Category: Also in TR

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  • Fearless Fighter

    Fearless Fighter

    Mayiwepi Jiti

    How Mayiwepi Jiti became a successful commercial grower in Zimbabwe’s male-dominated leaf tobacco industry.

    By Stefanie Rossel

    In sub-Saharan Africa, more than 60 percent of employed women work in agriculture. As shown by the example of Malawi (“This Is a Man’s World,” Tobacco Reporter, May 2021), they are at a significant disadvantage compared to men as women often lack control over land and access to financing while being excluded from important links of the agricultural value chain. Being dependent on a male relative to access the land, they are vulnerable; a husband’s death, a divorce or simply a man’s change of mind can leave a female farmer landless overnight.

    Zimbabwe is no exception. Tobacco, which today is grown primarily by smallholder farmers, accounts for about 40 percent of the country’s exports. According to the Borgen Project, approximately 72 percent of the country’s population lives in chronic poverty, and 84 percent of Zimbabwe’s poor live in rural areas. Zimbabwe has yet to recover from the 2008 financial crisis. Its gross domestic product (GDP) has been declining since 2013, in part due to stalling investments and adverse climate conditions that hurt the agricultural sector.

    “Zimbabwean women played and are still playing a pivotal role in resuscitating the country’s agricultural sector after its dilapidation by the Zimbabwean-British relations,” explains Mayiwepi Jiti. As a successful commercial farmer employing more than 200 permanent and seasonal workers and as the founder and president of the Zimbabwe Integrated Commercial Farmers Union (ZICFU), she is a rare example of a powerful woman in the country’s agricultural sector.

    “Women are bearing positive results on the country’s economy, where tobacco accounts for 10.7 percent of the country’s GDP. However, the Gender Links 2013 Barometer on Zimbabwe reported that although Zimbabwe’s economic framework calls for women’s participation in key sectors of the economy, there are no gender-responsive policies in the agriculture sector. Plans are underway for the government to align legal frameworks that would ensure equal opportunities between men and women.”

    Before the land reform of 1999, not a single woman owned a commercial farm in Zimbabwe’s mostly patriarchal commercial farming system. Females would inherit land only when there were no male heirs. Things gradually began to change from 2000, when the government redistributed land to redress the imbalances of landownership and a small number of Zimbabwean women secured land and became commercial farmers. Due to lack of funding in agriculture, contract farming was introduced as a temporary relief, but conditions remained unfavorable, especially for women.

    Out of more than 110,000 small-scale farmers today, 39.5 percent are women, says Jiti—an increase triggered by a rise in the number of single mothers, either widowed or divorced or pressed with financial responsibilities. In tobacco farming, these women are accepted as equal partners when they are selling tobacco on the tobacco floors, but due to gender-based constraints and shortages of funds to compete with the patriarchal society, they are not yet fully involved in all stages of the tobacco value chain, Jiti points out. “This makes it difficult to be involved in decision-making and inclusion on finance issues. Women have a very limited voice in that aspect.”

    In less than two seasons, I proved both the financiers and family members wrong

    Mayiwepi Jiti

    Rocky Road

    Reflecting on her own career, Jiti says that raising her voice and getting heard as an entrepreneur was not easy. “I faced a lot of challenges when I took over running of the family farm when my husband suddenly passed away in 2004. I had small children to look after, I had over 300 farm workers who looked up to me and I had a farm to work on to make a living and run as a professional enterprise,” she says.

    “Banks shunned me because of gender, and they looked down upon women as they had a feeling that as a woman, I was a nonperformer, and they did not know that behind every successful man there is a woman. Culturally in Zimbabwe, women tend to submit themselves to men and believe that it is the man who should initiate first before they follow. While men are discussing important issues, whether business or family issues, women are supposed to keep quiet or sometimes act behind the scenes. In most cases, the women are the brains, with brilliant and intelligent ideas. They are good at implementation and [are] naturally hard workers,” says Jiti.

    A primary schoolteacher by training, Jiti married a man with a farming background. Together, they bought a farm in 1996 and set up the respective infrastructure, which involved clearing land, making bricks, constructing tobacco barns and preparing the land to plant a crop. Three years later, when Jiti was pregnant with twins, her husband persuaded her to resign from her job. Instead of teaching, Jiti became involved in farm work. “It was like he fully prepared me to eventually take over farming after him,” she says.

    With both coming from farming backgrounds and having a lot of passion for agriculture, it was not difficult for her to proceed after her husband died in a car accident. At that time, they had just started construction of a dam for irrigation. The banks immediately stopped funding the project. “They demanded that I pay back what had been borrowed simply because they thought [that] as a woman, I was never going to finish off the project. Obviously, they judged me based on gender.”

    However, Jiti managed to construct the dam to 75 percent of its intended capacity without bank funding. “I achieved this through planting and selling cash crops like potatoes, cabbages, tomatoes, with the assistance of well-trained supervisors whom I had groomed with the assistance of my husband.”

    Today, Jiti grows tobacco on 80 hectares, whereas 50 hectares each are dedicated to maize and wheat, respectively. Most of the workers she employs are housed on the farm in self-contained houses with clean water and electricity.

    While women are accepted as equal partners when they are selling leaf on the sales floors, they remain disadvantaged in other parts of the tobacco value chain. (Photo: Taco Tuinstra)

    Successful Exporter

    The start was tough. “Running the farm and the family was a huge responsibility which needed sobering up and tireless hard working. I had very limited time to rest as I had a huge responsibility. My two children were in junior primary school when my husband passed on. Most family members looked down upon my abilities as a single mother and businesswoman. But in less than two seasons, I proved both the financiers and family members wrong. I pulled through and became a very successful and prominent farmer as I managed to not only look after extended family members, but I also successfully joined the male and white dominated export field of fruits and vegetables to Europe and won an international gold award on production of quality products.” Due to racial discrimination, black farmers were not allowed to venture into export, she adds. As information was not easily and readily accessible, it wasn’t an attractive field of business for them either.

    While more women are now in leadership positions, Zimbabwean farming is still dominated by men, according to Jiti. Women, she says, are often told to give their ideas to their husbands, who then take the credit. What’s more, female entrepreneurs also suffer the challenge of defying social expectations. “On the one hand, men tend to believe that to be successful in any business, there is a need to be competitive, aggressive and sometimes harsh. On the other hand, some successful women out there are mostly true to themselves and generally confident with their work,” says Jiti. “The societal perspective needs to change, and women must be embraced for who they are. They ought to be given a chance to display their wings on their own and not to be made to compete with men, who are born inherently different.”

    Another issue is that most women have no access to funding. “In my opinion, if there are government grants, they must benefit women equally as much as they benefit most men,” says Jiti. “Other challenges need to be addressed as well. Examples are corruption, the bottleneck system on the certification on export permits and the middlemen in the tobacco industry who buy farmers’ produce at low prices and resell it at huge markups.

    Contract farming, she believes, plays a positive role to most women farmers in Zimbabwe, where tobacco is typically sold in auctions. Under the current tobacco-selling regulations, farmers receive 60 percent of their tobacco payments in U.S. dollars and the remainder in Zimbabwe dollars.

    Farm inputs are priced in U.S. dollars, and the Zimbabwean dollar has been subject to considerable inflation. “In a country like Zimbabwe, which is believed to have many small-scale farmers who are unable to participate in intensive agricultural production and lucrative export markets, contract farming will be the way to go, at least for now,” says Jiti. “It is the women who suffer most as they have restricted access to loan facilities, insurance, are treated unfairly, etc. Contract farming has been tried before and has proven to be useful to most women. I therefore believe that if it is upheld, it assists in the promotion of most women into intensive agricultural production.”

    Representing Farmers’ Needs

    Jiti founded the ZIFCU in 2018 after facing challenges with the existing farmers union, ZFCU, where she was vice president of administration. “ZCFU has been registered as a private company benefiting a few individuals and allocating themselves union properties that were acquired by farmers for the benefit of the union members,” Jiti says. “Being a woman founding the union would not be taken lightly by the men-dominated ZCFU as they think it is a direct challenge to their union and are scared of the competition as they are quite aware that women leaders deliver. As a result, they are trying by all means to tarnish my image by false accusations. It is so sad to note that ZCFU leadership has very little knowledge about agriculture, making them very passive leaders in as far as farming challenges is concerned.”

    ZICFU provides support networks to farmers, ensuring they have access to resources and skills training and development for them to effectively utilize the land and market their produce. Groups represented by the association include subsistence agriculture, dairy farming, ranching, poultry and hobby farming. “ZICFU creates collaboration between farmers regardless of gender and other organizations, government and private partners to enable them to get the best out of their land,” Jiti explains. 

    Because irrigation equipment is expensive, small-scale to medium-scale Zimbabwean farmers tend to produce only rain-fed crops, which means low productivity. Most smaller farmers depend on government input handouts, which do not encourage them to expand production. When given these free packages, some farmers sell them to earn a small income for immediate household needs, eroding their credibility as borrowers in the eyes of the banks, according to Jiti. “The huge interest rates charged by the lenders are exorbitant and leave the farmer always in debt.”

    To eliminate this—and to deal with the effects on precipitation of climate change—more dams must be constructed. “In addition, there is need for the Zimbabwean government to constantly give grants to the deserving citizens so that those that are into commercial farming can afford irrigation equipment and other inputs that assist them in their farming activity thereby also bringing foreign currency to Zimbabwe.

    “I also believe that farmers need to be educated on the importance of evolving from subsistence to commercial agriculture. Commercial farming is highly rewarding, not only for the farmer but for the country at large,” Jiti says. Furthermore, she argues, people need to be educated on the importance of honoring the credit facilities. “This farming business can only succeed if we as farmers observe the need to be honest amongst ourselves and to the bank. The banking sector should charge reasonable interest rates for the sustainability of the farmers.”

    It is at this juncture that ZICFU comes in as an organ that advocates for positive change in agriculture. “Our aims and objectives are centered on the evolution in the agriculture sector and being the voice of the women who are still downtrodden, who also need emancipation and empowerment. In addition, ZICFU educates farmers to stand on their feet instead of constantly relying only on government grants and to embrace the digital world. We therefore intend to bring more awareness campaigns to the Zimbabwean farmers from all spheres, which will assist them in moving from small-scale farming to commercial farming, which is also in line with the Zimbabwean economic blueprint.”

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

    The Smoke That Thunders

    A startup cigar manufacturer hopes to move Zimbabwe’s tobacco exports up the value chain.

    By Thulani Mpofu

    When water flowing along Africa’s fourth longest river, the Zambezi, plunges over a cliff to a gorge 108 meters below at a point on Zimbabwe’s western border with Zambia, it produces a roaring sound and a spray of droplets visible from 48 km away.

