Category: Print Edition

  • All Hands on Deck

    All Hands on Deck

    Photo: The Global Forum on Nicotine

    Tobacco harm reduction is gaining momentum but continues to face many hurdles.

    By Stefanie Rossel

    “Tobacco harm reduction: Here for good“ was the theme of this year’s Global Forum on Nicotine (GFN) conference, which took place in Warsaw June 16–18, 2022. Around 50 speakers and panelists discussed the issues that will determine the future of safer nicotine use and tobacco harm reduction (THR). The meeting was preceded by a day of satellite events and once again featured the International Symposium on Nicotine Technology, which highlighted the latest technological advances in the rapidly changing nicotine delivery landscape.

    Two hundred years after the first snus brand was launched in Sweden and almost 20 years after the Chinese pharmacist Hon Lik invented the modern electronic cigarette, THR continues to face challenges. While THR is making good progress in high-income countries, low-income and middle-income countries (LMICs), where about 80 percent of global tobacco users live, are mostly excluded. In India, for example, where smokers of bidi cigarettes and consumers of hazardous oral tobaccos such as gutka represent 85 percent to 90 percent of tobacco users, bidi packs do not even carry health warnings. While gutka is officially banned, prohibition is not enforced. Instead, health authorities focus on the harms of vaping. Although vape products are banned in the country, they are readily available on the black market.

    Thailand legalized the cultivation and consumption in food and beverages of cannabis in early June but continues to prohibit vaping under strict penalties. Vapers risk a jail sentence of up to 10 years. An observational study in South African hospitals not only demonstrated that inpatients had a lack of knowledge of nicotine-replacement therapy (NRT) but also that doctors in LMICs are often not trained to explain to patients how to use NRTs. Research comparing THR in Russia, China, Indonesia and India found that once smokers have understood that combustible cigarettes are harmful, the key challenge is changing behavior. In Russia and China, consumers are generally aware of reduced-risk products (RRPs) whereas in India and Indonesia, nicotine is considered the most harmful constituent, and few people know that RRPs exist.

    Uncontrolled Influence

    Most LMICs have ratified the World Health Organization’s Framework Convention on Tobacco Control (FCTC), which takes a dim view of vaping. This position is backed by one of its largest donors, billionaire and former New York City mayor Michael Bloomberg. In his keynote presentation, journalist Marc Gunther demonstrated that philanthropy is an excise of power that requires scrutiny.

    By pumping millions of dollars into nonprofits and anti-vaping groups worldwide while funding university researchers, a media initiative and a nonprofit health consultancy through the Bloomberg Philanthropies foundation has created an effective global anti-vaping campaign that is not driven by science, according to Gunther. For example, The Union a Bloomberg-backed nongovernmental organization headquartered in Paris, recently published a paper calling for a ban on all e-cigarettes in LMICs. Most damaging, Gunther said, was the relationship between Bloomberg and the WHO, which the billionaire has generously funded with many millions of dollars for a variety of projects, including $5 million for its tobacco work in 2019.

    While few countries ban RRPs outright, the products often face prohibition by stealth. This month, Germany started applying a tax to e-cigarettes, which came on top of the previously applied value tax. With e-liquids now being taxed by volume, their price has almost doubled, which prevents smokers from switching as it conveys the impression that a product taxed so high must be equally as harmful as combustible cigarettes.

    In the U.S., the Food and Drug Administration picks the winners and losers through its tobacco product authorization process with little regard for consumers. The agency’s requirement for comprehensive scientific documentation of a product’s contribution to the protection of public health represents a hurdle that only the largest and most amply funded nicotine companies can manage.

    Prohibiting elements that make vapor products appeal to smokers, such as nontobacco flavors, are also a kind of stealth prohibition that has no effect on overall smoking or vaping prevalence. U.S. states that ban flavors miss out on tax revenues and Master Settlement Agreement money while the number of smokers stays the same and vapers buy their products in neighboring states. Prohibition by stealth, panelists agreed, stifles innovation and, given the discrimination against vape products compared to combustibles, may be potentially illegal in trade law terms.

