Category: Also in TR

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  • Chew on This

    Chew on This

    Photo: Swedish Match

    How sensibly will modern oral nicotine products be regulated in the future?

    By Stefanie Rossel

    Is history repeating itself? The parallels between the development of the vaping sector and that of modern oral nicotine are striking: Quick consumer adoption leads to phenomenal category growth rates. The promising, still-unregulated market lures myriad players and creates an unmanageable number of brands. Leading tobacco manufacturers seek to get their slice of the cake, often by strategic acquisitions. Despite evidence pointing at the reduced harm potential of the product compared to combustible cigarettes, tobacco control activists raise the alarm, urging regulators to crack down. The Wild West, gold-rush atmosphere is then abruptly curbed by the introduction of often-misguided restrictions and even product bans.

    It is at these crossroads where modern oral nicotine currently finds itself. The category, still a niche, has grown impressively in the five years since Swedish Match introduced Zyn, the first product of its kind. Market analysts are outdoing each other in their forecasts. 360Research Reports expects the category to increase to $32.77 billion in 2026 from $2.38 billion in 2020. Five key global players jointly hold a 77 percent share of the world market, according to Precision Reports. With 66 percent, Europe is the largest market, followed by North America and Asia-Pacific with more than 30 percent each, the company states.

    Competition in the market has rapidly heated up. Research and Markets notes the launch of 27 new brands of nicotine pouches in 2020. By now, all major tobacco companies and several smaller players are represented in the category. To cater to the increased demand, many of them had to step up production capacities, among them British American Tobacco, which in September 2020 built a new plant in Hungary that is dedicated to the production of nicotine pouches for export markets.

    The most recent company to enter the segment is Philip Morris International. In an investor presentation in February 2021, then-CEO Andre Calantzopoulos announced the development of a respective product through a “combination of partnerships and internal development.” In May, PMI acquired Danish family business AG Snus, a manufacturer of nicotine pouches. The deal was followed by PMI’s takeover of Danish firm Fertin Pharma on July 1, a company specializing in nicotine-replacement therapy (NRT) type products such as gums, pouches, liquefiable tablets and other solid oral systems for the delivery of active ingredients, including nicotine.

    Less Harmful Than Snus

    Nicotine pouches or “modern oral,” as manufacturers have termed the novel segment, are considered a subcategory of the smokeless tobacco segment. They are an evolution of traditional Swedish snus, a pasteurized oral tobacco that is available as loose products or in pouches and has been consumed in the Nordic country for 200 years. Unlike snus, however, modern oral nicotine contains no tobacco. In some brands, the nicotine used is not even derived from tobacco but produced synthetically. The nicotine pouches are white, pre-portioned little bags comprising nicotine applied to a carrier material, such as food-grade fillers. They come in a variety of flavors and nicotine strengths and even as nicotine-free variants. Like snus, they are discreet and spit-free and can be disposed of in household trash after use.

    For years, Sweden has had the lowest smoking rate in the European Union. According to Statista, the share of daily smokers in the country stood at 7 percent in 2019 (if the rate were to drop below 5 percent, Sweden would be considered “smoke-free” by some definitions). This compares to an average smoking prevalence of 23 percent throughout the EU. Sweden’s low smoking incidence is largely attributed to snus, which is used by 1 million Swedes. Decades of scientific research have confirmed the product’s efficiency as a smoking cessation tool. Snus use is estimated to be about 90 percent to 95 percent safer than smoking combustible cigarettes, which puts the product on par with e-cigarettes on the continuum of risk scale. A 2020 survey conducted by the European Tobacco Harm Reduction Advocates found that 43.3 percent of Swedish ex-smokers had used snus and/or nicotine pouches to quit smoking whereas more than 31 percent of current European smokers would be interested in trying snus if it was legalized.

    However, snus sales have been banned in the EU since 1992 except in Sweden, which negotiated an exemption from the ban when it became part of the trading bloc in 1995. The EU prohibition has survived two lawsuits, and few expect it to be lifted in the foreseeable future. Modern oral products, which offer non-Swedish EU users an alternative to snus, may rank even lower than snus on the risk continuum, according to a recent BAT study published in Drug and Chemical Toxicology. The research found that the company’s nicotine pouches had a toxicant profile comparable to that of NRTs, which are currently considered the least risky of all nicotine products.

    In a Gray Zone

    Given the EU’s attitude toward tobacco harm reduction, such an acknowledgement appears unlikely, however. Because modern oral products don’t contain tobacco, they cannot be regulated under the current EU Tobacco Products Directive (TPD); their status will be reconsidered during in the next TPD revision.

    In Germany, this has recently led to confusion over the legality of nicotine pouches. Several courts at the federal level have ruled that modern oral products are to be classified as foodstuff. As such, they would have to meet the requirements of European food legislation, which does not permit nicotine as food, food ingredient, food additive or flavor. Furthermore, food must not be hazardous to consumers’ health, according to the legislation. However, toxicological studies have shown that the nicotine dose that is taken up even by moderate users of modern oral is linked to health damage, courts argued. The rulings led to local sales bans. Due to this legal uncertainty, BAT in July 2021 suspended sales of its Velo nicotine pouches in Germany. The company called for legislation to set advertising standards for tobacco-free nicotine pouches and to limit nicotine concentration to 20 mg/mL.

    In the absence of EU legislation, several countries have tried to regulate nicotine pouches at the national level. In May, the Czech Republic amended its food and tobacco products act, obliging manufacturers, importers, retailers and distributors of nicotine pouches to ensure that these products meet the requirements for the composition, appearance, quality and characteristics stipulated by the decree of the Ministry of Health under similar conditions as those for e-cigarettes. In addition, they will have to inform the ministry, on a regular basis, on the nicotine pouches that they intend to launch on the EU/European Economic Area market. Manufacturers will also have to collect information on the suspected adverse effects of these products on human health. Tobacco-free nicotine pouches that do not comply with the amendment and that were produced or marketed before May 12, 2021, will have to come off the market in 2022.

    Italy, where nicotine pouches are considered consumer products, will reportedly consider modern oral products when it revises its anti-smoking law by the end of the year. Estonia’s parliament announced in July that it might relax its snus regulations to help reduce smoking.

    The U.K., no longer an EU member and therefore not bound to the common market’s regulation, is expected to follow Sweden’s example. To achieve its goal of a smoke-free society by 2030, the British government is presently shaping a tobacco control plan, which may very well include stronger promotion of cigarette alternatives, such as heated-tobacco products and nicotine pouches.

    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.
  • No Exaggeration

    No Exaggeration

    Photo: asayenka

    The future of tobacco machinery in a rapidly changing market for nicotine products

    By George Gay

    According to the Oxford Dictionary of Humorous Quotations, on June 2, 1890, the New York Journal ran what was to become one of most famous quips by Mark Twain: The report of my death was an exaggeration. The quote is perhaps more often rendered as “Reports of my death have been greatly exaggerated,” and, in this form especially, it could be applied to the tobacco industry. With the word “my” substituted with “the tobacco industry’s,” the quote could have been run in the New York Journal and other U.S. or European newspapers any time during the past 50 years because, while the tobacco industry has suffered a number of well-publicized setbacks, it has always recovered.

    No one can deny, however, that while sales of traditional cigarettes might be increasing slightly in a few markets and holding firm in others, in many, they are falling or even plummeting. Certainly, the long-term, worldwide trend seems to be down, and it is difficult to imagine any future scenarios in which tobacco smoking will be given a boost.

    This, of course, raises questions about where the machinery sector—and here and elsewhere in this piece I’m writing about making and packing machines for traditional cigarettes—is headed. It would seem reasonable to assume that it will decline in line with the market for cigarettes. But things might not be quite as simple as this, partly because there are divisions within this sector.

    Ask around and you will no doubt be told any number of reasons why the tobacco industry has managed to survive in the face of the moral outrage aimed at its existence by the people with the power to put it out of existence, but one of the most important reasons is that it has demonstrated flexibility where necessary, though sometimes reluctantly and, therefore, belatedly.

    There was, about 30 years ago, a sense that machinery suppliers, especially those based in Europe, were working themselves out of a job because, as increases in sales of cigarettes outside China slowed, machinery speeds were being ramped up—at times hugely. And at roughly the same time, technology transfer deals were being made with engineering companies in China.

    In part, though, there was something of a separation between overall cigarette consumption and machine capacities. The very fastest machines became relevant mostly to what were known as long-run brands, the most internationally in-demand products, the sorts that major cigarette manufacturers wanted to focus on and wanted increasing numbers of consumers to focus on while the manufacture of lesser brands was left in the hands of slower—though mostly not slow—machinery.

    On the surface, such a separation was based on the competing claims about machine flexibility. Those supplying slower machinery claimed their equipment was better for manufacturing other than long-run brands because technicians could make the size and other changes needed when switching from the manufacture of one type of cigarette to another more quickly than was the case with faster machinery. And even if changes took the same length of time on the two types of machines, they said, it was more inefficient to have a fast machine sitting idle while lengthy changes were made to it than to have a slower one sitting idle.

    Partly in response to this, perhaps, the suppliers of the fastest machinery made well-publicized efforts to make their equipment more flexible. But this response was more likely to have been caused mostly by competitive issues, supplier to supplier, I think. After all, those that supplied the faster machines offered also slower—though not the slowest—equipment, either directly or, as time went by, through acquired specialized suppliers.

    Of course, there is more to the machinery capacity arguments than cigarette production numbers; it also concerns investment costs. For many years now, we have been used to seeing the major international cigarette manufacturers swallow smaller companies, and, in recent times, seeing those manufacturers consolidate their product portfolios, all of which, I guess, has tipped the scales toward high-capacity machinery.

    New-Generation Products

    But what about the future? I guess it is not beyond the bounds of possibility that, having perhaps taken their eyes off the traditional cigarette ball somewhat, the major cigarette manufacturers have left the door open to startups, at least in those countries where it is possible to start a cigarette manufacturing business from scratch. After all, they have stopped manufacturing some of their shorter run brands and are in the process of converting former cigarette factories to manufacture new-generation products. Clearly, if this door is left ajar, part of the focus might start to switch to smaller manufacturers and, therefore, to lower capacity machinery, including secondhand machinery.

    Such thoughts were brought to the surface again recently when, according to a report in the Guardian newspaper, Philip Morris International’s CEO, Jacek Olczak, called on the U.K. government to ban cigarettes within the next 10 years. Olczak apparently said PMI could “see the world without cigarettes … and actually, the sooner it happens, the better for everyone.” Olczak said, “Give [people] a choice of smoke-free alternatives … with the right regulation and information, it can happen 10 years from now in some countries. You can solve the problem once and forever.”

    I don’t know why Olczak picked on the U.K., but it might have been partly because the country has already seen a fairly dramatic fall in cigarette consumption, because it has taken a generally progressive attitude toward lower risk alternatives to combustible cigarettes and because the country is in a state of transition in respect of tobacco and nicotine as it reviews its tobacco and related products regulations after having left the EU and left behind the necessity to comply with that institution’s Tobacco Products Directive (TPD).

