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  • In the CatBird Seat

    In the CatBird Seat

    Photo: 22nd Century Group

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

    By Taco Tuinstra

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    For the Long Haul

    Photo: Taco Tuinstra

    Experts share their views on sustainability during the In Focus webinar.

    TR Staff Report

    Patricia Kovacevic

    Sustainability: We see and hear the word everywhere. But what does it mean for the tobacco and nicotine sectors? How are sustainable strategies meeting the needs of our businesses and stakeholders today while ensuring that future generations can also thrive?

    On May 5, a group of experts convened virtually at the In Focus webinar to explore how tobacco and nicotine are transforming to protect the future of people and the planet. Among other topics, they discussed product stewardship and leadership.

    The In Focus event series was launched in 2021 with the focus of the first event on tobacco harm reduction. The new series evolved from the prestigious Global Tobacco and Nicotine Forum and aims to explore vital themes in greater depth.

    The May 5 event featured five keynote speakers and two panel discussions and was moderated by Patricia Kovacevic, global legal and regulatory strategist and principal of RegulationStrategy.com.

    Pippa Bailey

    Pippa Bailey, head of climate change and sustainability practice at Ipsos U.K., a global market research and public opinion specialist, set out the concerns, perceptions and attitudes of people around the world toward climate change and sustainability. According to Ipsos, 83 percent of citizens across the globe believe that the environment is heading toward disaster. This is felt most acutely in South America where the impact of climate change has been greatest. Concerns around waste packaging and single-use plastics rank ahead of climate change, likely because this topic is very visible through dramatic images of polluted oceans and coastlines.

    Cigarette butts are the most littered product on the planet, and solving this problem will require both leadership and innovation, according to Bailey.

    Ipsos research shows that global citizens feel that they have given governments and businesses a mandate to address the environment. Sixty-two percent of citizens believe the Covid-19 pandemic was caused in part by people’s misuse of the environment

    Social and environmental concerns are becoming increasingly linked, and Bailey advised companies to avoid operating in environmental, social and governance (ESG) silos. Consumers do not think that way, she noted—so neither should companies. Instead, their approach should be more holistic.

    One challenge in achieving sustainability goals is the “say-do” gap, according to Bailey. While most citizens say that they care about the environment, their actions don’t always reflect their ambitions. Ipsos found that people tend to overestimate the impact of the actions they take. Businesses and governments, she says, need to make it easier for people to understand what more they could do to effect change.

    Behavioral change is a big part of getting consumers to recycle, according to Bailey. Citizens are not willing to pay extra to achieve that, however. They are willing to make the sustainable choice, but the financial and social benefits must be equal in their eyes.

    Erik Bloomquist

    Examining sustainability from a financial perspective, Erik Bloomquist, a global nicotine and tobacco investment consultant, noted that the main priority for investors is tobacco companies’ transition to harm reduction products that can drive returns in the future.

    In anticipation of the Foundation for a Smoke Free World’s 2022 Tobacco Transformation Index, Bloomquist presented data from 2020 to examine how much progress individual companies have made in shifting their business from combustible cigarettes to less harmful nicotine-delivery products. Product sales, capital allocation and expenditure are key criteria to assess that transformation, according to Bloomquist.

    He also presented data from the index showing how the companies’ price/earnings ratios compare with their Tobacco Transformation Index rating. Swedish Match, Philip Morris International and BAT topped the list.

    Bloomquist insisted that engagement, not exclusion, is key to progress and that investors support this.

    Adrian Payne
    Sarah Bostwick
    Liem Khe Fung
    Karen Hall
    Ronald Ngwira

    The first In Focus panel discussion, moderated by Adrian Payne, a consultant on corporate social responsibility and tobacco harm reduction, focused on leadership in a sustainable world.

    Sarah Bostwick, head of sustainability stakeholder engagement at PMI, described her company’s ambition to phase out cigarettes and build new businesses in healthcare and wellness. She said the company aims to generate substantial revenues from these segments.

    In the company’s 2019 sustainability materiality report, PMI set out how it accounts for internal developments and stays abreast of external trends. The company found that it could make the biggest difference by reducing the health impact of its products and addressing climate change. While the fist finding was expected given the health toll of smoking, the second was somewhat surprising considering that PMI’s operations have a relatively small environmental footprint.

    Bostwick also stressed PMI’s openness to stakeholders’ scrutiny and engagement.

    Ronald Ngwira, managing director of Pyxus Agriculture Malawi (PAM), detailed his company’s efforts to help meet global ESG targets. Working closely with the likes of Imperial Brands and PMI, PAM has reduced water usage by 60 percent. He said that building sustainability into the farmer base has been critical. From 2004–2010, Pyxus provided farmers with seedlings to help reverse deforestation caused in part by tobacco curing but with limited success. To make greater headway, the company decided to create its own tree plantations. Since 1991, Pyxus has planted more than 250 million trees worldwide, and in Malawi, PAM plants approximately 8 million trees each year.

    Ngwira said that Pyxus’ sustainability initiatives also cover actions to eliminate child labor and forced labor, with the company investing in education and product traceability, for example.

    Pyxus is leveraging its strong agricultural expertise to advance progress on key issues. In Malawi,  the company has not only become one of the country’s largest sustainable timber producers, but it has also invested in alternative crops, such as groundnuts, thus helping farmers diversify their income streams.

    Karen Hall, director of sustainability at Universal Leaf Tobacco Co., spoke about the challenge of growing tobacco as climate and social expectations change and are becoming more complex. In the face of global change, Universal Leaf is currently reviewing the resilience of its origins, setting ambitious but achievable goals, creating data-driven action to meet those goals efficiently and effectively, and preparing to adjust strategies as new information becomes available, she said.

    Liem Khe Fung, innovation director at cigarette paper manufacturer BMJ, pointed out that 99.9 percent of paper production relies on water and detailed his company’s plans to minimize water consumption without compromising product quality at a time when water is becoming scarce.

    Nathan Eaton

    Following the panel discussion, Nathan Eaton, executive director at NGIS, spoke about the potential of data and technology—particularly geospatial capabilities—to help address ESG challenges and commitments.

    While significant advances have been made in the fight against child labor, progress has recently slowed for the first time in 20 years. What’s more, it has been uneven across regions, sectors and age groups. Further progress will require new approaches and insights, according to Eaton

    Eaton described a collaboration with BAT to bring disparate data sources together. Showing a Google Map of southern Brazil—a major tobacco producing area—he demonstrated the ability to display variables such as distance to schools, access to safe drinking water and housing conditions—factors that may help identify at-risk communities and drive further progress in the fight against child labor.

    Juliette Le Roux Audren

    Juliette Le Roux Audren, environmental health safety product stewardship and sustainability manager for EMEA at Amphenol, argued that waste reduction requires a combination of regulation and innovation. Minerals such as tin, gold and cobalt are becoming scarcer, she noted, and the risk of scarcity is often underestimated. By redesigning and re-engineering products, the world can avoid scarcity. This will require companies to pivot from linear production cycles to circular production cycles. Le Roux Audren argued that companies need to navigate between risks and opportunities and that agile product stewardship will help them make more of their talents.

    Kevin Peng
    Jodie Clarke
    Edward Butt
    Gianmarco Guiduzzi

    The second In Focus panel, moderated by Edward Butt, group head of environment, social and government at BAT, centered on sustainable products and stewardship.

    Jodie Clarke, vice president of procurement and corporate security at Altria Client Services, explained that Altria is addressing societal and environmental concerns by engaging with all stakeholders. The company aims to create value not only for shareholders but also for society by driving responsibility through the value chain—for example, by reducing the harm to health associated with tobacco consumption; sourcing and distributing responsibly; striving for supplier diversity; supporting agricultural sustainability; promoting human rights; and ensuring ethics and compliance.

    Gianmarco Guiduzzi, head of sales and aftersales for Cerulean, detailed how Cerulean is putting sustainability at the heart of its equipment. He urged the industry to avoid working in silos and stressed that success requires the participation of people both upstream and downstream in the production process.

    For Guiduzzi, the challenge is how to replace existing raw materials for products such as cigarette filters with environmentally less harmful alternatives. For example, cellulose acetate—a critical component of cigarette filters—often ends up as litter on land and in water. Finding an alternative material with the same filtering characteristics is a challenge. Guiduzzi also challenged the industry to find an environmentally friendly replacement for polypropylene film in cigarette packs.

    One potential problem, according to Guiduzzi, is that each tobacco manufacturer is developing its own solution to these issues, and each will try to protect the associated intellectual property. While it is tempting for the larger multinationals to retain the fruits of their research and development, Guiduzzi said that, in order to create a level playing field and maximize the benefits, these solutions should trickle down to the wider sector.

    Guiduzzi also noted the rapidly growing popularity of nicotine pouches, which he said will present their own sustainability opportunities and challenges.