    Academic Freedom Under Threat

    Misinformation about RRPs and the question of who can be trusted remains one of the biggest issues in tobacco harm reduction. While the trust in science has generally increased through Covid-19, countless flawed studies on less hazardous nicotine products continue to circulate, contributing to misperceptions among consumers. Google Scholar ranks studies according to popularity rather than quality, so even two years after e-cigarette or vaping use associated lung injury (EVALI), studies attributing the outbreak to nicotine vapes rather than illicit THC products still feature prominently in search results. But even research professionals are often interested only in the title, abstract and conclusion of a study and thus fail to detect flawed methodologies.

    A recent example of misinformation is the claim by several emission studies that the aerosol of vape products is polluted with heavy metals. By providing a concise explanation of the ingredients of e-liquids and the complex chemical processes that take place in a device during vaping, Miroslaw Dworniczak, a Polish chemist and author, refuted this assumption, concluding that despite the presence of some potentially dangerous compounds, e-cigarettes were far less risky than regular cigarettes. Mexican physicist Roberto Sussman, who examined 12 studies on metals in e-cigarette emissions, found that all of them were methodologically flawed.

    Having become ideological rather than evidence-based, the health debate about vaping is full of contradictions. Mark Tyndall, an infectious disease specialist from Canada, compared his experience working with HIV with the experience in vaping. It took 40 years for HIV to lose its association with fear, blame and stigma—issues that smokers and vapers are facing too. Medical treatment of AIDS was the greatest breakthrough—vaping, he claimed, could be a similarly efficient weapon to treat smoking.

    Stigma is also present in the academic world, and it goes far beyond suspicion of tobacco-funded studies. Scientists detected “the ghost of Senator Joseph R. McCarthy,” the paranoid U.S. communist hunter of the 1950s, as they often confronted hostility from fellow academics and institutions. Experiences of suppressed academic freedom ranged from a lack of institutional support for THR research to “mobbing” and exclusion from faculties.

    Here for Good, but …

    So, is tobacco industry transformation a myth or a reality? Sharing her view from the corporate side, Flora Okereke, head of global regulatory insights and foresights at BAT, said that her company’s efforts to help smokers switch to less risky products—and therefore doing something for society—had given employees a sense of pride. Peter Stanbury, a political economist, evaluator and management consultant, pointed out that companies such as British Petroleum are also in the process of transformation, driven internally by people who realize that change is required and externally by regulation.

    In advancing tobacco harm reduction, regional networks in THR consumer advocacy play a vital role. Nancy Loucas, founder and executive coordinator for the Coalition of Asia Pacific Tobacco Harm Reduction Advocates, related how her organization, faced with challenges such as government interests in tobacco growing and manufacturing, notably in China and Indonesia, and foreign philanthropist influence in the development of policy, achieved a paradigm shift in several countries by working with an expert advisory group.

    Tobacco harm reduction, panelists agreed, is here to stay; consumers have a right to it. But accessibility of THR will remain a problem, and more restrictions are on the horizon.

    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.
  • Policy Masterstroke or Political Quagmire?

    Policy Masterstroke or Political Quagmire?

    Image: Zerbor

    Rules to reduce nicotine in cigarettes are back on the agenda.

    By Clive Bates

    On June 21, the United States Federal government announced its intention to develop a rule requiring deeply reduced nicotine levels in cigarettes on sale in the United States. This idea has been in circulation since first proposed in 1994 and was given a new lease of life in the FDA comprehensive plan in 2017. In late 2021, New Zealand adopted this policy and has committed to introducing legislation this year. The zombie policy is back, and it walks among us. Despite the warped logic of taking out the relatively benign nicotine and leaving the very harmful tar, despite the obvious practical problems of mounting a de facto cigarette prohibition at this scale, and despite the weird ethics of encouraging people to switch from one smoking product to another smoking product, this idea just will not die. How should we consider this proposal from a tobacco market transformation perspective?