    Looked at like this, the U.K. could become an experiment in tobacco harm reduction (THR), were the government to make such a bold move. And this is not altogether unthinkable even for a semi-detached libertarian regime as is now in power. But the real question is: What would be the conclusion of such an experiment? Would the U.K. become, as those supporting the principles of THR might have it, a tobacco smoke-free heaven in which former smokers were satisfied with the new, less risky nicotine-delivery products, cancer rates plummeted and the economy boomed as improvements in health, productivity and social cohesion provided huge dividends?

    Or would it conclude, as those opposed to THR might have it, with a nation, most of whose youngsters were hooked on nicotine and committing crimes to obtain the money necessary to buy the black market cigarettes onto which they had moved during their summer breaks abroad—a nation with worsening health, productivity and social cohesion?

    Given scenario one, the medium-term to long-term outlook for cigarette machinery suppliers would be bleak because even the best efforts of the World Health Organization and its allies would not be able to hold the tide of countries wanting to take advantage of similar THR dividends. But given scenario two, cigarette machinery suppliers could end up on a roll given that what had appeared to be the only truly viable route out of smoking had been shown to be fatally flawed.

    Of course, it is unlikely, I think, that Olczak believes the U.K. government would ban cigarette smoking within 10 years, but I wouldn’t rule out that he is banking on his plan B being taken seriously: “Give [people] a choice of smoke-free alternatives … with the right regulation and information …”

    This would, of itself, be a valuable experiment, especially if cigarette smokers were also provided with the right, or rather truthful, information and if the information provided to both smokers and vapers included accurate information about the environmental impacts of traditional cigarettes and lower risk products. After all, it is going to be challenging to enjoy a smoke or a vape if your house has been blown away and you are standing up to your neck in water that is being evaporated by the heat dome that has appeared overhead.

    So what is the likely outcome? I think we will see a U.K. scenario that sits somewhere between one and two above. The art of politics is compromise, which, depending on your point of view, means satisfying everybody or nobody. In other words, there will be significant but modest changes in the U.K. that will bring about a welcome boost to the conversion of smokers to less risky products.

    Looking further afield, the U.K. example might have some effect on those countries orbiting at the greatest distance from the WHO, while those in closer orbits will continue to try to rebut the ideas of THR. The result will be that cigarette smoking worldwide will continue to fall for the next 10 years, much as it has in the past, and the requirement for cigarette machinery will fall with it, perhaps with demand tilting toward medium-speed equipment. I think there is simply too much inertia in the market, largely held in place by the opposition to THR inherent in positions taken up by the WHO and its allies, for there to be any sudden, major changes. For one thing, it has to be remembered that while the U.K. might have shaken off the shackles of the TPD, it is still tied to the WHO’s Framework Convention on Tobacco Control and the way that treaty is interpreted by the parties to it.

    One last point: If the U.K. government does decide to ban cigarettes during the next 10 years, it would be consistent and fair for it to also ban alcohol. In fact, it would be hypocrisy not to do so. Alcohol consumption takes a far greater toll on U.K. society than tobacco consumption, and, with the number of smokers falling and the number of drinkers increasing, the damage caused by alcohol is only going to increase relative to that of tobacco.

    Sodim’s Synergies

    Eric Favre

    In communicating earlier this year about a story published in the August issue of Tobacco Reporter, Eric Favre described as synergistic the relationship between the instrument company of which he is managing director, Sodim, and Hauni, the machinery supplier. He made his remark in reply to a question about what advantages had accrued after the acquisition some years ago of Sodim by Hauni.

    Favre made the point, also, that this synergy, this coordination if you like, extended to customers and potential customers. There were, for example, advantages to be had for a customer in acquiring, for instance, a cigarette maker and a quality control (QC) test station as a single package—advantages such as those to do with technology and logistics. And by the same token, Favre added, during an R&D project, a customer could take advantage not only of the machinery expertise and support available from Hauni but also of the quality assurance (QA) and QC oversight of Sodim.

    The idea of such synergies did not make it into the August story but, this, the September issue, provides an opportunity to take the idea further because it is looking at making and packing.

    Tobacco Reporter: Given that Hauni making machinery would, in the normal course of things, be delivered with QA/QC equipment included, what, specifically, can Sodim add to a cigarette manufacturer’s standards armory?

    Eric Favre: Sodim adds the capacity of automatic sampling, a hands-free system that picks a cigarette from the mass flow and delivers it into the hopper of a Sodim test station: a SodiQube or a station from the Sodiline family. The data generated by the test station is then fed back to the maker, which, where necessary, uses it automatically to adjust its settings and thereby keep each cigarette produced very close to the target weight, diameter and dense end position. It is, in fact, a “police camera” that fine tunes the monitoring of the maker.

    What can Sodim offer in the way of additional QA and QC equipment in respect of cigarette packing?

    In the packing area, Sodim can offer a nondestructive pack seal tester that has the advantage of allowing all boxes that are correctly sealed to be returned to the product flow. Currently, this system is manual, and it would be ideal if it were developed so that it sampled automatically. Such automatic sampling would require complex developments, however, and might not be viable economically.

    In respect of making and packing, what can Sodim offer to manufacturers of other tobacco and nicotine products, such as tobacco-heated products (THP) and snus?

    Sodim test stations are suitable for measuring THP weights and diameters, though not dense-end positions. And the nondestructive pack-seal tester is suitable for testing THP and snus packs.

    Are Sodim’s instruments used mainly by major manufacturers, or do smaller manufacturers also use them?

    Sodim equipment is used by any type or size of manufacturer, from small and family-owned businesses to international groups.

    Is it true to say there are certain measurements, such as those that have to do with complying with regulations, that all manufacturers must make, though these will differ from country to country, while others are optional because they provide data for internal use, perhaps for improving efficiencies and reducing waste, etc.?

    This is correct. In the case of traditional cigarettes, Sodim’s very accurate and specialized equipment is needed to meet both the demands of regulations and internal standards of quality control. But for THPs, which do not generate smoke, our equipment is used more for internal QC reasons because there are fewer specific regulations in respect of these products than is the case with traditional cigarettes.

    How does Sodim or a manufacturer running Sodim instruments ensure they are giving the correct readings? Do they need regular servicing and replacement after a given lifetime?

    Sodim instruments will give the correct readings provided that the end users—mainly manufacturers but also laboratories—calibrate these devices regularly. And to allow users to calibrate their instruments, Sodim’s ISO 17025-accredited laboratory regularly delivers calibrated standards to the users. In addition, regular servicing is strongly advised and in most cases is carried out by Sodim at customers’ sites. –G.G.

    A Veteran’s View: Challenging Times Ahead

    Chris Crawley

    In another main story accompanying this sidebar, I question how much longer traditional cigarettes, and therefore the machinery that makes and packs them, will be around. My conclusion is that they will be around for quite some time, even though their demise is perhaps being brought into sharper focus right now.

    That is my stab at predicting the future, but what is happening right now? In an email exchange, I asked Chris Crawley of Axiom Select, who has been observing and working widely in the tobacco industry for many years, whether he believed that demand for traditional cigarette making and packing machinery was currently strong, average or weak. “I believe the market for new secondary (making and packing) machinery—with almost all the multinationals—is soft globally as traditional cigarette markets mature and volumes decline,” Crawley wrote. “If there’s a bright spot, it is probably Asia, but this, too, has its ups and downs.”

    And if Asia is a bright spot, for whom is it a bright spot? Crawley pointed out that the large EU-based machinery producers were finding emerging competition in Asia where labor and materials were often lower. There was an ongoing argument that said the quality of machinery built in Asia was not as good as that built in Europe, but while those putting forward this argument might be correct in some instances, any quality gap was certainly narrowing. And, at the same time, the cost and, therefore, the machinery price gap could be considerable.

    Crawley said he expected these trends to continue as mature cigarette markets slowly contracted, particularly in North America and Europe. But again, there is a bright spot. “Nevertheless, there is a highly competitive market—mostly price driven—for used/refurbished machinery from some of the larger independent cigarette producers,” said Crawley.

    That is all well and good, but isn’t the competitiveness of this market in part down to the fact that supply has been choked off in recent years? “It has been general policy, with the multinational producers, not to resell or trade their surplus machinery,” Crawley acknowledged. “Nevertheless, not all play by the same rules all over the world. Consequently, there is a good amount of used machinery available if one cares to search. This trend, also, is expected to continue.”

    At this point, I couldn’t help asking a question that has often occurred to me in my more fanciful moments. If I decided I wanted to start a modest cigarette manufacturing plant in the EU, what would be my best options in respect of machinery and equipment, assuming that I had a modest budget—whatever that might be—but what I thought was a winning brand name? “A modest startup can still find good used machinery at competitive prices,” said Crawley. “For example, a Molins Mk9 with a Hauni MaxS tipper is a good medium-speed complex with high efficiency/productivity. Spares and expertise are also available. And from this mid-point, you can go up or down in price and type of machinery.

    “For the last 30 years, machinery development has focused on higher speed machinery, and, while there are huge benefits to achieving greater speeds from the same machinery footprint, those speed increases often come with the sacrifice of flexibility. Machinery flexibility lags profoundly and there is little development in this sector. Changing machinery configurations for different lengths, diameters and tipping, etc., remains difficult, time consuming and costly.”

    Finally, Crawley turned his gaze on the future. “Affluent and highly profitable cigarette markets still abound, but they are increasingly finding their volumes shrinking and competition increasing,” he said. “In the longer term, challenging times are ahead for both machinery and cigarette producers.” –G.G.

    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.
  • Uncharted Territory

    Uncharted Territory

    Photo: JHVEPhoto

    The FDA’s review process of PMTA applications won’t be completed by the Sept. 9 deadline.

    By Stefanie Rossel

    Regulation of novel tobacco products can be a tedious and sometimes overwhelming process, as current developments in the United States show. Almost a year after the court-ordered deadline for manufacturers to hand in premarket tobacco product applications (PMTAs) for their products and only a few days before the grace period for unapproved products to stay on the market ends, the U.S. Food and Drug Administration sits on a mountain of more than 2 million applications for “deemed new tobacco products.”

    In 2019, a Maryland district court judge had ordered the FDA’s Center for Tobacco Products (CTP) to set a new and earlier PMTA deadline for electronic nicotine-delivery systems (ENDS), which was finally laid down for Sept. 9, 2020. The court order provided for a one-year period during which time such products might remain on the market pending FDA review. After Sept. 9, 2021, the FDA will be allowed to grant further extensions on a case-by-case basis for “good cause,” but no general extra time.

    If a negative action is taken by the FDA on the application prior to Sept. 9, 2021, the product must be removed from the market or will risk FDA enforcement. If the FDA issues a positive order on a product, it will be listed on the positive marketing orders page and can continue to be marketed, according to the terms specified in the order letter. At the time of writing, however, most applications, each consisting of hundreds or even thousands of pages of scientific data, still needed to be reviewed. In May 2021, the agency published a long-awaited list of vapor companies that had submitted PMTAs by the Sept. 9, 2020, deadline. The publication of the list is believed to signal the start of enforcement.