    From a distance, the immense collection of droplets looks like a pall of white smoke. The Tonga people, among the first inhabitants of western Zimbabwe, call the landform Mosi Oa Tunya, “The Smoke that Thunders” in English. It is now officially known as the Victoria Falls after Scottish missionary and explorer David Livingstone first saw falls on Nov. 16, 1855, and named them in honor of Queen Victoria of Britain. In addition to being Africa’s most famous waterfall and Zimbabwe’s foremost tourist attraction, Victoria Falls is one of the seven natural wonders of the world.

    Zimbabwe’s first cigar maker, which started operating in March 2020, aspires to be what Victoria Falls is to local and global tourism while giving consumers a smoking experience that thunders.

    “The naming of the cigar is not by coincidence,” Mosi Oa Tunya Cigars founder and CEO Shepherd Mafundikwa told Tobacco Reporter. “This will be the smoke that thunders!”

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    Mafundikwa has never smoked but was motivated to consider investing in cigar making after he had a discussion with a friend while in the United States in 2019. They talked about Zimbabwe’s tobacco industry, its contribution to the southern African country’s economy, the level to which it is being beneficiated and prospects for growth. Cigar making featured prominently in their discussion. Mafundikwa had lived and worked in the U.S. for 15 years. Returning to his homeland, Zimbabwe, he and his friend Loy Veal started translating the casual conversation they had had into practice. Harare, Zimbabwe’s capital, was the natural choice for the setting up of the factory because the city is the center for tobacco trade in the country and is surrounded by four tobacco growing provinces.

    Mafundikwa also travelled to Cuba and the Dominican Republic to learn more about cigar making as well as to recruit staff skilled in cigar rolling. He convinced several cigar rollers to come over from Cuba to help him launch the business, but after some time, most of them opted to return home. However, a veteran cigar roller from the Dominican Republic, Elias Lopez, stayed on and became the head of training. He has, since May, been training an all-female workforce of eight.

    The Mosi Oa Tunya team. Elias Lopez is the fifth person from the left and Shepherd Mafundikwa is the sixth. (Photos: Mosi Oa Tunyaosi)

    Lopez, who is also a cigar smoker, has been rolling them for 30 years in the Dominican Republic, Costa Rica, Nicaragua and Panama for companies such as Arturo Fuente, Davidoff and other legends. Prominent American film actors and producers Sylvester Stallone and Chuck Norris have smoked some of the cigars he has rolled during his time in the Americas, Lopez claims.

    “When I agreed to come to Zimbabwe, I didn’t know what to expect,” Lopez said.

    “I must say, I have been pleasantly surprised by the quality of the tobacco, the warmness of the people and the pace at which the students have grasped the cigar rolling skills. I’m proud to be associated with the first cigar making factory in Zimbabwe, and I look forward to being part of the growth this company will definitely experience. The world will soon know and love the Mosi Oa Tunya cigar brand.”

    Zimbabwe is Africa’s leading tobacco growing nation and the sixth largest internationally. The three main types of tobacco grown in the country are Virginia flue-cured, burley and Oriental. Virginia accounts for over 95 percent of the leaf outputs, according to the Tobacco Industry and Marketing Board (TIMB).

    Burley, which Mafundikwa says his company rolls into cigars, contributes between 2 percent and 3 percent of total yearly tobacco output in the country.     

    “Ninety-five percent of our cigar input is locally grown burley,” he said.

    “The wrapper is imported. We are working with local experts to grow the wrapper, and hopefully we will soon have a 100 percent Zimbabwean cigar.”

    I have been pleasantly surprised by the quality of the tobacco, the warmness of the people and the pace at which the students have grasped the cigar rolling skills.

    Elias Lopez, veteran cigar roller

    Goodson Khudu, a research and extension officer at the Tobacco Research Board, said burley is grown in Burma Valley in eastern Manicaland Province near Zimbabwe’s eastern border with Mozambique.

    “That area has the right climatic conditions for the crop,” said Khudu.

    “We have had some German interest in contracting local farmers to grow burley there, and it has been very successful. However, output has been low in recent years, suggesting that the company (Mosi Oa Tunya Cigars) might want to consider promoting its growing in a bigger way so that local production meets all their requirements.”

    The German tobacco firm Von Eicken has been supporting farmers in Burma Valley to grow cubra. In 2016, 11 tons were produced under the Von Eicken initiative. The volume expanded to 20 tons in 2017 and 24.5 tons in 2018.

    Mosi Oa Tunya Cigars recognizes that a large proportion of locally grown tobacco is exported unprocessed, a weakness that is shared by other countries in Africa. The firm produces three blends—light, mild and strong. The light flavor is for beginners and is available in mini cigars.

    “Our staff is still undergoing training, and at optimum production we will be producing 1,500 cigars a day,” Mafundikwa said.

    “We want to scale up production, but the final figures will depend on market demand. Surprisingly, there is a very vibrant cigar smoking culture which we were unaware of. At the moment, all our output is being locally consumed, and there is potential to grow the market as more people become aware of our product.”

    He is happy to be contributing to local tobacco beneficiation in a country that exports up to 90 percent of its leaf raw.

    “This is not peculiar to Zimbabwe,” said Mafundikwa. “It’s a continental problem where countries find it easy to export raw materials. In addition, finances also hinder players getting into manufacturing. We at Mosi Oa Tunya are playing our part in value addition. Governments have to come up with policies and support to start manufacturing entities.”

    Mosi Oa Tunya is confident the quality of its cigars is comparable to that of any brand anywhere.

    The cigar manufacturing industry in southern Africa is small, with reports that there are only two companies in the region that are in the business—Zimbabwe’s Mosi Oa Tunya Cigars and Bongani Cigars in neighboring Mozambique. The latter, which considers itself Africa’s first in this luxury market, hand rolls 10,000 cigars every month with locally grown tobacco and wrappers imported from Cameroon across the continent in West Africa. It was founded in 2016 and, like its Zimbabwean counterpart, relied on a maestro from the Dominican Republic to train Mozambican rollers. It sells locally and exports to South Africa, Kenya and Nigeria, among other countries.

    Mafundikwa is aware that breaking the stranglehold of legends in the elite cigar market will not be easy for his greenhorn. However, his company has already had expressions of interest from Vietnam, Romania, Dubai and the U.S.

    “We are making an African cigar, and we believe the quality is comparable to any brand anywhere given the legendary status of Zimbabwean tobacco. The lure of a new exotic and authentic African product will be our trump card, and we will thrive on competition,” he said.

    Mosi Oa Tunya Cigars has been received well by locals who are excited that at last their country has an exotic product to match their nation’s lofty standing as Africa’s biggest producer and one of the world’s top six growers.

    TIMB chief executive officer Andrew Matibiri said the government always encouraged greater investment in tobacco beneficiation, but the response has been slow. There are about four cigarette manufacturers in the country, with British American Tobacco dominating. The entry of Mosi Oa Tunya into the market, he said, is a welcome addition.

    “It is clear that, yes, we are the dominant growing nation on the continent and among the top six globally, but that dominance has not been matched by corresponding investment in adding value to tobacco,” Matibiri said.

    “I am talking here about the flue-cured leaf, which is more than 90 percent of the national output. But like Oriental and others, we are exporting them in raw form. Therefore, we welcome Mosi Oa Tunya Cigars in the context of the national effort to boost value addition and hope that, with time, they will get all their requirements locally. We are excited that they have joined that niche market and wish them the best.”

  • Rooting for Science

    Rooting for Science

    Photo: BAT

    Participants in the In Focus: THR conference examined the state of tobacco harm reduction in a critical year for the subject.

    By Stefanie Rossel

    The year 2021 will be critical for tobacco harm reduction (THR). In November, the ninth session of the Conference of the Parties (COP9) to the World Health Organization’s Framework Convention on Tobacco Control will take place. The European Union recently introduced its Beating Cancer Plan, which aims to reduce tobacco use in the EU to less than 5 percent by 2040 and commits to significantly strengthen tobacco-control measures in the union. It coincides with a review of the EU Tobacco Products Directive, scheduled to begin this month, that will consider amendments to take account of next-generation products (NGPs), many of which did not exist or were in their infancy when the original directive took effect years ago.

    The first “In Focus” virtual conference, organized by the GTNF Trust and held on April 27, shed some light on the challenges and opportunities for THR. The open mic session, moderated by Counterfactual Director Clive Bates, probably summed up best what is going well and what is going badly in THR. On the positive side, panelists noted that, thanks to continuous innovation in the corporate sector, consumers now have a vast choice of alternative products that are fundamentally better than combustible cigarettes. In the United States, the leading market for vape products, the Food and Drug Administration has started to process premarket tobacco product application (PMTA) submissions. Significantly, it approved Philip Morris International’s IQOS tobacco-heating product as a modified-risk product in 2020.

    The negative list, however, is much longer: Several countries tax e-cigarettes like combustible cigarettes. The tobacco industry appears to have no chance to restore its bad reputation—whatever it is doing, it must be counteracted, in the view of its detractors. The points most frequently mentioned by panelists were misperception of the risk of nicotine and the misperception that reduced-risk products (RRPs) are in fact more harmful than combustible cigarettes. Both have led to bad public health policies, such as flavor bans, rules that make distribution of NGPs more difficult or outright prohibition of vapor products. “Correcting misperception of nicotine and RRPs is essential to spreading the concept of THR,” said Maria Gogova, vice president and chief scientific officer, Altria Client Services. “Data show that consumers who are informed about relative risks are more likely to switch to RRPs.”

    Cliva Bates
    Maria Gogova
    David Abrams

    No magic bullets

    Almost two decades after Hon Lik invented the modern e-cigarette, there is a plethora of THR studies, according to Professor Riccardo Pelosa, professor of internal medicine at the University of Catania, Italy, and founder of the Center of Excellence for the Acceleration of Harm Reduction. “However, THR research is in need of critical reform,” he argued. “Many THR studies have common methodological problems or a flawed study design. Rigorous THR research is not an obstacle but an asset to reduce divisions among tobacco control researchers. We need extensive research that shows the effect of switching in fewer illnesses and deaths.”

    Making science prevail over ideology remains a daunting task, said Professor David Abrams from the Department of Social and Behavioral Sciences at New York University. He lamented the proliferation of “zombie ideas,” such as the claim that e-cigarettes don’t help quitting, that keep resurfacing without supporting evidence. “There is no magic bullet against them,” he said. “We can’t expect those with the strongest convictions to change their minds quickly or easily—or ever. But those without such intense effects will come to recognize that harm reduction opponents lack an evidence base compared to those supporting the risk continuum.” Abrams recommended a focus on acts of scientific virtue, such as openness and humility, and said there was a need to engage in good faith with those who disagree.

