Category: Also in TR

Keeping up with a rapidly evolving industry, Borgwaldt establishes its Vapor Competence Center.

By Stephanie Banfield

Founded in 1867, the Borgwaldt Group has spent nearly 150 years becoming a primary player in the research, development and production of flavorings for the tobacco industry. In addition to flavorings, the company is also well-known as a leading vendor for quality-control devices and machines used by the tobacco industry and its subsuppliers. Following its acquisition by Hauni Maschinenbau in August 2013, Borgwaldt Group, which consists of Borgwaldt Flavor and Borgwaldt KC, recognized the opportunities presented by the ever-evolving vapor industry, and before year’s end the Borgwaldt Vapor Competence Center was born.

“We decided to establish the Vapor Competence Center at the end of 2013, when we realized that all units are involved in the vapor business, even when in different segments,” says Thomas Schmidt, director of scientific and technical affairs. “The positive experience was in the beginning—and still is—that it was very beneficial to have competent discussion partners within our own company to reflect specific technical aspects. We wanted to give this advantage to our customers to support them in all fields of their activities.”

Located at Borgwaldt’s headquarters in Hamburg, Germany, the Vapor Competence Center brings together the entire Hauni network’s knowledge and experience with instrument technology, flavor development and analysis. Experts from the Borgwaldt Group’s subsidiaries, Borgwaldt Flavor and Borgwaldt KC, have teamed up to develop innovative technologies and processes and to provide specific solutions to customers within the vapor industry.

“We are working in a team of in-house experts from our three units Borgwaldt KC GmbH, the manufacturer of QA/QC [quality-assurance and quality-control] instruments; Borgwaldt Flavor GmbH as provider of flavor solutions for the vapor industry; and finally ASL, our analytical service laboratory with the expertise in analytical testing of e-liquids and aerosols,” says Schmidt. “All the units are active in their field of expertise, which means developing instruments, creating flavors and aromas, and developing analytical test methods. The information exchange within the Vapor Competence Center during the process is our driver to enhance our service, products and solutions. In addition, we are working actively in international standardization work groups to ensure that our service and products are always state-of-the-art.”

In addition to having access to the expertise of both Borgwaldt subsidiaries, customers who come to the Vapor Competence Center for customized solutions will also benefit from having access to the know-how of the industry professionals employed by Hauni.

“Like the Vapor Competence Center as melting pot for all Borgwaldt expertise, the professionals of the Vapor Competence Center can connect to Hauni’s big source of know-how, which can be pulled together on project basis,” says Schmidt. “If a customer needs advice for manufacturing or design, Borgwaldt can rely on the experts from Hauni machine development or primary equipment.”

With more than a century of success in the tobacco industry, diving into the vapor industry was a logical next step for Borgwaldt.

“Coming from the cigarette flavor, analytics and instruments business, we applied our knowledge on the vapor industry,” says Schmidt. “Concerning flavors and liquids, we think that this gives us the needed edge to transfer smokers’ expectations in terms of taste and impact also to the new field of e-cigarettes. Adapted instruments for the vapor industry help our customer to apply and check new regulations and quality data.”

Although some in the vapor industry are under the impression that Borgwaldt’s Vapor Competence Center manufactures specific products, Schmidt stresses that this is merely a misconception.

“The Vapor Competence Center does not produce an instrument or a flavor concentrate,” he says. “Production or service is still provided by the related Borgwaldt units. The Vapor Competence Center coordinates activities and gives the strategic direction to the operating units. The main task is to support and consult our customers to work out the perfect solution for them. Some customers [might believe] the VCC is an independent member of the Borgwaldt Group, but that is not the case. The Vapor Competence Center is simply a business unit within the group.”

And while many of Borgwaldt’s employees are tasked with performing duties for the vapor side of the business, the work is not performed in a separate facility with a focus specifically on vapor solutions.

“Don’t understand our VCC as an independent unit in its own walls,” he says. “In fact, it is a dedicated joint-working unit which uses the whole facility in Hamburg. Depending on the face task, more or fewer colleagues are involved and active. Our whole service laboratory team is currently heavily involved in e-product testing, and due to the wide variability of e-products, our engineers and flavor experts are constantly delivering ideas and potential solutions to support our customers, especially regarding the required product registration within the European Union.”

Like many companies operating in the vapor industry today, recent changes in rules and regulations have posed challenges and concerns for Borgwaldt and its operations at the Vapor Competence Center.

“Vapor products are more and more in focus of regulatory authorities,” says Schmidt. “Different regulations and product requirements—e.g., the European Union’s latest tobacco directive, which covers also vapor products—are interpreted different in diverse member states, necessitating individual solutions. However, there is often a lack of understanding and a huge portion of uncertainty on our customer’s side.”

Despite the challenges that potentially lie ahead for the company with regard to regulations, Schmidt is determined not to let such hurdles overshadow the achievements that have been made so far—particularly the introduction of a brand-new product of which the company is particularly proud.

“We have successfully developed and launched test equipment to the market—e.g., the introduction of our LM4E, a four-channel aerosol collection unit,” says Schmidt. “The feedback of our customers is quite positive. In the same way we can evaluate the service laboratory activities positive. We have satisfied customers getting the needed results reported right on time. Also development and sale figures show us that the flavor business in that area is working well.”

With decades of experience in flavor development, analysis and quality control, Borgwaldt is well-positioned to develop unique and innovative solutions for the vapor industry—and according to Schmidt, the Vapor Competence Center’s ultimate goal is simple: “We want to become the market leader related to vapor quality testing, analysis and taste.”

Obtaining trademark protection for tobacco products in Germany

By David E.F. Slopek, Morten Petersenn and Wiebke Reuter

Branded tobacco products are as old as the German trademark law itself. In fact, the first trademarks for cigarettes were registered as early as 1894. While the protection sought by brand owners has evolved since then, it is safe to say that strong trademarks have never been as important as today. This article sets out the legal framework and basic conditions for obtaining trademark protection in Germany—a leading tobacco market—by providing an analysis of the relevant case law on the registrability of tobacco products.

Introduction

Marketing plays a major role for the success of consumer products. In that regard, the tobacco industry is no exception. However, what makes the tobacco industry an exception is that it faces extensive restrictions in promoting its products. Over the years, in Germany and other European markets advertisements for cigarettes have been widely excluded from TV, radio, print media and the internet. Further forms of advertisement, such as commercials in cinemas or the public transport, as well as sport-related marketing activities, have been regulated.

Against this background, a strong trademark is more vital than ever, as it allows the tobacco industry to maintain the most important form of marketing. Obviously, quality—in particular, taste—is of particular importance for tobacco products. If a consumer is satisfied with the quality and taste of a cigarette and wishes to purchase this specific product from the same manufacturer again, it is the trademark that enables him to do so. However, before the trademark can have a marketing effect by fulfilling its function as an indicator of commercial origin, it has to be registered.

Unfortunately, the registration process often turns out to be more challenging than one would expect. The legal obstacles to overcome are reflected by the German case law on the registrability of tobacco products on absolute and relative grounds (the latter ones will be dealt with in a subsequent article), which, over the years, has become quite extensive. This article aims to make the outcome of trademark registrations for cigarettes more predictable by providing a systematic overview of the relevant judicature and thus help to successfully navigate the route to registration.

Overview on absolute grounds for refusal

The first hurdle that a brand owner seeking protection has to overcome is the so-called absolute grounds for refusal as laid down in Section 8 of the German Trademark Act. If a trademark is applied for, the German trademark office examines the absolute grounds on its own motion. The two most important reasons for a registration to be refused on absolute grounds are descriptiveness and lack of distinctive character.