    Considering the large volumes of PMTAs submitted, though, it is improbable that the FDA will be able to process all submissions before manufacturers are required to withdraw their products from the market. In June, the U.S. Small Businesses Administration (SBA), a federal agency that represents small businesses to the various branches of government, urged the FDA to ask the Maryland district court judge to allow the agency to extend the deadline until September 2022. Most small ENDS manufacturers, the SBA argued, did not have the resources to absorb the losses from having their products pulled from the marketplace for several months or more. It said that once the FDA ordered small ENDS manufacturers’ products removed from the market, those small businesses would close permanently. The SBA also pressed the FDA to end its current practice of processing PMTAs in order of manufacturer market share.

    On August 4, Swisher International filed a motion for an emergency preliminary injunction against the CTP for threatening enforcement against products without PMTAs or substantial equivalence approval authorized. The cigar manufacturer, whose cigars are also in the FDA’s premarket-review process with authorization pending, called the FDA’s process “half baked” and accused the agency of creating chaos.

    Individual instead of standardized

    Jonathan Fell

    Consumer staples specialist Jon Fell, partner at Ash Park Capital, thinks it’s unlikely that the FDA will grant a blanket extra year extension. “The FDA has regularly stressed that it has discretion to defer enforcement action on a case-by-case basis, although it’s very hard to know what that will actually mean for the—presumably quite large number—of products which the FDA still hasn’t had time to review by September. I suspect that they will have to defer enforcement against products whose PMTAs have been accepted for review and aren’t obviously deficient, otherwise they’ll face more legal challenges.”

    The agency has repeatedly issued warning letters to manufacturers and retailers to remove unauthorized products from the market, most recently in late July. “The FDA will continue to prioritize enforcement against companies that market ENDS without the required authorization and that haven’t submitted a premarket application to the agency—especially those products with a likelihood of youth use or initiation,” the agency said on its website.

    In contrast to the EU, which with the Tobacco Products Directive (TPD) created a regulatory framework that sets the legislative standards for nicotine strengths, ingredients, labeling, health warnings and other issues for ENDS, the U.S. opted for an individual approach at product regulation. In its recent application report of the TPD, the European Commission stated that the directive’s restrictions on additives in e-liquids, such as vitamins, likely was the reason why the EU was spared the EVALI (e-cigarette or vaping associated lung injury) that raged through the U.S. in 2019.

    “There are very few pros to the way FDA is regulating e-cigarettes in the U.S.,” says Fell. “About the only one I can think of is that having a product explicitly authorized to be marketed in the U.S. might help build consumer confidence in these products after various health scare stories, including the EVALI crisis. But that is at the cost of an enormously complicated and expensive regulatory process that really adds very little value and is a substantial barrier to innovation. I think it would have been far more effective to define a set of standards that e-cigarettes have to meet and then take enforcement action against any products on the market which don’t meet those standards.”

    IQOS on hold

    But it’s not always the FDA’s long-winded processes that prevent manufacturers from marketing their novel tobacco products. Altria subsidiary Philip Morris USA suspended sales of its IQOS heated-tobacco product (HTP) after the U.S. International Trade Commission (ITC) in late July 2021 had found that PM USA had infringed on two patents owned by British American Tobacco subsidiary Reynolds American Inc. (RAI). RAI, which sued PMI USA last year before the ITC and in federal court in Virginia, claims that IQOS violates its patents over the device’s heating blade and alleges PMI was using a former version of the current technology of its own HTP Glo.

    RAI was seeking to have an import ban into the U.S. imposed on IQOS devices and consumables unless PMI licensed the technology from it. The ITC judge’s findings are subject to review by the full commission, with the investigation scheduled to be completed by Sept. 15. In the Virginia case, Altria responded with its own patent-infringement claims and a separate suit in May. The company also filed petitions with the U.S. Patent and Trademark Office, challenging the legality of several RAI patents, inclusive of three investigated in the ITC court case.

    IQOS had been introduced in U.S. test markets, including Atlanta, Georgia, Richmond, Virginia, and metropolitan areas in North Carolina after the FDA had granted the product PMTA authorization in April 2019. IQOS was the first next-generation inhalable product to be authorized as a modified-risk product in July 2020. Its U.S. expansion is now on hold.

    “I hope that the two-way patent battles between PMI and BAT will be settled in a grown-up way before long,” says Fell. “It’s not a good look for an industry trying to make the case for harm reduction to be squabbling in this way, particularly if it results in consumer choice being restricted, by products being taken off the market or not rolled out as fast as they otherwise might. Robust competition ought to be a potent mechanism for encouraging more innovation and shifts in consumer behavior.”

    Another development with uncertain impact on the cause of tobacco harm reduction is Juul Lab’s recent funding of a scientific publication. According to The New York Times, the vaping company spent almost $60,000 to fund the entire May/June issue of The American Journal of Health Behavior to help establish Juul as a smoking cessation tool. Juul Labs has submitted a PMTA to the FDA for its Juul products.

    In the past, scientific articles on reduced-risk products sponsored by tobacco or ENDS manufacturers repeatedly had difficulties being accepted by renowned scientific journals. “Perhaps optimistically, I think if the tobacco harm reduction concept continues to take a broader hold, then over the medium to longer term, excluding research sponsored by tobacco or nicotine companies from academic journals will not be tenable,” says Fell.

    “It will come to be seen as what it is: an anti-scientific and unjustifiable attempt at censorship, rooted in a view of the industry which is at least a couple of decades out of date. Perhaps this is the other silver lining of FDA regulation: the FDA has to engage with industry science and recognize its integrity, and over time the influence of that might spread. Ultimately, the FDA’s decision on Juul’s PMTA will have to come down to rigorous science and hard data, whatever attempts are made to sway the agency’s hand via the emotive arguments of campaigning organizations.”

    FDA Refuses to File Substantial Share of PMTA Applications

    On Aug. 9, the U.S. Food and Drug Administration issued a “refuse to file” (RTF) letter to JD Nova Group. The letter notified the company that the premarket tobacco product applications (PMTAs) it submitted for approximately 4.5 million of its products do not meet the filing requirements for a new tobacco product seeking a marketing order.

    As a result of this RTF action, JD Nova Group must remove approximately 4.5 million products from the market or risk enforcement action by FDA. The company may resubmit a complete application for these products at any time. However, the products may not be marketed unless they receive a marketing granted order.

    The FDA’s action affects a significant share of PMTAs under review. The agency has received applications for more 6.5 million products from over 500 companies.

    According to the FDA, JD Nova was issued the RTF letter because the company’s applications for these products lacked an adequate environmental assessment. Under FDA’s regulations implementing the National Environmental Policy Act, an environmental assessment must be prepared for each proposed authorization.

    This RTF does not apply to all product applications submitted by JD Nova. The remaining product applications the company submitted by the Sept. 9, 2020, deadline are still moving through the review process, according to the FDA.

    The list of affected products is available at https://bit.ly/3fP6cZj.

  • Innovation as a Driver

    Innovation as a Driver

    Photo: Celanese

    Even in challenging times, filter and tow suppliers find new business opportunities in innovative nicotine products.

    By Stefanie Rossel

    Over the past years, manufacturers of acetate filter tow and cigarette filters have come to learn how to best cope with challenges. The continuous decline in global cigarette consumption since 2013, which also resulted in lower demand for tow and filters, has been one such issue.

    Hyunyoung Park

    In 2020, tobacco companies sold 5.06 trillion cigarettes worldwide, representing a decline of 3.7 percent compared to 2019, according to Euromonitor. Increasing restrictions on tobacco products as well as the rise of reduced-risk alternatives contributed to this development. “Philip Morris International’s conventional cigarette-free world mission is a big challenge to filter makers,” notes Hyunyoung Park, sales and business development manager at Taeyoung Industry Corp. of South Korea, a supplier of mono, dual and triple filters to multinational cigarette manufacturers.

    The year 2020 added more trials for the tobacco industry, most notably the Covid-19 pandemic. At the ITGA’s Issues Day in November 2020, Shane MacGuill, Euromonitor’s senior head of tobacco research, said he expected combustible cigarette volume to decline further in the next five years, aided by a pandemic that left many governments scrambling to refill their coffers.

    Harald Bruggeman

    For the time being, the most tangible effect of the pandemic for suppliers of acetate tow is logistic in nature, says Harald Bruggeman, vice president of commercial acetate tow at Celanese in the U.S. “A challenge for the entire industry is that the global liner market remains tight with lower performance and higher freight rates that continue to climb,” he says. “To ensure supply chain security, Celanese has a global warehouse network and healthy inventory levels.”

    Bruggeman notes that pandemic-related travel restrictions continue to impact business. To provide best possible service, he explains, Celanese provides remote sales and technical customer support by offering video conferences, online training, webinars, web-based software for item selection, filter and cigarette design calculations and RealWear devices, such as hands-free, voice activated, head-mounted tablets, for remote assistance.

    The pandemic follows a period during which tow manufacturers were busy preparing for tighter regulation. In February 2018, the European Commission published the classification of titanium dioxide (TiO2), a delustering agent that had been used in paints and varnish, plastics, paper, printing inks and many other applications for about 100 years, as a suspicious carcinogen for inhalation. Although many scientific studies show that TiO2 does not cause cancer in humans, the classification will take effect Oct. 1, 2021. “The filter tow manufacturers are transitioning to acetate tow without added TiO2, which increases complexity in manufacturing, portfolio and supply chain,” Bruggeman says. “Celanese has completed all necessary preparations for the commercial production of acetate tow without added TiO2 at both manufacturing sites, i.e., Narrows, Virginia, USA, and Lanaken, Belgium.”

    Jens Ebinghaus

    Jens Ebinghaus, CEO of Swiss-based acetate tow manufacturer Cerdia, formerly Rhodia Acetow, stresses the positive side of this challenge. In November 2018, the company launched DE-Tow, a tow made of cellulose acetate that is free from TiO2. “Most of our customers have already switched to TiO2-free filter tow while others still use tow with TiO2,” he says. “Supplying both customer groups adds complexity to the manufacturing process and creates opportunities to the most flexible suppliers.” In 2019, Cerdia’s Freiburg, Germany, plant committed to invest close to $100 to strengthen its competitiveness, to foster the growing market share of specialty filters produced in Freiburg and to focus on product innovation as well as diversification.

    Taeyoung Industry Corp. is developing filters with non-acetate tow and studying alternatives to conventional filter material.

    Toward Increased Sustainability

    While the pandemic is far from over, this summer brought about new challenges for the sector: On July 3, 2021, more parts of the European Union’s Single-Use Plastics Directive (SUPD) entered into force, banning the sale of items such as plates, cutlery, straws and cotton bud sticks made of plastic as well as food containers and expanded polystyrene cups. The directive was drafted to fight marine pollution. Although cigarette filters are among the 10 single-use plastic products most often found on Europe’s beaches and seas, representing as much as 60 percent of all waste items, they are not among the prohibited products. Worldwide, around 98 percent of cigarette filters are made of cellulose acetate, a bio-based polymer that biodegrades over several months to several years, depending on the conditions of the environment where it has been discarded.