    Despite the abundance of THR research, scientists are still seeking to fill gaps. Many of those gaps relate to real-world use of electronic nicotine-delivery systems (ENDS). It remains unclear, for example, to what extent vape products differ in effectiveness in assisting smoking cessation. To help answer that question, Neil McKeganey, director of the Center for Substance Use Research at the University of Glasgow, is carrying out The Big Vape Survey.

    Mark Kehaya
    Neil McKeganey
    Riccardo Polosa

    Over a period of 12 months, his team will collect data on 30,000 current adult smokers, looking at aspects such as ENDS purchase at the baseline and at follow-up, combustible cigarette use, patterns of e-cigarette use, intentions to quit smoking and nicotine strength and flavor choices. The output, McKeganey related, will provide a deeper understanding of the interaction between individual customers and individual devices. A similar survey in the U.S. will investigate the impact of reduced product variety. Since September 2020, ENDS manufacturers may sell their products only if they have submitted a PMTA.

    AMV Holdings, one of the largest independent specialty vape retailers in the U.S., has conducted several consumer surveys since 2015. Chairman Mark Kehaya shared the results of the most recent one from 2019. Seeking to measure how effective AMV is in weaning smokers off cigarettes, the poll looked at the behavior of almost 10,000 present and former customers for more than 12 months. Ninety percent of respondents used traditional tobacco products before they started using ENDS. Thirty percent of them had been smoking more than a pack of cigarettes per day; 50 percent had been smoking for more than 10 years. Ninety percent of respondents chose e-liquids with nontobacco flavors—for AMV, Kehaya pointed out, fruit is the single biggest category. After 12 months, the repeat range was between 72 percent and 73 percent. Sixty percent reported success in using ENDS to quit cigarettes, whereas 42 percent said they would eventually quit using ENDS as well. A reduction of nicotine strength in e-liquids was also observed. “ENDS are a significant means of getting people out of combustible cigarettes in an effective way, and flavors play an important role,” Kehaya concluded.

    A poll of 2,000 U.S. consumers conducted by Reynolds American (RAI) earlier this year demonstrated how widespread misperceptions of RRPs and nicotine are. While 70 percent of respondents believed that THR was a positive thing for public health in the U.S., only 16 percent thought that vaping was better for health than smoking combustible cigarettes, according to James Murphy, executive vice president of R&D and scientific and regulatory affairs at RAI. Eighty-two percent believed that nicotine was linked to cigarette-related mortality. “This misperception restricts the movement of smokers to less hazardous products,” said Murphy, who also hinted at the challenge of assessing the risk profiles of NGPs for which no epidemiological data are available yet. Modern oral products, such as nicotine pouches, have shown even lower toxicity and chemistry levels than the well-researched traditional oral products, such as moist snuff and Swedish-style snus.

    James Murphy
    Kgosi Letlape
    James Glassman

    Wanted: A new approach

    To make the WHO’s fight against global tobacco consumption more efficient, the COP9 would be well advised to change its stance toward THR, according to the participants in the In Focus forum.

    Clive Bates invited his panelists to a mind game, asking them about the elements their policy would include if they were the WHO. Karl Fagerstrom, president of Fagerstrom Consulting, suggested that the system of alcohol regulation in which the alcohol concentration is decisive for the risk attributed to it could also be applied to tobacco. “In the case of tobacco, it would not be the nicotine concentration, but the hazard of the individual product,” he said. “This, however, requires that people are informed about the nature of nicotine and the continuum of risk.”

    Regarding knowledge gaps, Kgosi Letlape, former president of the Health Professions Council of South Africa, noted that the way in which people have been socialized in countries such as his presents a formidable challenge. “After 400 years of colonization, there is no cultivation of independent thought,” he said. “We have become a zombie nation, relying on the WHO to tell us what to think. People need to be given reliable information to make differentiated choices.”

    By 2030, more than 80 percent of tobacco-related deaths will occur in low-income and middle-income countries (LMICs), according to Ambassador James K. Glassman, former U.S. undersecretary of state for public diplomacy and public affairs and chairman of Glassman Advisory.

    Since September, Glassman has been chairman of the Commission to Reignite the Fight against Smoking, which is being sponsored by the Foundation for a Smoke-Free World. The committee is currently working on a report that focuses on how tobacco harm reduction can be leveraged to LMICs.

    It is scheduled to be finished by September—well in time for the COP9.

    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.
  • A New Dawn

    A New Dawn

    Kingsley Wheaton (Photo: BAT)

    BAT is keen to build “a better tomorrow.” Chief Marketing Officer Kingsley Wheaton explains what that entails.

    By George Gay

    I believe that Oscar Wilde, a man of fashion, once described fashion as “a form of ugliness so absolutely unbearable that we have to alter it every six months.” So I wonder whether he, as a fashionable smoker, would have supported altering the cigarette every six months, given he had known it posed an absolutely unbearable risk.

    I think he would have done so. He was a risk-taker, but he was also highly intelligent, and there comes a time when intelligent people, even risk takers, have to yield to reality. Time caught up with the tobacco industry years ago, and, during the past decade or so, it has been changing in the light of what to most people is smoking’s unacceptable risk. These changes have included offering consumers a burgeoning range of increasingly viable lower risk alternatives to combustible cigarettes, which, rather than appearing every six months, have been launched as a steady stream of innovative products that, yes, up to a point, are dictated by consumer-led fashion.

    Appropriately, Wilde talked of altering fashion while the tobacco industry talks usually of change. But there is a new word on the block: “transformation,” which seems to describe a more muscular form of change—one that is not just about the market but about the companies supplying the market and the consumers buying from the market. BAT is one company involved in transformation and, in April, Tobacco Reporter asked it what form this transformation was taking.

    “BAT has a clear purpose—to build ‘A Better Tomorrow’—by reducing the health impact of our business through offering a greater choice of enjoyable and less risky products,*” said Kingsley Wheaton, chief marketing officer, in an emailed reply. “We aim to generate an increasingly greater proportion of our revenues from products other than combustibles, and we are targeting £5 billion [$6.97 billion] New Category revenue by 2025. We aim to have 50 million consumers of our noncombustible products by 2030, and today, already 13.5 million consumers choose these products … 

    “We have the broadest New Categories portfolio in the industry, comprising vaping devices, tobacco-heating [products] and modern oral nicotine products. Our multicategory portfolio offers innovative consumer products that have been developed using cutting-edge technology and science. We are building the brands of the future.

    “From launching our first vaping device in the U.K. in 2013, our vaping products are now available in 27 countries. In total, our New Category brands are available in more than 50 countries around the world. 

    “We have come a long way, and our transformation continues to accelerate. We are building new capabilities around the world focused on science, innovation and digital technologies. Consumer preferences and technology are evolving rapidly, and we are staying ahead of the curve with our digital hubs, the creation of innovation super centers and further development of our world-class R&D laboratories. We are also leveraging the expertise of our external partners and are looking forward to exciting results from our venturing initiative BTomorrowVentures.

    “In December 2020, we also announced we had progressed our Covid-19 and seasonal flu vaccine candidates into human trials—a significant milestone that further demonstrates our commitment to innovation and science.”

    Endpoints

    It would be easy to dismiss the above reply from BAT as the sort of polished promotional prose you would expect from a multinational, and I’m certain some people will do so. But if this is your reaction, it is worth reading it again because the breadth of the transformation cannot be denied, even if you don’t like the direction of travel. As BAT pointed out, it started life in 1902 and, for more than 100 years, had a product portfolio comprising more or less only cigarettes, which themselves comprised mainly a processed plant. Now it is describing how it is harnessing science, digital technologies and innovation super centers to produce a range of new category products that will change the market and consumer habits significantly within a targeted time. And let’s not forget the vaccine trials, which are impressive in themselves, but which hint at scientific developments that might provide important cross-fertilizations.

    One interesting question that arises when considering the transformation of a company has to do with whether there comes a point at which the transformation is complete, or whether it is a continuing process without any readily identifiable endpoint.

    “From the start of our portfolio transformation journey, we have always been clear that no consumer is the same,” said Wheaton. “In order to meet differing needs in multiple marketplaces, a portfolio of suitable alternatives is required—that is the hallmark of a modern consumer products business. It’s about understanding consumer preferences and how the marketplace is evolving.

    “We are transforming from a company that defines itself by the product that we sell to the consumer needs that we meet. We are committed to driving a step change in our New Category business while also innovating new product areas that go ‘beyond nicotine.’

    “We recently entered a strategic R&D collaboration with Organigram, a leading Canadian cannabis licensed producer. This agreement augments our activities to expand our portfolio ‘beyond nicotine’ and follows the pilot launch of our first CBD vaping product, Vuse CBD Zone, in Manchester, U.K., earlier this year.”

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    The Shifting Regulatory Landscape

    Given the stated individuality of consumers and their inevitable turnover, it would seem that transformation will be a continuing business, especially since there is another significant variable in the equation: shifting regulatory landscapes. And at this point, the question arises as to how a multinational company can navigate regulations in a world where countries operate with different—sometimes vastly different—regulations in respect of tobacco and new-generation products.

    “The regulatory environment around tobacco harm reduction is evolving,” said Wheaton. “Science increasingly points to the reduced-risk* nature of our New Category tobacco and nicotine products as an alternative to smoking. This means we are seeing policy and regulatory shifts in several markets. Some countries have greater restrictions in place. Others, like the U.K., view tobacco harm reduction within a regulated framework, encouraging smokers to use potentially reduced-risk tobacco and nicotine products.

    “We believe a stakeholder-inclusive, whole-of-society dialogue, which includes regulators, policy makers, consumers and the industry, is key to developing effective policies that can accelerate tobacco harm reduction as fast as possible.

    “We also believe that accelerating progress toward more effective tobacco harm reduction policies needs an evidence-based approach; proportionate regulation; freedom to innovate; engagement, dialogue and communication; and responsible marketing freedoms.

    “Underpinning all of this is our ethos: It is about being bold, fast, empowered, responsible and diverse to create a future-fit culture at BAT.”

    Dropping the Pods

    Although change is always put forward as a positive by those bringing it in, it doesn’t take more than a second’s thought to realize this is not necessarily the case. And the same could be said about transformation, so Tobacco Reporter asked whether BAT was concerned the tobacco industry’s transformation to some new-generation products could be viewed as having negative consequences for the environment.

