the communities where the company operates.
Visit the company’s website at www.universalcorp.com.
U.K.-based Zanoprima Lifesciences was founded in 2014 by leading professionals and scientists from the pharma and life sciences sectors determined to create a cleaner nicotine with full traceability to help reduce and ultimately eliminate the harmful effects of tobacco on the environment, society and health.
In pursuit of this objective, Zanoprima patented a cost-effective enzymatic process to manufacture an ultra-high-purity synthetic nicotine ((S)-nicotine) devoid of many of the residual impurities in tobacco-derived nicotine. Furthermore, Zanoprima’s synthetic nicotine is odorless and tasteless for use in the vaping sector.
Zanoprima’s nicotine is produced using “green chemistry” principles—catalytic, renewable resources and water as solvent. In addition, Zanoprima’s groundbreaking technology creates enormous environmental and social benefits fulfilling many of the World Health Organization’s environmental, social and governance goals in the area of tobacco cultivation leading toward a tobacco-free world.
By applying Zanoprima’s cutting-edge expertise and knowhow, its team has developed a suite of products using its ultra-high-purity (S)-nicotine, including sodium-free snus, protonated (S)-nicotine e-liquid for e-cigarettes, sodium-free next-generation gum and lozenges, transdermal patches and heat-not-burn products as potentially less harmful products than those currently on the market.
Visit the company’s website at www.zanoprima.com.
Founded in January 2016 and headquartered in Shenzhen, China, Zinwi Bio-Tech Co. is a high-tech company that develops, produces and sells e-liquids. Zinwi Bio-Tech’s products have been exported to dozens of countries, including markets in Europe, America, the Middle East and Southeast Asia.
The company’s solutions, especially its nicotine salt technologies, have been well received by consumers worldwide. Zinwi Bio-Tech has been recognized by a number of domestic and foreign authoritative organizations with certifications such as ISO 9001 and CNAS.
In 2021, Zinwi inaugurated a GMP workshop. With its high-quality products and services, the company has won the recognition of more than 300 brands around the world and has established long-term strategic cooperative relations with many international and domestic brands.
Visit the company’s website at www.zinwi.com.
September 6, 2022
On a Mission

Photos: EUBAM
The EUBAM supports Moldova and Ukraine in their fight against illicit cigarette trade.
By Stefanie Rossel
In June, Ukraine and Moldova became candidates for accession to the European Union. Driven primarily by the huge difference in price between a pack of cigarettes in these countries on the one hand and the EU member states immediately to their west on the other, both Moldova and Ukraine are among the leading origin and transit countries for illicit cigarettes trafficked into the EU market. According to the European Commission, EU member states miss an estimated €10 billion ($10.57 billion) in tax revenues every year due to the smuggling of both genuine and counterfeit cigarettes. This is equivalent to approximately 10 percent of the community budget.
To harmonize border control, customs and trade standards of the two countries with those of the EU member states, the European Union Border Assistance Mission to Moldova and Ukraine (EUBAM) was set up in 2005. Its aims are to ensure full implementation of integrated border management practices at the Moldova-Ukraine border, assist Moldovan and Ukrainian authorities to combat cross-border crime and contribute to the peaceful settlement of the Transnistrian conflict by supporting the development of Transnistria-related confidence-building measures and approximation of legislation and procedures in customs, trade, transport and trans-boundary management. Transnistria is a breakaway state that is internationally recognized as part of Moldova.
Cigarette smuggling, which includes both duty-nonpaid illicit whites and counterfeit products, is a major threat in the EUBAM’s area of operations, particularly at the central, Transnistrian segment of the 1,222 km border between the two countries. There are 67 border crossing points along the Moldovan-Ukrainian border, including 25 at the central part. Cigarette trafficking in the region comes in various forms, ranging from cross-border small-scale smuggling of packs hidden in vehicles to large-scale shipments being secretly transported at night. Other smugglers exploit legal loopholes.

Slawomir Pichor
Platform Against Contraband
To combat illicit cigarette trade more efficiently, the EUBAM in 2010 set up the Task Force Tobacco (TFT). The mission assists both Moldova and Ukraine in developing comprehensive anti-illicit strategies. At the practical level, the EUBAM helps its partner services to establish direct contact with their EU counterparts. It supports the law enforcement agencies of Ukraine and Moldova in their cigarette smuggling investigations, analysis and enforcement activities. This includes joint border control operations. Since the TFT started, the partner services have gradually developed the knowledge and expertise to conduct these operations through their own initiatives and in close cooperation with EU member states.
In addition, the EUBAM supports partners from the two countries in combatting tobacco smuggling by assisting them with the coordination of risk management decisions, targeting risky shipments of cigarettes as well as joint investigations and border operations. A recent success of the TFT was joint border control operation “Scorpion II,” during which Ukrainian, Moldovan and Romanian law enforcement agencies in cooperation with the EUBAM and OLAF, the European anti-fraud office, seized 8.5 million cigarettes between August and October 2021.
General Slawomir Pichor, head of the EUBAM and chairman of the TFT, says the platform has become a highly effective tool. “Most importantly, the Task Force Tobacco has been initiating and suggesting collaboration on certain proposals for tightening the legislative framework. Law enforcement action is not enough to effectively combat illicit trade; you also have to make interventions to close the legal loopholes to set signs. The platform has been kind of an early warning system. It is also elaborating substantial proposals for making legislative changes, which has been very effective in the long term as the mission is working to strengthen cooperation between Moldova and Ukraine law enforcement agencies and neighboring European member states, which we brought to this forum. It’s actually those countries that are affected by smuggling from this region, so it was important they could share experience and exchange information with Moldova and Ukraine.”

Moldova Joins the WHO Protocol
Internationally recognized as part of Moldova, Transnistria is a special case in the fight against illicit tobacco. The breakaway republic controls most of the narrow strip of land between the Dniester River and the Moldovan-Ukrainian border as well as some land on the other side of the river’s bank. Although unrecognized as independent, the region has its own government, parliament, military, police, postal system, currency and vehicle registration system. Over the years, the Transnistrian region has become a gray economic and security area 190 km from the EU’s external borders that attracts all sorts of cross-border crime. The illicit tobacco trade is no exception. According to the EUBAM’s observations, between 2012 and 2014, the delivery of tobacco products to the Transnistrian region vastly exceeded the potential demand on the local market, which meant that those products were destined for the much larger EU market.
“There is no presence and no control by the Moldovan enforcement authorities in the Transnistrian region, which means a lack of transparency and essential information, which is very important in effectively fighting illicit tobacco trade,” explains Pichor. “The mission was helping Ukraine and Moldova to monitor this tobacco trade very closely. In May 2015, Ukraine closed all border crossing points at the central Transnistrian segment of the border for excisable goods, including tobacco and cigarettes. Even though tobacco supply was cut off from the Ukrainian side, smugglers in the Transnistrian region misused other mechanisms, such as duty-free shops. In 2020 alone, 1.7 billion cigarettes were imported to the region with roughly 480,000 residents. EUBAM was raising this issue at different levels, including TFT, and in December 2020, the Moldovan side took proper actions at the policy level by intervention to the regulatory framework.”
In March 2022, the Moldovan Parliament decided to accede to the World Health Orgnization Framework Convention on Tobacco Control’s Protocol to Eliminate Illicit Trade in Tobacco Products. “This protocol is introducing elements which will cover the existing gaps in Moldovan legislation, so this is a very good step,” comments Pichor. “This protocol provides a very good toolbox for the effective fight against the clandestine factories. It also adds more surveillance and monitoring of cigarette production, from growing tobacco till the final finished product. It will also require amendments in the Moldovan legislation to introduce this tool set as well to effectively use it, and our mission has been advocating for its adoption. Overall, it will contribute to the effective fight against illicit tobacco trade.”