    Instead of the originally discussed consumption reduction targets for filter cigarettes, the European Parliament reached a provisional agreement stating that “the huge environmental impact caused by post-consumption waste of tobacco products with filters, discarded directly into the environment, needs to be reduced. Innovation and product development are expected to provide viable alternatives to filters containing plastic, and this development needs to be accelerated.” Through the introduction of extended producer responsibility (EPR), a reinforced application of “the polluter pays” principle, the provisional agreement seeks to further encourage innovation leading to the development of sustainable alternatives to tobacco product filters containing plastic.

    More specifically, the directive will require producers to cover the costs of consumer awareness-raising measures and EPR schemes tackling the clean up of litter and its subsequent transport and treatment, the costs of data gathering and reporting, and the costs of collection of waste of tobacco filters discarded in public collection systems. EU member states have until Dec. 5, 2023, to set up ERP schemes for tobacco filters that contain plastic, but to date, there is no available guidance for member states as to how such EPR schemes should be implemented. As of July 3, all packaging of tobacco products with filters are required to be marked with a pictogram warning against littering.

    “The most burning concern at the moment is the impact of the SUPD—how to deal with the directive and product solutions that are compatible with the criteria it sets out,” says Ebinghaus. “The role that biodegradability of filters and tow will play in the future depends heavily on littering regulations. Cellulose acetate is based on wood pulp, a renewable raw material. With Cerdia DE-Tow, we have already created a product that is characterized by certified rapid biodegradability. We are convinced that this topic will continue to accompany us in the future and are glad that we can already offer a future-proof solution to our customers.”

    “The criteria for biodegradability under the SUP directive are not expected to be established by the EU until 2027,” notes Bruggeman. “The EC is concerned about potential misleading claims around biodegradability of filters as it could likely have an inverse effect on littering behavior. Certifications of biodegradability alone do not resolve the fundamental problem of reducing the impact of ‘littering’—thus, the measures called for in the EU SUP directive remain as important and necessary to be adopted, i.e., contribute to awareness-raising EPR, including cleanup, collection and waste treatment, and labeling requirements for cigarette packs.”

    SK Low

    Seeking the Gold Standard

    Filter manufacturers are also busy trying to meet changing requirements for an expanding environmentally friendly products market. Taeyoung’s R&D department is working on filter development with non-acetate tow and is carrying out studies on the replacement of conventional filter material. Seng Keong Low (SK), global marketing manager at specialty filter manufacturer Essentra, explains that the greatest challenge now is to find the perfect substitute for cellulose acetate filters—“a gold standard, so to speak. While we have commercially launched paper-based filters from our ECO range, we also acknowledge that there are certain tradeoffs when using these alternative materials. That is why Essentra Filters continues to learn, innovate and improve upon these products to achieve that gold standard.” He relates that his company has several intermediary products within its portfolio of products, such as BiTech, which mixes cellulose acetate and paper, thus increasing the biodegradability of the product.

    Sustainability issues aside, filter designers continue to seek innovative solutions beyond the usual range. Filter and tow makers observe an ongoing shift toward slim and superslim formats while capsule filters remain popular. “Outside of the EU, flavors continue to play a role in driving consumer demand, especially in countries like China, Japan and Korea,” says SK.

    While cigarette consumption will likely continue to decrease, heated-tobacco products (HTPs) are creating new opportunities for filter and tow manufacturers. Like conventional cigarettes, HTP consumables require a—highly complex—filter. Cellulose acetate tow is found in vape products too; it can be used in e-cigarettes to prevent leakage of e-liquids. “We see great opportunities and great potential in developing and producing a broader spectrum of specialty items for more specific new-generation products and in the advancement, refinement and expansion of the [HTP] segment,” says Ebinghaus.

    “We observe continuous innovation and product launches in the strong growing HTP market, e.g., PMI’s IQOS Iluma, BAT’s Glo Hyper plus, JT’s Ploom X or KT&G’s Lil Solid 2.0,” echoes Bruggeman. “Celanese partners with the major players in the HTP segment for the development of new filters for heated-tobacco sticks.”

    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.
  • Thank You!

    Thank You!

    The 2021 GTNF would have been impossible without the support of these generous sponsors.

    TR Staff Report

    Founded in 2009 and headquartered in Shenzhen, China, ALD Group Limited is an innovation-driven enterprise specializing in a full range of next-generation products, including electronic nicotine-delivery systems, CBD vaporizers and heated-tobacco devices. As one of the leading vape manufacturers, ALD is capitalizing on years of R&D know-how and manufacturing experience to provide global one-stop service. With a powerful intellectual property system, high-quality assurance, fast delivery service and a strong commitment to social responsibility, ALD serves worldwide clients with the most cutting-edge products.

    Alliance One International is a tobacco leaf supplier that offers customers high-quality leaf they can trust. With more than 145 years of agricultural experience and customers in approximately 90 countries, Alliance One International purchases tobacco from a network of more than 300,000 farmers worldwide to produce products that are sustainable and traceable.

    Altria’s tobacco companies have a long history of leading the industry. Today, adult tobacco consumers are increasingly seeking new options, including those that reduce risk, and their preferences are evolving rapidly. Altria’s vision by 2030 is to responsibly lead the transition of adult smokers to a smoke-free future. To that end, it will work within the framework that government, public health and regulatory bodies have established to communicate about reduced-harm choices. And for any tobacco consumer who wants to quit, Altria offers access to a breadth of information from experts on how to do so successfully. The actions the company is taking will create a different Altria—and a different landscape that the company believes will benefit today’s adult tobacco consumers.

    Barrettine Environmental Health has worked with the tobacco industry to develop a combined insect monitoring trap that functions as an early warning detection system for both tobacco beetles and tobacco moths. The MoBe Combo trap is an all-in-one hygiene control system for use during tobacco storage, shipment, processing and manufacture.

    When using the MoBe Combo Mk. 2, there is only one trap to check, which can significantly reduce both product and labor cost. Since the launch of the MoBe Combo trap, the company has introduced several enhancements.

    The tobacco beetle is often seen as the most significant tobacco pest; however, tobacco moth infestations can also contribute to significant damage to stored tobacco as well as processed and finished stock. With climate control used in many areas of tobacco processing sites, both species have the potential to thrive in all regions of the world. The MoBe Combo trap is effective in monitoring both species or either of the species in isolation.

    BAT is a leading consumer-centric, multi-category consumer goods company that provides tobacco and nicotine products to millions of adult consumers around the world. Its purpose is to build “a better tomorrow.” It will achieve this by reducing the health impact of its business through a multi-category portfolio of noncombustible products tailored to meet the preferences of adult consumers.

    BAT is investing in building a portfolio of reduced-risk tobacco and nicotine products*† alongside its traditional tobacco business—including vapor products, tobacco-heating products and modern oral products, which are collectively termed New Categories, as well as traditional oral products.

    BAT’s ambition is to increasingly transition revenues from combustible products to its New Category products over time. The company employs more than 55,000 people, operates in more than 180 markets and has 79 owned manufacturing facilities in countries around the world. In 2020, the BAT Group generated revenue of £25.8 billion and profit from operations of £10 billion.

    BMJ is the world’s No. 1 partner for specialty paper and packaging materials in the cigarette industry. BMJ produces cigarette paper, plugwrap paper, base tipping paper and printed tipping paper with standard weights of 18 grams to 40 grams per square meter. As a printing packaging company, BMJ represents high-quality packaging utilizing both rotogravure and offset.

    Boegli-Gravures designs, develops and manufactures state-of-the-art embossing tools and solutions for an exacting worldwide clientele. The company’s combination of artistic vision and engineering excellence has brought it recognition as a world leader in high-precision embossing and as an original equipment manufacturer supplier. The secret of Boegli-Gravures’ success lies in the company’s vision and passion for innovation.

    Broughton is a privately owned global contract research organization (CRO) offering fully integrated end-to-end services to deliver U.S. premarket tobacco product applications, EU medicinal product applications and EU Tobacco Products Directive notifications for next-generation nicotine products. Our business culture is to continue to invest in new science and innovations aligned with global regulatory requirements. By partnering with Broughton, clients will know they have access to some of the most experienced consultants in the world with deep industry knowledge combined with regulatory compliant CRO laboratory facilities. Broughton is committed to supporting clients in their development of safer nicotine products.

    CNT is the world’s largest supplier of highly purified nicotine to the pharmaceutical and next-generation products (NGP) industries. With pure nicotine and nicotine polacrilex resin manufacturing capabilities in Switzerland and Northern Ireland, CNT offers 100 percent contingency in supply of these key products. In addition, CNT has now developed an array of new nicotine-containing formulations for use in a broad spectrum of NGP applications, including modern oral (pouch) products. CNT is actively developing new product categories in its “beyond nicotine” strategy, utilizing its knowledge learned in nicotine to explore additional active substances of interest to our customers. CNT is one of the world’s leading suppliers of sustainably produced tobacco leaf.

    Headquartered in Austria, Delfort is a global leader in tailor-made specialty papers. In addition to thin print paper, release base paper, food packaging paper and electrical applications paper, the company manufactures a complete portfolio of top-quality cigarette paper, plugwrap paper, tipping base paper and printed papers. By utilizing pure and certified raw materials with the most advanced equipment, Delfort ensures that its products meet the most stringent quality requirements.

    FEELM is a high-end atomization technology brand belonging to SMOORE, a world leader in atomization. Focused on cutting-edge atomization technology research, FEELM specializes in the development and manufacturing of high-quality atomization devices driven by the FEELM ceramic coil.

    As the research engine of the global electronic atomization industry, FEELM delivers premium experience. Ever since the successful development of the FEELM black ceramic coil in 2016, FEELM has a significant impact on the research and manufacturing of closed vaping products, changing the whole competitive landscape.

    FEELM won a Golden Leaf Award at GTNF 2018, the China Patent Excellence Award and the iF Design Award 2020. Vaping devices loaded with FEELM atomizer have been exported to Europe, America, East Asia, Africa, Oceania and many other countries and regions. Its accumulated sales volume has surpassed 3 billion pieces, becoming more and more popular among worldwide consumers.

    The Foundation for a Smoke-Free World is an independent, U.S. nonprofit private organization that was formed in 2017 to reduce the 8 million annual deaths caused by tobacco use and address the consequences of reduced demand for tobacco farmers. The Foundation’s mission to end smoking in this generation is supported through three core pillars: Health, Science, and Technology; Agriculture and Livelihoods; and Industry Transformation. To achieve its mission on a truly global scale, the Foundation strives to identify and address the unique needs of the developing world as they relate to tobacco cessation and harm reduction. The Foundation is led by Derek Yach, a global health expert and anti-smoking advocate for more than 30 years.