    As part of his reply, Wheaton said BAT’s group-wide circular economy strategy for all its product categories—including its New Categories portfolio—was guided by three strategic priorities:

    • Simplifying the design of products to improve recyclability and reduce the use of virgin materials and resources;
    • Maximizing the longevity of products to improve the experience for consumers; and
    • Minimizing waste through increased product recovery and recycling.

    “Responsible disposal of our New Category products is key to our approach,” he added.

    “We have implemented ‘drop the pod’ pilot schemes in France, Mexico and the U.K. for consumers to return their e-liquid pods. In Japan, we have a scheme that allows consumers to return tobacco-heating devices. We aim to implement takeback schemes for our New Category devices, in all markets where they are sold, by [the] end of 2021.”

    So it would seem that, as far as BAT is concerned, building a better tomorrow goes beyond addressing individual and societal health improvements. In answer to another question, Wheaton pointed out that the expectations of the broader society were that businesses should play a more active role in addressing and finding solutions to crucial social, economic and environmental issues. “At BAT, we welcome this shift, which is aligned to our company’s purpose and our ESG [environmental, social and corporate governance] agenda,” he said.

    “Reducing the health impact of our business by encouraging those smokers who would otherwise continue to smoke to switch completely to scientifically substantiated reduced-risk alternatives* is the greatest contribution we can make to society. This means growing our New Category business and increasing the proportion of our revenue coming from New Category products as fast as possible. 

    “Our work to reduce the environmental impact of the business will also drive growth and create shared value, delivering results that simultaneously benefit shareholders and wider society.

    “In support of our ‘A Better Tomorrow’ purpose, in 2020, we set three ambitious ESG targets: First, to increase the consumer base of our noncombustible products to 50 million by 2030; second, to become carbon neutral for emissions resulting from our own business by 2030 and accelerating our existing environmental targets to 2025; third, to eliminate unnecessary single-use plastic and make all plastic reusable, recyclable or compostable by 2025.”

    There is a saying that you can lead a horse to water, but you cannot make it drink, so what, Tobacco Reporter asked, could BAT do if a hard core of smokers decided they did not share the company’s vision of a better tomorrow? Would it keep manufacturing traditional cigarettes for them, or would it stop supplying such cigarettes when a country’s smoking population dropped below 5 percent or some such figure?

    “We are clear that cigarettes pose serious health risks,” said Wheaton. “The only way to avoid these risks is not to start or to quit. We encourage those who would otherwise continue to smoke to switch completely to scientifically substantiated reduced risk alternates.* Driving value from our combustible cigarette business is how we fuel our investment in, and transition revenue to, New Categories, so it will be an important part of our business for many years to come.

    “Providing smokers with factual information, about, for example, vaping, is essential to enable them to make informed choices. We are committed to providing this information and have launched www.vapeexplained.com, a digital information hub providing adult smokers and vapers with science-informed answers to the vaping questions most commonly searched for online. VapeExplained.com is built on the company’s vast technical expertise of over 1,500 R&D specialists and the experiences of offering vaping products in over 26 countries around the world.”

    That, of course, didn’t answer the question of how long BAT was willing to continue making combustible cigarettes for a diminishing consumer base, but an answer was hinted at in answers to the next questions, when Tobacco Reporter asked how the company would take with it on its transformation its commercial stakeholders, or, in the case of some stakeholders, such as tobacco growers, how it would help them transition to new, perhaps unrelated, activities.

    “Also on this journey to a better tomorrow, we expect tobacco growers to remain central to our supply chain for many years to come, and farmer livelihoods is one of the priority areas of our sustainability agenda,” said Wheaton. “We are committed to helping our contracted farmers and their communities to grow and flourish. Farm diversification is just one example of this.

    “Over 93 percent of our contracted farmers in our supply chain grow other crops alongside or in rotation with tobacco, ensuring they don’t rely on one crop. This has helped to increase their resilience as well as enhancing food security and preserving soil health. If there is a future impact on the overall demand for tobacco leaf, we have an established approach for working with impacted farmers to support a smooth transition into alternative agricultural livelihoods.”

    *Based on the weight of evidence and assuming a complete switch from cigarette smoking. According to BAT, these products are not risk free and are addictive. “Our 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,” the company points out.

    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.
  • This is a Man’s World

    This is a Man’s World

    Photos courtesy of the Foundation for a Smoke-Free World

    Bridging the gender gap will strengthen Malawi’s economy.

    By Stefanie Rossel

    Imagine you own a piece of land, but you are not free to decide what to grow on it. You do most of the farm work in your family, but you earn only a fraction of the income of your male partner. You lack basic reading and writing skills, and you cannot easily get a loan with the bank because you do not own assets that can be used as collateral. That’s the situation for many women in Malawi’s tobacco sector.

    Women represent a little more than half of Malawi’s estimated 21.2 million people, but they provide more than 70 percent of agricultural labor in the country. Malawi is one of the poorest countries in the world, with a young, fast-growing population. Its economy is heavily based on agriculture, which contributes 90 percent of exports and represents 22 percent of gross domestic product (GDP). Productivity is below 40 percent of potential because there is limited access to modern technologies such as mechanization and irrigation as well as to competitive financing and competitive structured markets.

    With tobacco accounting for 54 percent of merchandise exports in 2019 and about 15 percent of GDP according to Trendeconomy.com, landlocked Malawi is one of the world’s most tobacco-dependent economies. It is also the 11th largest tobacco producing country. Ninety-five percent of the tobacco grown in Malawi is burley, supplied mostly by smallholder farmers (80 percent). Of these, less than 10 percent are female. Tobacco marketing is managed through two systems—auction (20 percent) and contract farming (80 percent).

    According to the United Nations, poverty is a gendered phenomenon in Malawi, with female-headed households disproportionately represented in the lowest quartile of income distribution. Most Malawian women working in tobacco cultivation do not own farms but work as farm laborers. “Tobacco is predominantly a man’s crop,” says Candida Nakhumwa, country director for Malawi at the Foundation for a Smoke-Free World (FSFW). “The man is the tobacco farmer. The woman and other family members just support him. It’s the man who is on the payroll, but in terms of the work on the ground, you find that the bulk of that is still performed by women. They are involved in terms of land preparation, planting, weeding and reaping of the tobacco or grading when they’ve harvested.”

    In addition to their farm tasks, women spend time on childcare and household chores, such as preparing food, fetching water and collecting fuelwood. “While women are actively involved at every stage of tobacco production, they are rarely present at the marketing stage. Tobacco marketing is mainly handled by men,” Nakhumwa says. “As such, proceeds from tobacco cultivation and decisions on use of this money are mainly in the hands of the man. Even among the roughly 10 percent of women who are tobacco smallholder farmers themselves, you can still observe that when it comes to marketing of the crop, they still look for a male figure to support them.”

    Because tobacco is a labor-intensive crop and most of the labor is supplied by the family members, farmers in some parts of Malawi marry a second or third wife to have more support. “The more family labor you have, the more advantage you have,” Nakhumwa points out. For the most part, education levels among female smallholder farmers are low, and that makes them more dependent on the husband, who is the bread winner. 

    Backbone of Agriculture

    Women take on a significant part of the farm work in most tobacco-growing countries. They represent about 43 percent of the global agricultural labor force and almost 50 percent in Sub-Saharan Africa, according to a 2011 U.N. Food and Agriculture report. A 2016 study commissioned by the Public Health Institute in Oakland, California, USA, looked at the role of women in tobacco farming in China, Kenya and Tanzania. In China, the world’s largest leaf-producing country, women spend 30 percent to 50 percent of their time in tobacco farming, according to the study. This amounts to six hours to eight hours per day on average and more than 16 hours during the harvesting season. Their husbands spend only 30 percent of their time in tobacco farming.

    What’s more, female seasonal workers earned less than men, the study found. In Tanzania and Kenya, both women and men spend about 40 percent to 50 percent of their time on tobacco cultivation. Awareness of the health risks of tobacco cultivation was low in all three countries, and pregnant women were often working in the field.

    In contrast to their African counterparts, however, most female tobacco farmers in China were decision-makers or joint decision-makers regarding farming activities and finances. Almost 55 percent of Chinese respondents, the study states, were the sole signatory to the contract with tobacco companies, with access to bank accounts and the payment from the tobacco companies. In Tanzania and Kenya, the situation was very different, according to the study authors.

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    Substantial Disparity

    In Malawi, women are mostly seasonal workers providing their labor to other farms. “These women may even own a small piece of land where they can grow other crops, such as maize, groundnuts or soybeans. But if they spend more time offering themselves as casual laborers, it compromises the amount of time they can invest on their own farms,” Says Nakhumwa. “Hence, these farmers tend to be food-insecure. They are not able to produce food that will last them from one harvest to another. So the food security dynamics for women are still a challenge.”

    With an average of 6.6 family members, tobacco farmer households are larger than the national average, which stands at four family members, and this also influences the food availability of farmers’ households. Malawian farmers own far less land than their counterparts in Zambia and Mozambique. Coupled with low productivity among smallholders, tobacco cultivation does not guarantee a profit if the crop is grown on less than 0.75 ha. “This is not economically viable. The land women own is even smaller—that’s why they go out and offer their labor to other farmers,” says Nakhumwa.

    Most of the smallholder land in Malawi is inherited. There are two types of inheritance. In the central region and southern regions, a matrilineal society prevails, so the inheritance is through the mother. The northern region has a patrilineal system, where inheritance is through the father. However, in the central region—the hub of tobacco growing—the married woman relocates to stay at the husband’s home. “In this situation, the woman cultivates land that belongs to her husband,” Nakhumwa says. “Therefore, these women do not control land nor other productive assets. In terms of decisions on how to make use of her land, she will still be looking up to a male figure. This could be her husband, but in most cases, it will be her uncle who is considered the owner of the clan.”

    The fact that the women don’t control the land ends up affecting issues such as whether they are able to access financing from a commercial bank. “If you don’t own the land, it means you cannot present it as a collateral to access finance,” says Nakhumwa. “This also limits women in terms of which part of the value chain they participate in. Tobacco is a high-input crop, so if you cannot get access to financing for inputs, then it’s no longer your preferred crop, whereas for a man, because they are controlling the land, they can easily go to the bank and get a loan.”

    Men are also the ones who negotiate the contracts with leaf companies because they benefit from larger land ownership than women. To be contracted, farmers need to demonstrate that they own enough land to be able to rotate tobacco with three other crops.

    The pattern of women passing on responsibility to a male figure is deeply rooted. Families will dedicate their limited resources to the education of their male child, as he is expected to take on more responsibility over the woman he will marry, while the girl child is expected to get married and be taken care of by her husband. “This is also linked to a lot of school dropouts and early marriages among girls,” says Nakhumwa. “Around 10 percent of girls are married before the age of 15. Fifteen percent are married before the age of 18.” Laws against child marriages are in place, but enforcement is weak.