New Smugglers’ Routes
The Covid pandemic markedly impacted the nature of cigarette trafficking in the region, according to Pichor. “Covid-19 influenced the modus operandi for cigarette smuggling significantly. With borders closed and regular flights and shuttles canceled, small-scale smuggling significantly decreased. Although, large-scale trafficking wasn’t influenced because cargo transportation is used in this case. In general, during this period, there have been fewer seizures, and a growing number of illegal cigarette factories was set up on EU territory.”
The next change came with Russia’s war against Ukraine. Not only is Ukraine a source of illicit cigarette production, but it is also a transit hub for cigarette smuggling. Three important seaport cities, among them Odesa and Chornomorsk, until recently Ukraine’s largest maritime gateways for imports and exports, have been blocked by the Russians. “This was the route for smuggling the cigarettes from Asia and the Middle East,” says Pichor. “Belarusian cigarettes, also a significant part of illicit tobacco trade, went via Ukraine too. Now that this route is closed, we can expect other channels to replace it. At the same time, there will now be more pressure from illicit production inside EU member states. With no internal borders in the community, the risk of detection is much lower.”
Even though the EUBAM had to shift its priorities following Russia’s invasion of Ukraine, the fight against illicit tobacco trade continues, according to Pichor. “Currently, there is immense pressure on Ukrainian authorities to get agricultural commodities out of the country, and our role is now to facilitate this,” he says. “As for the fight against illicit tobacco, we cooperate with the Bureau of Economic Security of Ukraine, which is very active in this sphere. Established in 2021 as an umbrella body to investigate all kinds of economic crimes, the bureau serves as a platform for constructive dialog between the state and the business community. As you see, we have not abandoned combatting cigarette trafficking and will continue our efforts, which we are strengthening even more with the help of recently recruited profile experts.”
At the beginning of the war, the EUBAM relocated its Odesa headquarters to Chisinau and deployed some of its staff to assist in managing the influx of refugees into Moldova. To support the mission in this task, the EU made €15 million available for additional staff, equipment and training.
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.

September 1, 2022
The Perfect Match?

Photo: Swedish Match
A takeover of Swedish Match would give Philip Morris International a comprehensive portfolio of reduced-risk products.
By Stefanie Rossel
Philip Morris International may take a giant step this year toward its goal of becoming a smoke-free company. In May, the multinational offered $16 billion to acquire Swedish Match, a Stockholm-based maker of oral nicotine products known for brands such as Zyn, General, Oliver Twist and Longhorn. If accepted by shareholders, PMI CEO Jacek Olczak said in a webcast on May 11, the deal would greatly accelerate the fulfilment of PMI’s smoke-free ambitions and position it to lead that transformation in the industry. PMI aims to reach more than 50 percent smoke-free net revenues by 2025 as compared to 30 percent in the first quarter of 2022 and essentially zero in 2015, when the company launched its IQOS heated-tobacco product.
The takeover has the potential to greatly benefit both companies. Swedish Match’s large portfolio of pouch and snus brands is largely complementary to that of PMI, and company cultures and organizations of both businesses are a fit, Olczak emphasized. The Swedish manufacturer shares PMI’s vision of working toward a smoke-free future without cigarettes; more than two-thirds of its revenues and around three-quarters of operating profits are from smoke-free products.
Around one quarter of sales are generated by Swedish Match’s cigar business, which the company in 2021 planned to separate via a spin-off to shareholders and a subsequent listing on a U.S. securities exchange. However, in mid-March this year, Swedish Match’s board of directors decided to suspend the preparations for the contemplated spinoff until further notice.
If Swedish Match’s shareholders approve the takeover, it would give PMI a comprehensive global reduced-risk products portfolio with leading positions in heated tobacco and nicotine pouches, the fastest-growing category of oral nicotine, with potential for accelerated international expansion, Olczak explained. Together with PMI’s emerging presence in the vape segment through its Veev product, the combined companies would have a strong position with brands across all three major smoke-free platforms, Olczak pointed out. The merger would add more than 3 million adult users of smoke-free products to PMI’s roughly 18 million IQOS users.
Strong in the U.S. Smoke-Free Market
The Swedish company is also well established in geographies where PMI would like to expand its smoke-free products. Of Swedish Match’s sales, more than 64 percent come from the U.S. and 29 percent come from Scandinavia.
An important aspect of the deal is Swedish Match’s strong position in the lucrative U.S. market. Excluding China, the U.S. nicotine industry is the world’s largest by value, with retail value accounting for around 30 percent of the international market. Around 34 million Americans smoke.
In smoke-free products, the U.S. alone generates more than half the retail value of all other countries bar China combined. In 2021, the U.S. smoke-free market accounted for about 23 percent of the country’s total nicotine volume, and its retail value continues to grow strongly at a compound annual growth rate (CAGR) of around 13 percent since 2018, according to Olczak. The purchase of Swedish Match would increase PMI’s directly addressable market for smoke-free products in the U.S. by approximately 60 percent.
Of the U.S. $1 billion nicotine pouches category, Swedish Match holds a 64 percent volume share with its fast-growing Zyn brand. The product’s extraordinary performance catalyzed the category in the U.S. in 2021, leading to an expansion of volumes by approximately 80 percent last year alone, Olczak said. With more than 500 salespeople, access to over 150,000 points of sale and manufacturing and support functions, Swedish Match has a substantial platform in the U.S. In 2019, eight products sold under Swedish Match’s General snus brand received the first modified-risk tobacco product (MRTP) orders from the Food and Drug Administration.
To date, PMI has made only limited progress in the U.S.’ growing smoke-free market. In the U.S. and elsewhere, the company has zero or negligible presence in the nicotine pouch category, according to Olczak. And while IQOS, too, has received MRTP orders, PMI had to halt the product’s U.S. rollout in November 2021, when the International Trade Commission (ITC) ruled that the heat-not-burn device infringed on two BAT patents.
PMI had intended to commercialize IQOS under an exclusive licensing agreement with Altria Group’s PMI USA subsidiary. Following the ruling, PMI USA was forced to remove the product from the market.
In February, during the company’s full-year 2021 earnings call, Altria CEO Billy Gifford said that while he didn’t expect to have access to IQOS devices or Marlboro Heat Sticks in 2022, his company remained focused on returning IQOS to the U.S. market as soon as possible. According to the ITC ruling, PMI can either change IQOS’ design, which would require it go through the cumbersome FDA authorization process again, or manufacture the product domestically. The company has opted for the latter, Olczak revealed in an interview, but he didn’t disclose where in the U.S. production will take place. However, the company said it plans to start selling IQOS again in the first half of 2023.
Leading in Modern Oral Nicotine
The global nicotine pouch market is valued at around $2 billion, having grown by approximately 65 percent in 2021. Here, too, Swedish Match leads the category with a volume share of about 40 percent. PMI anticipates the modern oral nicotine category’s retail value to grow by a CAGR of 30 percent to 40 percent over the next five years, with the rest of Europe overtaking fast-growing Scandinavia in the next three years. PMI views low-income and middle-income countries as attractive targets for nicotine pouches, given the products’ simplicity, affordability and ease of use.
This is where the advantages for Swedish Match from a potential deal would come in: In addition to benefiting from access to the resources of a much larger corporation, IQOS’ extensive international commercial infrastructure and PMI’s complimentary development capabilities would provide Swedish Match with a significant international opportunity for Zyn. PMI is committed to invest in the nicotine pouch category, according to Olczak. Leveraging the strengths of the companies’ respective nicotine offerings could translate into great potential for PMI’s position in Scandinavia.
Whether the deal will be completed remains to be seen. Swedish Match’s board of directors accepted PMI’s offer and recommended to do the same to its shareholders. Under Swedish law, some 90 percent of shareholders need to agree to the deal for it to proceed. Several investors have objected to the takeover, claiming it was unclear whether the offer price sufficiently reflected the long-term value of Swedish Match. Swedish Match is a fast-growing and profitable company, experiencing a CAGR of more than 17 percent, excluding currency fluctuations between 2018 and 2021, and increasing its cash from operating activities at a CAGR of 20 percent during the same period, from $426 million in 2018 to $738 million in 2021.
In July, U.S. activist investor Elliott was rumored to be building a stake in Swedish Match to stop the deal, according to Bloomberg. Opposing shareholders can have a significant impact: In 2021, pharma company Astra Zeneca blocked a $7.6 billion takeover of Swedish player Orphan Biovitrum by withholding its 8 percent stake in the company from a buyout offer.
In the case of Swedish Match, things may turn out differently. Mads Rosendal, an analyst at Danske Bank, wrote in a research note that it was unlikely that Elliot will succeed in building a large enough stake in Swedish Match to thwart the deal on its own.
Of course, the deal will take effect only after the last signature has been placed. Swedish Match shareholders have until Oct. 21, 2022, to accept the offer.
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.