    Funded by annual gifts from PMI Global Services, the Foundation is independent from PMI and operates in a manner that ensures its independence from the influence of any commercial entity. Under the Foundation’s pledge agreement with PMI and bylaws, PMI and the tobacco industry are precluded from having any control or influence over how the Foundation spends its funds or focuses its activities.

    Founded in the mid-1980s, Hall Analytical is a globally respected analytical laboratory based in Manchester, U.K., which specializes in complex trace analytical chemistry.

    The company’s mission is to deliver innovative and high-quality analytical expertise to strengthen its clients’ ability to improve product safety and reduce harm to patients and consumers. To that end, Hall Analytical partners with clients in the pharmaceutical, biopharmaceutical, medical device and consumer sectors to ensure their products are safe and compliant with appropriate regulatory frameworks.

    To support the nicotine reduced-risk product industry, Hall Analytical offers clients a wealth of experience in the analysis of vapor products and heated-tobacco products, supporting their core strategic objective to deliver less harmful, smoke-free alternatives for nicotine consumers.

    Imperial Brands is a global consumer organization and the world’s fourth-largest international tobacco company. Its products include JPS, West and Davidoff cigarettes, Rizla rolling papers and the vapor brand Blu. Imperial Brands operates in 120 markets, including the U.S. where its ITG Brands subsidiary offers a broad portfolio of cigarette and mass market cigar brands, including Winston and Backwoods.

    Driven by insights and data, Imperial seeks to meet the expectations of adult smokers by putting the consumer at the center of everything it does. It is also refining its ways of working and its culture to foster a strong challenger mindset among its 27,000 employees worldwide.

    Imperial is focused on leveraging its tobacco assets in its five priority markets and on building a successful and sustainable next-generation product (NGP) business. This year, it has refocused its NGP strategy behind heated-tobacco and oral nicotine opportunities in Europe and in selective market opportunities in vapor.

    Japan Tobacco International is a leading international tobacco and vaping company, with headquarters in Geneva, Switzerland. JTI began 22 years ago when Japan Tobacco acquired the non-U.S. operations of R.J. Reynolds. Since then, its international workforce of over 40,000 employees has driven two decades of growth. JTI owns some of the world’s best-known brands, including Winston, the No. 2 global cigarette brand, and Camel. Other major international brands are Mevius and LD. The company’s portfolio brings together the rich heritage of traditional tobacco as well as the latest technical and scientific innovation in reduced-risk products.

    Juul Labs’ mission is to transition the world’s billion adult smokers away from combustible cigarettes, eliminate their use and combat underage usage of its products. The company believes that vapor products can offer adult smokers an alternative to combustible cigarettes and, in so doing, reduce the harm associated with tobacco. Nicotine is addictive and can potentially be harmful. It would be best if no one used any nicotine product. Anyone who smokes should quit. Adult smokers who have not successfully quit should completely switch to potentially less harmful alternative nicotine products. Juul Labs does not want any non-nicotine users, especially those underage, to try its products, as they exist only to transition adult smokers away from combustible cigarettes. Juul products are not intended to be used for smoking cessation or other therapeutic purposes.

    Kure operates more than 130 retail locations across the United States and several more in Europe. The company is a recognized leader in the vape industry. Kure’s e-liquid line and bar offers custom, bespoke liquids made with the highest quality ingredients to cater to the tastes of every guest. Its tailored in-store service is designed to provide the best support possible to transition from smoking to vaping. Kure offers the latest and greatest hardware to ensure its guests receive only the best.

    Kure has submitted its thorough premarket tobacco product applications to the U.S. Food and Drug Administration. These applications detail the high standards the company adheres to in all aspects of its business. Moreover, Kure takes its responsibility to its guests and the community it serves seriously and has thus designed and implemented measures to ensure its products never end up in the hands of minors. Kure uses tools such as electronic point-of-service age verification software, secret shopper programs and extensive employee training programs to keep this commitment.

    Philip Morris International is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes as well as smoke-free products, associated electronic devices and accessories and other nicotine-containing products in markets outside the U.S.

    In addition, PMI ships versions of its IQOS Platform 1 device and consumables to Altria Group for sale under license in the U.S., where these products have received marketing authorizations from the Food and Drug Administration under the

    premarket tobacco product application pathway; the FDA has also authorized the marketing of a version of IQOS and its consumables as a modified-risk tobacco product, finding that an exposure modification order for these products is appropriate to promote the public health.

    PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements.

    PMI’s smoke-free product portfolio includes heat-not-burn and nicotine-containing vapor products. As of June 30, 2021, PMI’s smoke-free products are available for sale in 67 markets in key cities or nationwide. PMI estimates that approximately 14.7 million adults around the world have already switched to IQOS and stopped smoking. For more information, please visit www.pmi.com and www.pmiscience.com.

    Quartz Business Media is the owner and organizer of the largest network of tobacco-related exhibitions and conferences in the world. These include the market-leading series of World Tobacco events, WT Middle East, TABEXPO and World Shisha Dubai.

    Founded in January 2018, Relx is Asia’s leading e-cigarette brand. Relx’s mission is to empower adult smokers through technology, product and science ethically. Relx independently develops its e-cigarette products at its CNAS-standard R&D center and continues to make significant investments in R&D, e-liquid testing and new product development to deliver the best possible experience to its adult users. To protect minors from accessing e-cigarette products, Relx developed the guardian program, a companywide initiative that stretches from product development to sales and marketing, leveraging cutting-edge facial recognition technologies, GPS data and cloud technologies. The company has attracted global talent from Uber, Proctor and Gamble, Huawei, Beats and L’Oreal.

    Reynolds American Inc. (RAI) is an indirect, wholly owned subsidiary of BAT and is the parent company of R.J. Reynolds Tobacco Co., American Snuff Co., Santa Fe Natural Tobacco Co., R.J. Reynolds Vapor Co. and Modoral Brands. RAI’s vision is to build “A Better Tomorrow” by reducing the health impact of its business through offering a greater choice of innovative products for adult tobacco consumers.

    SMOORE is a global leader in offering vaping technology solutions, including manufacturing vaping devices and vaping components for heat-not-burn products on an ODM basis, with advanced R&D technology, a strong manufacturing capacity, wide-spectrum product portfolio and a diverse customer base. According to Frost & Sullivan, SMOORE is the world’s largest vaping device manufacturer in terms of revenue, accounting for 18.9 percent of the total global market in 2020.

    Through its innovative and pioneering vaping technology solutions, SMOORE operates two principal business segments: research, design and manufacturing of closed system vaping devices and vaping components for leading global tobacco companies and independent vaping companies; and research, design, manufacturing and sale of self-branded open system vaping devices, or APV, for retail clients.

    SMOORE owns a series of tech brands, including FEELM, CCELL and METEX, and the product brand Vaporesso.

    SWM is a leading global provider of highly engineered papers, films, nets and nonwovens for a variety of applications and industries. As an expert in manufacturing materials made from fibers, resin and polymers, the company provides critical components that enhance the performance of their end products.

    The company’s engineered papers group has been serving the tobacco industry for decades with highly technical papers and reconstituted tobacco leaf. SWM continues to innovate, with a special focus on heat-not-burn products, using its advanced paper and reconstitution technologies to meet the demands of this emerging product category. SWM’s versatility and portfolio are designed to deliver satisfaction while meeting stringent specifications.

    In recent years, SWM has diversified to include films, nets and nonwovens offered through its advanced materials and structures (AMS) segment. The AMS platform serves a variety of industries with the same focus on technical expertise, operational excellence and customer collaboration that have long been SWM’s hallmark traits.

    SWM and its subsidiaries manufacture on four continents, conduct business in over 90 countries and employ approximately 5,000 people worldwide.

    Founded in 1975, Tobacco Technology Inc. (TTI) exclusively develops and manufactures customized flavors, including casings, for the global tobacco industry: cigarettes, cigars, water pipe, snuff, snus, chew, kretek, roll-your-own, pipe, hemp and dissolvables. TTI also offers consulting services to facilitate flavor, process and product development.

    E-LiquiTech (ELT), a TTI subsidiary established in 2016, is dedicated to the development and manufacture of the highest quality e-liquids in addition to offering both bottle and cartomizer filling services. ELT is also the exclusive global distributor to the tobacco industry for Zanoprima, a research-driven, innovation-led life sciences company, offering SyNic high-purity synthetic (S)-nicotine in pure, bitartrate and polacrilex resin form.

    TTI Flavors, TTI’s subsidiary in Assisi, Italy, will start production of flavors, casings and e-liquids in the fall of 2021 to offer faster delivery to the company’s customers in Europe, the Middle East, Africa and Russia.

    Turning Point Brands continues to grow and evolve to meet changing consumer preferences. Along with a tobacco portfolio that features iconic, historic brands, such as Zig-Zag and Stoker’s, the company has expanded into the vapor and tobacco alternative segments with innovative brands such as VaporBeast, VaporFi and Marley. A highly effective sales force and distribution network ensure that consumers, retailers, partners and shareholders benefit from these products.

    For over 100 years, Universal Corp. has been finding innovative solutions to serve its customers and meet their agri-products needs. The company built a global presence, solidified long-term relationships with customers and suppliers, adapted to changing agricultural practices, embraced state-of-the-art technology—and emerged as the recognized industry leader.

    Today, Universal Corp. is a global business-to-business agri-products supplier to consumer product manufacturers, operating in over 30 countries on five continents, that sources and processes leaf tobacco and plant-based ingredients. Tobacco has been the company’s principal focus since its founding in 1918, and Universal Corp. is the leading global leaf tobacco supplier. Through its plant-based ingredients platform, Universal provides a variety of value-added manufacturing processes to produce high-quality specialty vegetable-based and fruit-based ingredients for the food and beverage end markets.

    Universal Corp. has a long history of operating with integrity, honesty and a focus on quality. It is a vital link in the leaf tobacco supply chain, providing expertise in working with large numbers of farmers, efficiently selling various qualities of leaf to a broad global customer base, adapting to meet evolving customer needs and delivering products that meet stringent quality and regulatory specifications.

    Going forward, Universal will build on its history by seeking opportunities in both tobacco and plant-based ingredients to leverage both its assets and expertise. The company will continue its commitment to leadership in setting industry standards, operating with transparency, providing products that are responsibly sourced and investing in and strengthening the communities where it operates.

    Zinwi Biotech was founded with the desire to offer the “nature flavor” e-liquid product to its clients. The company is sensitive to new trends. When nicsalt appeared as a game changer, Zinwi became one of the first suppliers with its own formula to meet the market needs.

    The merging of cutting-edge technology and boundless creativity, in turn, generates innovative flavoring solutions that serve 400-plus customers worldwide, resulting in a significant share on nicsalt juice used for electronic nicotine-delivery systems.