    Kevin Peng, advanced technology scientist at ALD Group, presented eco-friendly solutions developed by ALD, which are made from Poly (1,4-butylene succinate) (PBS), which is a biodegradable, semi-crystalline thermoplastic polyester synthesized through polycondensation of succinic acid and 1-4-butanediol, and another thermoplastic polyester, Polylactic Acid (PLA).

    Peng claimed ALD’s solution will reduce emissions as well as avoid/reduce waste. The device features a biodegradable shell and a long-life battery, and the lifecycle of the product is integrated into a holistic recycling system.

    Kate Rebernak

    Kate Rebernak, founder and CEO of FrameworkESG, urged nicotine companies to practice “radical transparency” in their operations, arguing that without such radicalism, revenues will decline, share prices will slide and investors will turn away.

    She pointed to the historical trust deficit suffered by the tobacco industry and urged companies to close the “say-do gap” by making sure that their actions match their words. As an illustration of how not to go about this, she cited U.S. companies publicly articulating their support for LGBTQ+ rights while at the same time financially supporting politicians who oppose such rights. She also gave the example of HSBC, which was recently reprimanded by the U.K. Advertising Standards Authority for advertising action against climate change while continuing to invest in fossil fuels.

    Rebernak suggested three ways for the tobacco industry to become radically transparent:

    1. Public-private engagement. She emphasized that a company cannot bring about change if it “isn’t in the room.” While acknowledging the hurdle presented by the Framework Convention for Tobacco Control’s Article 5.3, which aims to protect tobacco control policies from the commercial and other vested interests of the tobacco industry, Rebernak said the industry could attempt to overcome this hurdle by being radically transparent on its progress in tobacco harm reduction.
    2. Sharing business models, investments in R&D and marketing. The Foundation for a Smoke-Free World’s Tobacco Transformation Index, for example, calls for greater disclosure on each of the companies’ policy positions.
    3. Consumer behavior. Companies would be more successful at moving smokers away from combustibles to reduced-risk products if they were radically transparent about the risks versus the benefits. Crucially, she insisted, they should stop marketing products to children.
    Chris Greer

    The In Focus event also included a “fireside chat” on sustainability between Chris Greer, the president and CEO of Tobacco Reporter’s parent company, TMA, and Vincent Li of Hengfeng Paper, which celebrates its 70th anniversary this year. With 21 paper production lines and an annual production capacity of 230,000 tons, Hengfeng is one of China’s leading paper suppliers. For the cigarette industry, the company manufactures cigarette paper, plug wrap tipping base paper and paper for next-generation tobacco products.

    Vincent Li

    Papermaking has a considerable environmental impact due to the raw materials used (wood and water) and its energy requirements. In 2021, Hengfeng paper declared corporate carbon emissions of 3,139,297,000 tons. Following China’s national strategy to achieve peak carbon dioxide emissions by 2030 and carbon neutrality by 2060, Hengfeng aims to slash its CO2 emissions by more than a third in eight years.

    Because power generation and acquisition account for the lion’s share of Hengfeng’s global warming potential, it makes sense to focus mitigating measures there. The company plans to replace some of the coal it currently uses to generate power with energy sources that lead to less pollution. Among other initiatives, it intends to electrify parts of the papermaking process and build a 10 MW photovoltaic power station.

    Product design, too, offers opportunities to improve sustainability. By designing stiffer plug wrap papers, for example, Hengfeng enables cigarette manufacturers to use less acetate tow in their filters, thus reducing the proportion of a material that does not readily degrade in the environment.

  • Combating Waste

    Combating Waste

    Photo: Timothy Donahue

    ALD Group is designing products that will help combat the growing concerns surrounding e-cigarette waste.

    By Timothy S. Donahue

    Disposable e-cigarettes produce a lot of waste. Many of today’s most popular vaping products are designed to be discarded after one use. While less wasteful than disposables, single-use plastic pod products also generate a lot of waste as pods can’t be recycled due to the residues left over from e-liquids. As the vaping industry converts more combustible cigarette smokers, vapor manufacturers are seeking to develop products that are less impactful on the environment.

    ALD Group, a leading China-based e-cigarette manufacturer, said that many industries are also facing new environmental regulatory requirements in some markets and that consumers are demanding more sustainable products. Business owners are responding by investing more in corporate social responsibility programs and the R&D required to create more environmentally friendly products. However, those goals come with challenges.

    One of the issues ALD faced in the development of its new disposable products was that traditional recycling programs for vaping products were time-consuming, inefficient and costly. Manufacturers struggled to keep retailers and consumers actively participating in recycling programs, such as e-waste drop-off sites. ALD wanted to develop an eco-friendly vape solution that satisfied consumers and used biodegradable and recyclable materials. The company wanted to redefine vaping systems to align with eco-friendly trends.

    ALD Group founder and President Eric Ding told Tobacco Reporter that ALD’s vision is inseparable from society and the environment. Innovation is part of ALD’s mission, and with social responsibility as a core principle, its new disposable product is “at the very heart” of ALD, according to Ding.

    “Before the development of this product, we always made a concerted effort in promoting environmental protection and awareness, including the implementation of power-saving management systems, regular environmental protection activities and so on,” Ding said. “While we are always developing products in response to challenges being confronted in the global market, ALD balances this with paying close attention to the reminders and warnings from the natural environment. It is ALD’s view that the uncontrolled production and disposal of single-use products that contain plastics, chemicals, batteries, etc., is ecologically damaging and cannot be sustained.”

    The latest ALD vaporizer is equipped with the company’s innovative iCot coil technology, which is the subject of more than 60 patent applications. Currently named the “Eco-friendly, Biodegradable Vape Solution” (EBVS), the new device was created in response to customer and market demand. Last year, numerous international tobacco customers approached ALD with requests to make e-cigarettes more environmentally friendly, ALD said in a statement.

    “Additionally, our insights are that reducing the carbon footprint of products will become a mainstream demand over the next two [years] to three years,” the statement said. “There are existing policies which point to these developments, such as requirements for the Environmental Protection Agency in the United States, packaging regulations in Europe and so on.” The EBVS device was created through the “redefinition of materials, structure and appearance.” There were also several breakthroughs in heat resistance, endurance, chemical resistance and other properties. However, the company is not yet sharing many of these innovations until after the product goes to market.

    “The key focus of the development process was improvement of product structure and the evaluation of the materials’ properties. Following this step, there was the inspection and evaluation of the finished product’s performance and research on the safety of the aerosol. The project has so far gone through two years of development.”

    The ALD eco-friendly vape solution’s plastic components use an innovative combination of biodegradable raw materials that obtained the German DIN CERTO biodegradable certification. The shell of the device and the structural parts don’t come into contact with e-liquid and are all made of biodegradable materials.

    “The innovative factor is that our extensive research showed that in the e-cigarette sector, there was currently no ready-made solution for the application of biodegradable materials. During development, we screened dozens of materials, repeatedly verified product performance and, finally, determined the seven best mix[es] of materials,” ALD stated. “Our processes included the verification of material strength, chemical resistance, extractability and degradability.

    “Additionally, this product can be easily disassembled with special tools. We have achieved this through an innovative structural design. If the product is recycled, the battery and electronic parts can be recovered easily because of the easy-to-disassemble structure. Also, 100 percent of its structural parts (i.e., plastic parts, which amount to 23 percent of the product’s total weight) are degradable after disassembly. If the product is not recycled, the plastic parts are still degradable naturally in the landfill.”

    The EBVS product will be available in all ALD markets, according to ALD. The Engineering Validation and Testing evaluation was completed in mid-2021, and the shelf life and biodegradability testing are expected to be completed in mid-2022. The launch date for ALD’s new product is planned for mid-2023.

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • The Virtuous Loop

    The Virtuous Loop

    Illustration: Hauni

    Reducing waste and saving energy in manufacturing boosts revenues, improves customer satisfaction and reduces environmental damage.

    By George Gay

    Filter cigarettes and the hinge-lid packs in which, on many markets, most cigarettes are sold have been available in similar forms for 60 years to 70 years, and, during that time, their manufacture has been guided by increasingly specialized materials suppliers, brand owners and machinery builders that have become environmentally aware, commercially astute and technically advanced. So, on being asked to write a story looking at what tobacco machinery suppliers are doing to reduce the usage of energy and the creation of waste during the operation of their machines by tobacco manufacturers, my first thought was that perhaps, after so many years of development, there wasn’t much more that could be achieved.

    I needn’t have been concerned. While the central objects of the exercise, the cigarette and pack, remain, to the uninitiated at least, much the same, the focus and interests of machinery suppliers have broadened to take in everything from how their employees get from home to work through production materials to the new industrial revolution. There is even a focus by one company on the efficiencies of factories that might or might not use its machinery.

