TobaccoReporter logo

Category: Also in TR

  • The PMTA Mystery

    The PMTA Mystery

    Credit: Gustavo Frazao

    How effective must a product be in helping adult smokers quit to overcome the theorized level of harm to youth?

    By Neil McKeganey

    If there is one thing that you can say about the U.S. Food and Drug Administration’s premarket tobacco product application (PMTA) process, it is that it is exceedingly data heavy. E-cigarette manufacturers’ submissions under the PMTA process can run to the thousands of pages, reporting the results of research costing millions of dollars. To receive a marketing authorization, e-cigarette manufacturers have to be able to show that their product is “appropriate for the protection of the public health” (APPH).

    The APPH standard has become something of a modern-day mantra in the world of tobacco regulation, but what exactly does it mean? While nobody would accuse the FDA of excessive clarity in its communications with industry, this much is clear—in the simplest of terms, manufacturers need to be able to show that their product is helping adult smokers to quit, or at least to substantially reduce their smoking, and that their products are not being used by nonsmokers. This, in a nutshell, is what the FDA means when it talks about the importance of assessing the net public health impact of new tobacco products—the capacity to assess the likely overall impact of a new tobacco product on the nation’s health.

    The kind of evidence that manufacturers are required to present under the PMTA process ranges from longitudinal customer studies collecting data from consumers of their products over weeks or months to assess how those products are impacting on the individual’s smoking behavior. Alongside such customer studies are the randomized control trials that monitor changes in smokers’ behavior when they are using the new tobacco product under control conditions. The randomized trials are probably the sort of things most manufacturers have heard of before even if they have not carried them out. These studies are often presented as the gold standard in research evaluating the impact of a new drug. The shortcoming with the control trial design, though, is that it tells you about the impact of your product under controlled conditions; it does not tell you how people will use your product in their real life.

    The results of these studies can be presented to the FDA along with studies showing which population groups are currently using the new tobacco product and which ones are likely to start using the new tobacco product if it were approved. This is where the PMTA process starts to get more mysterious. One of the key groups that the FDA wants to know about is young people. With recent studies showing that more than one in 10 young people in the U.S. are using e-cigarettes, the FDA has repeatedly stressed that in deciding whether a manufacturer’s product is going to be judged as APPH, it needs to balance the impact of the product on adult smokers and young people. When the former FDA commissioner stated in 2018 that the “offramp” to adult smoking must not be achieved at the cost of the on-ramp to youth vaping, he was making it clear that the FDA would be prepared to deny approval to a new tobacco product that might be helping adult smokers to quit if at the same time it was being used by youth or likely to be used by youth.

    In a scenario where youth use of a new tobacco product can become a deal breaker for a company seeking regulatory approval for their new tobacco product, it is clear that the FDA is placing greater weight on youth vaping prevention than on adult smoking cessation. For many people, the greater value placed on youth vaping prevention may seem entirely fair—but the question at the heart of all this is by how much is the FDA valuing youth vaping prevention over adult smoking cessation? The answer to that question, or more accurately, the failure of the FDA to answer that question, is the mystery at the heart of the PMTA process. An e-cigarette manufacturer may be able to present stellar data to the FDA showing the benefit of their product in helping adult smokers to quit and still receive a marketing denial order on the basis that in the view of the FDA, the product poses too great a risk to youth.

    In interpreting the results of the empirical studies that manufacturers may have carried out, the FDA is trying to model the likely impact of the product on the total population—adults and youth. Modeling, though, is a mysterious process in which you try to anticipate what you think might happen in the future under various assumed conditions in the present. Some years ago, the National Academies of Science Engineering and Medicine carried out a modeling exercise to try to quantify the impact of e-cigarettes on population health in the U.S. This was a limited exercise carried out under precisely stated assumptions about how effective e-cigarettes might be in helping smokers to quit and how harmful they may be compared to combustible cigarettes. In contrast to such transparency, the FDA has never specified how it is weighing youth harm prevention against adult smoking cessation. As a result, e-cigarette manufacturers will never know how effective their product needs to be in helping adult smokers quit to overcome the theorized level of harm to youth to be judged APPH.