    Long Way to Go

    On the bright side, recognition of the hazards involved in tobacco growing, such as green leaf sickness, is improving, according to Nakhumwa. More leaf companies are working to create awareness about farm safety. “In a country where more than 80 percent of tobacco is contracted, more than 80 percent of farmers should get the message,” she says. “However, mostly male farmers take part in these awareness creation meetings, so it’s up to them to inform the women at home, but it’s not the extent to which this happens.”

    While many leaf companies supply their farmers with protective gear, this is helpful only if enough equipment is provided for all farm workers rather than just for the men, Nakhumwa notes. “More needs to be done for women to understand the dangers of tobacco cultivation,” she says. Yet even if women know about the risks, they will likely continue working in tobacco fields because they have few alternatives, according to Nakhumwa.

    Gender equality is one of the 17 U.N. Sustainable Development Goals (SDGs) supposed to be reached by 2030, which seems like an extremely ambitious target. Much work is needed to improve the situation of women working in Malawi’s tobacco sector. “The key priority is to provide women with increased opportunities and access to quality education,” says Nakhumwa. “If they attended school longer, their decisions would be different. They’d have access to other opportunities. Furthermore, we need to empower and enable women to have access and control over factors of production such as land and competitively priced finance, among others, to help them engage effectively in agriculture. If this happens, they can be involved in production and marketing of commodities other than tobacco.

    “The third area is that women need to be empowered to be involved in nonfarm activities and in decision-making to reap the benefits of the labor they are putting in and get control over the money they have made. I think education and empowerment will help us close this gender gap and also deal with issues of population in which women play a big role.”

    To close the gender gap, she continues, the men need to be taken along. “If this capacity building targets both the man and the woman to help them understand how much more they can do if they work as a unit, they might embrace that. I think men will be able to support women to be better off. In some communities, men and women are supported to have a joint vision for their families—if they don’t do that, you see that they are pulling in different directions. The man needs to understand that a woman is a critical player in this field and that he cannot leave her behind.”

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    Diversification is Key

    Elected in June 2020, Malawi’s new government is committed to reducing the country’s dependence on tobacco. Its “Malawi Vision 2063” plan aims to turn Malawi into a wealthy, self-reliant nation. The country is also a signatory to the African Continental Free Trade Area Agreement (AfCFTA), which is estimated to boost intra-African trade by 52 percent by 2022.

    “For Malawi to be successful in this, our agricultural exports need to be competitive and prioritize value addition,” Nakhumwa explains. “Otherwise, we may be the losers and fail to exploit the 1.3 billion population AfCFTA market. Further, the total value of food imports in Malawi has more than doubled between 1998 and 2020. These imports mostly consist of products from crops that the country produces itself, which is cereals and oil seeds. This demonstrates the readily available domestic market and points to some of the things we have to focus on as part of an import substitution strategy.”

    To support the country in its transition toward a more sustainable, diverse agriculture sector, the FSFW awarded a grant to a consortium led by Land O’Lakes Venture 37 to set up and manage the Centre for Agricultural Transformation (CAT) in Malawi in 2019. The CAT addresses an objective of Article 17 of the Framework Convention on Tobacco Control to assist tobacco farmers in the development of alternative livelihoods. The CAT includes several initiatives such as the science, technology, innovation (STI) program and business and incubation cohort (BIC), both of which will help smallholder Malawian farmers make economically viable, data-driven decisions for diversifying their livelihoods. The center facilitates the development of new technologies, partnerships and income opportunities to help farmers achieve greater economic success in the coming years, with a special focus on women and youth. Numerous programs under the CAT are dedicated to encouraging women and youths to engage in agriculture, link up farmers to markets to sell their produce at competitive prices or training them on vital entrepreneurship.

    In addition, through a policy program led by Michigan State University, FSFW is supporting targeted policy reforms while also working closely with Malawi’s National Planning Committee. Michigan State University has also supported the establishment of the Malawi Agriculture Policy Advancement and Transformation Agenda Institute. Institutions play an important role in helping women to develop a vision of what they want to do and where they want to be. Policies have been aligned accordingly, Nakhumwa says. “What we have to do as development partners is to ensure that we generate evidence that supports these policies so that governments recognize that if they change certain aspects in existing policies, women will benefit. There is need for legal review to ensure that all policy and legal instruments are tailor-made to support equality between men and women.”

    FSFW is also contributing toward human capital development efforts to strengthen the capacity of researchers and professionals, both men and women, in high-priority fields that will help the country transform its agricultural sector. Scholarships have also been awarded to candidates based in Malawi who are pursuing their master’s degrees and doctoral degrees and advancing their postdoctoral research in agriculture, business, data science, economics, ecology/environment and engineering. This effort is in addition to institutional capacity building and business incubation support offered through the CAT and policy programs.

    Nakhumwa says that diversification will be good because other commodities will allow women to participate in production and marketing. However, she notes, women will benefit from diversification only if certain conditions are met. “To support farmers, we need to enhance access to improved technologies for women so that they can experience increased productivity in production of the crops or livestock they will be producing. If they continue to produce at low productivity, the women will still fall behind.

    “We also need to help the woman to access competitively priced finance so that when she goes to the farm, she will be able to invest the required amounts of inputs and produce the volumes and quality that she can take to the market. Through the STI and BIC pillars of the CAT, tailor-made programs have been launched for women to learn about and access improved agricultural technologies and capital as well as develop necessary technical and entrepreneurship skills to grow their businesses. Focus on women and youth is at both the enterprise level—women and youth-led agri-enterprises—and the business model level, with emphasis on women and youth inclusion.”

    Other important factors include investing in labor-saving technologies as well as ensuring that women get access to structured and competitive markets as well as control over land. Nakhumwa emphasizes that to benefit from diversification, the woman needs to be empowered to upgrade in the value chain.

    “Instead of being laborers only, women need to be supported to own strategic factors of production and begin to add value to what they are producing to maximize the value they earn from their efforts. I also believe that when these women farmers are organized in groups, they can benefit from economies of scale. They can easily be taught new technologies and management practices. Finally, we need to deal with cultural barriers that exist so that even in these new commodities, the woman is treated like an equally important partner.”

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    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.
  • A Golden Age

    A Golden Age

    Photos: Curved Papers and Republic Technologies

    The Covid-19 pandemic notwithstanding, rolling papers, blunt wraps and cones are flying off the shelves in some markets.

    By George Gay

    Michael O’Malley

    If you speak about the roll-your-own (RYO) sector with Michael O’Malley of Curved Papers, much of what he says revolves around marijuana, so it is easy to come away with the idea that RYO’s future lies in this direction. But he dismisses this idea, pointing to the huge disparity in volume sales between those of tobacco and those of marijuana, which, of course, favors the former. However, he concedes that, right now, marijuana is making the news and the running, partly by providing what he describes as a “vortex of innovation.”

    I guess this is only to be expected. Tobacco has been on sale legally for a long time while marijuana is only now gaining the stamp of legislative approval in a limited number of jurisdictions. This is the time for marijuana-use research and fast-moving, follow-up innovation, something that has attracted the attention of a wide range of companies, including major corporations involved with tobacco, beverages and consumer packaged goods: companies that are investing directly or indirectly in marijuana and associated intellectual property.

    Overall, the RYO market was steady globally, said O’Malley, but, at the same, it was generating a significant expansion in brands and products because of the entry of marijuana, primarily in North America. In 2017, Canada and Mexico both passed federal legislation on marijuana and, recently, Mexico followed through with full adult use (previously more usually termed “recreational use” to distinguish it from medicinal use), leaving the U.S., by far the largest market, the laggard on federal legislation. However, 17 U.S. states, including some populous ones, had now opted for full legalization while almost every state had a legal medical marijuana program.

    That last point is significant because the dynamics of U.S. state legalization has tended to see medicinal marijuana leading the way before being followed by adult use. In some states that allowed only medicinal use, programs were based on “no flower consumption”—that is, no smoking. However, under pressure from people making use of these programs, and with the support of medical professionals, new regulations and/or legislative amendments have been introduced to allow for smoking to be part of these programs.

    O’Malley, who is based in the U.S., believes the legalization of marijuana will sweep from state to state and will eventually lead the U.S. to align nationally on this issue and broadly with its North American neighbors, despite the existence of considerable resistance in some states and powerful opposition at the federal level.

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    Flying off the shelves

    Even with the situation as it is, O’Malley was moved to say that now was something of a “golden age” for the RYO market, encompassing both tobacco and marijuana. Rolling papers, blunt wraps and cones were all flying off the shelves like never before, he said, notwithstanding the Covid-19 pandemic. In part, this was because, in the U.S., outlets selling RYO products, including convenience stores, gas stations and dispensaries, were largely deemed essential at the outset of the pandemic while smoke shops and head shops had also been open for some time.

    At the time of writing in mid-April, Curved Papers had suffered no supply chain interruptions because of the pandemic and, as a consequence, had been able to absorb an uptick in demand for its products. O’Malley said the legalization of marijuana was attracting new smokers and that many of these were drawn to Curved Papers’ products because their curved edge made it easier to roll a cigarette with inexperienced fingers. At the same time, he added, expert rollers continued to enjoy the “elegant convenience of the easy-to-roll curved edge.” And he is confident about the future, saying that economics and consumer preferences would remain favorable for hand-rolling.

    This confidence is steadfast even in the light of the emergence of machines capable of producing cylindrical joints resembling tobacco cigarettes. In fact, O’Malley sees the products of these new machines, some of which are expected to be launched this year, as providing competition more for the products of the knockbox machines used for filling cones than for hand-rolled cigarettes. “These new machines will not eliminate rolling joints,” he said. “We see them as complementary to and supportive of our markets.” Smoking the flower had survived the onslaught of speculative product introductions in the past, he added, including that of vaping devices.

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    Ancillary products

    While recent developments have seen the introduction of a lot of new products and product categories, O’Malley points out that rolling papers still comprise the biggest of the ancillary products in both tobacco and marijuana. But this should not be interpreted as meaning that O’Malley is anti-new developments or anti-technology. He describes Curved Papers as being an innovative company with a soon-to-be-announced development that will have an impact on how rolling papers are made in the future.

    For the time being, however, the company is content to remain a supplier of an ancillary product that doesn’t become involved directly with marijuana plants and therefore doesn’t become tied up with the accompanying regulations.

    However, it has consulted with companies that are so involved, including those researching CBD rolling papers and marijuana wraps. And, O’Malley said, because sustainability was a core value for Curved Papers, it had collaborated in the field of so-called hemp plastic, from which it would like to see produced a truly recyclable “doob tube,” which, for the uninitiated such as me, is a container in which to keep pre-rolled joints.