    Aiger recently installed a 350 MW solar power system on the roof of a new manufacturing bay. (Photo: Aiger)

    Nurturing a Mindset

    But what about the bit concerning how your employees get from home to work? How does that fit into the grand scheme of things? I hear you ask. Well, according to Courtland Macduff, Aiger’s sales director for Asia, this has to do with the idea that if you are going to improve the operational efficiencies of the equipment you offer in respect of such things as energy usage and waste, you need to build such thinking into the ethos of the company. Aiger had set up, for instance, a carpool system that allows its employees to get to work using less gasoline and creating fewer carbon dioxide (CO2) emissions than they would if they all traveled alone. Four years ago, the company introduced efficient waste management systems to deal with everything from machining waste to general consumables. And, on a larger scale, it recently installed a 350 MW solar power system on the roof of a new manufacturing bay, allowing it to function as a smart factory in which heating and lighting are based on zone scheduling, a system that has provided for a 20 percent saving in energy costs.

    As Macduff said during an email exchange, saving energy and reducing waste worked by example, so now, every design engineer was focused on smart solutions aimed at providing better machine performance because the faster a manufacturer was able to operate with the highest uptime, the less waste was generated. But this had to involve a joint effort. Machinery manufacturers could have only a limited impact on operational waste if factories didn’t maintain high efficiencies by optimizing their procedures and materials.

    But no operation could be perfect, so, at the same time, Aiger machinery “digested” rejects as far as possible by recycling tobacco shorts and reclaiming the tobacco. End-of-bobbin machine production wastage had been reduced as had glue application.

    In reducing energy usage, designers were, for instance, working on the optimization of drive selections and had already minimized the power consumption of heating elements by using a higher level of temperature control and new insulation materials to protect the areas heated to high temperatures, which was one of the major power drains. At the same time, designers were constantly looking to incorporate new technologies.

    In this regard, Macduff made the interesting comment that while new technologies were welcome, they came at a price, so they had to be introduced at the right time and for the right reasons. Tobacco companies would not pay more simply to have a machine that used less energy. Output mattered at the end of the day, and high efficiency was not negotiable.

    There was something of a trade-off to be made here. While modern machinery was generally faster and more reliable and consistently produced better quality products than was the case in the past, such improvements did not necessarily lend themselves to energy savings because the newer machinery used more controls, more automation and more drives.

    But there are other areas where savings of one type or another can be made, often working in conjunction with materials suppliers and tobacco manufacturers. Factory floor layouts could be optimized, said Macduff; optical fibers could replace cables; new, harder-wearing materials could ensure that parts had longer lives; and the 3D printing of parts at customer sites could cut the impact of transporting such materials. Coreless bobbins could be introduced, filters and packaging materials that are more environmentally friendly could be brought in and the use of plastics could be reduced in respect of packaging materials for tobacco products and even machinery exports.

    Finally, Macduff said Aiger was one of the leaders in machinery manufacturing flexibility, and the modular concepts engineered into its machinery helped to keep efficiencies high in the face of brand changes, which always created a degree of startup waste.

    Montrade now offers technology to help tobacco companies to manufacture plastic-free filters. (Photo: Montrade)

    Win, Win, Win

    Meanwhile, Montrade’s senior sales manager, Emanuele Massari, said his company’s machines were designed so as to map product flow because the focus was on maximizing product quality while minimizing material consumption and waste. The company had a division dedicated to the research and development of sensor and process control systems that, once integrated into its machines or even those of other companies, enhanced productivity optimally. “It is an essential step of the migration toward industry 4.0,” he said- in what I took to be a reference to the sorts of new processes that focus on interconnectivity, automation and machine learning.

    Artificial intelligence provided all Montrade’s sensors with auto-learning skills, so systems improved themselves autonomously, he said. And such autonomous maintenance initiatives helped provide for an increase in machinery MTBFs (mean time between failures), which, in turn, led to “a righteous path of real sustainability.” “This synergy allows us to optimize and reduce the material and energy consumption and the waste of spare parts,” said Massari.

    Sustainability was said to be one of the main drivers at Montrade because working to reduce waste and save energy created what Massari described as a “win-win-win virtuous loop.” The first win was that customers could use Montrade’s equipment to manufacture more high-quality products while spending less, thus increasing their revenues and consumer satisfaction. The second win saw Montrade’s business boosted because its customers were satisfied. And the third win meant that the environment and, consequently, the global community profited from the reduced impact of the tobacco industry.

    Massari said that his company’s machines were designed to constantly monitor the consumption of utilities with an eye on reducing usage. The levels of electrical consumption and compressed airflow rates, etc., were always available to view on human-machine interfaces, which was a standard feature not an optional one.

    Another issue on which Montrade had been focusing its sustainability efforts concerned the materials used on its machines. The company collaborated closely with its customers and with materials suppliers to rethink the product as more eco-friendly and more fit for the final consumer. Recent examples of this approach could be seen in the company’s machines for producing biodegradable cigarette filters and paper tubes. A unique crimping technology allowed conventional acetate filters to be replaced with paper ones while reducing by about 20 percent the paper consumption typical of other machines available on the market.

    As well as offering new filter-making equipment, Montrade also revamps older equipment to produce eco-friendly products. “For instance, we offer our paper crimper in a free-standing configuration to retrofit existing filter makers to convert them to make plastic-free filters,” said Massari. “In the same way, we have also recently developed a wide range of conversion kits for existing packing machines to reduce the wrapping materials and/or replace them with plastic-free ones.”

    The Holistic View

    Another way of looking at reducing waste is to examine just tobacco waste but over complete operations. Marco Castro, global head of Hauni Advanced Services (formerly Hauni Consulting), said that while the whole tobacco industry was currently working on reducing waste, his division had, in July 2020, set itself the ambitious challenge of approaching this objective in a different way. And, in doing so, it had pioneered a completely original approach, tobacco waste prevention (TWP), by developing an integrated methodology for preventing waste at critical points in green leaf threshing plants (GLTs) and during primary processing and secondary manufacture.

    Interestingly, TWP can be applied to all production facilities regardless of the machine base. “Our approach is strictly based on the existing conditions of our customers’ brands,” said Castro in announcing the initiative. “This enables them to prevent waste quickly and successfully, maintaining these gains over the long term.”

    TWP is said to offer immediate, measurable improvements, and figures said to have been achieved already in customer projects are impressive: The reduction of waste generation in GLT processes is up to 50 percent, in the primary it’s up to 70 percent and in the secondary up to 60 percent.

    “The first step is to quantify the potential for waste prevention at the customer’s site,” said Castro. “This is the basis on which we implement our TWP methodology, which aims to achieve the physical limits for waste prevention for the respective combination of blends, brands and equipment as quickly as possible.”

    The approaches adopted as part of TWP are said not only to prevent waste but also to reduce production complexity and technical costs by standardizing blend/brand and equipment combinations where they are relevant to waste.

    The starting point for every TWP project is the manufacturer’s own production facility. “This means that we not only strictly consider their specific blends and brands but also implement the TWP specifically for their existing production equipment,” said Castro. “No investments in equipment are necessary to achieve this new, optimized level of waste and costs—at least initially. Of course, on request, we can advise our customers on the potential of machine upgrades or other changes to their equipment while focusing on waste prevention.”

    What might well appeal to tobacco manufacturers is that the price of implementing TWP is performance-based, something that Hauni says underlines its belief in its new service. “We are certain that we can deliver the savings we promise our customers after quantifying the waste situation,” said Castro. “That is why payment for this service is performance-based. If we achieve less than we promise, the price is reduced. If the improvement falls below a set level, our clients pay nothing.”

    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.
  • Great Expectations

    Great Expectations

    Photos: Cavendish Lloyd

    Cavendish Lloyd has started growing low-nicotine flue-cured tobacco in Zimbabwe for shisha.

    By George Gay

    Although it’s unfashionable to say so, I believe there is something most appealing about some aspects of tobacco and the tobacco business, not least because they are naturally part of the Slow Movement. Indeed, they were part of that movement long before it came into existence in the mid-1980s with the realization that there was something to be gained in taking the time to savor certain things—and something being lost in doing things too quickly.

    For instance, though many welcome efficiencies have been introduced to the leaf tobacco business over the years, it always had about it, and still has, a comfortingly unhurried air. I mean, there is, after all, no point in a farmer, at the start of the growing season, standing over her seedlings and shouting, “ready, steady, grow!” And who in their right mind would want to walk quickly through a tobacco warehouse when he could dawdle and savor the aroma?

    Of course, not all aspects of the tobacco business are slow, nor should they be. There is a lot to be said for introducing the sorts of machinery updates and general processing efficiencies and manufacturing efficiencies covered in another story in this issue (see “The Virtuous Loop,” page 36). But, at the same time, there are other aspects of the business that have contraventions of the tenets of the Slow Movement that are to its detriment. I find it sad, for instance, to see smokers racing through their cigarettes as they stand in the cold outside pubs and offices.

    Low-nicotine Virginia flue-cured tobacco has the propensity to absorb the high levels of molasses and flavors that Shisha manufacturers require.

    Unseen Advantage

    Luckily, however, there is a type of smoking that still lends itself to savoring the moment, which comprises mainly the enjoyment of products such as fine cigars, pipes and shisha. Shisha smoking, especially, tends to be part of a relaxed social occasion, and perhaps that is why its appeal is increasing at a time when that of other combustible tobacco products is not.