As far as the question of descriptiveness is concerned, Section 8 (2) No. 2 of the trademark act provides that a trademark is excluded from registration if it consists exclusively of signs or indications that may serve, in the course of trade, to designate characteristics of the goods. For a sign to fall under this provision, it is sufficient that it is capable to be used to describe the respective products—i.e., it is not necessary that it is already used in a descriptive way on the market.

Concerning the question of nondistinctiveness, pursuant to Section 8 (2) No. 1 of the trademark act, trademarks are excluded from registration if they are devoid of any distinctive character. To overcome this bar, it suffices that a sign has a minimum of distinctiveness. While descriptive signs are by definition lacking distinctiveness, a sign is eligible for registration if it is capable to be perceived as an indication of commercial origin by the public for the goods for which protection is sought.

Practice regarding tobacco products

1. Signs related to tobacco products

In many cases, descriptive signs that indicate the nature or one of the key benefits of a specific product appear to be attractive from a marketing perspective. The reason is simple: You do not need any particular efforts to explain to consumers a specific benefit or the purpose of a product if this message is already conveyed in the product’s name. While this is a good reason to choose a descriptive name, the bad news is that such signs face an apparent risk to be objected to on absolute grounds.

By way of example, the sign 10’S PACK for tobacco products, including cigarettes and cigars, was rejected based on descriptiveness. The Federal German Patent Court took the view that the mark sets out a feature of the goods at issue by indicating the quantity of cigarettes in a box. Likewise, the trademark TOASTED was excluded from registration because the sign is a technical term that describes a certain roasting process for tobacco.

The trademark TABAKWELT (“tobacco world”) covering cigars was rejected based on nondistinctiveness. The patent court held that the sign is limited to a pure factual statement and stressed that it is in fact often used to describe different goods and services related to tobacco.

2. Geographical indications

Geographical indications are often not eligible to trademark protection, since there is a heightened risk that consumers could perceive them as expressions of regional origin of the goods in question.

By way of example, the patent court denied registrability of the sign CALIFORNIA for cigarettes and tobacco products, thereby referring to the tremendous economic importance of the state of California, which justifies a public interest to keep the sign free to be used by everyone. In its reasoning, the court stressed that there is a general assumption that economically important areas will be needed as geographical indications because it is very likely that consumers will link the name of a well-known place to certain goods. For similar reasons, NEW YORK has been refused.

3. Names of colors

Under German practice, registering abstract color marks is difficult and regularly requires evidence that a certain color is in fact perceived as an indicator of commercial origin. However, the strict practice for color marks does not apply for word marks that comprise the name of a color. Those signs are only considered to be descriptive if they refer to the product itself—e.g., brown as the color of tobacco. Therefore, the following word marks were registered as trademarks for cigarettes and tobacco products: ROT (which translates to “red”), GREEN, SILVER, GOLDEN, GOLD & SILVER, BLACK, GREY, YELLOW, BLUE, ORANGE and WHITE. As to the last mark, the patent court observed that cigarettes are white due to their paper. Nevertheless, there is no need to keep the name of the color free to be used by others because an indication that a certain cigarette is white would be superfluous.

4. Numbers and letters

Numbers are generally held to be registrable on absolute grounds. By way of example, the German Supreme Court decided that the numbers “1” and “6” are eligible for registration for cigarettes. The court held that they were not descriptive as there was no indication for the consumer what these numbers could refer to. In particular, the numbers were not perceived as a reference to the filling amount of a box, as cigarettes are typically sold in larger units.

The same applies for letters, such as “Z.” In that regard, the Supreme Court decided that the mere fact that consumers might not be used to single letters as trademarks is not sufficient to deny any distinctiveness of the letter “Z” in relation to tobacco products.

5. Shape

Many companies seek protection for innovative shapes of their products or packaging as a three-dimensional trademark. Case law has repeatedly stressed that the requirements for the registration of 3-D marks are, as a general rule, the same as for other types of marks. However, one must consider that consumers generally do not perceive shapes as an indication of origin. In many cases, even an unusual design will not be perceived as an indicator of commercial origin but rather as the result of a particular effort to create an aesthetic product. As a rule of thumb, 3-D marks are only registrable if they depart significantly from the typical shapes used on the relevant product sector.

Obviously, this standard is not easy to meet. For example, an application showing a picture of an octagonal packaging (See Figure 1) was refused by the patent court based on nondistinctiveness.

The court ruled that the consumers would not understand the shape as an indication of commercial origin but rather as a reference to the contained goods, namely cigarettes. In particular, the mere fact that the shape is octagonal instead of rectangular is not enough to sufficiently deviate from existing packaging of competitors.

While the standard applied by German courts is quite strict, the good news is that applying for a 3-D mark for the packaging is not necessarily a quixotic undertaking, as can be seen from a look into the German trademark register. Many companies have successfully registered marks like the ones depicted in Figure 2.

6. Names

Registering the name of a famous person for tobacco products can be difficult. By way of example, the patent court refused registration of the name Leonardo DaVinci written in a slightly stylized typeface, for, inter alia, cigarettes and smokers articles. The court argued that everyone recognized the name as belonging to the famous scientist and artist. The name is a part of the cultural heritage of the public and thus not capable of distinguishing products from one company to those of another.

7. Promotional or laudatory signs

Laudatory signs or promotional messages are normally held to be nonregistrable due to a lack of distinctiveness. Consequently, the patent court refused protection for the mark JEDERZEIT (“anytime”) for, inter alia, cigarettes and related products. In fact, the sign simply suggests that the products can be consumed anytime and thus conveys a promotional message. For similar reasons, marks such as FIRSTPRICE or TEST IT for tobacco products have been rejected. However, case law is not fully consistent. Notwithstanding its promotional meaning, LEADING was held to be registrable for tobacco products. Likewise, but less surprisingly, LOOK, YES and FOR YOU for cigarettes and tobacco products have been registered. The Supreme Court held the signs to be distinctive, thereby stressing that they are not commonly used in everyday language.

Summary

In Germany, trademarks normally enjoy protection only if they have been registered. While there are some hurdles to overcome during the registration process, there is extensive case law that makes the likelihood of a successful registration relatively predictable. As a rule of thumb, names of colors, numbers and letters are most likely to be granted protection, whereas tobacco-related terms, geographical indications and products’ shapes run a higher risk to be rejected.

As cigarette sales fall throughout Scandinavia, snus is becoming even more popular—where it is allowed.

By Stefanie Rossel

The Scandinavian countries are united not only by their cultural and linguistic heritage, but also by their aspiration to a healthy lifestyle. Already, Norway, Sweden and Denmark boast some of the world’s lowest rates of cigarette consumption—and cigarette sales volumes continue to decline year on year.

Of the three nations, Sweden is the furthest along in achieving the World Health Organization’s (WHO) dream of a smoke-free society. Smoking prevalence among its adult population was a mere 11.6 percent in 2015, down from 13.4 percent in 2010, according to Euromonitor International. In Norway, smoking incidence dropped to 13.2 percent from 19 percent during that period. Lagging somewhat behind, Denmark had a smoking rate of 20.4 percent in 2015—but the level was still down from 21.5 percent five years earlier.

Vapor prevalence, meanwhile, has moved in the opposite direction, rising from only 1 percent in 2010 in Norway to 10.7 percent in 2015. In Sweden, 9 percent of adults used electronic nicotine-delivery devices (ENDS) in 2015, compared with 5.5 percent five years earlier. Denmark leads the pack: According to Euromonitor, 20.8 percent of Danes vaped in 2015, up from 5.2 percent in 2010.

Sweden’s low smoking incidence is partially a result of the Swedes’ love of snus, a pasteurized oral tobacco that is available loose or in small pouches and has been used in Sweden for about 200 years. Snus is also popular in Norway.