    Neil McKeganey is the director of the Center for Substance Use Research in Glasgow, Scotland.
  • The Dilemma of Diversification

    The Dilemma of Diversification

    Login

    While lambasted by anti-smoking activists, the tobacco industry’s move into pharmaceuticals may well turn out to be a positive for public health.

    By Cheryl K. Olson

    “The pharmaceuticalization of the tobacco industry.” This awkward phrase comes from a 2017 Annuals of Internal Medicine article referring to industry moves into noncombustible nicotine products. But recently, it’s gaining some literal truth. Legacy tobacco companies are stepping up diversification into pharmaceutical ventures.

    Given that their current business direction is stalling, new adjacent opportunities that let tobacco companies use their specialized knowledge (say, of the tobacco plant genome or lung physiology or means of delivering substances) make sense. It may seem counterintuitive, or ethically iffy, for these companies to start offering solutions to problems they helped create. But they may frankly be well placed to do so because of their deep expertise. The criticisms of current industry moves into medical research and pharmaceuticals, such as Philip Morris International’s acquisition of Vectura and Fertin Pharma, seem more rooted in emotion than in practical concerns about effects on public health.

    A Tour of Recent Criticisms of Diversification

    Let’s review some recent criticisms and attempt to separate the moral from the practical. Take this September STAT+ article by Olivia Goldhill, titled “Tobacco Giant Philip Morris is Investing Billions in Health Care. Critics Say It’s Peddling Cures for Its Own Poison.”

    The tone of the article makes ordinary business behavior sound sinister. Vectura Fertin Pharma, a firm combining two companies previously acquired by PMI, was “quietly incorporated.” PMI has been “racking up patents and taking over healthcare companies, an unlikely pivot that has accelerated dramatically in the past year.” PMI has also been “poaching considerable regulatory and pharma expertise.” All this in the article’s first two paragraphs.

    The recent move by Matt Holman, who was director of the Office of Science at the Food and Drug Administration’s Center for Tobacco Products (Goldhill mislabels him as head of the CTP), to a position at PMI is described as a “move that shocked public health and tobacco researchers.” Why the surprise? Employees cycling from the FDA to the pharmaceutical companies they reviewed is commonplace; back in 2016, Time magazine called it “a revolving door.”

    When PMI purchased Vectura, best known for making asthma medicine inhalers, the Reuters headline read, “Philip Morris seals deal for U.K.’s Vectura despite health group concerns.” The chief executive of Asthma U.K. and the British Lung Foundation stated, “There’s now a very real risk that Vectura’s deal with big tobacco will lead to the cigarette industry wielding undue influence on U.K. health policy.”

    The U.S. reaction was similar. A joint statement by the presidents of the American Lung Association and American Thoracic Society called the acquisition a “reprehensible choice” by PMI. They were concerned that PMI might use Vectura’s inhalation technologies “to make their tobacco products more addictive.” They raised the prospect that PMI “could further profit from the disease their products have caused by now selling therapies to the same people who were sickened by smoking.”

    The idea of cigarette companies profiting from conditions such as asthma and lung disease was reportedly also raised by British government officials, with the U.K. business minister asking for information on PMI’s plans for Vectura.

    A deliberate company strategy to invest simultaneously in selling addictive poison and in peddling cures for that addiction would indeed be reprehensible. Is that what’s happening here? Or are tobacco companies making effortful attempts to find paths to replace the profits from cigarettes with profits from products that don’t harm and might improve public health?

    Time will tell. PMI’s website states, “We are focused on our mission to one day stop selling cigarettes.” The Guardian newspaper’s coverage noted that while the Vectura acquisition was part of PMI’s smoke-free vision, “the company still makes about three-quarters of its $28 billion in annual revenue from ‘combustible’ products that involve the burning of tobacco.” 