    With heavy investment in R&D, Zinwi in the future won’t limit itself as an e-liquid or nicsalt manufacturer but will also provide flavoring technologies that enrich food, healthcare and medicine products and other products that will help take humans’ lives to the next health level. Visit the company’s website

    * Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk-free and are addictive.† BAT products as sold in the U.S., including Vuse, Velo, Grizzly, Kodiak and Camel Snus, are subject to FDA regulation, and no reduced-risk claims will be made as to these products without agency clearance.

  • ‘Focus on Youth Vaping Could Hinder Cessation’

    ‘Focus on Youth Vaping Could Hinder Cessation’

    Photo: andrian cz

    A new paper co-authored by U.S. tobacco control experts endorses the harm reduction benefits of vaping for adult smokers trying to quit combustible cigarettes. The paper suggests that the public image of vaping products must be improved, and electronic nicotine-delivery systems (ENDS) should be promoted as a safer alternative to combustible cigarettes.

    “Opponents focus on e-cigarettes’ risks for young people while supporters emphasize the potential for e-cigarettes to assist smokers in quitting smoking. Most U.S. health organizations, media coverage and policymakers have focused primarily on risks to youths,” the report states. “Because of their messaging, much of the public—including most smokers—now consider e-cigarette use as dangerous as or more dangerous than smoking. By contrast, the National Academies of Science, Engineering and Medicine concluded that e-cigarette use is likely far less hazardous than smoking. Policies intended to reduce adolescent vaping may also reduce adult smokers’ use of e-cigarettes in quit attempts.”

    Published Aug. 19 in The American Journal of Public Health, the study was led by Kenneth Warner, a professor emeritus of health management and policy at the University of Michigan and a distinguished tobacco control expert. Fifteen former presidents of the Society for Research on Nicotine and Tobacco co-authored the paper.

    The authors present four categories of evidence supporting vaping as a quit aid for combustible tobacco use: the results of randomized trials, which show e-cigarettes outperform other cessation methods like nicotine patches; population studies, the findings of which “are consistent with a near doubling of quit attempt success”; cigarette sales, which decrease rapidly as vaping sales increase; and the unintended consequences of policies restricting vaping, such as bans that unintentionally shot up cigarette smoking.

    “The major elements of the public health community that are concerned with tobacco have been singularly focused on the risk to kids,” Warner told Filter. “They seem to truly have no interest whatsoever in adult smokers. The other piece is that you’re seeing lots of allegedly scientific papers that are raising health concerns that are unwarranted.” One such paper, which claimed that vaping increased the likelihood of having a heart attack, was later retracted.

    The paper also presents “a sensible mix of policies” to boost ENDS use, including taxing traditional cigarettes higher than e-cigarettes to encourage adult smokers to switch, allowing flavored vaping products available only at vape shops, restricting advertising to limit youth initiation and reducing the nicotine levels in cigarettes while ensuring the availability of “consumer acceptable” reduced-risk nicotine products.

    “Because evidence indicates that e-cigarette use can increase the odds of quitting smoking, many scientists, including this essay’s authors, encourage the health community, media and policymakers to more carefully weigh vaping’s potential to reduce adult smoking-attributable mortality,” the paper states.

  • PMTA Deficiency Letters

    PMTA Deficiency Letters

    Photo: Tobacco Reporter archive

    Common causes and how to prepare for them

    Contributed

    Paul Hardman

    In this article, Broughton Nicotine Services Head of Scientific Affairs Paul Hardman outlines the factors that can lead to data gaps in premarket tobacco product applications (PMTAs), what prompts a deficiency letter and how you can respond quickly and appropriately.

    What is a deficiency letter?

    Deficiency letters are sent to those who have submitted a PMTA with incomplete or insufficient data for the U.S. Food and Drug Administration to make a decision on whether the product is “appropriate for the protection of the U.S. public health.”

    Why have I received a deficiency letter?

    There are common causes of deficiencies that prompt the arrival of a letter. These could include a PMTA that lacks information that was mistakenly considered unimportant by the electronic nicotine-delivery systems (ENDS) company but is actually required by the FDA.

    Applicants may also have been rushed to meet last year’s Sept. 9 deadline, leaving the company submitting the PMTA with insufficient time to collate and provide the required data. Similarly, the timeframe required to submit the application may not have left enough time to complete stability studies of the required length to provide a range of data. The FDA is, understandably, keen to understand the stability of a product over its expected shelf life.

    Other reasons include:

    • A lack of integration between different studies—often submissions provide extensive data for some workstreams but are light in others. It is important that appropriate data is provided for all product analysis, nonclinical and human subject studies—and that data and approaches are integrated across all areas.
    • Different interpretation of “scientifically justified”—many elements of the PMTA guidelines indicate that approaches applied need to be justified by scientific data. However, as all products differ, there is a level of ambiguity in terms of what this looks like and what is required.
    • Poor “bridging” of data—the FDA welcomes the bridging of scientific data between similar products where appropriate. However, bridging that is not, in the opinion of the FDA, sufficiently scientifically justified will be highlighted and raised as a deficiency.

    What will be in a deficiency letter?

    Despite the name, it won’t just be a letter. The deficiency packs issued by the FDA are very detailed, outlining positive aspects about your application and areas for improvement and attention.

    There will be multiple pages covering different points, with sections covering all products or particular products in a bundled PMTA and perhaps highlighting deficiencies for particular timepoints.

    What is the aim of the deficiency letter?

    Once a PMTA application has been accepted for filing, the next stage is substantive scientific review, which results in either a deficiency letter, a request for environmental information, a market order granted or a market order denied. The FDA will notify the submitting company when their application enters substantive scientific review.

    The FDA intention of the deficiency letter pack is to support you in providing the required information. Each will typically cover what you need to do to remedy the deficiency and what data you need to provide to allow the FDA to carry on with a substantive scientific review—and the FDA has confirmed that, for deemed products (those on sale in the U.S. on or before Aug. 8, 2016), you will only receive one deficiency letter based on the agency’s current high workload with the many applications in process. The FDA has said this may be reviewed in the future once the backlog is cleared. Generally, for deemed products, you will have only 90 days to respond to the deficiency letter with all the relevant data that has been requested.

    Information could include examples of what meets the FDA’s requirements and advice on how you could better explain or justify the information provided. There is no set response to a PMTA application. The FDA has received an extensive number of applications, which are reviewed by a team of people, so inconsistencies may arise between different responses. Also, take note that answering all the queries in a deficiency letter does not necessarily guarantee that your application will eventually be granted a marketing order.

    How can I prepare for a deficiency letter?

    As an ENDS company, you might have a good idea of possible data gaps within your submission and understand whether you are likely to receive a deficiency letter. Or, you may believe that what you have provided is appropriate and adequate. Either way, it is best to be prepared.

    Steps can be taken to ensure you are ready for any eventuality, the most important one being to ask for help. Scientific and regulatory ENDS specialists can undertake gap analysis to identify any possible deficiencies so that steps can be taken now to provide what is required.

    You can also ensure you fill any missing data gaps. If there is information that is clearly missing or inadequate, put studies in place to collect the data now. Remember, there are only 90 days to respond to a deficiency letter, which may not be sufficient time to obtain the information required.

    Another piece of advice would be to start stability studies now if you are in any doubt that the stability data you provided may not be sufficient in terms of duration. Putting studies in place now will help you stay ahead of the game if this aspect of your submission is questioned.

    Finally, you should always cross-check requirements. It is surprising how many companies miss out key sections, such as an executive summary or environmental assessment. Although omission of key sections is likely to lead to the FDA refusing to accept or refusing to file the application prior to reaching the substantive review phase, it makes sense to compare the detail of what you have provided with the list of requirements from the FDA to check if you have overlooked anything.

    Recently, the FDA confirmed that addendums of additional data can be submitted to them before the commencement of the substantive scientific review stage for the process. This is fantastic news for manufacturers who had submitted dossiers that were not as comprehensive as they would have liked; if your application has not yet entered substantive scientific review, you now have the opportunity to submit additional data at no penalty to your application. However, if you plan to do this, it is important to contact the FDA and describe the anticipated plan of data generation and submission—and be quick. If you leave this too late and your application does enter substantive scientific review, you run the risk of any addendums being detrimental to your application and a shortening of the FDA’s enforcement discretion.

    How can I be prepared for, or minimize the chance of, receiving a deficiency letter?

    ENDS companies most prepared to respond appropriately will be those that are expecting the letter and have the required data ready or those that avoid receiving a letter altogether by providing information upfront. Companies such as Broughton Nicotine Services can help at any stage of the process, either prior to submission or during substantive scientific review, troubleshooting when there is a refuse to file/accept decision and also helping with preparation for and response to deficiency letters.

    Broughton Nicotine Services can help you undertake a gap analysis on your submission and generate the required information. Contact our regulatory consulting team to book a meeting so that we can help you advance a smoke-free future. 

    This article was supplied on behalf of Broughton Nicotine Services.

     

  • Messy Market

    Messy Market

    Photo: Taco Tuinstra

    Ukraine’s anti-monopoly committee tries to break up a cartel it helped create.

    By Stefanie Rossel

    June 1, 2021, marked another step toward the end of a multimillion-dollar anti-competition lawsuit brought against four tobacco manufacturers and a distributor in Ukraine. On that day, the country’s Supreme Court ruled that a UAH460 million ($16.87 million) fine imposed by the Antimonopoly Committee of Ukraine (AMCU) against Imperial Tobacco Ukraine (ITU) and Imperial Tobacco Productions Ukraine for alleged violation of antitrust legislation was groundless.

    The Supreme Court found that Imperial’s Ukrainian subsidiaries had not been involved in the events that had unlawfully left the country with only one cigarette distributor. In a press release, Imperial Tobacco Ukraine’s CEO, Ratislav Cernak, welcomed the decision, saying it was an encouraging sign for all foreign investors in Ukraine. The ruling followed the overturning of similar fines for British American Tobacco and Tedis in February and for Philip Morris International in April 2021. At the time of writing, Japan Tobacco’s case was still pending before the Supreme Court.

    In October 2019, the AMCU imposed a record fine of UAH6.5 billion—one of the biggest in the country’s history—on the local affiliates of PMI, BAT and Imperial Brands, along with Tedis Ukraine, the country’s largest tobacco distributor, for conspiring to eliminate competition in cigarette distribution. The committee claimed that the tobacco companies and Tedis had conspired to keep new businesses from entering the market. The companies appealed but lost their cases in the first instance court. Both manufacturers and the American Chamber of Commerce (ACC) in Ukraine expressed concern about the anti-competition trial, arguing the defendants had not been given full access to the evidence on which the AMCU based its allegations and that insufficient attention was paid to the companies’ arguments during the trial.

    The AMCU then asked the court to collect fines from all accused companies and freeze funds on their bank accounts, which could potentially have led to a manufacturing halt. In the face of such pressure, some of the companies paid up. However, some defendants also made clear their intention to defend their rights as foreign investors in arbitration.