In its 2015 annual report, category leader Swedish Match estimates the region’s snus market at slightly more than 360 million cans, an increase of approximately 5 percent from the previous year. Consumer preference has shifted from traditional loose products to snus pre-portioned in pouches, which accounted for almost 80 percent of volumes in Scandinavia at the end of 2015.

Value-priced products accounted for 46 percent of snus sales in 2015, according to Swedish Match, which held about 41 percent of this competitive segment at the end of last year. In 2015, Swedish Match accounted for 69.3 percent of Sweden’s overall snus market, 1.2 percentage points less than in the previous year.

Sweden’s entire tobacco market was worth $3.34 billion in 2015, with snus and moist snuff accounting for $1.14 billion, according to Euromonitor. The snus segment has been growing, as has Sweden’s vapor category, which more than tripled in value over five years, reaching $3.7 million in 2015.

During the same period, the value of cigarette sales grew at a slower rate, to $2.04 billion from $1.82 billion. The development reflects a trend among consumers to switch from combustible cigarettes to tobacco products that are perceived as less harmful. It is also aided by extensive smoking bans.

In 2015, Swedish Match reported an operating profit of sek3.69 billion ($431.1 million). Snus accounted for 54 percent of that figure. The company’s snus brands in Scandinavia include General, Goteborgs Rapé and Ettan. In addition to manufacturing snus for the Nordic countries and the United States, Swedish Match is a major player in the U.S. mass-market cigar and chewing tobacco segments. As its name implies, the company also supplies lighters, matches and associated products.

Norway

With a population of 5.21 million, Norway is the smallest Scandinavian market. In the period 2010–2015, the retail value of all tobacco sales declined to $2.07 billion from $2.1 billion, according to Euromonitor. However, the smokeless tobacco category, which includes snus and moist snuff, grew to $595.7 million from $340.7 million during the same period.

Norway’s snus volume market alone has grown by more than 20 percent over the past three years and by approximately 7 percent in 2015 versus the prior year, according to Swedish Match. The other categories either stagnated or showed considerable decline. Cigar and cigarillo sales were flat at $21.1 million from 2010–2015, while sales of smoking tobacco decreased to $341.7 million from $473.2 million during that time.

Like their neighbors in the east, Norwegians have turned to snus at the expense of combustible cigarettes. According to Euromonitor, the retail value of the Norwegian cigarette market declined to $1.08 billion in 2015 from $1.26 billion in 2010. Retail volumes of cigarettes including roll-your-own tobacco shrank to 2.3 billion stick equivalents from 3.14 billion stick equivalents over the same period.

British American Tobacco (BAT) holds 51.7 percent of the cigarette market, followed by Philip Morris International (PMI) at 33.6 percent, Imperial Tobacco Group (ITG) at 11 percent, Japan Tobacco International (JTI) at 2.4 percent and Scandinavian Tobacco Group at 0.3 percent.

Euromonitor expects Norway’s smoking prevalence and tobacco market value to drop further.

On the occasion of World No Tobacco Day in May, Norway announced that it would introduce plain packaging for cigarettes. The Norwegian bill is reportedly based on Australian and U.K. legislation and will in principle cover all tobacco products, with the exception of certain product categories that are not used by young people—although the sale of such products might be restricted to specialist sales outlets.

Similar to Australian packs, tobacco packages in Norway will be required to be the same dark green color, using the same font without logos or other design elements. The proposed regulation extends to the tobacco products, which, for example, may feature only a certain color of cigarette or tipping paper.

Denmark

Denmark is a bit of an outlier in Scandinavia. While its smoking rates stagnated around 20 percent between 2010 and 2015, the retail volume of its cigarette market shrank dramatically over that period, to 5.64 billion sticks from 7.7 billion sticks, according to Euromonitor. Including RYO stick equivalents, the cigarette market declined to 6 billion from 8.1 billion in the five years reviewed. Cigars and cigarillos, by contrast, saw a bit of boom before the revised EU Tobacco Products Directive (TPD2) took effect in May. Between 2010 and 2015, according to Euromonitor, the retail volume of the cigar/cigarillo category in Denmark almost doubled to 114.4 million units.

Value-wise, the Danish tobacco market contracted to $2.12 billion in 2015 from $2.4 billion in 2010. Euromonitor anticipates the decline to continue “relentlessly” between now and 2019. Cigarette value sales including RYO accounted for the vast majority of the market, representing $1.78 billion in 2015, down from $2.09 billion five years earlier.

Aided by its 2008 acquisition of House of Prince, BAT boasted a Danish market share of 73.6 percent in 2015. The remaining market was shared by PMI (17 percent), JTI (7.5 percent), ITG (0.2 percent) and Von Eicken (0.1 percent).

In contrast to shrinking cigarette volumes and value, the vapor category showed impressive growth in Denmark, increasing to $41.8 million in 2015 from $22.1 million in 2010. By comparison, the 2015 retail value of vapor products in Norway and Sweden was $24.1 million and $3.7 million, respectively. This contrast is especially remarkable given Denmark’s population—only slight larger than Norway’s—and regulatory history: Until recently, the country classified e-cigarettes with nicotine as medicinal products, requiring manufacturers to obtain market authorization.

According to ECigIntelligence, this all changed on June 7, when Denmark introduced the draft proposal to transpose TPD2 into national law: Since then, selling nicotine-containing e-cigarettes and e-liquids has become legal.

Contrary to their Nordic neighbors, the Danish traditionally have displayed a strong liking for smoking combustible tobacco and pipe smoking. While the Danish smoking tobacco market shrank to $126.6 million from $144.5 million in 2010–2015, the decline was less dramatic than that in Sweden and Norway.

Perhaps unsurprisingly, Denmark is home to the world’s largest manufacturer of cigars and pipe tobacco, Scandinavian Tobacco Group (STG), which sells about 3 billion cigars and 5,000 tons of pipe tobacco annually. In 2015, it generated net sales worth dkk6.732 billion ($1 billion). According to Euromonitor, it led the Danish smoking tobacco category with a market share of 73 percent in 2014, followed by Mac Baren Tobacco Co. (22 percent).

Sidebar

Swedish Match eyes EU sales—again

In 2014, Swedish Match presented its vision of “a world without cigarettes.” To help accomplish that goal, the company said it would focus on less risky tobacco products. It named the development of the snus category in Sweden and the U.S., as well as continued efforts to establish snus and other innovative smoke-free products in select markets, as the core of its strategy.

As far as the EU is concerned, these efforts have not gone far; snus has been banned there since 1992. The EU based its measure on a WHO study suggesting some risk to snus users but ignored a number of Swedish long-term studies more favorable to snus. When Sweden entered the EU in 1995, it negotiated an exemption from the snus ban based on cultural heritage considerations. Swedish Match and the German tobacco manufacturer Arnold Andre have challenged the snus ban, but the European Court of Justice (EJC) rejected their arguments.

In July 2016, Swedish Match tried again, this time in Britain’s High Court of Justice, according to Reuters. The company has reportedly asked the U.K. court to make a reference to the ECJ on the validity of an article in TPD2. As TPD2 allows novel tobacco products, the company claims, the legal circumstances have changed. The supposed novelty of the product had been a main argument in the EU’s decision to ban snus.

This time, the company’s chances may indeed be better. Clive Bates, director of The Counterfactual, lists 10 reasons why Swedish Match has a strong case to overturn the EU snus ban (see www.clivebates.com/?p=2461).