    Critics of the tobacco industry didn’t always take such a dim view of moves away from cigarettes. A quick search in Google Scholar for “tobacco industry diversification” brought up this 1985 piece by Alan Blum in the New York State Journal of Medicine. He stated, “Some health professionals believe that criticism of tobacco companies for promoting cigarette smoking should be tempered because they have become conglomerates that are diversifying into nontobacco products and services. By encouraging such diversification, it is reasoned, health professionals can help expedite the phasing out of smoking while tobacco companies can have an opportunity to replace the resultant lost revenue.”

    Blum’s concern was that this belief among “individuals working to eliminate smoking may be misguided.” This was not because those individuals saw industry diversification as a potentially positive step. Rather, he thought diversification wasn’t happening fast enough. Blum noted that tobacco companies were not decreasing investment in cigarette manufacturing and that “the percentage of total profit accounted for by tobacco sales is still the highest of all sources of revenue for tobacco companies.”

    “Those It Employs [or] Funds Are Therefore Banned”

    PMI’s announced acquisition of Vectura triggered efforts to exclude its employees and their research. The Drug Delivery to the Lungs conference terminated Vectura’s sponsorship. A Thorax editorial titled “Vectura and Philip Morris: The leopard has not changed its spots” stated that “The tobacco industry, those it employs and those it funds are therefore banned from membership of professional societies, including the British Thoracic Society (BTS).” The BTS would “exclude the tobacco industry as a legitimate partner in science and education,” including “publishing in respectable journals” and collaborations with universities. The editorial warns that “Vectura employees will need to consider their future.”

    The treatment Vectura’s employees received is far from unique. Ian Fearon, director of whatIF? Consulting, has conducted research in a variety of settings and helps manufacturers write up their scientific data for publication. “The barriers to publication for tobacco companies and independent ENDS [electronic nicotine-delivery system] manufacturers are high, with many journals flatly refusing to even accept a paper to undergo peer review,” he said. “One major irony is the ‘we need the industry to be transparent’ phrase, yet the reality is that the number of journals willing to publish manufacturers’ data, despite its potential importance in assessing public health impacts, is small and diminishing.”

    Fearon noted the criticism Juul received for “buying out” a 2021 special issue of the American Journal of Health Behavior to fully present their findings, which were a comprehensive examination of the potential impact of Juul on public health. Such publishing fees are common in academia; Juul even paid extra to make the articles free to all readers.

    Derek Yach, formerly with the World Health Organization and the Foundation for a Smoke-Free World, equates the opposition based on the tobacco industry’s past bad practices to the 1980s U.S. boycott of Nestle. “That pushed NGOs [nongovernmental organizations] and WHO to vilify them for decades despite changes in their marketing way back,” he said. “To this day, in many public health leadership settings, Nestle is a real villain, regardless of all they have done to change. I suspect that playbook will apply here too.”

    Yach sees the downside of diversification as less about ethics and public health and more about the practical difficulties. “It’s all about company focus and the inevitable clash of cultures—a pharma culture versus a tobacco company one, for example—and as a result, the ability to manage the transition.”

    David Sweanor

    Thinking About Diversification: A Conversation with David Sweanor

    David Sweanor of the Centre for Health Law, Policy and Ethics at the University of Ottawa has long monitored tobacco company behavior.

    Tobacco Reporter: Why are you interested in the issue of tobacco companies diversifying into things like pharmaceuticals?

    Sweanor: My main interest is public health policy: How do you end up with a healthier population? Is this doing anything that’s going to create poorer health—in which case, there’d be a need to oppose it or try to regulate it in some way? Is it going to be neutral in terms of public health? Then, who cares who owns these companies?

    If it’s something that could actually be good for public health, then we should be supporting it. And there’s reason to believe this could be the case. When companies have loads of resources to throw at something, and if this signals more of a move to transformation within the industry, it would be incredible for public health.

    If they are working on [inhalation] technologies for lower risk alternatives to cigarettes, we have the potential for enormous breakthroughs. If we can get any of the major companies to really switch to being all-in on risk reduction, it would completely change the environment. The impact globally would be remarkable and happen very quickly.