September 1, 2022
How to Save 100 Million Lives
Photo: Smoore
Innovation and creative destruction in the evolving tobacco market will render cigarettes obsolete and end the burden of smoking-related disease—if we let it.
By Clive Bates
Let’s play strategy consultants. Imagine an international public health agency has hired us. We are tasked to advise on reducing the global burden of noncommunicable disease associated with tobacco and nicotine use and how to do it as deeply and rapidly as possible. Our assignment is to propose a clear-eyed, unemotional and results-driven approach to addressing this problem. What would we do?
First, we define, limit and quantify the problem. According to the Global Burden of Disease study published in The Lancet, in 2019, around 1.1 billion people smoked 7.4 trillion cigarettes. Worldwide, 7.7 million died from smoking-related disease and 200 million disability-adjusted life-years were lost. On top of the burden of mortality, there are additional economic and welfare harms from smoking. Then there are further harms caused by the policy response, such as regressive taxes, stigmatizing campaigns and restrictions on smoking. These policies might be justified to reduce disease and protect nonsmokers, but they add to the welfare burden for people who continue to smoke. The problem is overwhelmingly caused by smoking tobacco—inhaling products of tobacco combustion—and not directly by the use of the drug nicotine.
Second, we determine why this problem persists. If it causes so much harm, surely it is just a matter of informing people? This seemed like the obvious answer to the anti-smoking pioneers of the 1960s onward. Doctors would educate people on the risks, and people who smoke would reassess their interests and would stop smoking or never start. Some analysts suggest that this could be the only anti-smoking strategy that has ever worked, but it has been painfully slow. Our working theory is that the underlying demand for nicotine is robust and potentially dependence forming. We determine that for some people, nicotine use may be rational or appealing for its mood control, cognitive advantages and pleasurable sensations. We note the long delay between the positive reinforcing experience of smoking and the most severe health effects and how people tend to devalue or discount negative impacts far in the future compared to gratification today. But if we can separate the experience of using nicotine from the harms of using it by smoking, maybe there is a way around this.
Third, we ask what is wrong with what we are already doing. Maybe it is a matter of letting evidence-based tobacco policy work through multiple countries and generations. Yet, despite 50 years of concerted action, we still have about one in seven adults smoking in the United Kingdom and the United States and about one in four in the European Union. Now that 80 percent of the world’s smokers are in low-income and middle-income countries, we ask if the intense and sustained regulatory, fiscal and campaign focus necessary to drive down smoking and nicotine use are viable and sustainable. Or would the process be slow and incremental as it has been in Europe and North America? We look for signs that the World Health Organization Framework Convention on Tobacco Control (FCTC) has been working but find surprisingly little credible evaluation. The available analysis, published in the BMJ, found no evidence “to indicate that global progress in reducing cigarette consumption has been accelerated by the FCTC treaty mechanism.”
Fourth, can we go further with the established measures? The problem with pulling harder on the existing levers is that we may start to run up against barriers of public consent and political acceptability (politicians are only willing to be tough on voters up to a point), or we start to see escalating unintended secondary consequences. For example, high tobacco taxes are regressive and likely to trigger black markets or adverse behavioral responses. The public might see smoking bans in workplaces as acceptable to protect workers, but would they feel the same way about banning smoking outdoors? We might push harder with enforcement, but the danger is that the measures start to look illiberal, excessive or unfair. What about escalating and just banning cigarettes or forcing manufacturers to remove the nicotine? After all, if that is the problem, why not take the most direct way to address it? Again, we run into difficulties of public consent, political appetite and perverse consequences that are all too foreseeable given the experience with drug and alcohol prohibitions.
Fifth, what innovative options are available to expedite progress? Here, there really is a potential game-changer. If the underlying demand is for the experience of using nicotine and the harm is caused by the use of nicotine by smoking and inhaling products of combustion, then there is an obvious path forward. Our key strategy advice is to do everything possible to refocus the nicotine market from the dangerous smoking products to the much safer smoke-free products, for which estimates suggest there are already more than 100 million users. There are two reasons to adopt this strategy. First, it provides a relatively simple way for existing smokers to switch to products that eliminate nearly all the additional risks of continued smoking. When someone who smokes switches, they do not have to give up the nicotine, a sensory experience, or much of the behavioral ritual. Second, these products provide low-risk alternatives available to people who wish to use nicotine in the future. This second function is essential because we do not believe it will be possible to stop future nicotine use any more than we could wind down the use of caffeine, alcohol or cannabis. To the extent we have managed to reduce demand for nicotine, it is mainly on the back of messaging and measures to address the harm caused by smoking. But it is precisely that harm we are trying to eliminate. We need to rethink our relationship with nicotine.
Sixth, how could we expedite progress? Here, we may rely on what the economist Joseph Schumpeter termed a “gale of creative destruction” or the “process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” So, should we just wait for this process to run its course? Of course not! Four critical contextual pressures will drive the inevitable creative destruction of the cigarette market. The right strategy for government, civil society and the tobacco industry is to shape them to expedite the obsolescence of smoking to create a viable nicotine market with acceptable risks:
The information environment – what do people believe about smoking and the alternatives? What do trusted professionals and organizations say and advise? What do newspapers report, and how reliably do scientists communicate their findings in scientific papers and press releases? A significant tobacco control effort has been made to engineer misperceptions about relative risk and to dissuade smokers who would switch from making that move. The information environment is highly contaminated with harmful misinformation.
The regulatory environment – regulations can encourage consumers to move from high-risk to low-risk products—an approach we know as “risk-proportionate regulation.” However, the regulatory landscape for cigarette alternatives is filling up with anti-proportionate regulation: prohibitions and stealth prohibitions, including outright bans, bans on flavors, limits on nicotine levels, advertising bans and so on. Again, the current trends protect the cigarette trade.
The fiscal environment – the tax system can create incentives for consumers, retailers and manufacturers to favor low-risk smoke-free alternatives over high-risk cigarettes. But we now see persistent calls to raise taxes on vaping and heated-tobacco products to equivalent levels to cigarettes. Again, the direction is anti-proportionate when it comes to taxation.
The innovation environment – how favorable are the market conditions to the emergence of improved products and new entrant firms? Is the market competitive, or does oligopoly form a barrier to innovation? Does it require massive regulatory costs and delays to bring a product to market (e.g., the U.S. Food and Drug Administration) or notification or compliance with standards (e.g., the European Union)? Can innovators communicate with consumers and explain their innovation, or are advertising and other commercial communications banned? Does innovation go into improving customer experience relative to cigarettes, or is it primarily directed to regulatory compliance that does little for product users?
These pressures will fundamentally change the tobacco market, perhaps ruining some companies but making revitalized giants out of others. A determined goal-driven strategist would shape these four environments to harness market dynamics for public health. That will mean challenging those purporting to represent public health interests while doing all they can to delay the market-based obsolescence of the cigarette. They may slow a necessary and inevitable transformation and cost thousands of lives. But ultimately, innovation and creative destruction will prevail. Every stakeholder involved should grasp the implications of that and act accordingly.
“Accessing Innovation” is the theme for this year’s GTNF, to be held in Washington, D.C., Sept. 27–29, 2022.
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
September 1, 2022
Smart Connection