For starters, according to Bates, there is now a better scientific basis supporting the harm reduction properties of snus. Swedish Match’s interaction with the U.S. Food and Drug Administration (FDA) will likely play a role, too: In November 2015, the FDA authorized the marketing of a new Swedish Match snus range in the U.S. Although the agency does not allow the manufacturer to make a reduced-risk claim, it nevertheless means that the product has been evaluated by the FDA as being “appropriate for the protection of public health.”

Also, unlike its predecessor, TPD2 includes a notification process for “novel tobacco products,” which makes it difficult for lawmakers to treat snus differently from other “new” products.

Although the European Commission in its 2010 TPD2 consultations decided to uphold the snus ban, both the public consultation statistics and the governmental representative response statistics showed that a majority was in favor of lifting the prohibition, according to Bates.

Swedish Match says it chose Britain because the procedure to make a reference to the ECJ was unavailable in Sweden. Britain is also known for its open-minded attitude toward innovative tobacco products, but it remains to be seen whether the country was the right choice for such a move in the light of the country’s decision to leave the EU. Should the British High Court refer the case to the ECJ, Swedish Match expects a ruling by mid-2018 at the earliest.—S.R.

Britain’s decision to leave the EU raises serious questions about the country’s future.

By George Gay

This, I’m afraid, is a true story. Longer ago than I care to relate, an acquaintance of mine, in my presence, told a young woman friend that he and his wife were going to Greece for their holiday. The young woman’s response was to ask, in all seriousness, whether Greece was in Spain.

I couldn’t get that incident out of my mind in the lead-up to the U.K. referendum on whether we should remain within or leave the EU. As a Brit, I hoped desperately that the middle-aged woman, as she would now be, and all the other people like her, were brushing up on the EU ahead of casting their votes.

I suspect they didn’t. We voted to leave by 52 percent to 48 percent. We had succumbed to the wisdom of Baldrick and decided that the only way to solve the U.K.’s low-ceiling problem was to cut off our own heads. And those who dreamed up the idea of the referendum—surely, it couldn’t have been thought up during waking hours—made it easy for us by setting the bar for this monumental constitutional change at a tad over 50 percent. They might just as well have called in Luke Rhinehart’s Dice Man.

Some people will take issue with this. A lot of people who voted to remain will have had little idea about the EU either, they will say. This is true, but to vote to remain was to vote for the status quo; it really didn’t require anybody to know very much apart from the fact that they wanted to keep going in the same general direction. But it was surely beholden on anybody who wanted to alter the ship of state’s heading that they were aware of where the new course would take them—and the rest of us.

A more reasonable complaint might be that I am being elitist, poking fun at somebody just because she couldn’t put Greece on a map. And I accept that it wasn’t altogether her fault. In the U.K., we have had compulsory secondary education for about 100 years and compulsory elementary education for longer than that. However, successive governments have meddled and muddled with the education system and, in doing so, failed the woman mentioned above, countless other people and, ultimately, the state.

But the problem went deeper than that. Why were the people of the U.K. asked to vote on such a complex issue? Take me for example. I could probably reel off 20 of the 28 nations that come together as the EU, but I would stumble and even struggle with the other eight. I have a rough working knowledge of what goes on within the European Commission, the European Parliament and the Council of the European Union, but I have no in-depth knowledge. And I, along with 99 percent of the population of the U.K., have never read one of the treaties that bind the whole EU edifice together.

Was I supposed to judge the competing claims of expert economists (in truth, the “leave” campaigners were a little short on such experts); was I supposed to know whether the U.K.’s security was better off with its being a part of the EU? And what of the wider geopolitical situation? How could I be sure that the environmental and animal-welfare concerns I have would be best addressed by being inside or outside the EU? What was I supposed to make of an in/out decision on health, education, collaborative research …? And even if I could make sense of these and the countless other issues that arose in my mind, how could I know what weight to give to each when summing up?

Or perhaps it was just the economy, stupid—though I would hate to think that the EU project was only about that. Certainly, I based my decision mainly on the words of the poet John Donne: No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less ….

In fact, I would guess that most people made their decisions on the basis of sound bites, though mostly those issued by living politicians rather than by long-dead poets. And the three sound bites that won out seemed to have been the “leave” camp’s “take back control,” and those that claimed that withdrawal from the EU would allow us to reduce immigration and provide us with an additional £350 million ($458.76 million at press time) a week to spend on the National Health Service. Of course, the facts were that we already had control over nearly all of those issues for which we hadn’t agreed to pool responsibility, that there was very little that could be done to reduce immigration assuming that, post-exit, we wanted to keep within some sort of single European market, and there never was an extra £350 million a week to spend.

Interestingly, even many of the people who led the “leave” campaigns seemed to have thought little beyond their own sound bites. They seemed to be as surprised/shocked as anybody when they won; so as soon as the result was declared, they went to ground, presumably while they thought things through for the first time. And when they did emerge, they started to row back from their promises. Indeed, on reappearing from his bunker, Boris Johnson, the Conservative member of Parliament, former mayor of London and one of the leaders of the “leave” campaign, seemed to indicate that what the “leave” side wanted was something that sounded very much like membership of the EU.

Hitting out

But the “leave” campaign strategy was clearly more effective than was the “remain” camp’s attempt to scare people into voting for continued EU membership. Experts from various international institutions were lined up to explain how the economy would tank should the U.K. leave the EU, and we were threatened with yet another £30 billion—it’s always £30 billion for some reason I cannot explain—in tax rises and austerity cuts. But whereas such threats might have worked with a few leafy-suburb southerners, they were never going to work on people living in the regions already ravaged by Conservative austerity measures—the people existing on the charity of soup kitchens, food banks and skips. The figure of £30 billion would have been meaningless to them. It might just have well have been £3 trillion. You might just as well have threatened that the major banks would relocate to the moon and Iceland would knock England out of the Euro 2016 football competition.

In fact, the people running the “remain” campaign could have learned a lesson from tobacco. Anti-tobacco campaigners have made huge efforts in trying to scare smokers away from their habit without success simply because they have no idea of who they are dealing with and what their lives are like. They offer people imprisoned within sink estates 10 years of extra life and wonder why the ingrates don’t accept.

I find it easy to understand why people living lives blighted by incompetent bankers and economists, greedy company directors, and unsympathetic, unhearing politicians took advantage of the referendum simply to hit out. That, in the main, they struck the wrong target couldn’t be helped. Sure, most of what had happened since 2008 was the fault of the U.K. government, but the EU has to take some blame for having failed to protect these people from the worst effects of globalization.

After the vote, there seemed at least to be some recognition that the EU needed to change, and there were murmurings to that effect. But then the EU has been talking about change for as long as I can remember, and little of substance seems to happen. So as the headless politicians and bureaucrats ran about in the wake of the “leave” vote, the main areas of concern seemed to be getting the exit negotiations underway as quickly as possible and promising tough negotiations, so as to prevent the anti-EU contagion spreading farther and wider. You have to ask yourself what message this sends out. I was reminded of the old joke about the person who went to an elite English public (read “private” if you live outside the U.K.) school that was difficult to get into, and even harder to get out of.

Reckless gamble

Whatever. It all ended, not with a bang but a whimper. In what a Guardian newspaper editorial described as a graceful little speech tendering his resignation, the prime minister, David Cameron, apparently said: “I will do everything I can as prime minister to steady the ship over the coming weeks and months, but I do not think it would be right for me to try to be the captain that steers our country to its next destination.”

Captain Graceful? Cameron had steered the ship of state—by this time viewed as Votey McVolte-face by the rest of the world—toward Continental Europe for a better look, grounded it, and was in the process of slipping into the resignation lifeboat. This was a man who had tried to sort out a long-standing division over the EU within the ruling Conservative party by putting the future of the country at risk, who, being at such a remove from ordinary people, had failed to judge the mood of the nation, and who, unsurprisingly, had failed to convince with his “remain” message.