    First, let us consider how this would work in practice. Regulators would introduce a rule requiring that cigarettes must have a very low nicotine level in the tobacco, say 0.4 mg per gram of tobacco compared to typically 16mg per gram—a 40-fold reduction. The level would be so low that nicotine could not play a meaningful role in the smoking experience, and “compensation” to obtain a satisfactory nicotine dose by puffing harder would not be possible. For unexplained reasons, regulators and researchers think that people would continue to buy and use these products, but smoke less and not become addicted to them. That forms the basis of the public health rationale for such a rule. But this is absurd.

    Second, the science is weak. Given that the main reason people smoke is to experience the effects of the stimulant nicotine, using low-nicotine cigarettes is among the least likely of all the possible responses to such a rule. After trying such products once, few smokers be willing to hand over hard-earned cash at the corner store for cigarettes with no noticeable nicotine. Yet nearly all the science to support rulemaking assumes that smokers will use these products and then finds out what happens if they do. But trials are not markets. In a trial, the subjects are volunteers and agree to participate. They are paid or incentivised to stick with the trial protocol and are usually provided with free cigarettes. This is nothing like real life.

    Third, what matters in real life is how users and suppliers respond to the disruption. A low-nicotine rule would eliminate the lawful supply of nicotine cigarettes. But it does not make them disappear from the market. It changes who supplies them, how, and at what price, creating incentives to develop a black market. The established producers would not remain passive either. They will find other lawful ways to sell nicotine-bearing smokes, for example, by selling cigars or hand-rolling tobacco or promoting workarounds such as personal cigarette-making machines. Consumers who use nicotine cigarettes will not automatically become abstinent or lose their interest in nicotine just because the FDA introduces a rule. Maybe they switch to black market cigarettes, cigars, or vaping. Nothing remains constant. A new rule disrupts the market, but it does not mean smokers will automatically do what regulators hope they will. The question is, what would they do, and can this be influenced?

    Fourth, regulators must shape the behavioural and market response to the rule. Merely implementing a low nicotine rule does not determine its public health impact. The pattern of behavioural responses to the rule will determine the overall effect. “Good pathways” like switching from smoking to vaping will compete with “bad pathways” like switching to black market products. Confidence in good behavioural responses to a rule should be a precondition for its introduction. Suppose we hope a reduced nicotine rule would prompt a migration of smokers to smoke-free alternatives. Three conditions would need to be met to incentivise migration from smoking to vaping. (1) the smoke-free products must be affordable, attracting zero or minimal tax. (2) the products would need to appeal to smokers by offering a diverse selection of flavours, good nicotine delivery, and a range of devices to suit all needs. (3) consumers must be aware of the benefits of switching, notably the dramatically reduced health risk compared to smoking. Sadly, there is no sign that the U.S. tobacco control community is working towards these meeting these preconditions, though there is a little more policy coherence in New Zealand.

    Fifth, there is a paradox at the heart of this proposal. A reduced nicotine rule needs good pathways to the low-risk options discussed above to make it viable. But when those preconditions are met, a low nicotine rule loses most of its purpose. Meeting the preconditions for a rule is a more useful policy than the rule itself. When those conditions are met, everyone who wants to quit smoking by switching can make an informed choice and just do it. What is the case for coercing the smoking holdouts? Surely, the state’s role should be to get in their corner with help and encouragement, not a big regulatory stick. And what if some people are fully aware of the risks, fully understand their options to switch to high-quality, low-risk alternatives, but still don’t want to switch? Should they be made to? And anyway, would anyone in public health want smokers to switch to a low-nicotine cigarette when they could be encouraged to vape? Imagine if a manufacturer brought out a vaping or heated tobacco product with the same nicotine delivery and toxicity profile as a low-nicotine cigarette? No one would take such a product seriously, let alone propose it as a public health intervention.