    And that increase in appeal is occurring, I suspect, without too many shisha smokers realizing there is an unseen advantage in their choice of product, the tobacco component of which could have been grown in a more environmentally friendly way than that of many other tobaccos. Indeed, I, too, didn’t know of this potential environmental advantage until I corresponded recently on the subject of low-nicotine Virginia flue-cured tobacco (LNFCT) with Koen Monkau, the president of Cavendish Lloyd, and Frank Magama, the head of the Plant Breeding Division of the Tobacco Research Board’s (TRB) Kutsaga Research Station in Harare, Zimbabwe.

    Monkau told me his company was experimenting in Zimbabwe with growing LNFCT for use in shisha products, and I assumed the aim of using such tobacco was to try to wean people off smoking as is being attempted in the U.S. in the case of cigarettes. But Monkau explained that, in general, shisha manufacturers required LNFCT (less than 1 percent nicotine) mainly because of its physical characteristics. This style of leaf was pale, white-yellow and very thin, he said, and it had the propensity to absorb the high levels of molasses and flavors that needed to be added to it.

    But this style of leaf also has a number of advantages when it comes to the environment and the cost of producing it, partly because it is closer grown than is standard flue-cured tobacco and partly because of a major reduction in the need for chemical applications. Magama told me it was expected that LNFCT would have lower costs of production with significant savings being made from reductions in the use of fertilizer and the cutting out altogether of systemic and contact suckercide applications. Labor savings would be made because topping would not be required, something that normally involved making several rounds of a crop. And energy and time savings would be made on curing the resultant thinner and smaller leaves.

    At the time of this writing, Cavendish Lloyd was in the process of grading its first trial crop of LNFCT.

    Growing Trials

    Cavendish Lloyd was established in 2011 by Monkau, who has been involved in tobacco for more than 25 years, and his wife, Jiayu Wang, who is vice president of the company. The company’s largest operation in respect of staff numbers is to be found in Zimbabwe, but it operates in the Far East, the Middle East and Europe as well as in other parts of Africa. Overall, it has about 100 employees. It is active throughout the tobacco chain, from the growing of tobacco to the marketing and distribution of cigarettes, though, currently, it does not directly operate any leaf processing or tobacco manufacturing facilities—or, I should point out, offer Cavendish tobacco. It is the exclusive distributor of KT&G products in Zimbabwe.

    Given the company’s close association with Zimbabwe, and the country’s favorable climatic and soil conditions, it is not surprising that this is where Monkau is currently conducting, in conjunction with Magama’s team, LNFCT growing trials and where he intends to expand into larger scale production during the next season, which will run from later this year into next year. And it is not surprising, either, that Magama shares this enthusiasm for Zimbabwe. He told me in an email exchange that he believed there was a combination of factors that made Zimbabwe a suitable country for growing LNFCT, including its resilient grower base, the presence of supportive merchants, a long tradition of growing the crop, and soils that were inherently low in nitrogen, which allowed growers to have good control of plant nutrition when producing LNFCT.

    Asked whether LNFCT varieties were more or less difficult to grow than traditional varieties, Magama said that both required the same attention to detail and good management, though, in the case of LNFCT, some key agronomic practices had to be modified, owing, for example, to the previously mentioned need for less fertilizer and the absence of topping. He added that there was so far no clear evidence about whether it was better to grow LNFCT in the dry lands or as irrigated crops, but he said it was important to note that excessive irrigation or precipitation limited growth and nicotine accumulation through leaching of nitrogen while excessively dry conditions resulted in high nicotine accumulation. Much of the year-to-year variation in nicotine content in a variety was due to differences in rainfall, with everything else being equal.

    At the time of writing, Cavendish Lloyd was in the process of grading its first trial crop of LNFCT, which was grown during the 2021–2022 season by a farmer operating near Marondera, Mashonaland East, and with the help of the Kutsaga team. But it has ambitions to quickly increase its production of LNFCT in Zimbabwe, and it aims, eventually, to become a major player in LNFCT by expanding production into Zambia, Malawi and South Africa.

    Koen Monkau (left) created Cavendish Lloyd in 2011.

    Exponential Growth

    Monkau believes that central and southern Africa can provide significant volumes of LNFCT at competitive prices. And, importantly, having done his research, he believes there is a ready market for such tobaccos. “Within the tobacco market at large, there are some segments that are in decline or stable and other segments that are growing fast,” he told me in an email exchange. “The shisha market is definitely in the last category, with even exponential growth expected in the next few years.”

    Given such opportunities come to fruition, it seems likely that other players will be attracted to growing LNFCT in Zimbabwe, a fact Monkau hinted at when he made the point that establishing an LNFCT production industry in Zimbabwe would be an important step in helping to expand and diversify the country’s tobacco client portfolio.

    Currently, no other companies are growing low-nicotine varieties in Zimbabwe or taking part in production trials. However, it seems that interest is growing. Magama told me the TRB had been involved with low-nicotine trials for the past five years, working with many merchants with different objectives and end-use applications. And the board had been selected, he said, to be part of a three-year global study on low-nicotine tobacco being coordinated by a taskforce of the Cooperation Centre for Scientific Research Relative to Tobacco.

    The plant breeding division of the TRB plays a vital role in low-nicotine trials, conducting research and making available where appropriate the results of that research. The division also makes recommendations when called upon to do so by the Tobacco Industry and Marketing Board (TIMB) and other stakeholders. Again, such cooperation is vital because the TIMB is responsible for authorizing the growing in Zimbabwe of any tobacco variety, and it is the TRB that carries out value for cultivation and use studies, and, on the basis of those studies, recommends or not the variety in question.

    Furthermore, two other government departments, the Seed Services Institute and the Plant Quarantine Services Institute, are involved in ensuring only suitable varieties are grown by processing seed permits and ensuring all phytosanitary issues from the country of origin are addressed before seed importation is made.

    It might seem from the above that obtaining permission for experimenting with new varieties would be complex, but, for instance, authorization for the seed used for Cavendish Lloyd’s trials was processed for the company by the TRB.

    The seed in question was obtained from a company based in Europe that has long cooperated with Zimbabwe and is a stable source of supply. But, in any case, Magama said that, depending on the results of the trial, it was possible seed could be sourced elsewhere if it were necessary to address limitations the original seed might have. Further, local breeding efforts could be activated should there be a business case for this nascent tobacco type, he added.

    Finally, without wishing to interrupt the Slow Movement that inevitably controls the scheduling of research and trials, I need to point out that Monkau intends to introduce some allegro con brio into his enterprise. “We plan to grow 1 million kg green from season 2022–2023,” he said. “This might seem ambitious, but we have spent a lot of time on research and are confident we can make it.”

    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.
  • An Elegant Solution

    An Elegant Solution

    Illustration: Airco Processing Technology

    A new technology allows cigarette manufacturers to use CO2 from their steam boilers for tobacco expansion.

    By Stefanie Rossel

    Besides being an unhealthy choice, cigarettes and their production have a substantial impact on the environment. A study published by Imperial College London in 2018 found that the cultivation and processing of tobacco to make the 6 trillion cigarettes manufactured worldwide in 2014 generated 84 million tons of carbon dioxide (CO2) emissions—approximately 0.2 percent of the global total. CO2 is the primary greenhouse gas emitted through human activities and thus a major contributor to climate change.

    Leading cigarette manufacturers have sustainability programs in place to reduce their carbon footprint throughout the supply chain. A new, improved technology developed by Airco DIET’s subsidiary Airco Process Technology (APT) allows them to optimize their production processes further.

    Founded in 2020, APT offers solutions for carbon capture and biogas upgrading, thereby benefiting from its parent company’s long-standing experience as a manufacturer of advanced process plants. The Danish company is best known for its Dry Ice Expanded Tobacco (DIET) facilities, of which the company has installed more than one hundred worldwide.

    Keld Laigaard

    “The diversification with Airco Process Technology makes a lot of sense for Airco DIET as we have worked with large international projects for more than 35 years,” says Keld M. P. Laigaard, sales director at Airco DIET. “And all these projects have involved our DIET plants, which includes working with pressurized and liquid CO2. The Airco employees are all highly skilled in working with CO2 and executing large-scale international projects, and we have been successful in transferring these unique abilities into the new company.”

    Generating heat and power is essential for many industrial processes. Primary processing represents about 80 percent of the total energy consumption of cigarette production, leading to a correspondingly high level of emissions. APT’s carbon capture technology enables manufacturing sites to recover and purify the CO2 before it enters the atmosphere.