The Guardian went on to say that no speech could salvage his standing in the history books. “Mr. Cameron will go down as the man who gambled the country’s future as a way out of a party difficulty,” it said.

But it was not only the U.K. that Cameron was willing to use in his high-stakes game. In trying to unite the Conservative Party, he had further divided it into the nasty party, which was in charge, and the really nasty party, which is going to take charge. He had divided families, divided regions of England, divided the U.K. and divided Europe. As President of the European Parliament Martin Schulz said, it was difficult to accept that “a whole continent is taken hostage because of an internal fight in the Tory party.”

And while all this was going on, the opposition Labour Party, which had campaigned tepidly for “remain” and which, in line with honorable political tradition, should have been putting the boot into the injured Conservatives, instead set out on a bloody internal feud as it enacted the anarcho-syndicalist scene from Monty Python and the Holy Grail.

The whole story was a tragedy played out in the theater of the absurd, but it made for compulsive viewing. The media had a field day, and social media was afire. As somebody said in the movie No Country for Old Men, if this wasn’t a mess it would do until a mess arrived.

But then again, Michael Gove, the justice secretary, who was another of the lead leavers, was quoted as saying that Cameron had led the country with courage, dignity and grace, and that he deserved to be remembered as a great prime minister. And this being the U.K.—for the time being at least—Cameron will have his time in the sun again, no matter that the U.K. is ripped asunder, the economy is broken, and the poor and powerless enter another round of paying for the follies and catastrophic failures of the rich and powerful. Sometime in the future, Cameron will be ennobled by the establishment, probably for his services to chaos theory—and practice.

Tobacco provides safe haven amid Brexit turmoil

It’s an ill wind that blows nobody any good, and tobacco companies were, when this story was written, providing something of a haven for investors as stock markets weathered the storm whipped up by the U.K.’s decision to leave the EU. A story in the Winston-Salem Journal in late June quoted analysts as saying that dividend-seeking investors were turning to U.S. tobacco companies such as Reynolds American Inc. (RAI) that lacked international exposure, particularly in Europe.

Dan Caplinger of The Motley Fool reportedly said that the Altria Group and RAI “are as close to Brexit-proof as you’re likely to find in today’s stock market.” However, he warned that the U.K.’s exit from the EU could have a substantial economic impact in the U.S., adding that “anything that hits discretionary income in Americans’ wallets could hurt tobacco companies.”

But it wasn’t only U.S. companies that benefited. Shares in British American Tobacco were up as investors turned in part to defensive consumer stocks. According to a Reuters story, those stocks’ resilience was underpinned by the combination of dependable profits, dividends and expectations of earnings upgrades for companies that sold to consumers outside Europe.

And on the basis of a small TR straw poll of tobacco companies and suppliers operating from the U.K. and in other parts of the EU, it would seem that while there was disappointment at the outcome of the referendum, the most common reaction was that, no matter what happened, it was business as usual. In fact, in the short term, some suppliers operating from within the U.K. were feeling the benefits of a weak pound; although, looking farther ahead, such gains are likely to be canceled out by increased import costs and the general political and economic uncertainties.

Perhaps Barnaby Page, writing the day after the vote for ECigIntelligence, summed things up best when he said that while there was panic in some quarters and rejoicing in others, “the wise if boringly sensible approach is to sit tight, wait and see what happens.” The decision to leave the EU would have little immediate impact on either vapers or the industry.

“With the timing and shape of the U.K.’s departure from the EU still supremely unclear, and the details of the latter at least unlikely to be known for many months, we believe any firm forecasting of longer-term effects at this stage would be close to meaningless,” he said.

“The full response of Brussels and Britain’s European neighbors to the Brexit vote is still uncertain, and to further complicate matters, the U.K. will have a new prime minister within about three months, whose approach to the long process of negotiating exit from the EU also remains to be seen.”

Nevertheless, Page wrote that for the time being—perhaps for two years—within the U.K. there would be little practical change for vapers because the country would not be able to repeal or very substantially alter its legislation based on the Tobacco Products Directive before formally quitting the EU, even if the new government wanted to do so. (Clearly, this is something that would seem to hold in respect of the tobacco industry also.)

Further, Page said that there were unlikely to be any important new vapor restrictions, simply because the government would have more pressing matters to deal with.

And looking to the EU, Page made the point that Britain’s moderate voice on e-cigarettes and related policy—along with its influence generally—would rapidly become close to irrelevant, even before the nation actually left the EU.

“For the industry both in the U.K. and in the rest of Europe, a likely short-term effect is that international companies looking to expand will be less interested in Britain as a base or British firms as acquisition targets, bearing in mind the risk that the EU departure negotiations could end up with British exporters facing European tariffs and other obstacles to trade,” he said.

“In the longer term, although a plausible outcome could be more liberal e-cigarette regulation for British vapers along with a less favorable international business environment for U.K. e-cig companies, there are so many factors at play—the departure negotiations, British internal politics, and of course larger trends in the e-cigarette market itself—that about the only sure bet is that there will be unanticipated developments.” —G.G.

As restrictions tighten, the filter has become one of the last bastions of product differentiation.

By Stefanie Rossel

If you happen to live in Germany, you cannot help but notice the massive billboard advertising campaigns that Philip Morris International (PMI) and British American Tobacco (BAT) have been running since last autumn. (Yes, besides Bulgaria, Germany is the only EU country where tobacco billboards are still allowed). The posters feature new variants of the companies’ flagship brands, Marlboro and Lucky Strike, the eye-catching innovations being their filters.

Initially launched in Malaysia, Marlboro Advance Blue was the first Marlboro cigarette that came with a recessed filter, which is set back a few millimeters from the mouth end. BAT’s new Lucky Strike Flow Filters employ a different technology: Their tube filter is hollow until further down the filter tip.

Apart from sporting a different look, the two new tobacco products also come with added value for the smoker: They create a smoother taste and shift the staining observed on the cigarette mouth end away from the consumer.

Marlboro Advance follows in the footsteps of PMI’s Parliament brand, which was launched in 1931 and is distinctive due to its recessed filter. Introduced at a time when cigarettes had no filters, its specially shaped filter was originally part of an advertising campaign. Today the brand holds strong positions in a number of markets, including Japan, South Korea, Turkey, Ukraine, Russia and the United States. PMI uses recessed-filter technology also in its new-generation products. In November 2015, it launched Parliament HeatSticks for its iQOS device in Moscow. In early 2015, it had introduced a new line of L&M cigarettes with recessed filters in Russia.

BAT, too, has expanded use of its Flow Filter technology, which is now available also on Dunhill, Kent, Pall Mall and Rothmans cigarettes in several countries. Altogether, Flow Filter variants of its products are for sale in 68 markets. According to a recent investor presentation, tube filters have become a vital part of the company’s marketing strategy.

Both companies report significant volume growth in the category. Their innovations come at a time when increasingly rigid regulations have left cigarette manufacturers with few means to communicate with customers and make their brands stand out from the competition.

“As a result of new legislation concerning marketing restrictions and plain packaging, filters are one of the few components left for tobacco companies to utilize to differentiate themselves and communicate to the consumer,” says Patrick Meredith, innovations director at Essentra, a leading specialty filter provider. “Therefore visual differentiations, such as the shape and color of filters, are increasing.”

“The current market environment is driving cigarette companies to be innovative in product design and taste, more so than [in] novel packaging,” echoes Perry Aliotti, vice president of cellulose derivatives sales at Celanese Corp.