    If you want to get tobacco companies to switch to being in favor of transformation, the last thing you want to do is prevent them from doing things that would aid transformation. If you’re trying to get automobile companies to switch to electric cars, don’t prevent them from buying companies with battery technologies. You’re forcing them to continue to focus on internal combustion engines.

    What do you see as valid and invalid criticisms of this diversification?

    No valid ones immediately come to mind. If they were buying up technology that gave a far better alternative to cigarettes and then trying to kill that, then yeah.

    It’s easy to talk about the invalid criticisms. A really good example of that is in Canada, where Medicago, based in Quebec City, developed a vaccine for Covid-19. In developing countries, this vaccine would work well because it doesn’t need to be stored at cold temperatures. Philip Morris has an indirect holding of about 30 percent in Medicago. Anti-tobacco groups attacked the government for approving the vaccine, and WHO refused to approve it.

    What’s the thinking behind that? It’s saying: We don’t like this company because we think it’s done bad things in the past. To deal with this, we’ll prevent them from doing good things now. They created an epidemic of disease from smoking that became larger and lasted longer than it should have. So we’re going to prevent them from doing things that could reduce this epidemic of disease from Covid to make it last longer than it should.

    Are people following the principles of the Enlightenment or the Inquisition? So much now with mainstream anti-tobacco groups is the latter. We don’t care about the quality of your work; we won’t give you a platform to discuss or debate it. That some affiliation you have is more important than the knowledge you bring is pretty reprehensible. It’s like saying Roman Catholics are not allowed to express their views.

    What do you see as potential benefits to public health from this diversification? For example, Matt Holman’s new position as vice president of U.S. scientific engagement and regulatory strategy at PMI.

    Look at the counterfactual. If they don’t do that, the only people working in cigarette companies working on transformation spent their careers working on and understanding and benefiting from cigarettes. If General Motors says, “we’re hiring engineers who understand electric mobility rather than hydrocarbons,” isn’t that a good thing? How can you transform if all the people in senior positions have their expertise in internal combustion engines?

    We see this in high tech all the time; one company will buy another to get the expertise of their employees. You need them at the table when you make decisions on where to go with the next generation.–C.K.O

    Addendum

    In the main article above, I stated that the boycott of Nestle from the 1980s has had a lingering negative effect on WHO and many public health leaders’ views of the company many decades later. This despite Nestle being a global leader in addressing food insecurity, sustainable agriculture and the use of 21st nutrition science (see the company’s 2021 annual report).

    In the second half of October, Nestle’s past came back to haunt the company. The WHO Foundation, set up to build innovative private public partnerships, banned future Nestle contributions despite having originally accepted  a grant for their work on addressing Covid-19.

    The WHO Foundation already bans contributions from tobacco and arms manufacturers though it is unclear how “tobacco” is defined. Does it include governments with state monopolies? Does it include standalone e-cigarette, or nicotine pouch companies? Does it distinguish between companies where revenue from reduced risk products is increasing while combustible revenues are decreasing? Probably not.

    Labelling companies as good or bad is the far easier option. But that option that ignores serious transformation and the opportunity to nudge and support the good emerging faster.

    Derek Yach

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

    The Eye of the Beholder

    Photo: Nopphon

    Not all smokers will be put off by the ‘dissuasively’ colored cigarette papers promoted by health activists.

    By George Gay

    Writing in this magazine two years ago about the pressures being placed on paper suppliers to the tobacco manufacturing industry, I claimed, uncontroversially I think, that the market for combustible cigarettes was declining. Later in the piece, and more controversially, I speculated that the part of the decline in demand for combustible cigarettes being caused by their substitution by vaping devices might slow because of policies being followed by some authorities.

    Although that speculation still has validity today in many parts of the world, significantly in countries with big populations, such as China, India and the U.S., in the U.K., there has been a development that is aimed at putting a different hue on things.