    Capturing CO2 from flue gas (a mixture of gases produced by the burning of fuel or other materials in power stations and industrial plants in which the amount of CO2 is limited) requires a thermal-driven process. Several technologies are currently available; they differ in the amounts of heat required to pick up CO2. APT focuses on solutions that require the lowest possible heat input. Its technologies can be applied to high CO2 concentration sources in which CO2 content exceeds 95 percent, such as biogas, fermentation and certain chemical and petrochemical waste streams. It is also apt for low-concentration sources with a CO2 concentration of more than 3 percent, which includes power stack gas, waste incineration, engines, turbines and similar types of waste streams.

    From Buyer to Self-Supplier

    “While mostly working outside the tobacco industry, Airco Process Technology also assists Airco DIET’s customers with its technologies,” Laigaard points out. “Our customers are in a unique position as they all have steam boilers that are emitting CO2 while they also use CO2 in the DIET process. APT is now able to provide CO2 capture plants that will extract the CO2 from the boiler exhaust, clean and then liquify the CO2 for usage in the DIET plant.”

    At present, most tobacco factories with DIET plants purchase their CO2 from a third-party source while they emit CO2 on the same property. DIET plants usually run 24/7. In the summertime, though, CO2 supply can be scarce, and most manufacturing sites only have CO2 storage tanks that last for two days or three days.

    By capturing their own CO2, the factories will become self-reliant and thereby secure the main utility needed in DIET plants. “Being independent becomes more and more important as the world experiences supply chain problems together with a higher global use of CO2 in connection with many of the new green fuels,” states Laigaard. “I’m sure this increased CO2 usage will lead to shortages in various regions.”

    In addition, the factory’s carbon footprint will be lowered. The captured CO2 will be made 100 percent food grade and equal to what is presently supplied by high-quality CO2 suppliers, Laigaard says.

    APT also upgrades biogas plants to make them operate more efficiently. The company has developed water-based and amine-based biogas technologies that, besides capturing the biogas, convert the biogas not only into natural gas grid specification methane but also into high-value products such as liquid bio methane and bio-CO2. APT has also filed a patent application for a liquefaction pretreatment polisher designed for trace CO2 removal from biomethane, also known as deep CO2 removal.

    Europe and the U.S. are the most promising markets for APT, according to Laigaard. “Airco Process Technology has only been online for two years but has already overtaken Airco DIET in size—and it continues to grow at an unprecedented rate.” 

    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.
  • Current Thinking

    Current Thinking

    Matt Holman (left) and Mike Ligon during TMA’s 103d annual meeting

    Matt Holman discusses the CTP Office of Science’s aspirations along with the challenges to achieving them.

    By Timothy S. Donahue

    The U.S. Food and Drug Administration has been busy. Before it had the chance to finish the first round of premarket tobacco product application (PMTA) reviews, the agency’s Center for Tobacco Products (CTP) was charged with also regulating all synthetic and other nontobacco-derived nicotine products. Manufacturers must submit PMTAs for the newly regulated products by May 14, 2022.

    During the 103rd annual meeting of Tobacco Reporter’s parent company, TMA, Mike Ligon, TMA board chair, and Matt Holman, director of the FDA CTP’s Office of Science (OS), discussed the regulatory agency’s challenges and lessons learned in regulating electronic nicotine-delivery systems (ENDS) and other novel tobacco products. It was the first time Holman had spoken publicly since Congress granted the FDA the authority to regulate synthetic products, and Ligon emphasized that the audience was eager to hear Holman answer questions.

    Holman made clear from the beginning that he heard during the conference that the FDA needs to do a better job with consistency, transparency and predictability. “That’s something I’ve strived to make sure we do as office director, but I’m hearing we’re not doing as good a job as we need to,” said Holman. “That’s something I’m certainly taking back to my colleagues to figure out … I think the point I’ve heard the most along those lines was just the timing and not knowing what the timing would be [for] taking action on applications. We need to do a better job of that.”

    After a federal judge ordered the FDA to complete a majority of PMTA reviews by Sept. 9, 2021—one year after the deadline for PMTA submissions—Holman said the review process was still new and that it was a challenge to build the programs necessary to complete reviews on time. He said that staffing the agency, for example, was a giant undertaking. “Something folks outside the agency don’t think about all that much is staffing levels. When I took over this position, we had something around 325 staff members that were in the office,” Holman explained. “And now, five years later, we have about 575-ish. Any of you who have not been in the federal government and tried to hire—it is a huge-level effort to hire that many people in that period of time; a huge-level effort … half my staff have come on board during the pandemic and have not met colleagues in person.”

    Holman said that the big-picture goal for the OS and FDA alike is creating an offramp for smokers to transition to less harmful products while minimizing any potential on-ramps for youth initiation, adding that youth use has been “decreasing the last couple of years, which is a really positive thing.” He also explained that the agency often hears a lot of criticism, some undeserved, surrounding the misinformation disseminated into the public by “stakeholders” (anti-nicotine organizations, health agencies, tobacco control groups, regulators and industry players).

    “We take all the feedback seriously … And we certainly actively encourage all stakeholders to engage with one another. I would hope to be able to sit here and say that I’ve been more successful than I have in that. There’s still a lot of resistance. There’s still a lot of really emotional, heated exchanges and feelings toward stakeholders,” said Holman. “I’m even seeing a shift in some of the stakeholder groups that have been aligned [previously] and now aren’t
    necessarily aligning.

    “I’ve just celebrated 20 years at the FDA in December. That entire 20 years, I’ve spent really actively engaging with all stakeholders, and I think it’s critical as regulators that we hear from and we talk with and we communicate—and we’re trying to be as transparent as possible—with all stakeholders. Unfortunately, I don’t control all the stakeholders. And I keep carrying this message forward. It doesn’t always get heard so well. And so, it’s still very much a work in progress.”

    Ultimately, Holman said the FDA is trying its best to base its decisions on the “good” science and not a specific source of data. “I don’t even care who the author is. I mean, the science is science,” he said. “Unfortunately, we have a lot of stakeholders that don’t look [at] it that way, and a lot that think they know what the policies shouldn’t be, and they want to come up with the science to demonstrate that. But we’re very aware of that. We’re very much looking out for that type of thing.”

    We take all the feedback seriously … And we certainly actively encourage all stakeholders to engage with one another.

    Matt Holman, director of the FDA CTP Office of Science

    Being Approachable

    Holman said he understands the frustration of trying to combat misinformation. On the FDA’s side, he wanted to clarify at least some of the misunderstandings and misperceptions he commonly hears when stakeholders discuss the FDA. For example, he had recently heard a stakeholder saying that the FDA only had one economist on staff. “FDA has more than one economist,” he said. “The CTP has more than one economist. I want to be clear about that … You can agree or disagree with where economists land on their analysis. That’s fine. But just to say that we only have one economist—this concern is just a major misrepresentation of the situation.”

    There are also the rumors that the regulatory agency doesn’t read all the docket submissions (everything submitted to the agency, whether a comment on rulemaking or a PMTA). Holman said the quality of the submissions vary greatly, but the agency is required by law to look at every single one. “To suggest that the FDA’s regulators don’t carefully consider the data when we’re weighing options … at the end of the day, we have a public health mission where we’re here to serve,” said Holman. “We’re not here to oppose anyone. I look at data from all sources. I don’t care who it comes from … to suggest anything otherwise, at least for the FDA, honestly, it’s a bit insulting … you can criticize all you want about where we come out on decisions and rulemaking, but at the end of the day, we are very much a science-based organization.”

    The agency also tries to consider the unintended consequences of regulatory action, according to Holman. However, he explained that determining these factors, such as the growth of a black market, is complicated because there’s often not a lot of data. “It’s very much [speculating] what’s going to happen to the black market or the gray market when we take an action. We don’t often have data on that. So it’s really modeling or predicting,” he said. “We absolutely consider that because, at the end of the day … as I like to say to my staff, we’re trying to tackle this with a scalpel not a machete. Because I think that’s how you sort of leave this fine line that we’re all trying to leave here.”

    Ligon asked Holman whether the FDA’s approach to regulating next-generation tobacco products was a workable standard. Ligon wanted to know if the FDA still recognizes that tobacco products exist on a continuum of risk, with combustible cigarettes being the most harmful (the “continuum of risk” is the scientific concept that some nicotine-delivery systems are more harmful than others). Holman said that while the FDA doesn’t know precisely what the relative risks are of the different products on the spectrum, the agency still believes in the continuum of risk.

    “The challenge is having strong, rigorous data that we can stand behind and say, ‘Yes, we know this product is lower in risk than that product.’ That’s one of the biggest challenges still, I think, figuring out how to collect that data, what are the right types of studies, what’s the sort of full body of data that we need to be comfortable saying, ‘Yes, this product is down the continuum from that product,’” he said. “I think the other big challenge in this is … communicating with the consumers because if they don’t understand—and we know there’s a lack of understanding—a lot of misperceptions and misunderstandings [begin to grow].”

    Workable Solution

    Communication is key. Holman said that to better understand the process and the challenges that stakeholders are suffering, the agency needs to better communicate its thought processes and goals. Before the Covid-19 pandemic limited stakeholder interaction, the agency would hold workshops to hear directly from stakeholders about their concerns. Holman wants to bring back that level of communication.