This aspect is expected to gain in importance especially in the EU, as the restrictions of the revised Tobacco Products Directive (TPD2) kick in. Among other things, TPD2 bans the use of “characterizing” flavors, prohibits mentholated cigarettes from 2020, and specifies in detail the size, shape and appearance of cigarette packs. The directive even leaves room for the introduction of generic cigarette packaging, which had already been announced in France, Ireland and the U.K. when TPD2 took effect on May 20. All these measures further reduce the range of marketing instruments cigarette manufacturers have at their disposal.

In response to tobacco companies’ desire to make their products stand out, filter and tow suppliers have significantly extended their product portfolios. This increases the flexibility required to support innovative products while maintaining the sensory experience and smoking mechanics—and meeting legislative requirements.

Essentra, for example, has launched its Icon range, dedicated to “visual differentiation.” The products allow tobacco manufacturers to include, for example, a thick, extruded cellulose acetate thread shaped with intricate designs in the center of their filters to suit individual brand requirements.

It is still too early to comment on the full impact of TPD2. For starters, cigarette companies have one year to clear existing stock. Nonetheless, Meredith is convinced there will be an impact. “Innovation in filters has and is continuing,” he says. “For example, tube filters have already seen considerable growth in markets and segments where differentiation in filters is beneficial. Likewise capsule filters are increasingly popular as consumer preference for flavor-on-demand product increases.”

Innovation is key

As disposable incomes increase, consumers become more interested in specialty products. “For example, Indonesia has a strong preference for kretek cigarettes, and in the Japanese, Korean and Russian markets consumers enjoy carbon filters for sensory reasons,” says Meredith. “As Japan is generally a very innovative market, we often see new products—such as capsule filters—launched and embraced earlier in this market. Additionally the U.S. has a very prominent market for mentholated cigarettes.”

Like all industry suppliers, filter and tow manufacturers are keenly aware of the declines in global cigarette sales. “Recently, the world demand for cigarette tow peaked and is now declining slightly,” says Aliotti. “Unless there are significant shifts in filter length, in filtered cigarette use in India, or in accelerated growth in developing markets, that trend is likely to continue long-term at a very slow rate. Tow suppliers have rationalized some capacity, but additional moves are expected at high-cost facilities. Celanese has a well-positioned global tow and flake footprint to meet future demands.”

Novel products, such as e-cigarettes and heated-tobacco devices, have yet to materially impact overall demand for filter tow—but that could change in the future. For the time being, suppliers of filters and tow continue to present new solutions that reduce toxicants in combustible cigarettes and provide a smoother taste. Celanese, for example, recently introduced a technology called CelFX. “This filter offers super-high levels of carbon in a rigid block form while retaining full tar delivery, a low draw resistance and minimal carbon taste,” explains Aliotti (also see “Active innovation,” Tobacco Reporter, March 2016.)

“Filter tow innovation remains a major factor in all regions of the world since the filter is the first thing a smoker sees when a pack is opened,” he adds. “Hollow filters, super- and micro-slim filters, and capsule filters all require highly specialized tow items.”

Flavor on demand

Flavor capsule technology has been one of tobacco’s most recent success stories. While EU sales of traditional mentholated cigarettes have declined in recent years, overall menthol market volumes have increased due to the performance of crush-ball products, in which a small capsule in or near the filter can be crushed to release additional menthol or other flavoring solutions. According to Euromonitor International data, sales of cigarettes with flavor capsules in Poland and Finland increased to 2.9 and 4.5 percent from 2.2 and 2.6 percent, respectively, between 2012 and 2014. (Poland and Finland were the leading traditional menthol cigarettes markets in Europe in 2014, with market shares of 19.5 and 19.1 percent, respectively.)

The first cigarette with a filter containing a menthol capsule was introduced in Japan in 2007. Today, a large variety of brands with capsules is available in many markets. Apart from traditional menthol, they come in different flavors and have been incorporated into diverse cigarette sizes, such as super-slims. The latest product launches even contain two differently flavored capsules.

“As with many other markets at the moment, consumers are demanding the ability to customize their own products,” says Meredith. “The tobacco industry is no different, producing customizable products primarily through flavor capsules and flavored filters.” For capsule filters, Aliotti adds, the basic material is decisive, too, since they require efficiency tow items to allow full airflow.

In addition to flavor capsules and tube filters, there are future opportunities within filters with smaller circumferences, Meredith says. “In fact, in recent years, super-slim filters—with circumferences under 15 mm—have shown strong growth in African and the Middle Eastern markets. Slimmer filters also provide advantages from a manufacturer’s point of view: Fewer materials result in cost-efficiencies, more sustainable products, and can help manufacturers to meet new tar and nicotine legislations.”

To produce super-slim and micro-slim filters, Aliotti explains, tow items are driven to ever-larger fibers and lower total denier levels.

Going green

Meanwhile, Meredith has also observed a growing interest in sustainability among smokers. “Consumers are becoming increasingly conscious of their environmental responsibility, so it is only natural that we’ve seen a rise in interest in more environmentally friendly products,” he says. “We have seen a growing demand for more biodegradable plugwrap and paper filters, both of which reduce the time taken for cigarettes to break down after being discarded. Paper filters have a somewhat harsher taste, so there is an increasing interest in our Infused paper filters—offering consumers the higher tar retention and faster degradability speed associated with paper filters without compromising on taste.”

To meet these requirements, Essentra has developed the Ochre filter, which it says degrades three times faster than industry-standard cellulose acetate filters and uses no chemical adhesives to bond the fibers. Its distinctive natural end appearance creates branding opportunity while it retains higher levels of tar and nicotine compared to the standard mono-acetate filter and provides a similar taste to standard cellulose acetate filters, according to the company.

“We see the challenge [of degradability] more as a litter issue,” reflects Aliotti. “Celanese has a long history of research into filter degradation and technologies to speed the material breakdown, but nothing can make the filter disappear instantly when improperly disposed.  As of today, none of the industry-developed innovations have been commercialized.”

How the Conference of Parties has affected the tobacco industry—and what to expect going forward.

By Jeannie Cameron

COP stands for Conference of the Parties. In the tobacco context it is a meeting of the parties to the Framework Convention on Tobacco Control (FCTC) treaty of 2005. There are also COPs associated with the Framework Convention on Climate Change and its Protocols. The parties are representatives of the governments that have given consent to be bound to the provisions of the treaty through an act of ratification or accession. At the time of writing there were 180 parties to the FCTC.

At each COP, members discuss elements of FCTC implementation, including checking off national actions, hearing the feedback of intersessional working groups and deciding future plans. COP decisions are made by consensus—an absence of a formal objection. So while technically the COP can vote, it is not the norm.

It therefore has a major role in strategic planning and oversight: to promote and facilitate the exchange of information, as well as to promote and guide the development of research and collection of data. One of its most significant roles is to act as a coordinator and repository for the collection of national reports of FCTC implementation; reports that must be submitted at regular intervals as an FCTC legal obligation.

The COP can adopt protocols, or sub-treaties, as it has done with the Illicit Trade Protocol, and make amendments to the FCTC. It also has the power to establish the criteria for the participation of observers at its proceedings—it can decide, for example, whether to open or close the viewing gallery to the public, including the tobacco industry. The COP has its own permanent secretariat to provide for functioning and to manage its budget.

Governments are allowed to put anyone they choose on a COP delegation. Nongovernment participants are known generally as advisors. COP observers are accredited from either from a state that has signed but not ratified the treaty, such as the United States, or from a state that has neither signed nor acceded to the FCTC, despite having taken part in the negotiations, such as Cuba.

COP observers also include accredited NGOs and most intergovernmental organizations. Nonaccredited NGOs, the tobacco industry and all other members of the public are only permitted to watch proceedings from a public gallery—a right related to proper international governance, which has been eroded in recent COPs.