    On Dec. 21, 2020, PMI filed a lawsuit for bilateral investment arbitration at the International Center for Settlement of Investment Disputes in Washington, D.C., claiming their fine violated bilateral agreements on mutual protection of investments with the United States and Switzerland. Previously, the ACC had cautioned that such high-profile disputes, which involve consideration by international bodies and make Ukraine, not the AMCU, a party to the dispute, usually gain international publicity and could have a negative impact on Ukraine’s image among foreign investors. The organization had called for a quick, transparent and fair solution.

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    Self-Made Problem

    The story behind the AMCU’s antimonopoly accusation is long and contradictory. Tedis and its predecessor company, Metropolis Ukraine, have repeatedly been the subject of legal challenges for antitrust behavior. Metropolis was founded in 2010 as a subsidiary of Megapolis, a Russian firm. At that time, it held 50 percent of the Ukrainian tobacco market, in which more than 50 cigarette distributors were operating. After a scandal that allegedly involved supplying weapons to the separatists in the war in Donbas in 2016, the company changed its name to Tedis Ukraine.

    Gradually, the company took over most of its competitors, with the AMCU approving the acquisitions. As of 2020, Tedis ranked eighth in the Forbes’ “Top 100 largest private Ukrainian companies” rating, generating an annual turnover of UAH49.7 billion. In 2019, Tedis aimed to generate a turnover of UAH60 billion, the company’s CEO Taras Korniachenko said in an interview with liga.net. According to Wikipedia, the company is one of the country’s largest taxpayers, employing 2,500 people spread over 35 regional branches in 2020. 

    According to openforbusiness.com.ua, which quoted AMCU spokesperson Olha Pischanska, Tedis’ share of the Ukrainian market rose to 99 percent between 2013 and 2015 but decreased to less than 75 percent by 2019. She pointed out that in addition to Tedis, other companies were buying cigarettes from manufacturers.

    Soon after Tedis had been cleared of the October 2019 charge, it was fined UAH274 million by the AMCU, which in March 2021 said that the company had not complied with an earlier ruling. In December 2016, the antitrust committee claimed that Tedis had abused its monopoly position between 2013 and 2015 and imposed a UAH431 million fine on the firm. The AMCU had also ordered the company to restore competition in the tobacco market. Tedis said it planned to appeal the most recent ruling, calling the decision “completely unfounded.” In an official statement on its website, it announced that it had fully paid the original fine in 2020 and fully fulfilled other obligations imposed by the AMCU.

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    Declining Legal Market

    About one-third of Ukraine’s 45.4 million people smoke, according to worldpopulationreview.com. With a joint share of more than 90 percent, PMI, BAT, JTI and Imperial Brands dominate Ukraine’s tobacco market. They also rank among the country’s 10 largest taxpayers. In 2020, the country exported €227 million ($268 million) worth of cigars and cigarettes to the European Union.

    Despite high domestic demand, cigarette sales in Ukraine have declined over the past few years. In 2019, the country produced 51 billion cigarettes, 15 percent less than in the previous year, a greater decrease than in the years 2011 to 2017 together, Imperial Brand’s country general manager said in an interview. His counterpart at PMI Ukraine expected a similarly steep drop for 2020.

    Tax revenues from tobacco account for about eight percent of Ukraine’s total state budget. In the past years, the country has repeatedly raised the excise duty for cigarettes, most recently by 20 percent in January. Presently, the specific rate of excise duty is UAH1,088.64 per 1,000 cigarettes, and the minimum rate is UAH1,456.33 per 1,000 cigarettes. Taxation accounts for around 70 percent of the pack price in Ukraine.  

    The former Soviet republic is one of the poorest countries in Europe, with an average nominal salary of €300 ($354) in 2019. Amid rising prices of legal smokes, the illegal cigarette market in Ukraine has flourished: According to PMI Ukraine’s CEO, the share of illegal cigarettes—including smuggling, counterfeiting and cigarettes with counterfeit excise stamps—has grown from 1 percent in 2016 to 9 percent in 2020.

    Ukraine is also the No. 1 country of origin for illicit cigarettes trafficked into the EU. In 2018 alone, inflows from Ukraine accounted for more than 4 billion cigarettes, according to the European Commission. Until recently, smuggling tobacco to other countries was not illegal in Ukraine. In April 2021, after years of pressure from the EU, Ukrainian President Volodymyr Zelensky introduced a bill that would make trafficking a crime punishable by up to 12 years in prison and a significant fine.

    Important Matter

    Solving the tobacco cartel dispute is essential for Ukraine as this is part of the Association Agreement between with EU that entered into force in September 2017. The contract establishes a comprehensive free-trade area between the parties and commits Ukraine to economic, judicial and financial reforms to converge its policies and legislation to those of the EU. Among other things, it requires the parties to “recognize the importance of free and undistorted competition in their trade relations.” The EU is Ukraine’s largest trading partner, accounting for more than 40 percent of its trade in 2019. Ukraine is preparing to formally apply for EU membership in 2024.

    To break up the monopoly, the country’s cabinet published a resolution in September 2020, which foresees the establishment of a national operator in the tobacco market by the end of 2021. Starting out as a pilot project, the operator’s task will be to combat tax evasion, smuggling and counterfeiting by introducing a track-and-trace system. The move is supposed to attract investment and is expected to add more than $535 million to the state budget.

    Critics, however, fear it would cement Tedis’ leading role and boost the illicit tobacco market. Legal challenges to the plan have been filed already. Ukraine’s road to EU membership is likely to be a long one.

    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.
  • Rebirth of an Icon

    Rebirth of an Icon

    Photo: Rizla

    The legendary Rizla brand gets a makeover.

    By George Gay

    Having been told that the Rizla brand of rolling papers was being given “a very significant refresh to ensure it remains relevant, particularly for younger adult smokers,” I couldn’t help wondering how it was possible to know when a brand needed such a refresh. The answer, it turns out, is fairly simple, at least in theory. Andrew (Drew) Marfleet, the head of marketing for Rizla, told me during a Teams meeting toward the end of June that, in large part, it was a matter of asking the brand’s consumers.

    Rizla, he said, had been talking to consumers for more than a year, and the feedback had included the message that, while during the past few years, changes had overtaken societies, the way consumers viewed brands and the way many brand owners presented their products, Rizla’s image had remained largely unchanged.

    The message was clear and the solution seemingly simple, but this was not quite the case. In refreshing the brand, a number of other factors had to be taken into consideration, not least of which concerned the fact that while consumers wanted change, they were at the same time greatly attached to Rizla’s “iconic and legendary” status. Now words such as iconic and legendary are often bandied about where they really have no place, but this is not the case with Rizla. The Rizla brand, which was acquired by Imperial Tobacco, now Imperial Brands, in 1997, dates to 1796 and the granting of a license by Napoleon Bonaparte to the Lacroix family for the supply of its premium rolling papers to his troops, while the Lacroix family’s involvement with paper can be traced back to at least 1532 and Pierre Lacroix.

    So there was something of a conundrum to confront because here was a rock-solid brand but one that had been around for the sort of timespan over which even rocks wear down. In other words, there was a tightrope for the marketing people to walk in trying to stay true to a venerable brand dating back more than 200 years, while bringing its image up to date. As Marfleet told the people around him, “no pressure then.”

    In fact, negotiating the tightrope required an even trickier balancing act than is implied here. In recent times, Rizla has seen an uptick in demand from those in the 21–30 age group, and it was focus groups largely made up of such people who expressed a desire for a refresh. But the brand’s core consumers are men aged 35 and above, so any refresh needed to be mindful not to alienate them. Unsurprisingly then, Marfleet made the point that this group of older consumers also had been kept close to the research, though, ultimately, he added, it had been about listening to all of the brand’s consumers and keeping them at the center of everything that had been done.

    I guess this approach goes to the heart of marketing, which is defined briefly as being about identifying consumer needs and determining how best to meet them. But care has to be exercised here; otherwise, like me, you can make an altogether wrong assumption. This refresh is about marketing, so these “needs” have to do with the brand messaging, not the product itself.

    Visual Positioning

    So, if the product remains the same, what is involved in a brand refresh? Well, according to Marfleet, it is ultimately about the brand’s strapline. “It is the visual positioning of the brand and the way that the brand communicates itself,” he said. “So, for as long as we can remember, Rizla has had the strapline of Never Settle [as, for instance, in: Keep Discovering—Never Settle; and Keep Creating—Never Settle]. What we have moved to, again after listening to our consumers, is celebrating our heritage and our legacy in a modern way. And that has led to our new brand positioning, which is, Roll with the Legend—Since 1796.”

    Beyond the strapline, Marfleet said, the refresh was more generally about brand communication, which, of course, raises another question. Isn’t the communication of tobacco and tobacco-related products and brands banned in many jurisdictions, which certainly include most of the markets where rolling-tobacco products and accessories are popular?

    Rizla was definitely limited in how it could communicate its message, Marfleet admitted, but it would be making changes in those channels open to it. So, instore materials would be changing, as would the brand’s online digital presence. A more specific example of the changes being made concerns a shift away from the sponsorship of motor sports and toward music and culture in general. Rizla has supported culture in the past, but now it is shifting all of its brand partnership efforts toward music and culture, which resonates more with the brand’s current consumers. Such a shift can be seen also in Rizla’s launch of a digital partnership with the global media platform Dazed, which positions it in the area of supporting emerging artists.

    Return on Investment

    This is a global refresh that, at the time I spoke with Marfleet, had been rolled out in two key Rizla markets, Italy and Spain, and that was due to be introduced elsewhere in the coming months. It was designed by the Rizla marketing team in close cooperation with a creative agency during a year and a half of weekly workshops that decided, following the sifting of something like 10 iterations, on the new brand positioning.

    The Covid-19 pandemic raised some challenges in respect of these workshops, but the overriding challenge, Marfleet said, had been ensuring that those working on the project got it right. In other words, the crux of the matter is: has it worked as a marketing project, and will it be successful as an investment? Well, apparently there has been excellent feedback after rigorous testing, and consumers in both the 21-plus and 35-plus age groups are said to love the refresh.

    But rolling papers comprise a niche product, and tobacco smoking is under attack, so will the market hold up to such an extent that the investment will turn out to have been worth it? Marfleet clearly believes so. The RYO market, which was the subject of healthy competition, was quite stable at the moment as a result of downtrading, Marfleet said, and Rizla had definitely seen an uptick in those aged 21-plus picking up on RYO. “Given the stable market and our predictions, we definitely feel that the investment into the brand refresh is completely justified and will pay off,” he said.

    Custom Manufacturing

    Of course, while Rizla says its products are aimed at the world’s adult tobacco smokers, it is likely that it will benefit from changes in some jurisdictions where marijuana smoking is being legalized. But on the other side of the coin, market challenges could be thrown up by revisions to the EU’s Tobacco Products Directives (TPD) and regulatory changes made by the U.S. Food and Drink Administration. However, Marfleet said these issues were on Rizla’s horizon. “What I can say is that we are proactively planning for multiple scenarios, especially with the TPD, so that we will be ready to take action whatever the outcome of that may be,” he added.