    “We need to do workshops. It’s been almost a year since we’ve done the last workshop, and a whole heck of a lot of things have happened in that time period. We’re definitely going to take that back with our staff and talk about how to put some workshops together because the feedback we’ve gotten to date on the workshops we have done [previously] have been very positive,” said Holman. “Folks really appreciate the discussion. Not only to hear what we have to say, but just talks among attendees and some shared ideas and thoughts.”

    When asked if there were any suggestions from TMA attendees for workshop concepts, several stakeholders offered ideas. One stakeholder wanted to discuss with the FDA how PMTA data is managed and submitted to the FDA. The participant said that his company had received a deficiency letter; however, the additional data requested was already included in the company’s PMTA. Holman said that type of seminar would be a “win-win” for both the agency and the stakeholders.

    Another attendee suggested that the agency bring in consumers to allow the FDA to hear from them directly and to understand the consumers’ thoughts, behaviors and attitudes as well as the impact of potential regulations on possible future consumer behavior. “I just feel like there’s a gap,” the attendee said. “I really think that would do a lot in being able to bring all of us together to promote the science.”

    Other attendees wanted to have a better understanding of how the FDA comes to its decisions and what some of the common errors were in PMTAs that had received marketing denial letters. “I’m suggesting a little bit [of a] deeper dive by product category into the top 10 reasons you’re finding that something succeeds and [the] top 10 reasons you’re finding that something fails,” the attendee said. “I’m talking more about … here are the reasons why these fail … here’s why this doesn’t work.”

    Holman said the fundamental goal of the FDA is moving people down the continuum of risk. He said that the consumer
    is the most important part of the equation and that all stakeholders need to be better at getting less harmful tobacco products into the hands of adult combustible smokers. He said that he would hope that five years from now the tobacco product marketplace looks very different. Holman suggested that manufacturers with the ENDS products that exist now, alongside the “products we’re not even talking about that I know are in the pipeline” at various companies, should also consider using the agency’s modified-risk tobacco product (MRTP) pipeline
    moving forward.

    “I would hope that our MRTP program sees a lot more action and that we see a lot more modified-risk statements on products … And again, I think the lack of dialogue amongst stakeholders, and the lack of sort of any level of agreement, really thwarts communication because the information the consumers are receiving, it’s all over the place, right?” Holman suggested. “There’s a lot of misinformation out there that certain stakeholders convey that just doesn’t reflect the science. Just flat out doesn’t … if we could just get stakeholders to agree on some basic key communication points that we would all collectively share with consumers, I think we could really drive this forward. But right now, consumers are just confused.”    

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • Taking Charge

    Taking Charge

    Photo: medwedja

    Regulators, manufacturers and consumers all bear a responsibility to minimize the environmental impact of the batteries used to power electronic nicotine-delivery devices.

    By George Gay

    A local councilor wrote a letter to me in February that went out to all his constituents, and, since he had taken the trouble to write at a time when elections weren’t due, I felt I should do him the courtesy of replying. So I did. I expounded at length my theories about how, in the face of the current existential environmental crisis, we should do away with all private cars by starting a campaign at the local level. (If you’re ever having trouble sleeping, call me, and I shall go through my ideas with you.)

    Abolishing private cars, I pointed out, would cause, for instance, a colossal saving on road maintenance costs, a huge fall in serious road accidents, a dramatic drop in pollution, a life-enhancing saving for the health service, an increase in community cohesion and an astronomical fall in criminality. I also pointed out that switching to electric cars will not save the environment partly because, according to recent research, nanoplastic contamination has been polluting Greenland’s ice cap for at least 50 years, and a quarter of the polluting particles are from vehicle tires.

    “I think it’ll be a brave person who tries to ban them [private cars],” replied my councilor, who, as far as I can tell, is an intelligent, well-meaning person. “Inconsiderate parking forms by far the largest part of my email box,” ran his next sentence.

    One of my concerns here is that I am going mad. What I seem to be hearing is that you would have to be afraid of public reaction if you tried to ban private cars, even though one negative aspect of the use of such cars is on the uppermost rung of the angry ladder within many people’s minds. Surely, if you harnessed this anger and appealed to people to think about the existential crisis as it pertains to their children and grandchildren, you would have the basis for a campaign.

    But I don’t think so. I believe a lot of people are able to function reasonably normally while keeping multiple opposing views in their minds simultaneously. “Yes, I’m worried about the effects of climate change, and I would do anything to prevent harming children, but I wouldn’t give up my polluting car for anything.” Hmm. Have you ever thought about having your head examined, you unbelievably irrational, selfish person?

    E-Cigarettes

    But perhaps, completely out of character, I’m being unfair. Perhaps such confused thinking is not surprising in a complex world. Where, for instance, should one stand in respect of e-cigarettes and other battery-driven devices aimed at helping smokers switch to less risky products? Sure, there are huge, direct personal health benefits to be reaped by smokers of combustible cigarettes switching to e-cigarettes, but what about the indirect negative effects caused by the careless discarding of e-cigarette batteries, about which this piece is mainly concerned, and other materials? How do these effects, which impinge upon nonusers too, compare with those of discarded cigarette butts? And where do heat-not-burn devices, with their batteries and butts, come into the equation?

    What’s the problem, you might ask. Well, from my admittedly less-than-comprehensive internet research, most electronic vapor devices use lithium-ion batteries, which are compact, complex devices designed without disassembly in mind, though various of their elements can be recycled. Simply put, they comprise a cathode, anode, separator and electrolyte. Battery technology is developing all the time, but, currently, they might contain, among other things, copper, aluminum, cobalt, nickel, manganese or rare earth metallic elements. And, of course, lithium. Given that these batteries contain heavy metals and toxic chemicals, disposing of them in landfill sites, where they will eventually leak, gives rise to concerns about soil contamination, water pollution and combustion.

    The good news is that these batteries, or parts of them, can be recycled, and, in many countries, there are facilities for such recycling. The bad news is that recycling is not without its problems. It might, for instance, involve chemical or mechanical separation, and/or smelting and, as part of these high-energy processes, give rise to significant electrical, chemical and thermal issues and costs.

    Another concern lies in the figures. Some figures suggest that “up to” 90 percent of battery elements can be recycled, which is less than comforting because it could mean anywhere from 0 percent to 90 percent. And, in any case, this speaks only to the percentages of battery materials that can be recycled. Because of technical, economic, logistical, regulatory and other factors, fewer than 5 percent of lithium-ion batteries are currently recycled.

    This 5 percent figure refers to all lithium-ion batteries, so, given that car batteries are of the same type, either there will be a big push to make the recycling of such batteries more efficient than it currently is, or we are going to wind up with a mountain of used batteries in landfill sites. Again, from my reading, in the absence of organized, large-scale recycling operations, battery manufacturers will continue to concentrate on lowering the costs of production and increasing battery longevity and charge capacity. Increasing battery longevity provides an advantage, but it should not be allowed to stand in for recycling.

    Fortunately, there are commercial and other benefits to recycling, but, as above, they are often canceled out by the perceived downsides. One swing factor is the price of the metals concerned. If the cost of mining them is higher than the cost of recycling them, then recycling is likely to get a look in; otherwise, probably not. That is the logic of the free market. But this is not a simple matter because decisions are influenced by the fact that mines and recycling facilities are capital intensive and take a relatively long time to set up whereas CEO bonuses are determined on the basis of annual reports. Such short-term factors are also likely to cloud the advantage that recycling might prevent future shortages of cobalt and nickel, for instance. And it might encourage battery manufacturers to ignore the fact that metal supply chains often start in a limited number of countries, some of which are not politically stable.

    So far, I have written only about vaping devices, but there are different types, and it is perhaps unfortunate that disposables seem to be on the rise. Whereas rechargeable devices will last a while and have easily removable batteries that, in many countries, can be taken to local recycling centers, disposables last a matter of days, have batteries that cannot be removed easily and must be taken in their entirety to specialist e-waste centers where they are available.

    While it is reasonable to expect smokers to dispose of cigarette butts responsibly, the dismantling of some vaping devices and the disposal of their constituent parts might be a stretch for the average brain. (Photo: Sergey)

    Taking Action

    So what are e-cigarette suppliers doing about the environmental impact of their products? Some are required to take seemingly modest action—given the state we are in—under regulations such as the EU’s Directive that sets targets for the collection, recovery and recycling of waste electrical and electronic equipment in general. Some are trying to do the right thing by providing online advice about how consumers can dispose of vaping device elements so as to ensure as far as possible that these elements are recycled. Some are setting up systems that allow customers to return used devices so that the suppliers arrange for recycling, sometimes in respect of all devices, including those of other suppliers. One Tobacco Reporter report based on a story in the Budapest Business Journal in August said Philip Morris International had inaugurated an e-cigarette recycling center on the outskirts of Budapest capable of recycling 150,000 electronic tobacco devices a month. This was said to have been PMI’s second such facility, the first one having been opened in Japan. But there were no other details, so the story raised more questions than it answered, making it difficult to judge how seriously the recycling issue was being taken.