A team of advisors, known as “the Bureau” heads the COP Secretariat, and it includes one advisor from each of the WHO regions. The Bureau’s president, five vice presidents and six regional coordinators are elected at the conclusion of each COP and finish their term at the conclusion of the next.

At COP, all the excitement takes place in Committee A, the body that discusses and adopts the FCTC guidelines. In terms of impact on the tobacco industry, Committee A is the one to watch.

While it is true that the guidelines are not legally binding—a point that tobacco industry legal departments have always been keen to point out—the FCTC is a political beast and governments will interpret as they wish or are encouraged to do so, as we have seen with plain packaging. Plain packaging does not feature in the legally binding FCTC treaty because in 2000–2003 the majority of the 193 government FCTC negotiators did not want it. Indeed, even graphic health warnings were excluded; the treaty included only pictorial health warnings as something to be considered if it were thought appropriate to do so. This shows clearly how the politics of a COP, the elaboration of guidelines and the subsequent political pressure, brought about policy outcomes the tobacco industry, in its determination to believe only in a legal interpretation, did not expect.

COP 1 – Geneva 2006

The six WHO regions take turns to host the COP. The first COP took place in Geneva, Feb. 6–17, 2006, shortly after the FCTC entered into force. At that point there were 113 COP members. During the meeting participants agreed upon financial and procedural rules (which were amended at COP6 in 2014). These rules would ultimately impact the industry because they gave the organization the power to close its public gallery, excluding the public and the tobacco industry from observing the debates in July 2009.

COP1 got the ball rolling with guidelines for FCTC implementation, and it agreed to initiate the elaboration of guidelines on the substantive issues of Articles 8 (protection from exposure to tobacco smoke) and Article 9 (regulation of the contents of tobacco products). It established working groups to discuss these issues and report back to COP2.

COP1 also established the reporting system and discussed the possibility of future FCTC protocols on cross-border advertising, promotion and sponsorship and on illicit trade in tobacco products.

COP2 – Bangkok 2007

COP2 took place in Bangkok, Thailand, June 30–July 6, 2007. At this time, there were 146 parties. From a personal perspective, this meeting is my favorite meeting to date. I think it was the logistical challenge of getting to the conference center through Bangkok’s notorious rush hour traffic that brought about the idea of traveling over the water instead.

Each morning we would rent a suitable long boat on the banks of the Chao Praya River. The risk takers among us tobacco-industry representatives would pile in, negotiate the waves and river traffic, and continue the journey to the conference center in tuk-tuks at the other end.

COP2 went on to adopt guidelines on Article 8 (the protection from exposure to tobacco smoke) and initiated work on further areas: Article 5.3 (tobacco industry participation); Article 11 (packaging and labeling) and Article 13 (advertising and sponsorship). It also began the process for recommendations for Articles 17 and 18 (economically sustainable alternatives to tobacco growing). In addition, COP2 agreed to establish an Intergovernmental Negotiating Body (INB) on a Protocol on Illicit Trade in Tobacco Products.

I distinctly recall Ian Walton George of the European Anti-Fraud Office (OLAF) arguing that Article 5.3 would not be relevant to the issue of illicit trade as it was not technically a health policy. He also said that, on such an important issue, it was imperative to consult with the tobacco industry.

I also recall it being the first COP where anti-smoking activists chased us around with cameras, attempting to snap anyone from the industry talking to a government delegate. Alas, that did not happen, and so pictures emerged in the NGO daily news bulletins with captions that stretched the imagination. One appeared showing a picture of me sitting taking notes in the public gallery with the caption that I was looking for marketing opportunities to undermine the discussions on product regulation.

The public smoking guidelines adopted at COP2 contributed to the stigmatization of smoking and its prohibition in many indoor and even outdoor public places. It also resulted in a significant stiffening of penalties for lighting up in smoke-free areas. These same policies are now impacting e-cigarette users, as well—even though vapor is not the same as tobacco smoke.

Despite COP2’s clear signals, including references to plain packaging, the tobacco industry at the time underestimated the risk.

COP 3 – Durban 2008

COP3 was held in Durban, South Africa, Nov. 17–22, 2008. With more than 600 delegates, it remains one of the largest COPs to date. It was also the first COP where access to the public gallery began to be restricted, with the WHO issuing only 30 passes per day, ostensibly for security reasons.

We had to get up earlier every day to get a pass, and we had to line up in an underground car park. Not many would believe that we did that—but we did so, quietly and orderly. One potential public applicant fell to his knees in desperation when advised he was number 31. The next day, he was there before 6 a.m. to ensure he’d be among the first 30 when passes were issued at 10 a.m.

As expected, the intersessional working groups on Article 5.3 (industry participation), Article 11 (packaging and labeling) Article 13 (advertising and sponsorship) delivered their guideline recommendations and the COP unanimously adopted each.

Even though some countries raised concerns, the guidelines on plain packaging were adopted by consensus. For example, my COP3 notebook reminds me that China asked the COP to delete 50 percent of the Article 11 guidelines. It also asked how plain packaging could be a recommendation of best practice when no country in the world had yet done it?

The Chair stated that the aim of the guidelines is not to enlarge or extend obligations—it was only to assist in implementation—and then after a few voices of support for no change to the draft, that was it; the guidelines were adopted. The same was true of the Article 13 guidelines regarding domestic enforcement of complete advertising ban, apart from where constitutional issues were found, and that was that—adopted. The working group on 5.3 guidelines, regarding participation of the tobacco industry, presented the draft and some objections began to be raised by the COP. According to my notebook, China argued that anyone interested should be entitled to raise anything. Once again the Chair intervened. “China is right,” he said, “however, we have a timing issue.”

The COP process is completely different to an INB process in so far as following due process is concerned. At an INB, any government representative taking the floor to speak on behalf of the government must have full powers to do so from either the head of state or the minister for foreign affairs, because in that capacity a representative has the power to legally bind a state to what is being negotiated.

This is how the FCTC and the protocol were negotiated. At COP, by contrast, anyone can speak for anyone, and this was witnessed often. On one occasion I saw a New Zealand NGO speaking for Saudi Arabia before taking another seat to speak for another country.

COP3 has had a most significant impact on the tobacco industry—one that has not yet fully played out as governments, fueled by political pressure, continue to implement the FCTC.

In the typical pattern, in the final hour of the COP, more guidelines were brought on for elaboration. My COP3 notebook reminds me that at the end of COP3, the Philippines raised that the WHO should seek expert advice to elaborate Article 6 (price and tax). One by one the WHO regions supported the Philippines and eventually the European region, represented by France, took the floor, proposing that the EU would draft the resolution on behalf of the COP. Those present could see that France was motivated by the need to reign back in what was fast becoming a rather concerning proposal on tax, and therein the EU became part of the consensus.

COP3 was also where the notorious “Merchants of Death” poster was circulated. Headed “Beware the Merchants of Death,” the poster carried a picture of me and three colleagues. It was funny on one level, and some delegates even asked for it to be autographed, but it was scary on another level, as the photo of me had been taken during winter and it being summer in the southern hemisphere meant the photo had been in someone’s file.

COP 4 – Punte del Este 2010

After COP3, COPs were to take place every two years rather than yearly and so COP4 was held Nov. 15-20, 2010, in Punta del Este, Uruguay. With 137 parties participating, COP4 adopted new implementation guidelines for Article 12 (education, communication, training and public awareness) and Article 14 (demand reduction measures concerning tobacco dependence and cessation) and partial guidelines for Article 9 (regulation of the contents of tobacco products) and Article 10 (regulation of tobacco product disclosures).