    Finally, O’Malley mentioned that while it was difficult to predict how U.S. relations with China would develop, there were likely to be implications for the RYO sector. China-made rolling papers had fueled a previously unseen white label market that had undercut European suppliers on price and that was continuing to narrow the gap on quality. But that surge might be slowed if East-West relations chilled during the next decade, and it was possible that the positions taken by the U.S. and the EU on China might differ, leaving the U.S. more isolated. In that case, he said, it would be interesting to see if product manufacturing returned to the U.S., even in the case of ancillary products such as tobacco rolling papers. “We see a possible window opening, again aided by developments around marijuana,” he said.

    Environmental considerations

    Santiago Sanchez
    Santiago Sanchez

    For the time being in Europe, one of the main concerns of the RYO sector is the EU’s Single-use Plastics (SUP) directive, which Santiago Sanchez of Republic Technologies International (RTI) described as almost surreal. He said he agreed that the use of plastics should be restricted because the damage being done to wildlife was immense and the situation had to be reversed. And Republic was committed to playing its part in protecting the environment, he added, as was evidenced by the company’s rolling-papers booklet factory, which, since the beginning of last year, had been running only on “green electricity.”

    Nevertheless, Sanchez is concerned that the SUP regulations are not realistic in that the period given for their implementation is unreasonable. Under the regulations, suppliers of filters marketed for use in combination with tobacco products are required to have printed on their packaging “plastic in filter,” a legend that must be rendered in the language or languages of each EU member state on which these products are sold. Of itself, this might not have posed a problem, but the text was published officially only in March, and products must include this message if they are “placed on the market” after July 3. Additionally, it is not clear what is meant by “placed on the market,” and the EU, at the time of writing, was yet to clarify the term.

    Sanchez said that major industries could not work with such short timeframes, which eventually could lead to a situation whereby manufacturers might have to destroy products that fell foul of such timeframes. In this event, it was possible that the regulation would, bizarrely, lead to a waste of energy and raw materials, not to mention the financial loss.

    One area where Republic had been concerned about the possibility of cost-induced losses has not come to fruition, however. The uncertainty over Brexit meant the company had had to play safe by placing additional stock on the U.K. market so as to avoid the possibility of product shortages in the shops. But whereas successive delays in the implementation of the Brexit accords forced the company to keep such additional stocks for quite some time, in the end, procedures worked quite smoothly, and Republic was not negatively affected by Brexit apart from some additional costs engendered by the necessity of producing extra paperwork. Currently, the company is bringing down its U.K. stock levels to normal levels.    

    Meanwhile, the Covid-19 pandemic seems to have caused a significant increase in sales in all of Republic’s product categories. Whether consumers smoked more due to the stress, whether they switched to cheaper products or whether both phenomena were in play, the result has been an increase in demand for the company’s products. A big factor here, of course, was that these products were distributed by major chains and tobacco shops, which were declared essential almost everywhere, which meant the public had access to smoking items.  

    In most of Europe, meanwhile, people don’t have easy access to marijuana as many do in North America, and most of those who do cannot smoke it legally. But Sanchez recognizes there is a boom in progress in North America and notes that this development could spread. Even in the U.K., where even medicinal marijuana is generally frowned upon, the mayor of London is launching a consultation; though, already, the central government has declared this is not a matter for London alone.

    In general, Sanchez said, demand for marijuana-related products was increasing and, in his opinion, would continue to do so. Companies, he added, should adapt to the new situation by taking advantage of the opportunities. “And in this sense, RTI is glad to confirm that it will launch shortly in selected markets a new range of rolling papers with CBD-infused natural gum,” he said. “It will be the first of its kind, and we are extremely proud of this development with a patented system that will bring a plus to marijuana consumers.”

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    In fits and spurts: Is the predicted growth in RYO sales sustainable?

    I’m told that the value of the global roll-your-own (RYO) tobacco product market is roughly about one percent of that of the all-embracing, global tobacco product market, but according to a February press note promoting analysis by Grand View Research, while the total product market is expected to expand at a compound annual growth rate (CAGR) of 1.8 percent from 2021 to 2028, the RYO market is expected to expand during the same period by a CAGR of 4.2 percent.

    This is positive news if you’re in the RYO business, especially if you are exclusively in that business. But before you start to cheer, it might be worthwhile spending a minute or two examining the reasons given for the predicted, relatively fast rise in RYO product business.

    “The rising consumption of [RYO] products among females and students is fueling market growth over the world,” the press note said. “The adoption rate of the product is increasing among the youth in major economies, including the U.S. Moreover, the financial stress caused by the Covid-19 pandemic has encouraged numerous smokers to shift from factory-made cigarettes to hand-rolled cigarettes due to the cost advantage of roll-your-own … tobacco products.”

    Although the Covid-19 pandemic might be seen as something exceptional, the reaction of smokers to the financial stresses that it has caused is anything but exceptional. It has been well documented in the past that, outside the core of RYO product consumers, there are smokers who move from factory-made cigarettes to RYO products and back again on a schedule that conforms roughly with the relative prices of RYO and factory-made cigarettes and with the health or otherwise of their finances, which might change according to their personal circumstances or local, national or global events, such as the economic hit caused by Covid-19. So the boost to the value of the RYO market that can be laid at the door of the pandemic is likely to evaporate if or when the virus is beaten, tamed or becomes part of the family, as with influenza; though, admittedly, with the current lack of attention to prevention, it’s always the case that another pandemic-inducing virus could be just around the corner.

    The other “problem” with the stated reasons for the predicted growth in the value of the RYO market is that they include rising consumption of such products among women and students around the world. Those opposed to tobacco consumption, especially the peculiar group that comprises people who seem to want tobacco manufacturer profits to be maintained as high as possible, will jump on this information as being indicative of the wicked nature of the RYO industry. In addition, the idea that RYO products should be sold around the world when, in the past, they have been confined largely to some specific geographical locations will not go down well. At the same time, even most of those championing sex equality will rail against any shift toward women of what has traditionally been a male-dominated habit. And, well, better we all fall down dead than a student or youth should be seen puffing on a rollie.

    What we have here is ammunition for those wanting to raise taxes on RYO products to the point where the cost of RYO smoking becomes as ridiculously high as that of factory-made cigarette smoking—all in the cause of helping the RYO smoker of course.

    It won’t help that the press note says the market for RYO filters will outperform that for other RYO products, with a 4.7 percent CAGR between 2021 to 2028, in part at least because of the introduction of biodegradable or environmentally friendly filters. Many people question whether cigarette filters perform any useful purpose beyond keeping tobacco out of the mouths of smokers, and they worry that filters tend to encourage smokers to keep smoking by giving them, in the view of those opposed to filters, a false sense of harm mitigation.

    But if there is one thing that is likely to raise the blood pressure of people opposed to smoking more than filters, it is flavors, and the report apparently describes how flavors are helping to propel the increase in the market for RYO products. And it gets worse. Flavors, different sized products and attractive packaging are said to be combining to propel a global demand for premium RYO products, an idea that will surely make it increasingly difficult to sell the idea that RYO is aimed largely at financially impoverished smokers.

    None of this is to say that the report’s authors should have shied away from describing what they see as the likely drivers of the market for RYO products; it’s just an interesting parallel to the phenomenon encountered by quantum physicists—that it is not possible to measure stuff without disturbing it. —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.
  • Smart Moves

    Smart Moves

    Photos: Godioli & Bellanti, CPM Wolverine Proctor and Koehl Maschinenbau

    Machinery makers are investing to future-proof leaf processing factories.

    By Stefanie Rossel

    Ed Wozniak

    While global cigarette consumption has continued to decline for years and next-generation products (NGPs) take an ever-greater share of the nicotine market, there has been some motion in the market for primary equipment recently. British American Tobacco, Montenegro-based Novi Duvanski Kombinat Podgorisca and Alliance One Tobacco Argentina are about to build new processing plants or are relocating their leaf-processing sites.

    “Without a doubt, the trend and investment are still toward heated-tobacco products [HTPs] and NGPs,” observes Ed Wozniak, regional sales manager at CPM Wolverine Proctor, a specialist in tobacco thermal processing operating from the U.S. and the U.K. “The consolidation, and in some cases diversification, of some plants is still ongoing.

    “I say ongoing, as the relocation of plants has been there for some time. It is only logical to move or consolidate production to areas that provide a more economical production and/or are also located close to the remaining major markets for traditional tobacco products.

    “This manifests itself in site and engineering service requests, along with the opportunity to upgrade and future-proof equipment as far as possible. This not only means replacement of spare parts and components but the addition of multiple sensors and up-to-date programmable logic controllers [plc].

    “These key elements combined offer a wide range of opportunities to processors and benefits ranging from almost full auto adjustment ‘on the fly,’ which inevitably leads to optimized production costs, to real-time traceability of materials.”

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    According to Wozniak, HTP sticks have to some degree eliminated the need for burley toasters, with most of the chemical process taking place in the stick. “Diversification and consolidation of the drying process into one flexible unit will possibly make the individual leaf, strip, toaster, stem and oriental dryer generally less attractive, presenting a new opportunity.”

    Lorenzo Curina, sales director at Godioli & Bellanti, an Italian supplier of leaf-processing equipment, has also witnessed an increase of investments in the primary sector. “The primary, having a higher level of technology than a normal green-leaf threshing line, is the first link in the chain, which, in order to remain at a good level of quality and efficiency, needs to be modernized. We are not a big company, but we know how to offer adaptability, flexibility, leanness and of course state-of-the-art technology. And we have been called and invited to collaborate in the relocation and/or modernization of parts of the department of leading cigarette manufacturers.”

    Stefan Hahn, managing director of Koehl Maschinenbau, a Luxemburg-based supplier of tobacco processing and logistics equipment, would like to see the investment pace accelerate. “The market situation slowly improves again, but not as fast as we would like to see as a supplier of processing machinery. Last year’s developments showed us the importance of interconnected solutions inside production. Ever since the beginning, we have been supporting our customers in the improvement of their plants, on the mechanical and automation side. Additionally, new processes lead us to the development of new solutions to react to the new market trends.”

    If HTPs grow exponentially in the next years as is expected by leading cigarette manufacturers, Hahn expects upgrades and extensions of leaf-processing equipment to become more important as well. “Considering this, we see the opportunity to increase our delivery of such processing equipment. Koehl is already deeply involved in the manufacturing of HTPs with several different processes and machines.”