Illustration courtesy of Maschinenbau
Koehl’s new communication platform connects field-level tobacco machinery with the Cloud.
By Stefanie Rossel
Communication is key—not only in everyday life but also on the factory floor. On the road to Industry 4.0, the Industrial Internet of Things (IIoT) is an important milestone. The digital mapping of production plants and their connection to systems for collecting and evaluating production data is the basis for smart analysis methods to optimize production processes. To keep up with the fast-paced development of new ideas and concepts that the fourth industrial revolution brings about, manufacturing companies are confronted with the difficult task of driving their digital transformation.
Modern tobacco manufacturing equipment comes with built-in features that allow it to communicate data on performance, settings, history and so on. However, the secondary machinery communication landscape in most tobacco factories is highly fragmented, both for machine-to-machine and machine-to-higher-systems data streams. Over the years, many production lines have formed a heterogenous machine landscape. The individual plant components often comprise controllers from different suppliers and generations. Over time, physical media, protocols and data formats, sometimes proprietary, have accumulated, leading to unnecessarily complex integration efforts. Fragmentation also limits the opportunity to extract manufacturing insights from the machine data.
To solve this problem, the world’s four leading cigarette manufacturers—Philip Morris International, BAT, Japan Tobacco International and Imperial Brands—and the OPC Foundation created a working group about five years ago to describe general requirements for manufacturers for primary and secondary machinery. “OPC” stands for Open Platform Communications. The OPC Foundation is responsible for the development and maintenance of OPC UA, the interoperability standard for the secure and reliable exchange of data in the industrial information space and in other industries. It is a platform-independent, open and license-free communication platform and ensures the seamless flow of information among devices from multiple vendors.
The jointly developed companion specification for the tobacco industry, named Tobacco Machine Communication (TMC), is based on the OPC UA information model and aims at harmonizing data exchange and interoperability requirements for the common benefits of both cigarette manufacturers and original equipment manufacturers (OEMs). It seeks to create interoperability between the various OEMs. The main objective of the companion specification is to provide information-modeling concepts and object libraries that can be applied to model a complete production work center. It covers machine configurations, product flows, setup, service, live status and historical information and can be applied to conventional tobacco products as well as products in the heated-tobacco environment. The OPC UA server of the work center can expose information in a harmonized way to upper-level systems or to other compliant work centers. While the working group started out by focusing on secondary machinery, the new standard 2.0, which was introduced in May, also covers primary equipment.
The TMC standard can be downloaded from the OPC website. All new tobacco machinery delivered today needs to be compliant with the standard.
Enhancing Efficiency
Arno Fries
However, cigarette-making equipment is known for its longevity, which means there are many shop floors with equipment that was developed before the standard was introduced. For such factories, Koehl Maschinenbau, a Luxemburg-based supplier of processing and logistics equipment for the tobacco industry, has designed a machine-to-cloud solution, the IIoT Server. Based on the TMC companion specification as a platform, the application server enables vertical data transmission to a business intelligence system (BIS) without, in the best case, changing the components’ programming. This way all data accumulated on the shop floor can be semantically processed in the same way to collect and analyze it centrally. The server collects and handles data at the shop floor level and forwards it to a Cloud or Fog environment where the data is stored, analyzed and archived.
“For the customer, this leads to an increase in efficiency and a reduction of costs,” explains Arno Fries, technical director of logistics and information systems at Koehl. He heads the company’s manufacturing IT department, which implements solutions and products for intralogistics and production logics. The IIoT Server is a proprietary development commissioned by one of Koehl’s tobacco clients. “It’s an easy, flexible, cost-effective and future-proof way to integrate and digitalize established machines into the customer’s preferred Industry 4.0 ecosystem,” says Fries. “An intelligent production optimizes workflows, maintenance, energy consumption and service management.”
The ability to interact with various programmable logic controllers (PLCs) in a heterogenous production environment is key to standardized data processing in the IIoT, says Fries. “The PLC connection module of Koehl’s TMC server is based on a highly flexible and exchangeable driver technology that is used for communication with different PLCs and different protocols. Drivers are available for the most common PLCs, such as Siemens Step-(300, 1200, 1500) or Beckhoff or for protocols, for example OPC UA.”
Easy Installation
The IIoT Server allows for collection of data from all machinery, whether new or old, is OEM independent and provides tailor-made solutions for equipment that is not standard. Transformation and normalization of data take place just in time. There are no programming changes of existing PLCs required. The web-based configuration enables central configurations for all instances. The server consists of a small data processor that fits into a control cabinet, which is required to have two Ethernet ports.
Depending on the customer’s requirements, the IIoT Server can be installed in a decentralized or centralized architecture. In a decentralized installation, each PLC is connected to a separate server unit, with data being transferred from the production network to the cloud in a secure way. In a centralized environment, all PLCs of a production line or an entire plant are connected to a central IIoT Server unit, which according to the company can be easily integrated into existing server or virtualization architectures. Either way, hardware requirements are minimal.
Implementation is uncomplicated, according to Fries. “The data to be transferred and their respective addresses are set once for each PLC through a configuration tool. The storage of the data retrieved by the various controllers and their depiction in the TMC information model is the main characteristic of Koehl’s server application. In addition, it allows for storage of data, which the PLC can neither provide nor store. After configuration, the TMC server runs in the background and provides the configured data as TMC objects to each OPC client for further processing. The operator is not involved unless he wants to add a further configuration.”
Koehl’s server can either be used if existing production lines are to be connected or if an OEM needs a bridge between a machine and the IT level that is compatible with the TMC standard and that he can’t or won’t realize himself.
Successful Pilot Project
The pilot project was installed at an Other Tobacco Products (OTP) manufacturer’s site. Three pilot lines out of nine OTP lines were selected for connection to the cloud-based customer BIS via the TMC standard. For each system, an industrial inter-process communication was placed in the respective control cabinet. “With these having a second network adapter, it was not necessary to take the PLCs out of the production network. The PLCs are therefore accessed via a different network than the data collected here,” relates Fries. “In order to be able to compensate failures of the higher level system, the IIoT Server also allows for the archiving of data movements and changes over a longer period of time.”
Across machines, data about machine running time, downtime and root cause analysis is now collected and can be accessed by the BIS via the TMC standard. Information about material rejects, production defects, material turnover and machine efficiency as well as predictive maintenance and machine configuration changes are also provided.
“The greatest challenge was the collection of data from existing production lines with different controllers without program changes in the PLC,” says Fries. “After we had collected the data, it was validated by the machinery operators, and since then, system has been running smoothly.”
Following the successful pilot, Koehl has been ordered to roll out the system to the customer’s remaining OTP lines. Fries observes increasing interest for his company’s solution in the industry. “If a tobacco manufacturer has several locations and lines and a fully automated production, the IIoT Server is ideal because it not only allows to comply with the TMC standard but also to control and evaluate processes.”
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.