    In June, Javed Khan published his U.K. government-commissioned review into government policies aimed at reducing the incidence of tobacco smoking in England to 5 percent by 2030, Making Smoking Obsolete. As part of that review, Khan suggested the government should rethink how cigarettes look—that it “should use every part of the cigarette, and what’s in the pack, to communicate the harms of smoking and offer opportunities to quit.” He gave three examples of what he was getting at:

    • mandating anti-smoking messages on cigarette sticks, such as the number of “minutes of life lost” per cigarette;
    • using dissuasive colors (like green or brown) on individual cigarette sticks or hand-rolling papers; and
    • [including] cigarette pack inserts that provide information on the health benefits of quitting, supported by web links that direct smokers to support for stopping smoking.

    I am little interested here in the third idea, though my concern would be that the information provided would be grossly misleading as is much of the “information” currently churned out on tobacco smoking. And I would say just two things in relation to the first. One is that you must always be careful what you wish for. Before mandating the printing onto cigarette paper of the estimated number of minutes of life lost to smoking those cigarettes, I would suggest checking whether this might prove to be a promotion among some young people, especially in the short term. Youngsters, at least those who might be drawn to smoking, tend to be perverse in some ways as was proved fairly conclusively when, in the 1990s, students in the U.K. took the Death brand cigarettes to their hearts. The second thing I would say is that, as far as I am aware, we possibly all lose more minutes of life to pollution than smokers lose to smoking, but of course it is difficult to disseminate the pollution figure because you cannot write on air no matter how polluted it is.

    Perception Matters

    But it is the second idea that interests me most. To my way of thinking, you have to try to be objective when describing and talking about colors, not least because not everybody perceives or experiences the same color in the same way. For instance, when the idea of standardized cigarette packaging was first raised in Australia, it was suggested that the background color should be an unattractive olive green. This idea went down like a lead balloon with Australian olive producers, and references to olive green were quickly shelved.

    In perhaps trying to sidestep such issues, Khan makes what to me is the mistake of claiming that all greens and browns are “dissuasive,” though I should point out that in saying this I am assuming he is using the word “like” in the bracketed phrase “like green and brown” to mean “such as” green and brown, not colors that are similar to green and brown, a concept that only an artist might be able to understand. In support of this claim, he references a web survey carried out among 281 adolescents (16–20 years of age) in Norway, though that survey references at least one other previous survey, which was carried out in the U.K. The Norway survey, which seemed to have investigated the reactions to yellow-colored and green-colored cigarette papers (as well as reactions to products with printed warnings) rather than green and brown, was summed up in an abstract that concluded: “This study supports earlier findings and suggest[s] that the use of unpleasant colors and warnings printed directly on cigarette sticks could increase perceived harmfulness, reduce notions of good taste and possibly reduce desires to experiment with cigarettes in adolescence.”

    The first thing that has to be said about this conclusion is that it seems rather uncertain of itself. It is less than 40 words in length, but it manages to cram in at least three doubting words: “suggest[s],” “could” and “possibly.” This is unsurprising in a way. I doubt that it would be possible to find a color that was widely dissuasive, though a certain hue of a certain color might prove to be more so. What is an unpleasant color is in the eye of the beholder and might even be the subject of fashion movements. And, of course, people, especially young people, tend to get used to things changing. Pasta that was rendered blue, a color not usually associated with food, especially savory food, would probably meet some resistance from consumers, but they, especially the young, would surely get used to it.

    In any case, if there were such a thing as colors that were unpleasant in the eyes of everyone, as the conclusion appears to suggest, it seems to me that the research carried out in Norway would be rendered pointless. It stands to reason that an unpleasant color applied to a consumer product that was previously another color would make that product less attractive, though, once again, it is likely that, over time, consumers would get used to it. Not that I think such considerations would dissuade many of the people who carry out such research. Rather, these considerations would probably be seen as a reason why scientists should, in the usual way, call for further study into this issue—further study grants to be used to make life a little more unpleasant for smokers.