    Kohl’s hemp line uses Twister technology to moisten the product before cutting

    Coping with Covid

    While in 2019 investments in the primary sector declined as cigarette manufacturers focused on next-generation products and integrating the track-and-trace technologies required by the European Union’s Tobacco Product Directive, the Covid-19 pandemic presented its own challenges.

    “To save their production, all manufacturers at the beginning of Covid-19 just kept their ‘business-critical’ projects alive. Our development of a Covid-19 strategy to fulfill highest hygiene requirements and the benefit that Koehl has [with its] different affiliate locations made it possible that new projects were and still are feasible to realize. Therefore, of course the insurance of the project realization despite Covid-19 has become a major requirement for all customers.”

    The execution of projects, he says, became more difficult because of travel restrictions. “To support our customers and avoid delays, we improved remote service activities, also with the help of our affiliates in different countries. Furthermore, we have extended our software of standardized machines with intelligent data-logging to guarantee improved online support.”  

    Curina says that the pandemic affected investment in the leaf-processing and primary machinery segments. “But mostly in the first period of the invasion of this cursed pandemic. Those investors who continue to see a source of income in tobacco know that the pandemic will not last forever. So we have noticed an almost unexpected revival of the market.”

    Wozniak points out that with two or even three lockdowns in some countries, it will take time for these effects to be felt by the industry. “While the marketing information indicates that the global decline for cigarettes has been halted during lockdown—in the U.K. [smoking] is reported to be 7 percent up during lockdown—it does not mean that decline will not continue again when restrictions are relaxed. We can only follow our customers’ demands, and at this stage, we do not see any major changes filtering down to our level. I think that the level of cautiousness at this stage is understandable. We need to understand the real trajectory of the market as we emerge from Covid-19 restrictions and then we and the tobacco companies will have a clearer picture.”

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    Eliminating human error

    Manufacturers agree that customer requirements for primary equipment are changing. “What is constantly required from us is the supply of machines with a low environmental impact, with minimal energy consumption,” says Curina.

    “Without a doubt, the ‘smart factory’ or even Industry 4.0 ‘dark factories’—i.e., fully automated, unmanned factories—are being considered,” says Wozniak. “Integration of our equipment via our local plc system to a central control SCADA or similar [system] is now commonplace. The reduction of human error and having absolute control of as many process variables as possible is now paramount. It reduces overall operating costs and increases efficiency in many areas, as well [as] introducing real-time traceability of the product, in any part of the process. The need for this automation is the reason that CPM has within its divisions Beta Raven, which specializes in such integrations, and locally programmers and qualified electrical staff.”

    Hahn confirms that customer focus has shifted toward a higher level of automation. “Therefore, we are proud to participate in several ‘smart factory’-related projects in which we are, together with our customers, developing tailor-made solutions to be prepared for these future trends. Here we see that specifically manufacturing execution systems—the intelligent link between the business and manufacturing levels—are extremely valuable overall systems for a smart digital transformation to increase efficiency, improve product quality and reduce costs. Our systems provide the correspondingly important layer for the direct execution of production orders as well as dynamic reaction to changes in orders, machine states, quality checks and similar situations for the self-organized factory.”

    Stefan Hahn

    As the tobacco sector slowly transitions away from combustible cigarettes, equipment manufacturers have begun to eye other business opportunities as well. Valued at $24.6 billion in 2020, the global legal cannabis market holds considerable promise. Grand View Research expects it to expand at a compound annual growth rate (CAGR) of 14.3 percent from 2021 to 2028.

    “We are following with interest the developments in the world of hemp for pharmaceutical and therapeutic uses and purposes,” says Curina, whose company also includes a processing business for herbs and plants, food and biomass but who insists its main focus will always be tobacco. “The openings are slow, but there are some,” he notes. “Openings depend on the political and social choices in the various countries. However, we pride ourselves in having created the first industrial processing line for hemp for about 1,000 kg per hour. And we were very happy when we learned that the processed product is appreciated by European pharmaceutical companies.”

    Two years ago, Koehl launched an entire cutting line for cannabis. “This booming market is still interesting for us,” Hahn explains. “We were able to further expand and develop the cutting line over the last year. The hemp line is using Twister technology for hemp-moistening before cutting. We can now announce that Koehl has further projects in this sector.”

    As part of the CPM Group, which is based in a U.S. state where marijuana remains illegal, CPM Wolverine Proctor is not allowed to offer dryers for cannabis containing more than 0.3 percent of THC, the psychoactive substance in cannabis. But the use of marijuana for medicinal use is now legal in 36 states and growing, Wozniak points out. “This may change things for us in the future. However, we can still offer dryers for hemp, which traditionally is used for sisal twine and rope and now also for high-end wearable fabrics similar to bamboo fiber. Traditionally, we have always been diverse, with dryers for fruits, vegetables, herbs, chemicals, cellulose fiber and ovens for breakfast cereals, ready meals and many more products. Many unique features in our tobacco dryers have actually come from some of these industries.”

    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.
  • Incubating Innovation

    Incubating Innovation

    Photos: ITM

    ITM continues to explore new ways to develop flexible next-generation products manufacturing equipment.

    By Stefanie Rossel

    On a global scale, next-generation products (NGPs) are expected to grow significantly over the next five years. During its February Consumer Analyst Group of New York conference, British American Tobacco forecast that the category revenue would increase from £16 billion ($22.12 billion) today to £29 billion by 2025, with vaping products accounting for a little more than half of revenues and heated-tobacco products (HTPs) and modern oral/traditional tobacco each representing roughly a quarter of revenues. Future consumption, Philip Morris International predicted during its recent investor day, will be characterized by “poly-use.”

    With the variety of NGPs rising to cater to different consumer needs, the manufacture of products brings about new challenges. To support its customers in their development of next-generation products, Dutch original equipment manufacturer ITM has created innovation centers at its sites in Kampen, Netherlands, and Radom, Poland, which aim at stimulating cross-over innovation.

    “We are actively looking at technologies in other industries to create groundbreaking innovations in the tobacco industry,” says Michiel van der Sluis, ITM’s sales director. “We have indeed been very successful from the very beginning of the next-generation products, both in heated-tobacco products and in vaping. The majority of the heat sticks [the consumables for HTPs] on the market are being produced on our combining platforms.”

    The new solutions usually are developed in close cooperation with ITM’s customers, sometimes at the initiative of the equipment manufacturer and sometimes at the initiative of the client. “Usually the technology and machinery concepts come from us, and the customer focuses on the product itself,” says van der Sluis. “But it greatly reduces the time to market if both product and machine development can go in parallel.”

    In addition to the innovation centers, ITM has set up an innovation hub called Perron038, which is based in Zwolle, Netherlands, and the ITM Lab. They have a different function than the company’s in-house development centers, according to van der Sluis. “Here we focus on specific technology developments that all technology partners in the region have an interest in. Our partners in Perron038 are universities, research institutes—but most importantly also other machine-developing companies in the region. Some examples are robotics, 3D metal printing and vision. To be leading in these fields, it is good to cooperate with other companies and universities and at the same time give talented students a high-tech environment to work with the latest technologies.”

    Less harm, more sustainability

    Solaris, ITM’s combiner for HTP consumables, and Genesis, the company’s high-volume platform for e-liquid cartridges, are results of ITM’s unique approach to product manufacture innovation. The most recent solutions incubated by the innovation centers include machines that are able to replace all acetate filters with a biodegradable alternative.

    ITM’s mission, says van der Sluis, is to create manufacturing solutions for better and sustainable alternatives. “For the tobacco industry, this means focus on next-generation products that have a lower health risk for consumers, and getting rid of single-use plastics in the tobacco industry, with a big focus on cigarette and heat stick filters. We see a very good reception in both these areas, so we look to the future with confidence.”

    To stay ahead in the fast-growing market for HTPs, ITM continues to develop its Solaris combiner. “Apart from combining, we also do a lot of work in the logistics of the HTP factories and are now delivering the first reclaimers specifically designed to reclaim the tobacco from heat sticks,” he says. “Next to these existing products, we expect a big push to not only make the HTP products better for your health but also better for the planet.”

    Many heat stick segments can be replaced by biodegradable alternatives, according to van der Sluis. For example, a cardboard tube can be used instead of hollow acetate; a paper filter with a capsule or flavor can replace the current acetate filter. The company was taking advantage of Covid-19 restrictions on business travel to develop a range of solutions for making filters biodegradable without degrading customer satisfaction.

    Cigarette butts are among the 10 most found single-use items on Europe’s beaches. Starting on July 3, 2021, the European Union will ban several single-use plastics products, but not cigarette butts, which were a bone of contention in the shaping of the legislation. For the time being, they remain subject to a vague provisional agreement, which states 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.”

    Michiel van der Sluis

    Covering all NGP segments

    Meanwhile, ITM is also developing solutions for the third category of NGPs, new oral nicotine, which is a small but growing niche. “Snus pouch-making has been around for decades, so we are not focusing on a me-too solution,” says van der Sluis. “To make a mark in this sector, we wanted to bring something extra to the table. The machine that we are working on will be able to make pouches in different shapes and without the flaps you see on current pouches on the market. We have gotten a good reception from the marketing departments of our customers of the samples we have provided, so we will go full steam ahead to also break into this segment.”

    With its Genesis platform, ITM in 2014 was the first company to launch a solution for quickly and efficiently filling, capping and testing e-cigarettes. The platform can assemble and fill up to 350 cartridges per minute. Although fully automated manufacturing of vape products is technically feasible, most e-cigarettes are still assembled manually in China.

    Despite an overall growing vape market, van der Sluis has noticed a big reluctance to invest in this category. He cites two key reasons: “Customers are waiting to see what the fallout is of all the negative press around vaping in the U.S. in the last two years. The second part [that is] blocking investment is the fact that the products are still constantly changing. We have had a few projects over the years where the product was completely changed before the machine was ready. Even though our machines are always modular and flexible, the products are not stable enough to invest in now. With hand-assembled products, it is much easier to change. We do expect some winners on the market to automate assembly once the markets and products have stabilized.”

    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.
  • Smart Farming

    Smart Farming

    CropIn has developed a robust farm and agronomy management system that can monitor field agents and track labor practices. (Photos: CropIn)

    Using sophisticated data technology, CropIn is helping leaf tobacco producers streamline their operations.

    By Stefanie Rossel

    Digital technologies are increasingly used in agriculture. “Smart farming” can enhance operational efficiencies, reduce environmental damage and improve livestock husbandry conditions.

    In the tobacco sector, data-driven farming is a relatively new development. Based in Bangalore and Amsterdam, the startup CropIn deployed information technology to help a leading Indian tobacco company significantly improve its tobacco-growing operations.