    Sixth, but what about youth? One of the big ideas that underpin this proposal is that non-addictive cigarettes would stop teenagers from falling into the trap of addiction and lifelong smoking and harm. This is now a much weaker argument than in 1994 when the reduced nicotine cigarette idea was conceived. In 1994, 12th grade past-30-day smoking prevalence was 31 percent. In 2021, it was down to 4 percent, according to the University of Michigan Monitoring the Future survey. The current trend in youth smoking is sharply downwards from a low base. Teenage vaping is likely doing the job that reduced nicotine cigarettes were once supposed to do – eliminate teen smoking. The other argument is that no evidence exists that this de facto cigarette prohibition would work. Consider the case of youth marijuana use. The Monitoring the Future survey shows that 12th grade past-30-day prevalence has been steady at an average of around 21 percent since 1994. But throughout most of this period, marijuana has been completely prohibited. The point is that banning something does not make it disappear or mean that teenagers cannot access it. It is more likely to mean they participate in illicit supply.

    Seventh, the politics will be very fraught. Though the legal base for such a rule would be Section 907 of the Tobacco Control Act, it would be a mistake to believe this could be done as a narrow technocratic rule-making exercise. Such a measure would impact a wide range of stakeholders far beyond the FDA’s routine contacts. U.S. cigarette sales are about $80 billion annually, and every part of that supply chain, from farmers to convenience store retailers, would be affected. There would be a substantial hit on the cigarette tax and master settlement receipts to State budgets. Law enforcement would be drawn in, with the potential for some of the adverse impacts we have seen in the War on Drugs. Then there is the question of identity politics. Surely, tobacco control activists have noticed that even sensible public health responses to the Covid-19 pandemic became weaponised into polarising identity politics. How would the Federal government intervening in the personal behaviour of 34 million American smokers play out in the febrile and divisive political climate that has developed in the U.S. since 2016? Which political leader will take a hard look at this measure and conclude, “yes, that is just what I need to win the next election”?

    In my view, measures like a low-nicotine rule are fantasy “policy masterstrokes”, in which a massive problem is solved with the swish of the regulator’s pen. I doubt this measure will ever work in real life. It will be mired in a practical, legal and political quagmire until it is no longer relevant. In the meantime, it is a distraction from the more useful, feasible and respectful regulatory business of setting up risk-proportionate regulation, fair taxation, and honest risk communication about smoke-free nicotine products. Migration of the market for consumer nicotine from smoking to smoke-free is the practical and viable way to make cigarettes obsolete and end the epidemic of smoking-related disease. A policy that relies on the consent of users rather than prohibition and coercion is far more likely to succeed.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • A New Sheriff in Town

    A New Sheriff in Town

    Photo: Taco Tuinstra

    China’s tobacco monopoly asserts its authority over vapor products.

    By George Gay

    It is wise to take seriously the warning that you should be careful what you wish for.

    At the Global Tobacco and Nicotine Forum (GTNF) in London in September, which was held about six months after new vaping industry regulations had been publicly mooted in China, one speaker told those listening how vaping industry regulations were overdue, necessary and to be welcomed. At the time, I assumed this welcome was predicated on the belief that the regulations would be beneficial—that they would allow the industry to grow in a stable way and, in doing so, serve the interests of the businesses involved, smokers wanting to quit their habit, and society at large while, at the same time, helping to remove from the industry cowboy operators and substandard products.

    Things have moved on since then. The regulations, formulated by the State Tobacco Monopoly Administration, were foreshadowed at the end of 2021, published in March 2022, became effective from May and are due to come fully into force in October.

    The question is: Are the regulations beneficial? I would say they are far from ideal, but then ideal would probably have been an ambition too far. Looking on the bright side, they are better than a ban, as has been introduced in Hong Kong and elsewhere, and, furthermore, given the considerable investment in these regulations and the systems necessary to operate them, unless some unforeseen catastrophe occurs, they seem to rule out a ban being introduced, at least in the short term to medium term. But they will undoubtedly rein in the country’s vaping industry—severely in some areas.

    The rise of China’s vaping industry has been hugely impressive, and the future had held out the offer of phenomenal growth, but now, predictions must surely be revised downward, particularly in respect of the domestic market, probably much less so in respect of exports. But in taking stock of this situation, it is necessary to bear in mind the relative importance of the huge and so far largely untapped domestic market.

    Domestic Sales Versus Exports

    One of the provisions of the regulations that will likely have upset those businesses and consumers looking for beneficial outcomes, assuming consumers in China tend to prefer the sorts of vaping products most popular in other countries, is the ban on flavored products other than those with tobacco flavors. They are unlikely, too, to have been overjoyed by a ban on nicotine-free products.