COP4 established a working group to elaborate guidelines on Article 6 (price and tax policies) and to continue the work on economically sustainable alternatives to tobacco growing, as well as to continue negotiations on a protocol to combat illicit trade in tobacco products. COP4 set up an expert group on Article 13 (cross-border advertising, promotion and sponsorship) to keep the COP up to date and to monitor progress in this area of work. At this COP, tobacco growers conducted various lively demonstrations not seen for some while. The growers were intent on making sure the COP understood their specific issues and that their livelihoods were at stake.

Parties adopted the Punta del Este Declaration aimed at strengthening the implementation and protection of public health policies in relation to tobacco control. They also adopted decisions to engage more actively with international organizations and bodies in promoting treaty implementation. Special focus was placed on the integration of implementation of the WHO FCTC with the existing mechanisms for development cooperation and the “One UN” framework.

COP 5 – Seoul 2012

COP5 took place in Seoul, Republic of Korea, Nov. 12–17, 2012, and included 140 parties. “Gangnam Style,” the Korean top of the pops, was order of the day and consequently there were often impromptu performances around the conference center to entertain delegates—or at least those of us who had been voted out of the room when the public gallery closed. As was the case at COP3, we had to get there ever earlier to secure a pass—at least until the lockout occurred. On one occasion that meant arriving at the conference in the dark at 4 a.m. and using a phone torch (flashlight) to navigate to where the queue would begin.

COP5 adopted a set of guiding principles and recommendations to support the implementation of Article 6 on price and tax measures to reduce the demand for tobacco, and established a working group to finalize the full guidelines. COP5 amended the partial guidelines on Articles 9 and 10 relating to ingredients and product characteristics, and requested this working group to continue its product related work.

COP5 also began to consider areas of harm reduction by opening up discussion of work in relation to smokeless tobacco and electronic nicotine-delivery systems. It also established an expert group on Article 19 (Liability). This working group is expected to report at COP7, scheduled for later this year in Delhi, India.

COP5 established a process for further developing policy options and recommendations on economically sustainable alternatives to tobacco growing. Most significantly, it adopted the FCTC’s first Protocol: the Protocol to Eliminate Illicit Trade in Tobacco Products. The COP5 parties also made a collective commitment in the Seoul Declaration, to accelerate implementation of the FCTC and to protect it from interference by the tobacco industry—a growing theme.

COP 6 – Moscow 2014

COP6 took place in Moscow, Russia, Oct 13–18, 2014, and was attended only by 135 parties despite there being nearly 170 parties at that point. COP6 finally adopted guidelines on price and tax and issued guidance on smokeless tobacco products, electronic nicotine-delivery systems, electronic nonnicotine-delivery systems, as well as water-pipe tobacco products. COP6 was also where trade and investment issues began to emerge in a significant way, fueled presumably by the various tobacco industry litigation cases taking place around the globe. There was a feeling at the end of COP6 that things had more or less been done, and the momentum of earlier COPs had dissipated. This feeling was fairly widespread and there many that expect therefore, COP7 to be bring about a renaissance.

COP 7 – New Delhi 2016

COP 7 will take place in New Delhi India Nov. 7–12, 2016. The first Meeting of the Parties (MOP) for the FCTC protocol is scheduled for Nov. 14–16. The MOP cannot take place until 40 FCTC parties have ratified the protocol, and at time of writing there are only 16 parties to the protocol. There are 54 signatories to date, so a rather large pool for political pressure to be placed upon. There may well be a flurry of ratifications by early August—the time by which a party must submit consent to be bound by the protocol in order for the MOP to take place as scheduled.

COP7 is expected to focus further on product characteristics, liability, sustainable development, trade and the areas of harm reduction, e-cigarettes, smokeless tobacco products and other nicotine-delivery systems.

It will be significant for the COP to determine whether it will be able to put public health ahead of politics and accept that tobacco may not harmful in all its forms—and that harm reduction is a policy that can apply to tobacco as well as other areas of public health. The FCTC already requires national tobacco control policy to include harm reduction strategies, and the COP has the capacity to embrace this concept, but it remains to be seen what will emerge. It will require a pragmatic approach.

U.S. government FCTC delegate Greg Jacob wrote in the Chicago Journal of International Law (2004) that the WHO FCTC process made him feel as though he had stepped into the Geneva edition of the Twilight Zone. He makes the point—one that has not changed—that rather than negotiating with foreign states, governments are negotiating with foreign health ministries that are not necessarily pursuing policies favored by their home governments. “Delegates saw the FCTC as an opportunity to do an end-run around their governments by inserting strong anti-tobacco measures into the convention and then relying on international political pressure to force their governments to join it. Some of the delegates openly admitted their ulterior agendas, making plaintive appeals from the floor to force the hand of their government back home.”

Plain-packaging laws infantilize adult consumers.

By Christopher Snowdon

Canada is the most recent country to make plain packaging of cigarettes compulsory in a bid to cut the rate of smoking, following Australia and the United Kingdom’s lead as governments around the world introduce or consider similar legislation. All this despite the fact that there is no hard evidence to suggest that the introduction of plain packaging had any impact on tobacco consumption and smoking trends in Australia, where the law was introduced in 2012. The potential implications for packaging and branding are huge, extending far beyond the tobacco sector, threatening government interference in many aspects of the average person’s daily life.

In 2016 Britain was ranked as the third-worst country in the European Union on the Nanny State Index, a list put together by the U.K. Institute for Economic Affairs (IEA). According to the IEA, a nanny state is characterized by “the excessive interest and influence of the government on the lives and choices of its citizens.” The introduction of plain packaging in Britain broadens this excessive influence even further, infantilizing consumers by stripping them of their freedom to make their own decisions in accordance with their own judgment. Informed adults are able to make educated decisions about cigarettes and other products regardless of packaging because they live in a country where there is freedom of information, and they should be trusted to do so.

The U.K. and Australian governments have effectively decided that the use of trademarks, branding and logos can be forbidden on the premise that it will discourage children from buying adult products. For the food and alcohol industries, this is an alarming concept; if one industry is deprived of its intellectual property then all those who own trademarks should worry. How long before the public health bodies call for plain packaging on fast food, pizza, breakfast cereal, alcohol, sugary drinks and other consumer goods? In Britain and Australia, some have already begun to do so.

Plain-packaging laws are based on the unproven belief that cigarette packaging encourages nonsmokers to start buying tobacco. They require the removal of trademarks, logos and colors, with the brand name being replaced by a uniform, standard font.

Trademarks exist because they are important for both consumers and businesses; crucially, they inform people of the quality, reliability and consistency of a product. For businesses, plain-packaging regulations compromise the intellectual property of their brands, which may have taken decades to develop. This is a potent infringement, as ultimately companies are stripped of the associations with their brand.

What is being dangerously ignored is the potential outcome of plain packaging implementation and the legal precedent set by it. These laws could boost organized crime, hamper investment, affect jobs and damage small businesses—and Australia bears witness to it all.

Regardless of the measures, nanny state regulations are generally ineffective. The claims that plain packaging facilitates lower rates of tobacco consumption are not supported by empirical evidence, and studies such as the 2016 Nanny State Index show that countries that have imposed rigorous regulations on alcohol and tobacco do not have lower rates of consumption.

Plain-packaging laws are a prime example of paternalistic governments becoming involved in the private lives of their citizens. In contrast with nations that advocate free choice and respect the decision-making power of adults, plain-packaging regulations have infantilized British citizens, suggesting that without governmental interference British adults are unable to make responsible decisions. The free market is founded on property rights, including intellectual property rights, and it is deeply concerning to see governments sweep them away so lightly. Where this trend will go should be the most serious question.