    There is also the issue of what green signifies. I would imagine that if a cigarette manufacturer launched on its own initiative a green cigarette, it would be pilloried by the anti-tobacco lobby, the media and possibly other manufacturers for trying to imply that the product was environmentally friendly and, by extension, healthier. Something similar has happened before in Europe, and the U.S. Food and Drug Administration makes such a link.

    Hypocrisy

    But the real issue is whether it is fair or, indeed, whether it makes sense to foist onto, say, a 40-year-old committed cigarette smoker in the U.K., a product variation that a web survey found made the product less attractive to a small number of adolescents in Norway. Not to mention that doing so amounts to rank hypocrisy. As above, the purpose of mandating that cigarette papers are available only in green or brown would be to make the cigarettes unattractive to smokers—that is, to ruin their enjoyment of them. Now the health evangelists might wring their hands and say they seek this only for the good of the smokers and their physical health, but they have to realize that once a smoker has made a decision to smoke, it is no business of those evangelists. Smokers are adults who are entitled, legally, to enjoy a tasteful, fragrant, satisfying and otherwise appealing product presented in attractive packaging. Goodness knows, they pay enough for this product.

    Now, let me explain what I mean by hypocrisy. Outdoor air pollution causes more deaths worldwide than tobacco smoking. It speeds up climate change and is a major cause of the biodiversity crisis, and yet we allow automobiles, which comprise one of the major causes of such pollution, to be sold in the most attractive forms imaginable. If it weren’t for hypocrisy, car design, like cigarette design, would have been heavily restricted so as to make people spurn these vehicles. Automobiles would come in a single “unattractive” background color adorned with health warnings covering everything from what happens when a pedestrian, especially a child, is hit by one to what happens to the lungs, especially young lungs, when they are hit by carbon dioxide and nitrogen oxide emissions. There would be no heaters or no air conditioning in automobiles, and the seats would be made from unadorned, used tires so as to make traveling uncomfortable. There would be no tops and no windscreens so that drivers and their passengers would have to wear goggles to keep (the quickly diminishing number of) insects out of their eyes. And, right now, somewhere, a person publishing a government-commissioned review would be recommending that all automobiles be fitted with square, solid-rubber wheels—brown ones with unevenly distributed knobs on them.

    Priorities

    Quite what will be the fate of the Khan review and his call for colored cigarette papers must be in doubt. For one thing, you have to wonder if any research has been done into whether adding pigments to cigarette paper would increase the toxicity of cigarettes, whether it would impede the technologies put in place to ensure that carelessly discarded cigarettes extinguish quickly, whether it would improve the taste of cigarettes and make them more attractive, or whether it would cause any other unintended—read: ill-thought-out—consequences. My bet is that the answer to those questions is no and that the only people who would gain in the short term from such a proposal would be the scientists who would be called on to carry out such research—and the follow-up research they would recommend.

    Secondly, the review was commissioned by a government that was falling apart and that, as I write, is de facto leaderless and wallowing in internecine battles as two woefully inadequate figures fight over who should take on the mantle of further undermining the U.K.’s tottering democracy and dragging further into impoverishment the long-suffering people of these increasingly septic isles. I write increasingly septic with conviction because, while the government is concerning itself about whether cigarette paper should be green, brown, puce, tomato red (my bete noire) or whatever color the most recent health minister might find unattractive, it is allowing water companies to discharge increasing and illegal amounts of raw sewage into our rivers and coastal waters.

    Why worry about the dangers of smoking when the air around you is putrid, the water around you is a lavatory and food crops are failing in a drought because, presumably, farmers are unable to irrigate given the low level and toxic nature of the rivers? Not to mention that, largely because of the Brexit dividend, “even if the crops were to survive, there would be nobody to harvest them.”

    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.
  • Key Takeaways

    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.
  • Thank You!

    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.

  • On a Mission

    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.
  • The Perfect Match?

    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.
  • How to Save 100 Million Lives

    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:

    1. 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.
    2. 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.
    3. 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.
    4. 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.).
  • Smart Connection

    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.
  • Leaving No Trace

    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.