    Meanwhile, there was another, unofficial focus group that was regularly kept appraised of what was happening with the refresh: the approximately 200 people who work at the Rizla rolling papers factory in Belgium, which supplies the world with such papers. And, according to Factory Manager Kris Smedts, all of the people working at the factory, who make up a wide range of ages, loved the refresh.

    The factory, which was built in 1958 and which, over the years, has been expanded and automated to provide for an annual manufacturing capacity of up to 100 billion paper leaves, spread over a staggering number of SKUs (stock-keeping units), is located on the south side of Antwerp, at Wilrijk. It uses lean manufacturing techniques and is managed by an MRP (manufacturing resources planning) system because, though paper booklets might appear to comprise a simple product, their interleaved presentation is difficult to achieve, especially at high speeds, and the addition of innovations such as cut corners (to ease rolling) and pack-closing mechanisms have, over the years, added to the complexity of manufacture and logistical handling.

    Another layer of difficulty is added because, since rolling papers are a niche product, it is not possible to buy off the shelf the machinery for manufacturing and packing it, so it has to be developed by the factory’s own engineers working with specialized partners. And because rolling papers comprise an evolving product, the factory has a special product development team that works on the design of the new or modified machinery required to manufacture the innovative products needed to stay ahead of consumer demands.

    Finally, despite the refresh, some things will not change, or not much. During my chat with Marfleet, I mentioned a fairly raunchy Rizla marketing campaign used a good while ago, and he agreed that the brand’s marketing archives included campaigns that had been “on the edge of cheeky,” though, over the years, the cheek had been toned down in line with new advertising regulations. Nevertheless, he said, we’ll never forget that Rizla should always be a fun and quirky brand.

    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.
  • Genetic Scissors

    Genetic Scissors

    Image: vchalup

    Demeetra AgBio offers tobacco companies a new tool to reduce nicotine levels.  

    By Stefanie Rossel

    The goal of making combustible cigarettes less addictive by removing or significantly lowering their nicotine content to minimally or nonaddictive levels has long been on the U.S. Food and Drug Administration’s agenda. In July 2017, the agency announced a plan that became part of its multi-year roadmap for tobacco and nicotine regulation. When the FDA in late April 2021 revealed its intention to ban menthol cigarettes and cigars, it confirmed that the low-nicotine proposal was still under consideration.

    For cigarette companies, a requirement to lower nicotine would present a cost-intensive and time-consuming challenge.

    To date, no specific amount of nicotine has been identified as the threshold for addiction. In March 2018, the FDA issued an advance notice of proposed rulemaking to obtain information for consideration in developing a tobacco product standard to set the maximum nicotine level for cigarettes. In its 2015 Global Nicotine Reduction Strategy, the World Health Organization defined nonaddictive levels of nicotine as “likely to be equal or possibly less than 0.4 mg/g of dry cigarette tobacco filler.” To reach such levels, conventional tools to control deliveries, such as ventilated filters, will not suffice.

    Getting nicotine out of tobacco is a tall order; key considerations are cost and the impact of the treatment on produce quality. Until recently, there were basically three methods available to produce very-low nicotine (VLN) cigarettes—chemical extraction, genetic modification and microwave-assisted extraction.

    Using solvents, the chemical extraction method is similar to that used for removing caffeine from coffee beans. Because it is a batch process, it is not selective to nicotine only, however. During the de-nicotinization process, some flavorings are also eliminated, which is detrimental to the taste of the tobacco.

    Another strategy involves the use of genetically modified (GM) tobacco plants. The GM variety is presently offered by only one company, 22nd Century Group. Through its subsidiaries, 22nd Century has been supplying the U.S. National Institute on Drug Abuse with VLN cigarettes for research financed by the FDA and other U.S. federal government agencies since 2011.

    A third approach comes from Canada-based Radient Technologies, which uses a proprietary microwave-assisted processing extraction technology. Both 22nd Century and Radient Technologies claim that their processes do not affect the taste of the tobacco and are suitable for nicotine extraction on an industrial scale.

    Cas-CLOVER targeted tobacco shoots with knockout mutations for the phytoene desaturase gene, which results in a visually pale and white phenotype.

    To the Core

    Now, a new nicotine-reduction technology has entered the scene. Demeetra AgBio, a biotech company headquartered in Lexington, Kentucky, USA, recently introduced its Cas-CLOVER technology, with which it is currently designing gene-editing protocols specifically for the tobacco industry. Cas-CLOVER builds on the CRISPR-Cas9 gene-editing technique, which achieved worldwide fame in 2020 when Emmanuelle Charpentier and Jennifer Doudna received a Nobel Prize in Chemistry for its development. CRISPR-Cas9 is a molecular biological laboratory tool used to “edit” pieces of a living organism’s DNA.

    Based on a simplified version of the bacterial CRISPR-Cas9 antiviral system, it works like a pair of genetic scissors by using a specially designed RNA molecule to guide a Cas9 enzyme to a specific sequence of DNA. Cas9 then cuts the strands of DNA at that point and removes a small piece, causing a gap in the DNA at a desired location, allowing existing genes to be removed and/or new ones added in vivo.

    The method is considered highly significant in biotechnology and medicine as it allows for the genomes to be edited in vivo with high precision, at low cost and with ease. The system can be used in the creation of new medicines, agricultural products and has potential to help treat inherited genetic diseases, such as cancer and AIDS.

    The technique, however, has downsides: CRISPR-Cas9 also introduces abundant off-target mutations, thus increasing the need for “backcrossing” the crop. What’s more, the opportunity for commercialization of products that use the technology is restricted by intellectual property rights. The current owner, the Broad Institute of MIT and Harvard, prohibits the technology from being used for applications that involve the commercialization of tobacco products.

    Jack Crawford

    Improved Approach

    This is where Cas-CLOVER comes in. Because Demeetra has separate and issued IP for Cas-Clover, users need only a single license from the company to obtain commercial freedom to operate, according to Demeetra CEO Jack Crawford. What’s more, off-target mutations are nearly undetectable with Cas-CLOVER.

    “This matters for several reasons, the first of which is time,” says Crawford. “Since there are little to no off-targets with Cas-CLOVER, it requires less back-crossing to remove those off-targets. For example, CRISPR/Cas9 or chemical mutagenesis might require six to 12 generations of back-crossing to remove most of the unintended mutations. This takes years to decades, and many undesirable traits are never removed.”

    The second reason involves traits, according to Crawford. “Since unintended mutations are not a concern with Cas-CLOVER, one knows that a trait of interest, such as reduced nicotine, is related to the gene you targeted and will not be lost during back-crossing or breeding,” he says.

    Like a pair of molecular scissors, Cas-CLOVER can cut and effectively turn off or “knock out” any gene in any organism, Crawford points out. The system can also be used to knock in genes at a specific location. “The traits that can be generated are virtually limitless,” he says. “By targeting specific genes, nicotine can be increased for extraction and use in nicotine-replacement therapy or decreased, and the carcinogen levels can also be reduced. Additionally, disease and drought-resistant crops can be generated in this way.”

    If used for the creation of VLN tobacco, Cas-CLOVER would differ from competing processes in several ways, according to Crawford.

    “Cas-CLOVER can rapidly and reliably target genes for nicotine reduction in a step-wise or all at once manner,” he says. “This can be done in many varieties at the same time, enhancing product quality and availability. Cas-CLOVER-edited plants will not be considered GM and would not require regulatory clearance on the level of introducing new GM varieties. This targeted approach could result in reduced nicotine without reducing yields, and downstream processing would be simpler, all contributing to lower costs.”

    In the U.S., Cas-CLOVER and CRISPR-Cas9 are not considered GM because the intended mutation, which is typically a deletion, could have occurred by breeding or in nature, and there are no other changes or nonplant gene sequences “transgenes” in the genome. “The traditional GM crops contain transgenes from exogenous organisms that are inserted permanently into the genome of the crop. These transgenes typically include antibiotic selection markers, antisense or RNA interference genes. In fact, targeted gene-editing technologies are a huge improvement over transgenic GMs and chemical mutagenesis in terms of safety.”

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    Leaf with Potential

    Located in the heart of tobacco country, Demeetra is one of several companies in the region that use tobacco as a universal plant research model. The company has validated and optimized the Cas-CLOVER technology in commercial varieties of tobacco for high-efficiency gene-editing and intends to license it to tobacco companies for multiple applications. The technology is currently being applied in a laboratory setting and will eventually move to field trials in commercial tobacco strains, such as burley.

    And its potential could extend beyond the lowering of nicotine levels. Demeetra is working on using its technology to modify carcinogen levels to reduce the cancer risk from smoking combustible cigarettes for various ethnic groups. “The bulk of the carcinogens are produced when the leaf is cured and nicotine is converted to tobacco-specific-nitrosamines (TSNAs), which are known carcinogens,” Crawford explains. “By using Cas-CLOVER, we can specifically turn off the genes responsible for the conversion of nicotine to TSNAs. This would result in a far safer combustible cigarette for all ethnic groups, and a by-product is increased nicotine.

    “[Different] ethnic groups metabolize TSNAs differently, which is thought to contribute to cancer disparities. These improvements with Cas-CLOVER may help close that disparity gap. The tobacco industry has generated low converter lines by conventional breeding and chemical mutagenesis. However, since this is not a targeted gene-editing approach, other undesirable traits come along with the low converters, such as low yield. Conventional breeding takes many years. Since most cigarettes contain multiple varieties of tobacco to enhance taste and other attributes, a rapid Cas-CLOVER approach in many varieties could produce low converters without sacrificing cigarette quality and tobacco leaf yield.”  

    The Cas-CLOVER structure

    Vast Range of Applications

    Crawford sees similar potential for his method in the treatment of cannabis plants. “Biopesticides could be produced in the plant or manufactured in an exogenous system, such as yeast, and then applied to crops. Cannabis is a blank canvas of opportunities and challenges. Once gene-editing conditions are worked out in cannabis, Cas-CLOVER would be best utilized to modify bioproduction of specific cannabinoids, such as CBD and THC, but also rare cannabinoids.”

    Currently, Demeetra is exploring use of its gene-editing technology to uncover the therapeutic value of tobacco plants. Crawford says his company had generated Nicotiana benthamiana-edited plants, which is the host variety for manufacturing biologic therapies. “There are many improvements that could be made to this manufacturing system with Cas-CLOVER, such as enhancing the quality of the biologic therapeutic produced in tobacco and removing components that complicate downstream processing.”

    Demeetra is also working to generate tobacco plants with advanced traits for biotherapeutic production. “This is not only applicable to vaccines but any biotherapeutic, such as an antibody,” says Crawford. “A primary example is by knocking out the plant post-translational modifications. When a biologic is produced, the plant adds certain sugars and other molecules to the protein just as it would with naturally produced proteins. Since these protein side groups are not the same as human, it causes undesired immune response, which can limit the efficacy of the product. With Cas-CLOVER, we can eliminate these and other genes to improve tobacco as a biotherapeutic manufacturing platform.” 

    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.