September 1, 2022
Leaving No Trace

Photo: McAirlaid’s Vliesstoffe
McAirlaid’s Genia cigarette filters decompose in a matter of weeks rather than years.
By George Gay
Some time ago, Rachel Roddy, a food writer specializing in Italian cuisine, wrote in The Guardian newspaper’s Feast magazine that 80 percent of recipes could be improved by omitting the tomatoes usually included. Being a renowned tomato-phobe, I was delighted with this story and set out on a campaign to have the message more widely disseminated and acted upon—a campaign that was met with little success, I’m sorry to say, and that fell by the wayside.
But I was reminded of Roddy’s piece recently when reading the McAirlaid’s Vliesstoffe’s website, which, at one point, poses an intriguing question: Is it possible to achieve more by omitting something? Of course, I was a convert and knew the answer immediately. Yes. Leave out the tomatoes!
While answering yes to its own question, McAirlaid’s would not be too happy with my response, I think, because part of its business is focused on food packaging, and tomatoes probably figure in the makeup of that business. But I’m getting ahead of myself. This piece mainly concerns another aspect of the company’s business: cigarette filters—specifically, cigarette filters that offer tobacco-smoke taste similar to that provided by cellulose acetate filters but that are manufactured using only pure cellulose, free from bonding agents, and that, therefore, decompose in a matter of weeks rather than years as is the case with cellulose acetate products.
A Patented Process
Katja Selle
McAirlaid’s specializes in manufacturing nonwoven absorption fleeces from pure, nonchlorine-bleached cellulose fibers using only a patented “airlaid” thermo-mechanical process to bond the fibers. In other words, the company omits from its SuperCore fleece the nonabsorbing bonding agents typically used to make fleeces, allowing SuperCore to achieve greater absorption and fluid distribution than is achieved using traditionally bonded fleeces.
The company, which sells its SuperCore fleece either as a raw material or as finished products, has four production sites in Germany and one in the U.S. Associate Sales Director Katja Selle told me during an email exchange that the company even had its own engineering department with machine design and building capabilities, which allowed it to develop “innovative and unique technologies.” Currently, it operates with five airlaid machines to produce its SuperCore fleece and more than 100 processing machines to service the particular requirements of the various markets with which it is involved and which it designates as food packaging, hygiene, medical, cigarette filters and home and garden.
And while McAirlaid’s products may rightly be described as environmentally friendly, so, too, can its processes. The company’s cellulose production, which is certified by the Program for the Endorsement of Forest Certification, operates with low carbon dioxide emissions and without the use of freshwater—and therefore without creating wastewater. Production buildings are climate controlled by means of efficient heat recovery systems.
McAirlaid’s, which now has more than 500 employees and customers in more than 70 countries, was founded in 1997 in Steinfurt, North Rhine-Westphalia, Germany, with production at its Heilbad Heiligenstadt factory starting the following year. It opened its third factory in Virginia, USA, operating as subsidiary, McAirlaid’s Inc., in 2006 and set up a new marketing organization offering Genia cigarette filters in 2017. 2020 saw the start of its first face mask machine.
The material that makes up Genia cigarette filters was developed by McAirlaid’s and is made from 100 percent EN-13432-certified cellulose produced using the same airlaid technology that is used for producing the company’s other products, though modified to meet the specific needs of the tobacco industry (EN-13432 is an industrial compostability standard). It is offered bleached or unbleached and is said to be available in just about any filter rod specification, including those suitable for heat-not-burn products. Genia filters are already part of tobacco cigarettes, filtered cigarillos and hemp cigarettes that are available in Europe, and, currently, tests and developments are being carried out in conjunction with many small and large manufacturers in the cigarette, cigarillo and roll-your-own segments.

McAirlaid’s biggest factory, at Berlingerode, Germany
Ahead of its Time
Development of these cigarette filters has been a long time coming. The founder of McAirlaid’s, Alexander Maksimow, recognized the littering problem associated with cigarette butts in the 1990s, at a time when, according to Selle, the market wasn’t ready to accept a change to more sustainable products. Once started, development took several years but was accelerated with the arrival of McAirlaid’s own rod-making machine, which allows it to manufacture efficiently at one of its German factories sample rods for testing by prospective adopters of Genia filters. This is important because Genia filters are always custom made for individual cigarette manufacturers after a joint development process aimed at identifying the most appropriate product to replace a cellulose acetate filter.
And things are likely to move much quicker in the future. The major filter producers are said now to have similar machines that run equally well as the one developed by McAirlaid’s, and the company has worked with filter-rod-machine builders to optimize the use of airlaid materials through their machines. Additionally, Selle said, McAirlaid’s airlaid material was being manufactured into filter rods and sold by global filter producers.
Selling Genia filter rods could be seen as pushing at an open door. These filters are price competitive and closely mimic the cellulose acetate products they are replacing, in respect of both their smoke-modifying and taste retention characteristics. But perhaps the major selling point is the fact that while carelessly discarded traditional cellulose acetate cigarette filters take up to 15 years to break down, Genia cigarette filters are biodegradable and compostable and break down within a few weeks of being discarded. Of course, McAirlaid’s emphasizes that the best option would be for smokers not to carelessly discard cigarette butts, but we are where we are, and a note on the company’s website indicates that, annually, carelessly discarded butts would fill up to 253,000 cargo containers. The number of containers that would be needed to house the butts carelessly discarded over the years that cellulose acetate filters have been widely used does not bear thinking about.
The construction of the Genia material is important from the point of view that it does not contribute to the ever-growing problem caused by micro-plastics being released into the environment. And it is important from the point of view that cigarette manufacturers need to comply with plastics reduction regulations in certain jurisdictions—regulations that are bound to become more widespread. At the same time, the material’s ability to break down quickly is important because it reduces the risk of butts being swallowed by water-dwelling or land-dwelling creatures. And it is important from the point of view of aesthetics, given that cigarette butts have long been an eyesore for many people, though one that seems to be reducing with the reduction in smoking in at least many Western cities.
Opportunities Ahead
With these advantages in mind, I asked Selle whether she thought there would be good opportunities for McAirlaid’s to grow its cigarette filters business in the future even though cigarette consumption overall might go down. She started by saying that her company was currently experiencing, especially in Europe, increased demand for sustainable alternatives to cellulose acetate, something that was being driven by various factors, one of which stemmed from a new European Commission regulation, the Single-Use Plastic Directive, which was put in place in July last year. Under the provisions of this directive, there was a package-marking requirement for products that included filters containing plastic of any kind, a designation that encompassed cellulose acetate filters but not Genia airlaid filters. In addition, there was the Extended Producer Responsibility policy, which levied a littering tax on, among any number of products, cigarette filters containing plastic. Again, Genia was exempt from the requirements of this policy. At the same time, McAirlaid’s was seeing an increased demand by consumers for sustainable products, so it was likely that demand would keep increasing.
In the U.S., the situation was different, Selle added. There, the Food and Drug Administration regulated the tobacco products sector, so moves toward the use of sustainable cigarette filters would first require the FDA to accept their use. This would come either through changes to their rules or through tobacco manufacturers agreeing to submit new cigarettes with sustainable filters through the premarket tobacco product application route. Consequently, McAirlaid’s was encouraging any U.S. tobacco company wishing to develop new products to consider a trial using Genia filters. For one thing, emerging initiatives, such as California’s proposed single-use plastic regulations, were likely to increase the momentum toward more sustainable materials.
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.