    With an estimated annual production of around 800 million kg, India is the world’s second-largest tobacco producer behind China. The tobacco industry in India is one of the major revenue generators of the agriculture sector. “With tobacco being one of the biggest cash crops in the world, production is highly regulated by the government in order to ensure maximum output and best quality,” explains Kunal Prasad, co-founder and chief operating officer of CropIn.

    “This means that every aspect of production is being monitored, including plot size, yield, package of practices and more. Hence, farmers cannot sell directly to companies and have to be organized into farmer producer organizations or become part of an agribusiness supply chain. In addition to this, farmers have to deposit the produce in specially designated buying stations. All in all, there are some unique operational needs that are specific to the tobacco industry.”  

    For its tobacco client, he continues, the main objective of the project was to streamline the hitherto unorganized operations into a smoothly functioning unit. This would help cut down on discrepancies in terms of predicted yield, traceable harvest and other quality issues. Achieving this required the adoption of a robust farm and agronomy management system that could monitor field agents and track whether fair labor practices were being followed. The system would also need to provide accurate fields and yield data.

    Before CropIn’s solution was installed, the client used conventional—almost primitive—techniques to cultivate and manage tobacco farms, according to Prasad. “Understanding total area coverage was another challenge for the management,” he says. “The client dealt with mostly smallholder farmers. These farmers used to round off acres of land that were under harvest. Adding all estimations would lead to a high discrepancy, which in turn adversely affected the output/yield prediction. Reporting was done using the pen and paper method, which was prone to human error.

    “Traceability at the end-to-end operations was missing, and many discrepancies were observed hence. Tracking operational tasks and harvest was proving to be difficult for the client since farmers take crops from multiple nurseries, and using paper to document all such important details would not work well as a scalable solution. There was no visibility regarding the risk of pest or disease infestations. It was also difficult to ensure that there was a consistency in the quality of tobacco produced every season. The stakeholders were facing issues recording and documenting corporate social responsibility activities.”

    Kunal Prasad

    Customized solution

    With its SmartFarm farm-management solution, CropIn introduced cutting-edge technology in the Indian tobacco fields. The technology includes data storage, machine learning, satellite monitoring and weather analysis. The company provides mobile data capture and assimilation and customized and near real-time data reporting. SmartFarm can configure data from agricultural labor practices (ALP) and good agricultural practices (GAP) in forms and takes appropriate signatures when needed. Data can be approved by senior management; real-time SMS are used for alerts.

    “The tobacco farmers know that to sell produce in the market, the produce needs to pass various kinds of tests,” Prasad says. “They have become aware only the best quality tobacco needs to be grown for fetching good prices and a good name in the market. Through the training and events module, they are trained on best practices for growing tobacco and maintaining them. Also, the GAP and ALP practices are followed by the farmers strictly so that when an audit happens, they pass in the same. The innovation [that] CropIn has designed has reduced a lot of paperwork and increased the efficiency of the farmers.”

    The project helped CropIn gain a better understanding of tobacco crops and what it takes to implement smart solutions in that segment. Until then, the company had been supplying its solutions to other agricultural sectors, including nursery growing, organic cotton and food.

    Tobacco is a complex plant to cultivate, not least because cultivation involves the growing of seedlings in nurseries for sixty days. “As we understood the nursery and main field breakup of the crop, we divided the whole operation into two parts,” explains Prasad. “First, nursery and secondly, the main field. The nursery planning and seed sowing starts almost 90 days before the main field. The nurseries are geotagged and activities captured till the seedlings are ready for transplanting. Once they are ready, the seedlings are transplanted into the main field.

    “The application takes care of the detail of the nursery and links it with the main field plots where they have been planted. This way, the traceability from nursery to main field and back is maintained. The labor that is involved is counted for every operation. The feedback can be captured in the forms and their signature [can be] taken for the fact that they are working willingly so that there is no forced labor. Even the cost incurred in the labor can be calculated to find out the cost per kg of tobacco. For weather advisories, we have weather-based notifications that can be sent to the farmers.”

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    Future-ready farming

    The implementation of smart tobacco farming was not without challenges. For starters, the farmers and extension staff needed training. “CropIn’s team assisted the farmers, and the field agents were given training in ensuring efficient utilization of the solution provided,” says Prasad. “Access to connectivity also was a challenge, given the geographical location and development of the area. Since a lot of documentation was happening in the traditional way, the transition to using digital methods of entry was a challenge for the stakeholders.”

    Now that it is installed, the solution offers a plethora of additional benefits for the customers. Importantly, SmartFarm creates a database that keeps track of farmers’ historical performance, yearly income and basic personal details. The forms are completely customizable based on requirements. Our solution provides the flexibility of setting up any type and number of crops and their varieties. It sets up configuration based on days to harvest, expected harvest per acre, allowed fertilizers and pesticides and addresses other general issues.”

    SmartFarm can help farmers forecast harvest quantity and dates and provides an optimized input plan, i.e., chemical application plan. “SmartFarm makes the farmer future-ready with actionable insights, real-time alerts and acts as a knowledge repository containing collected data and data-driven analysis,” says Prasad. “It helps farmers to improve their farming skills, get an optimum price for their yield, empower them with new or improved farming practices.”

    Having zero tolerance toward child labor and forced labor, CropIn has implemented a corresponding system in its solution. GAP-based and ALP-based survey forms help field technicians capture details on violations uncovered during farm inspections. The SmartFarm app enables them to find the sources of water pollution, child labor and any other audit-related information.

    Prasad is proud to share his customers’ feedback. “CropIn is helping us practice sustainable tobacco production by capturing the data exactly at the location of the farmer and what the farmer is practicing in terms of signature modules, geotagging and taking pictures,” a client representative told CropIn. “This is helping us to understand better the progress at the farm. After we started working with CropIn, our apprehensions about field technicians not collecting data accurately have been diminished.’”

    According to Prasad, CropIn’s solutions are designed to be dynamic. “As the tobacco industry keeps on changing with more rules and regulations, the challenges will also come in the audit and reporting,” he says. “We are making sure that we are engineering an innovation that is as close to addressing all the challenges in the work being done in tobacco farming as possible.”

    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.
  • Trade Body Calls For Tax Stamp Clarity

    Trade Body Calls For Tax Stamp Clarity

    Photo: Tobacco Reporter archive

    The International Tax Stamp Association (ITSA) is urging greater clarity around the definition of the tax stamps used to secure excise revenues from tobacco products.

    The move comes in the wake of the continued misuse of the term “tax stamp” by some sector solution providers, which is raising issues around specification and seem to contravene international standards.

    The ITSA says there is a lot of confusion over specific terms, notably the difference between tax stamps and the security feature labels used by some member states under the EU Tobacco Products Directive (TPD).

    The fundamental differences between tax stamps and secure labels pertain to functionality and the specifier/issuer. Stamps fundamentally serve a tax purpose and may fulfil other functions, such as those related to authentication, while secure labels should just be used for authentication purposes.

    Tax stamps play an important role in securing revenues as international supply chains continue to be threatened by counterfeiters and smugglers look to take advantage of the pandemic to trade in illicit tobacco.

    The latest figures indicate that the trade in fake tobacco is worth upward of $50 billion annually worldwide, according to a 2020 World Bank report, and accounts for approximately 600 billion illicit cigarettes per year.

    ITSA’s call comes as most EU member states use tax stamps to comply with the TPD’s security feature requirements while in five other states plus the U.K., which do not use tax stamps, the tobacco industry has opted for secure labels to ensure conformance with the TPD.

    Moreover, individual tobacco manufacturers contract directly with various printers for the provision of these labels rather than going through the national tax or other government authorities.

    The current situation is further exacerbated by the misuse of terminology in other parts of the world. In India, for instance, there are reports that state excise departments use the terms “excise adhesive label” and “security hologram” to refer to the same thing, which is adding to the confusion and highlighting the need for strong action around definitions, the ITSA said.

    Some sector solution providers continue to describe nontax labels as tax stamps when they are clearly not.

    Juan Carlos Yanez, chair, ITSA

    Juan Carlos Yanez, chair of the ITSA, said confusion reigns where there needs to be clarity. “The need for tax stamp programs has never been more timely as we see government revenues plummet, deficits rise and debt levels swell to eye-watering proportions in the face of the Covid pandemic.

    “So the differences between tax stamps and nontax-related secure labels must be clear and unequivocal to remove the doubts. Yet, some sector solution providers continue to describe nontax labels as tax stamps when they are clearly not.

    “Moreover, the use of the wrong terminology may contravene international standards and water down stringent recommendations of standards, notably ISO 22383:2020, covering guidelines for the selection and performance evaluation of authentication solutions for material goods, and ISO 22382:2018, covering guidelines for the content, security, issuance and examination of excise tax stamps.”

    A tax stamp is defined by ISO 22382 as a “visible stamp, label or mark placed on certain types of consumer goods to show that the applicable excise tax has been paid.” This identifies the key and unique function of a tax stamp, which is to show that the required tax on the item that the stamp is affixed to has been paid—the stamp acts as a receipt. It also recognizes that stamps may have other functions including those relating to legislative compliance such as complying with the security feature provisions of the TPD.

    Tax stamps are specified and issued under the authority of the appropriate tax authority, defined in ISO 22382 as “a government (national, provincial, state or local) agency that has responsibility for the collection of applicable taxes and for the specification and design of tax stamps.”

    Secure labels are normally specified and issued by the brand owner while tax stamps are state organization issued. The TPD is the exception to this in that it requires authentication labels to conform to an agreed national design and security specifications, with at least one security element on the label issued by an authorized and independent third party.

    “Tax stamp and traceability programs help governments protect and recoup much-needed revenues as they battle to secure excise and get their public finances back on track,” said Yanez. “So the bottom line as far as the difference between a tax stamp and secure label is concerned in this battle is that the latter doesn’t provide proof of tax paid while the former does.”

    Tax stamps can be an integral element of track-and-trace programs and best practice within the sector, effectively monitoring the location and movement of goods throughout the supply chain from manufacture to point-of-sale. A secure track-and-trace program works by assigning a unique individual identity to each item—a pack of cigarettes, for example—during the manufacturing process.

    Once assigned, the identity is stored in a secure database and updated every time there is a significant event, such as a change of ownership or payment of tax due and supports authentication throughout the supply chain. This produces a comprehensive product history; it means that if the pack or bottle is found in a place or state that is irregular, its provenance can be fully traced back and the responsible party held accountable.

    The digital traceability features of tax stamps, combined with their material security features and tamperproof functionality, are the most robust means to ensure tax compliance, audit optimization and product protection. Considering the highly detrimental and pervasive nature of the illicit trade of excisable products, great ills require great remedies.