    I must say that I am not filled with confidence. If you look at the history of the tobacco/nicotine industry, we never got on top of the carelessly discarded cigarette butts issue, and now, well into the second decade of vaping devices and past the point of no return in respect of environmental breakdown, there seems to be no plan for a coordinated industry approach to the issue of carelessly discarded vaping devices. Indeed, there seems little interest, let alone a plan. Asked to contribute to this story, BAT, Imperial Brands and Japan Tobacco International each said no thanks. Juul and PMI didn’t reply. Vaping associations in the U.K. and the U.S., while showing initial interest, fell by the wayside.

    Of course, the industry is not wholly to blame for the situation we are in. Governments and regulators shoulder some of the responsibility. The cigarette butts problem could have been largely overcome years ago by regulators having the courage to ban cigarette filters. At the same time, it is hardly fair to blame the U.S. vaping device industry for being reluctant to invest heavily in respect of environmental issues when the regulatory framework within which suppliers operate is chaotic. And it has to be said that in banning snus, the tobacco harm reduction product with what must be by far and away the best environmental credentials, the EU has clearly indicated that it would rather indulge in political posturing than environmental protection.

    Consumers’ Responsibility

    And then, of course, we come to consumers, many of whom seem not to be concerned about carelessly discarding cigarette butts, vaping devices and any other products that they no longer have use for. They, of course, have the power to end most of the environmental problems, but just as they won’t give up their cars, they won’t stop using the streets as giant trash cans. But perhaps I’m being unfair again. While it is reasonable, I think, to expect smokers to dispose of cigarette butts responsibly, the dismantling of some vaping devices and the disposal of their constituent parts might be a stretch for the average brain.

    What the industry needs to be wary of is the fact that no matter what consumers do, the industry will get the blame for environmental problems caused by its products. Those people who are opposed to vaping will use environmental issues to undermine these products, no matter how many lives they might save. The Truth Initiative, for instance, says that e-cigarette manufacturers are failing to provide consumers with guidance or take responsibility for appropriate disposal methods, presumably trying to justify why, according to the initiative, “[o]nly 15 percent of young e-cigarette users reported disposing of empty pods or disposable vapes by dropping them off or sending them for electronic recycling.” And it compares e-cigarettes unfavorably with cigarettes when it comes to environmental issues. “E-cigarette waste is potentially a more serious environmental threat than cigarette butts since e-cigarettes introduce plastic, nicotine salts, heavy metals, lead, mercury and flammable lithium-ion batteries into waterways, soil and to wildlife,” the Truth Initiative says. “Unlike cigarette butts, e-cigarette waste won’t biodegrade even under severe conditions. E-cigarettes left on the street eventually break down into microplastics and chemicals that flow into the storm drains to pollute our waterways and wildlife.”

    That is worrying. So perhaps it is time for the industry to concentrate on producing products that break down almost harmlessly if discarded in the street. Would such a product be possible? Certainly, it would have to be one without a battery and would therefore produce a different consumer experience. So the question arises as to whether consumers would be willing to have what is perhaps a less satisfying experience in the knowledge that they were making a positive contribution to the environment.

    I doubt it. But there is another way, and given that we are in such an environmental mess, it should not be ruled out. We could go in reverse. While leaving on sale filterless cigarettes, pipe tobacco, roll-your-own tobacco, cigars, snuff and snus, regulators could ban filtered cigarettes, roll-your-own filters and electronic vaping devices. At the same time, the door could be left open for manufacturers to come up with new, less risky tobacco/nicotine products that were not hugely damaging to the environment.

    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.
  • Rolling With The Punches

    Rolling With The Punches

    Photo: Republic Brands

    Rolling paper manufacturers benefit from pandemic-related downtrading and moves to legalize cannabis.

    By Stefanie Rossel

    With Covid-19 refusing to clear the stage and Russia invading Ukraine, crisis appears to have become the new normal. For many industries, business as usual ceased when the pandemic broke out two years ago, bringing about an economic slump. Worldwide, consumers have had to cope with lower disposable incomes. Such a development often prompts smokers to switch from expensive factory-made cigarettes to more affordable roll-your-own or make-your-own products—and, indeed, manufacturers of cigarette rolling papers have noted a positive effect on their businesses.

    “Speaking exclusively from a business perspective, we had two extremely strong years with record sales levels,” relates Santiago Sanchez, executive president of Republic Brands in France. “We were fortunate to have our plants running at full capacity as we didn’t have to shut them down for a day. Of course, the health of our employees was a priority, but thanks to the strict sanitary measures taken from day one, we were able to maintain or even increase our volumes.”

    Michael O’Malley, founder and CEO of Curved Papers in the U.S., says his rolling paper sales were up 40 percent last year. “People are just blazing weed like never before,” he says. “And it’s a good alternative among the choices people have made to cope.”

    Lisa Esser, head of corporate affairs and business development at Gizeh Raucherbedarf in Germany, has observed an enormous shift of sales within Europe due to closed borders during the pandemic. While in 2019, almost 20 percent of cigarettes consumed had been nonduty paid, it was “only” 14 percent in 2021, she points out. The development was similar for rolling tobacco. However, while the absolute share of duty-paid tobacco sales in Germany grew during the pandemic, this does not reflect more tobacco consumption in absolute terms. Rather, says Esser, a large share of the previous cross-border sales has returned to national retail.

    Curved Papers’ sales jumped 40 percent in 2021.
    (Photo: Curved Papers)

    Rising Production Costs

    Santiago Sanchez

    The numerous pandemic-related disruptions, including container shortages and raw material price increases, have also impacted suppliers of rolling paper. The availability of cartons and cellulose have been especially affected. “The vast increases in energy costs are not only hitting us but also our suppliers, who often pass on these costs to us,” says Esser. “There are also considerable challenges in logistics, with much longer lead times and shipping costs partly exploding. We expect price hikes of 10 [percent] to 20 percent across the entire value chain. Nevertheless, our supply of materials has been secured and continues to be of highest priority for us.”

    During the first days of the lockdown, particularly in 2020, Republic Brands was concerned about logistical problems, both in the supply of raw materials and in the shipment of their finished products, according to Sanchez. “Thanks to the strong mobilization of logistics companies, our activities have not suffered in terms of logistics,” he says. “On the other hand, in the second half of 2021, we faced, like all other industries, difficulties in the Chinese supply chain, particularly the shortage of containers. These were just the beginnings of the tensions we are currently experiencing.”

    Curved Papers, which caters mainly to the U.S. and Canadian markets, says it has been able to keep its stocks at the required levels. “Shipping has made us take a hit, but we’re not yet changing our price to the customer,” says O’Malley. While the conflict in Ukraine has not directly impacted his company, the global double whammy of a pandemic followed by the threat of World War III has made it hard to start new initiatives around the world. “It seems a matter of keeping what you have together and trying to respond to demand,” says O’Malley.

    Esser expects a dramatic rise in costs and purchasing prices. “Risk assessment has shown that the pricing situation represents the biggest risk,” she says. “The situation has been exacerbated by the Ukraine crisis. We must contend with difficult conditions and are in close contact with our suppliers to be able to mitigate potential hurdles early on.”

    Republic Brands is present in more than 100 markets and, as a result, feels the impact of the conflict, according to Sanchez. “I will not say anything original if I say that the Ukrainian war, in addition to being a humanitarian disaster in Europe, is significantly affecting all our activities in every sense of the word,” he says. “I have never seen anything like this before. Rising prices [for raw materials] are not the only problem. There is also a lot of pressure on the availability of raw materials. Just as there is a lot of pressure on the availability and consumption of energy. Some companies in our sector or in related industries—cigarette paper, acetate tow, etc.—consume lots of energy and are therefore highly exposed to the risk of increased energy costs. For our part, and even if it is symbolic, we have decided to stop our sales in Russia and Belarus. This is the minimum we could do.”

    Eager to reduce the environmental footprint of their operations, rolling paper manufacturers are increasingly using fast-growing or recycled materials instead of fresh fibers in their products.
    (Photo: Gizeh Raucherbedarf)

    Greening Processes

    Michael O’Malley

    In addition to coping with current challenges, companies are working to become more sustainable. O’Malley, whose rolling papers are manufactured in the Dominican Republic, says his company’s paper comes from Forest Stewardship Council-certified forests and is produced under processes following strict European standards. “We would like to use more recycled material in our packaging,” he says. “We are always innovating.”

    Gizeh, meanwhile, is striving to install sustainable processes in all of its operations. “Improvement is an ongoing project,” says Esser. “The maximum reduction of energy consumption is given high priority. In Austria, for example—our largest production site—we have invested in a photovoltaic system. Besides, we are constantly trying to reduce the use of fresh fibers and instead utilize fast-growing alternatives or recycled materials.”