September 1, 2022
A Curious Case

Photo: steheap
The U.S. Food and Drug Administration’s marketing denial order for Juul may have been a political decision.
By Stefanie Rossel
In June, long-simmering criticism of the way the U.S. Food and Drug Administration is handling premarket tobacco product applications (PMTAs) culminated in a public uproar. “The whole regulatory process is becoming surreal now,” wrote Clive Bates, an independent public health and sustainability advocate, on his blog The Counterfactual. Bates was referring to the agency’s June 23 marketing denial orders (MDO) for all currently marketed Juul Labs products in the United States and compared them to the FDA’s previous marketing authorization of 22nd Century’s low-nicotine combustible cigarette. “No one could make a vape product even remotely as toxic as a cigarette,” Bates stated, “but guess which one got the green light.”
In its press release, the FDA said that Juul’s applications lacked “sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health.” In particular, some of the company’s study findings raised concerns due to insufficient and conflicting data, the agency claimed. The problems of genotoxity and potentially harmful chemicals leaching from Juul’s propriety e-liquid pods had not been adequately addressed in the applications, according to the FDA, thus precluding the agency from completing a full toxicological risk assessment of the products.
However, the agency admitted that to date it had not received clinical information to suggest an immediate hazard associated with the use of the Juul device or Juul pods. A further reason for the MDO, the FDA wrote in a statement, was that there was “no way to know the potential harms from using other authorized or unauthorized third-party e-liquid pods with the Juul device or using Juul pods with a non-Juul device.”
Michel Mital, acting director of the FDA’s Center for Tobacco Products, said that the agency was tasked with ensuring that tobacco products sold in the U.S. met the standard set by the law but that responsibility to demonstrate that a product meets those standards was with the manufacturer. “As with all manufacturers, Juul had the opportunity to provide evidence demonstrating that the marketing of their products meets these standards,” she said. “However, the company did not provide that evidence and instead left us with significant questions.”
The FDA’s Volte-Face
One day later, Juul Labs requested and was granted an emergency stay of the FDA order by the U.S. Court of Appeals for the D.C. Circuit to give the judges time to evaluate the merits of Juul’s appeal. In its court filing challenging the FDA ruling, the company called the FDA’s order “extraordinary,” “discriminatory” and “unlawful” and said that it would suffer significant irreparable harm without a stay.
The agency, Juul Labs claimed, had overlooked more than 6,000 pages of data in the applications on the aerosols that users inhale. The company, which argued that it has helped 2 million adult smokers quit traditional cigarettes, also suggested that the FDA’s decision was influenced by political pressure—through letters and at hearings, the company said in its filing, members of Congress pressed FDA officials to commit that Juul products would not be authorized. Furthermore, the manufacturer questioned the agency’s handling of the MDO announcement, which had been leaked to the media before it was officially announced.
On July 5, the FDA backed down and temporarily halted its ban on Juul Labs products while the manufacturer appeals the agency’s decision. The agency said it had determined that there were scientific issues unique to the Juul application that warranted additional review. The FDA stressed that its suspension did not mean rescission of the MDO. While the stay technically doesn’t allow Juul to continue selling its products, the FDA later explicitly stated, for the first time, that it did not intend to take enforcement action against the Juul products subject to the MDO.
Different Treatment
The removal of Juul products from the U.S. market would have far-reaching implications. The company had experienced a fairy-tale rise from a small business to U.S. market leader of the vape category. It was said to have revived the stagnating U.S. vape market and became so popular that the term “Juuling” became almost synonymous with “vaping.” Coming in a sleek design and with a nicotine salt-based pod system, Juul products were easy to use and able to satisfy the nicotine cravings that smokers previously satisfied with cigarettes. At the height of its success, Juul Labs accounted for more than 80 percent of U.S. nicotine vape sales. In 2018, it sold a 35 percent stake to Altria. If its products were to exit the market, smokers seeking to switch as well as vapers would be left with a mere handful of FDA-approved, but decidedly less popular, vape products.
In a letter to investors, the financial services company Morgan Stanley wrote that a Juul MDO would create opportunities for other reduced-risk products that have already received PMTA approval, most notably BAT, which recently overtook Juul as the leading U.S. vape manufacturer through its Vuse brands with a market share of more than 33 percent. In recent months, the FDA has authorized several vape products for marketing in the U.S. market, among them Njoy and Logic variants.
While tobacco control activists welcomed the FDA’s decision, vaping advocates were shocked, and the events following the MDO sparked much speculation. The agency treated Juul’s application very different from those submitted by competing vaping companies, according to critics. Following its normal process, the FDA should have sought answers to its “significant questions” about Juul’s application through a deficiency letter. Instead, the FDA simply banned Juul’s products. Also, the agency did not rescind its MDO for Juul as it had done for other companies after admitting potential errors. In addition, the FDA in its MDO held Juul responsible for third-party or counterfeit Juul products—a task that belongs to the regulator.
Punishing Past Mistakes
“It looks like the FDA searched for a pretext for denying Juul’s products, and this is the best they could come up with,” wrote Bates. The MDO seems to be designed to punish Juul for past mistakes. When the company entered the U.S. market in 2015, its early ad campaigns were heavily criticized for targeting youth.
Critics held the company single-handedly responsible for triggering a youth vaping “epidemic.” By the time Altria purchased a stake in Juul, the e-cigarette manufacturer was facing a sea of lawsuits. Around 2,000 cases have been filed against the company, by cities, counties, school districts and states, claiming that Juul purposefully addicted teenagers to its products with high-level nicotine pods.
Although youth vaping, which was never high on a daily basis among youth who have never smoked, has been declining since 2019 and vaping adolescents have turned to other, mostly disposable products such as Puff Bar, Juul Labs continues to bear the blame for youth vaping in the popular imagination.
Over the past years, the company has gone out of its way to please anti-vaping advocates—perhaps mistakenly, according to critics. Instead of challenging the misinformation spread by its opponents, Juul removed its flavored pods from the market before the law required this.
FDA Processes Questioned
While the MDO decision surprised many, the FDA’s subsequent administrative stay later made the story only more curious. Almost immediately querying a decision that the FDA had taken two years to reach appeared odd at best. Experts assumed the FDA realized that its arguments were weak and wouldn’t stand up to a legal challenge. The withdrawal leaves the agency with two options: issuing a new, amended MDO or admitting that it has erred, releasing a full rescission and putting Juul back in scientific review.
In an interview with Filter, Bates said the PMTA process was “wide open to abuse” as the agency can set arbitrary standards for what it considers acceptable.
In mid-July, the American Vapor Manufacturers Association (AVMA) asked the U.S. Department of Health and Human Services inspector general to investigate whether the FDA’s MDOs were driven by political pressure. “Manufacturers are routinely meeting the PMTA requirements to scientifically demonstrate how their products are appropriate for the protection of public health,” wrote AVMA President Amanda Wheeler. “Despite compliance, the agency isn’t approving the vape products sought by adults who want to quit smoking. The Office of Inspector General should open the door and hold the FDA accountable to its standards.”
In recent months, the FDA has faced increasing public and congressional scrutiny not only over its regulation of novel nicotine products but also for its role in a shortage of infant formula. On July 19, FDA Commissioner Robert Califf announced an external review of the agency’s offices on food safety and tobacco regulation.
The agency has tasked the Reagan-Udall Foundation with an assessment of the resources, procedures and organization of the offices on food and tobacco as well as parts of the Office of Regulatory Affairs, the division that conducts inspections. Whether the measure will improve Juul’s odds remains to be seen. The initial evaluation of the reviewing process was scheduled to be completed within 60 days.

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.

September 1, 2022
A True Transformation

Photo: BAT
To BAT, “A Better Tomorrow” is more than a catchy slogan.
By Stefanie Rossel
Flora Okereke
Flora Okereke is head of global regulatory insights and foresights at BAT, responsible for the analysis and forecasting of international regulatory developments on behalf of the company’s 180-plus markets. She has previously held several senior country, regional and global roles at BAT, including legal, corporate and regulatory affairs director for West Africa; head of regulatory affairs for Africa, the Middle East and Eastern Europe; global head of regulatory strategy and engagement; and senior director of government affairs and international policy at Reynolds American Incorporated Services, a subsidiary of R.J. Reynolds Tobacco based in Washington, D.C. She is an advocate of evidence-based regulation. Okereke was called to the Bar of England and Wales (Middle Temple) and later admitted as a solicitor by the Law Society. Tobacco Reporter caught up with Okereke to discuss her views on the remarkable transformations taking place at BAT and throughout the tobacco industry.
Tobacco Reporter: It has been some years since BAT set out on its transformation journey from a single-category company to a multi-category player. In March 2020, it announced its new corporate purpose: to build a better tomorrow, with the aim to reduce the health impact of its business through offering a greater choice of reduced-risk products. You have been with BAT for more than 20 years—can you please describe how working for BAT has changed since the transformation process started?
Okereke: I’ve had the great fortune of working in most parts of our business over the years across every region of the globe. Given the long history and focus on combustibles, the transformation since we launched our first e-cigarette in 2013 is nothing short of miraculous. We have seen the emergence of a multitude of products that are giving adult consumers compelling choices as an alternative to combustibles. And this is a very good thing. Recognizing the strong potential of these new products to reduce the risk in comparison to continued smoking, our CEO invited everyone in our organization in 2020 to embark on a transformation journey to reduce the health impact of our business. The goal of this transformation journey is what we call “A Better Tomorrow.”
Being part of this transformation has engaged employees across the business like never before. There’s a real rise in energy and a renewed commitment and sense of pride amongst our employees as we work together to reduce the health impact of our business.
During the recent Global Forum on Nicotine, you participated in a panel debating whether the industry’s transformation is a myth or reality. Being inside a company during the transformation process, what do you think?
The transformation is real, and we are making tangible change. We are laser-focused on providing adult consumers with a wide range of less risky* products. We are making significantly increased investments year-on-year in reduced-risk products—in 2021 alone, we invested £496 million [$602.73 million]. We are proactively communicating with our adult consumers, encouraging them to switch through over 1 billion inserts to date and over 136 peer-reviewed scientific publications on product manufacturing safety and performance standards of our products.
In parallel, we are expanding availability of reduced-risk products, which are in 57 countries to date, 20 of which have the highest smoking prevalence. We are actively engaging regulators and public health and governments advocating for a regulatory and fiscal framework that recognizes the important role of tobacco harm reduction and is designed to incentivize adult smokers who would otherwise continue to smoke to switch.
We aim to switch 50 million adult smokers to reduced-risk products by 2030. E-cigarettes were only invented in 2003, by a Chinese pharmacist, so when we see the level of progress BAT is making in this area, I think we are doing pretty well.
How can we verify that tobacco companies are really transforming?
For BAT, “A Better Tomorrow” is a world where smokers who would otherwise choose to continue to smoke have the option to switch to less risky alternatives to combustible tobacco. But A Better Tomorrow also represents a renewed commitment by BAT to improve society for all those that are sharing the road in our transformation journey—we are measuring ourselves against the expectations of our customers, our employees, our shareholders, our government partners and the public.
We are setting clear and ambitious goals, measuring ourselves and sharing progress with all of our stakeholders. And we are making significant progress in support of those goals.
We have set a goal of 50 million consumers of our noncombustible products by 2030. Today, over 20 million adult consumers have chosen to use our many reduced-risk products, with 14.6 percent of group revenue delivered by noncombustible products.
We also aim to achieve at least £5 billion in New Category revenues by 2025. In a few short years, we have built a £2 billion New Category revenue business, and we are confident of more than doubling this to reach our revenue target by 2025.
In your panel presentation, you said that the core of the change was the transformation of BAT’s portfolio, but behind it, this meant that smokers are encouraged to switch and that BAT is therefore doing something for society. While this is working quite well in the developed world, what can tobacco companies do to repeat this success in low-income countries?
BAT’s reduced-risk products are available in 57 countries to date—something we are truly proud of. We are rolling these out as fast and as responsibly as we can, including in low-income countries.
It is important to remember that we are not alone in our transformation journey—our governments in low-[income] and middle-income countries have an especially crucial role to play. Progressive, evidence-based regulatory measures will help encourage smokers to transition to reduced-risk products. We believe governments in low-[income] and middle-income countries can introduce three types of regulation to accelerate the transition of smokers from combustibles to reduced-risk products. These include regulations and policies that enable and encourage companies to innovate and bring new products to market, permit clear communications with consumers about the relative risks of products and incentivize consumers to switch from combustibles to reduced-risk* alternatives.
Regulations should allow flavors that adults enjoy, ensure high enough levels of nicotine to satisfy adult smokers, and where products are taxed, acknowledge the reduced-risk profile of products like e-cigarettes, oral nicotine pouches and tobacco-heating products compared to combustibles. To realize the benefit of tobacco harm reduction, the products must remain affordable.
What does the transformation process mean for BAT’s company culture?
My earliest impression when I first joined BAT was how diverse it is, which gave rise to our motto, “Strength in Diversity.” For a company with over 52,000 employees based in over 175 countries with multiple languages and time zones, the advent of the “A Better Tomorrow” vision has been a global rallying cry that has motivated and organized our people around a common purpose to transform our business and benefit society.
The “A Better Tomorrow” purpose has affected our culture positively in many meaningful ways. [For example], 72 percent of new senior management hires are from outside the tobacco industry, and 39 percent of women [work] in management roles. [There are] employee initiatives supported by management to drive and reward new ideas that generate solutions; [and the company has] a comprehensive environmental program addressing factory waste, emissions, plastic and litter.
Most notably, there has been a shift in who our people are and how they expect the business to operate. As we make progress in our transformation, I have personally noted our people taking more pride in our organization and raising their expectations for the company in the way we deliver our commitments. This is making BAT a better company and improving our contribution to society.
Increased focus on complex novel nicotine-delivery systems requires a different composition of staff, i.e., an increasing share of scientists also coming from other industries. How far have these new arrivals impacted on the internal spirit and atmosphere at BAT?
Probably the biggest change I’ve noticed is the diverse types of profiles now applying to join BAT. We have moved from a company selling a product based on agriculture to a high-tech and innovation-focused company. This requires all kinds of expertise that is new—[as mentioned], 72 percent of new senior management hires are now from outside of the tobacco industry. These new hires are bringing new perspectives and capabilities to drive our business transformation.
I believe this shift in hiring will only strengthen our culture and DNA while at the same time propelling us all toward our “A Better Tomorrow” goals.

*BAT use the terms “less risky,” and “reduced risk” based on the weight of evidence and assuming a complete switch from cigarette smoking. The company is keen to stress that these products are not risk-free and that they are addictive. BAT says that its products sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to Food and Drug Administration regulation and that it will make no reduced-risk claims regarding these products without FDA clearance.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