    Republic Brands, too, is continuously working to minimize its carbon footprint. “An important step has been obtaining the ISO 14001 certification, which confirms the implementation and the effectiveness of an environmental management system. The group and all its employees adhere to a set of common values that are grouped together in an environmental charter, which can be accessed from our website.” The company’s factory in Perpignan, France, and its booklet distribution warehouse are powered by hydroelectric power stations in the Pyrenees and in the Alps.

    Republic has launched a cigarette paper booklet with a CBD-infused gum line under Roor brand in select European countries. (Photo: Republic Brands)

    The Power of Pot

    While the current business environment for rolling papers is far from ideal, new opportunities keep arising as more jurisdictions around the world legalize cannabis. “In countries where legalization has occurred in recent years, such as Canada and the United States, we are seeing a growth in sales,” confirms Sanchez. “The debate is open in many European countries, and now the only question is how soon the legislation on cannabis use will be relaxed,” he says. “We were the first to develop a new product for this category—namely a cigarette paper booklet with a CBD-infused gum line. Under the iconic Roor brand, these products have been launched in select European countries. In addition, one of the products is made from rice paper. Currently, this is the only product containing real rice fiber—from Camargue, France—although many others print ‘rice’ in their packaging.”

    Founded in 2014, Curved Paper started out offering cigarette papers for cannabis consumption. “Eventually, hemp and flax came in as a couple of concerns or interests drove innovation of hemp and other nonwood material-based papers,” says O’Malley. “There is something to the don’t-cut-down-trees thing, of course, though we do it sustainably—but they do make the best rolling paper. The inexorable drive toward lighter papers, which zoomed right past the desirable range for a while there, was accompanied by this diversion away from wood pulp papers.

    “Hemp-based papers are popular as [hemp] is from the same plant as marijuana. The papers commonly called ‘rice papers’ are mostly made from hemp and flax. The term ‘rice’ is from the early days of fine paper centuries ago. Fine paper first came from China and was indeed made from rice. So as Europeans developed printing and the fine European paper we have had for centuries now, they called all fine paper rice paper, and that term of art remains in use till this day not only in rolling papers but in all kinds of paper industries.”

    Curved Paper offers seven styles based on four kinds of paper at two popular sizes, 1 1/4 and KSS. “Our marketing is still only U.S.[-based] and Canada-based, so our focus remains on cannabis,” says O’Malley. “Tobacco is 25 times as big. We have customers in the U.K. and the EU and all over the world, and we look forward to the global market, which is much larger for some of our exact same products. We are not looking to flood the market with a lot of silly products. In the long run, easy, simple and natural are going to be strong qualities to market. While cut corners are making a big move in 2022, our easy-to-roll curved edge is the next-generation solution to the same problem—and our key differentiator.”

    Having recently decided to legalize recreational marijuana (see “State of Euphoria,” Tobacco Reporter, February 2022), Germany is poised to become the EU’s most important cannabis market—although it will likely take years before cannabis will be legally available in the country. Esser welcomes sensible regulation, saying that consumers should have access to less risky, quality-controlled legal products.

    Unlike O’Malley, Sanchez does not necessarily believe that the best rolling papers are made from trees. Many cigarette and RYO paper companies, he says, use other fiber sources, such as hemp, flax, rice and bamboo, etc. These materials, notes Sanchez, are generally not inferior to base tree paper and in many cases cause less pollution.

    He cites the example of Roor, which is already distributed in Germany without referencing cannabis. “We only develop our business in strict compliance with national regulations. However, as soon as legislation is made more flexible, we will develop our strategy accordingly.”

    For O’Malley, European cannabis is a promising horizon. “The way it came from the West Coast here to New York and then to Europe is a prediction we made long ago that is playing out,” he says. “After a rolling papers brand matures, unless there is a major innovation, like introducing a curved version, it often becomes a pseudo-lifestyle brand to engage already loyal customers. This opportunity is huge as the political engagement behind legalization activates communities, as it will in Europe in the coming years and as it will continue [to do] in the U.S. So, even though tobacco is the big opportunity in actual use of the products, the cannabis culture stuff will be rich with opportunities for content creation for rolling paper brands.”

    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.
  • Sailing to Zero

    Sailing to Zero

    Photo: BAT

    BAT wants to become carbon neutral across its value chain by 2050.

    By Stefanie Rossel

    For the environment, tobacco production is a damaging business. In 2014, global cigarette manufacturing was responsible for 84 million tons, or 0.2 percent, of the world’s carbon dioxide (CO2) emissions, according to a study by Imperial College. Eager to minimize their impact, tobacco companies have been working hard to reduce their carbon footprint.

    BAT, for one, aims for carbon neutral operations by 2030 and a “net-zero” value chain by 2050. The company signed up for the United Nations-backed Race to Zero global campaign, an initiative to halve global emissions by 2030 and achieve net-zero carbon emissions by 2050. As part of this, BAT has committed itself to realigning its existing carbon neutral targets, which were previously based on the 2015 Paris Agreement to limit the global average temperature rise to 2 degrees Celsius, to match the new consensus that the temperature rise should be limited 1.5 degrees Celsius to avoid severe climate change effects on people, wildlife and ecosystems.

    In 2020, BAT’s emissions totaled to 6.11 million tons of CO2 equivalent (CO2e), according to the company’s ESG Report 2021. The company’s own operations, however, contributed a mere 9 percent of its total 2020 emissions footprint. The remainder were “Scope 3” emissions—indirect emissions from resources that the organization does not own.

    Seventy-six percent of Scope 3 emissions came from the company’s upstream value chain, including 32 percent from tobacco growing (fertilizers, curing barns, farm machinery, etc.) and 22 percent from materials. Another 15 percent emerged from BAT’s downstream value chain, 10 percent of which were produced by the use of sold products and 5 percent by their end-of-life treatment.

    BAT is tackling the emissions of both its own operations and its wider value chain. To decarbonize its operations, the company continues to expand its renewable energy sourcing. Across its manufacturing sites, it is identifying opportunities to reduce CO2e emissions through decarbonization assessments and value stream mapping. Internal carbon pricing has been incorporated into the company’s business plans since 2021 to ensure that the impact on environmental performance and targets is formally considered and quantified.

    A Cure for Curing

    By generating solar power on-site and purchasing green electricity, BAT aims to expand its number of carbon neutral sites. Of BAT’s 75 manufacturing facilities, 32 were sourcing 100 percent renewable electricity by the end of last year while 19 sites were producing renewable energy on the spot. Combined, the company says, these measures have reduced CO2 emissions to 42.7 percent of CO2e from its 2017 baseline. Renewable sources currently account for 28.6 percent of BAT’s total energy consumption. The company aims to achieve 100 percent by 2030.

    Reducing emissions in its tobacco supply chain, where about a third of BAT’s Scope 3 carbon emissions are generated, is a tougher nut to crack. Most of these emissions come from tobacco curing. Although more than 80 percent of BAT’s annual leaf volumes are cured using renewable fuels, sustainable wood, biomass or sun curing, the problem of emissions persists.

    The company sources approximately 61 percent of its tobacco leaf from its own operations in 18 countries, which contract directly with more than 75,000 farmers. The company’s remaining leaf comes from third-party suppliers in 26 countries that contract with over 264,000 farmers.

    In several countries, BAT has introduced fuel-efficient curing technologies, among them new types of curing barns that enable at least a 30 percent reduction in fuel use and a 14 percent reduction in electricity use. For the tobacco volumes it purchases, the company aims to eliminate the use of coal as a curing fuel. Coal-cured leaf presently accounts for 10 percent of the tobacco that BAT sources through third-party suppliers.

    To further determine the best combination of curing technologies and fuel types for reducing emissions, the company started trials in six countries in 2021. Its global leaf agronomy center in Brazil is identifying startups to help develop new technologies and practices that support carbon-smart farming.

    Planting trees and cover crops and practicing conservation tillage not only keep the soil covered and store carbon but they may also increase water retention capacity, improving drainage and making the soil more fertile, which in turn will lead to increased yields and better quality crops. BAT is currently working with a specialist consultancy to validate its approach and verify the results. The company started testing its carbon-smart farming program with 35 farmers in Brazil last year and intends to expand the pilot to Bangladesh, Mexico and Pakistan in 2022.

    Making Products More Sustainable

    Product materials account for around 59 percent of BAT’s Scope 3 emissions, 15 percent of which are generated by the company’s 30 largest direct suppliers across more than 100 sites. An assessment showed that most suppliers were only in the early stages of decarbonization. To enable suppliers to align with its net zero target, BAT provides support and technical assistance and continues to track progress.

    To include end products in its sustainability ambitions, BAT has implemented a company-wide circular economy. Through life-cycle analysis across its product categories, the company has identified key areas that can contribute to reducing Scope 3 emissions, including the optimization of product design and shipping goods by sea instead of air where possible. Underlining its environmental commitment, BAT in 2021 announced that its Vuse e-cigarette had become the first global carbon neutral vape brand.

    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.