September 1, 2022
The Review Reviewed

Photo: Marc
The recent U.K. Khan review contains a number of wrong-headed statements that need to be challenged.
By George Gay
To my way of thinking, there is little of value in the U.K. government-commissioned review by Javed Khan into government policies aimed at reducing the incidence of tobacco smoking in England to 5 percent or lower by 2030. The review, Making Smoking Obsolete, which was published on June 9, was apparently supposed to also reflect on government policies aimed at countering health inequalities within England, part of its “leveling up” agenda. But while there is little of value in the review, it is worth reading because it contains any number of wrong-headed statements that need to be challenged, one of which seems aimed at propping up the hypocrisy that—in England and many other places—regards tobacco smoking as bad but alcohol consumption as good.
In Part 2 of his review, in which Khan addresses the idea of prevention, of stopping people from taking up smoking in the first place, he says, in part, “I have considered various options for raising the age of sale. Should the government raise it from the current age of 18 to 21 in one go? Why not jump to 25? Will this be the ‘nanny state’ or ‘big government’ in action? How would this sit alongside the legal age to buy alcohol, to get married, to vote? Note, none of the others are likely to kill you!”
Literally speaking, this is true. Buying alcohol is highly unlikely to kill you. But consuming it, now that’s another thing entirely. According to Alcohol Change U.K., “[a]lcohol misuse is the biggest risk factor for death, ill health and disability among 15[-year-olds to] 49-year-olds in the U.K. and the fifth biggest risk factor across all ages.”
Of course, Khan, and other anti-tobacco, pro-alcohol operatives, would say that while tobacco smoking is a risk factor for death, ill health and disability when smokers consume cigarettes as they are intended to be consumed, it is only when alcohol is misused that it negatively affects health and leads to lethal consequences. But this, of course, is pure head-in-the-sand hokum. The U.K. National Health Service website is unequivocal in stating, “[t]here’s no completely safe level of drinking.”
“It’s recommended to drink no more than 14 units of alcohol a week, spread across three days or more,” the website states. “That’s around six medium (175 ml) glasses of wine, or six pints of four percent beer. There’s no completely safe level of drinking, but sticking within these guidelines lowers your risk of harming your health. Try using Alcohol Change U.K.’s unit calculator to work out how many units you drink.”
What the website doesn’t tell you is that, by its intoxicating nature, alcohol consumption does not lend itself to rational analysis of how much you have drunk or should continue to drink on any particular occasion. By design, it fuddles the brain and disguises misuse as having a good time. How many times are we told that cigarettes are designed to addict consumers and keep them smoking? But we are rarely told that alcohol is much the same—that alcohol by its nature is such that the more you drink, the more you feel like drinking more.
It is ironic, I think, that Khan chose to make his statement about alcohol in a review that was commissioned by a government department because, within a month of the review’s publication, the prime minister, Boris Johnson, had been forced to resign over his failure to act decisively when one of his whips—a person, it is worth noting, with the responsibility, in part, of ensuring the smooth running of parliamentary business—was allegedly involved in alcohol-fueled inappropriate behavior. Of course, it wasn’t only this alcohol-fueled incident that brought Johnson down. He had started tottering previously when he was involved in alcohol-fueled events in Downing Street during a time when, because of a Covid lockdown, such events had been declared by his government to be illegal.
Given this, it might have been expected that questions would have been raised about drinking alcohol, especially about the apparently numerous subsidized bars that the Palace of Westminster boasts. But no—there was hardly a murmur. And this speaks to the foreword with which Khan opens his review. “Most people don’t see smoking as a problem anymore,” reads his first sentence, to which the obvious rejoinder is: and clearly few people see drinking as a problem even when its use is prominent in bringing down a prime minister.
In the next sentence of his foreword, Khan makes the point that the nation has moved on from smoking, which tends to indicate that he believes that smokers are not part of the nation but outcasts, an idea he seems to endorse when he seeks in his review to have smoking, and by association, smokers, “denormalized.” But it’s his third sentence that I really like. “It’s no longer common for living room ceilings to be stained yellow from chain-smoking in front of the TV,” he remarks, without adding, “but the carpets are still stained with the vomit spewed out by drunks downing buckets of alcohol on top of cheap takeaways.”
A Blind Spot
I have no problem with alcohol consumption. But what is beyond my comprehension is how some people are able to condemn outright the problems caused by tobacco smoking while turning a blind eye to the much wider-ranging problems created by drinking alcohol. I think sometimes these people would sooner be the victim of passive drinking—of being knocked down by a drunk driver or assaulted by a drunk in the street—than being the victim of passive smoking—of being annoyed by the smell of burning tobacco.
As well as comparing tobacco smoking with alcohol consumption, Khan cannot resist an equally risky diversion toward Covid 19, suggesting, I think, that smoking presents a potential risk greater than that of viruses. “Tobacco manufacturers make lethal products, which have killed 8 million people in the U.K. over the last 50 years,” he writes. “That’s more than 400 people a day and far more than Covid-19.”
I assume that what is meant here is that the average number of daily deaths from smoking is greater than the average number of daily deaths caused by Covid-19, which seems like an odd comparison to make without adding caveats. Smoking tobacco is a lifestyle choice while contracting Covid-19, unless you’re really strange, is not.
One clue here is to be found in the fact that tobacco consumption raises huge amounts of revenue while Covid-19 just consumes revenue. Smokers die from smoking-related diseases, if they do, after 40–50 years of smoking while those who have contracted Covid-19 die, if they do, within days, weeks or months, so the years “lost” to smoking will generally be fewer than the years “lost” to Covid-19.
Additionally, we now know pretty much what happens when people smoke, but there is no agreement yet even on how to calculate the number of deaths caused by Covid-19, and the future of those who have had Covid-19 and survived is still being mapped out. There is simply no way that tobacco smoking threatens to destroy the human race, but the same cannot be said about viruses, antimicrobial resistance and environmental breakdown. It is time to introduce a sense of proportion—to get a grip.
More of the Same
Two of the major problems with the Khan review are that it contains little that is new and that it is mostly about scaling up those things that haven’t worked in the past. In addition, it seems to take no notice of the problems that England is facing at the moment, though this is perhaps down to the brief Khan was handed. Khan wants cigarette taxes to be increased by 30 percent, something he recognizes will cause the further impoverishment of some of the most financially vulnerable people in the country.
And, in an admission that this tax hike will prove a bonanza for those involved in the illegal trade in cigarettes, he wants a further, faster crackdown by the police and the courts on those involved in this trade. But what is the point of making such recommendations in a country where six police forces are in special measures, where one of those forces, London’s Metropolitan Police, has, as I understand it, lost the confidence and support of the public and is no longer able to police by consent, and where the courts, already with huge backlogs of cases, are the subject of strikes?
Khan seems to accept that the 12-year austerity program imposed by successive conservative governments has “skinned to the bone” smoking interventions. “The results of disinvestment are stark,” he writes. “Since 2010, the number of people using stop-smoking services reporting a successful quit attempt has fallen by 72 percent. From 380,000 people then to 105,000 now.” But he doesn’t seem to appreciate that the police and the courts have also been starved of funds to the point where they are unable to function as they should.
Inconsistencies
Khan’s review has many uncompleted comparisons, inconsistencies and oddities, such as when he speaks of “illicit enforcement” when presumably he means law enforcement activities against those involved in illegal activities. And he says at one point that he wants to put out of business the criminal gangs behind the illegal trade in cigarettes, seemingly having failed to notice that the government for which he is producing the review is also something of a criminal gang that has shown itself willing to break national and international law to get its own way.
Despite his claiming to be interested in the dissemination of accurate information, Khan seems to also be blind to the fact that, in England, cigarette packs are covered with graphic health warnings that amount to falsehoods in the absence of proper explanations about what proportion of smokers suffers from the particular medical complaints depicted, what proportion of smokers suffers from those complaints to the extent depicted and what proportion of nonsmokers suffers from these conditions.
Some bottles of alcohol, on the other hand, come in what I would describe as colors likely to appeal to young children, especially girls aged four to seven, and with labels depicting sophisticated young people having a good time. There are no graphic warnings on these bottles showing diseased livers and brains and none showing bodies mangled in car wrecks or with faces disfigured by broken glass. And yet, Khan wants to go further in the case of cigarettes. With no room for maneuver on the pack, he wants to attack the cigarettes themselves with more misleading warnings. He wants to choke any enjoyment out of consuming cigarettes, even in the case of committed smokers.
Interestingly, one of his ideas is to mandate that cigarette paper should be colored brown or green, without, I assume, having carried out any experiments into whether the coloring agents would add to the toxicity of those cigarettes. Presumably, he picked brown and green because his personal view is that these colors are unattractive. Of course, here he feeds into the great myopia of our government and our age. The government doesn’t like green either. It’s an embarrassment that daily reminds them of how it, along with most governments around the world, is failing in respect of the environment. What the government seems to have overlooked, however, is that this failure means that it doesn’t need to worry about making smoking obsolete. Destroy the environment and you make smoking obsolete. Dead people don’t smoke.
Countering the Myths?
As suggested above, Khan often mentions the need for the dissemination of accurate information to counter the myths around smoking and vaping, but what he is talking about is information based on a version of reality concocted by people who make their living out of opposing the consumption of tobacco and will retire on comfortable pensions having failed to achieve that which they purportedly set out to do. Most of these antis have probably never smoked and probably have never lived in financial poverty the way that many smokers do, partly because of the oh-it’s-in-your-best-interests tax hikes that the antis have recommended to governments greedy for revenue. The antis probably never question whether people living in abject poverty actually want the extra five years of life without adequate food, shelter and heating that giving up smoking may or may not impose on them. And the antis will probably live their lives without ever questioning whether their drinking, opioid or cocaine habits might make what they are up to a tad hypocritical.
Although Khan claims to be interested in accurate information, he perpetuates the myth that it is somehow bad for your health to sit outside a pub or restaurant drinking if there is a smoker on the horizon, while failing to point out that, if you are 49 years of age or younger, you are more likely to be harmed by your drink than by a whiff of tobacco smoke. And he fails to warn that, if you are worried about your health, it is not the tiny puffs of visible tobacco smoke that should concern you the most but the invisible, ubiquitous air pollution, the inhalation of which, worldwide, kills more people than the consumption of primary and secondary tobacco smoke.
Khan seems to be certain of a couple of things. One is that longevity is a goal that should be embraced by everybody—or, in the case of those who refuse to do so, embraced on their behalf. “The single most important thing you [my emphasis] can do to improve someone’s [my emphasis] physical health, mental health and to get them to live a longer life is to help them to give up smoking,” he writes. Of course, a curious reader of the review might be pardoned for asking who is this you, and who is this someone? Well let me give you my best attempt at definitions. You comprise all the good, financially well-off people bulging at the seams with the right stuff that they are just bursting to share with someone while someone comprises the bad people who are lacking the right stuff and need to be guided onto the true path by you.
There seems to be no hint in the Khan review that rational arguments could be put forward for tobacco smoking. There’s no hint that smokers might have independent minds with which they have examined the facts and with which they have decided they want to continue with their habit. In fact, this idea is borne out in one sentence of the review that I found especially instructive. “For example, many people wrongly think smoking relieves their stress, but the science shows us that it is quitting that reduces anxiety and depression,” Khan wrote. Wrongly think! What towering scientific arrogance! The idea here is that through the use of some gadgetry, scientists working in a field that is as yet little understood can experience an emotion in a way that it is being experienced by an individual independent of the scientists—only more accurately. It reminds me of the old joke that I read again somewhere quite recently in which two behavioral scientists meet in the street and one says to the other, “You’re fine, how am I?”
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.

September 1, 2022