    On the other hand, the industry can take heart from the fact that products with flavors other than tobacco and those that are nicotine-free may be manufactured for export where such products do not conflict with the laws of the country of destination. Basically, export products must comply with the laws, regulations and standards of the destination country, though, where the country of destination does not have vaping regulations in place, export products will have to comply with China’s regulations.

    This difference between the requirements for local and export products raises an interesting question. The ban on the sale of nontobacco flavored and nicotine-free vaping products in China seems to be based, at least in part, on the idea that products with these properties are the ones favored by young people, who should be discouraged or, where minors are concerned, banned from vaping. This seems to be an ethical stance, but it is difficult to see how, given such an ethical stance, exports of such products could be allowed, even to countries that do not ban them.

    The regulation’s authors say, in translation, the “Measures for the Administration of Electronic Cigarettes” are being put in place in order “to further strengthen the supervision of new tobacco products such as e-cigarettes, regulate the market order, ensure the health and safety of the people, and promote the legalization and standardization of industrial governance in accordance with the Tobacco Monopoly Law of the People’s Republic of China, the Law of the People’s Republic of China on the Protection of Minors [and] the Regulations on the Implementation of the Tobacco Monopoly Law of the People’s Republic of China.” The regulations are said to cover the production, sale, transport, import and export, supervision and management of vaping products.

    Market Order

    There seem to be some curiosities in the regulations. From my reading, the regulators have gone down the U.S. route in deeming electronic cigarettes to be tobacco products, at least for the purposes of incorporating them under expanded tobacco laws. And while they refer to “vaping products,” they tend to refer to the use of these products as involving “smoking” rather than “vaping.” Having said that, I should point out that these are issues picked up by Western eyes from a translation of the regulations, which, unsurprisingly, have gone through a number of revisions.

    One of the things that jumps out at a Westerner from the stated aims of the regulations is the idea of regulating “the order of the market.” China’s economic system is such that, in part, the regulations are concerned with supply-side matters whereas in much of the rest of the world, such considerations would not come into the picture. Elsewhere, the market is controlled, if that is the right word, by demand, so if it becomes oversupplied, prices fall and, eventually, companies go bust. Or that’s the basic theory. In reality, some companies are considered to be too “important” to fail and have to be bailed out by taxpayers.

    The regulations aim to balance supply with demand through such mechanisms as setting production and sales targets, overseeing imports, controlling the expansion of companies, concentrating production sites, restricting product transport and overseeing wholesale and retail trading.

    Some of these controls are to be exercised through the licensing and registration of existing and new manufacturers, wholesalers and retailers, and even the expansion of their operations, or other changes, including moves into the trading of imported products. One of the requirements for obtaining a license will be that the applicant has access to sufficient funds to carry out whatever enterprise it wants to engage in, which, along with certain other restraints, some observers believe will tend to favor the bigger companies and weed out smaller ones. Again, this weeding out of the smaller players seems to be following the U.S. route, though by using a registration requirement applied to the company rather than the product.

    Big Versus Small

    Whether you view such provisions as good or bad will probably depend on whether you are a small vaping industry operator in China likely to be driven out of business or a big one that will benefit from fewer competitors. Of course, if China is successful in using such a system to stabilize the market and ensure underfunded companies don’t go bust with all the social fallout such failures can cause, it will probably be seen to have done a good job. But there are clearly dangers in disadvantaging smaller businesses working within an industry that, because of its youth, is dependent on innovation for its success, commercially and socially.

    In addition, the market will be closely controlled by “a unified national e-cigarette transaction management platform” through which manufacturers, wholesalers and retailers will have to process and record all their trading and transactions. Wholesalers wishing to trade in imported vaping products will have to obtain permission to do so, and the imported goods will have to comply with all local technical requirements and regulations and be sold, appropriately labeled, through the transaction management platform.

    There are provisions in the regulations for dealing with counterfeit and inferior products and the infringement of intellectual property rights, including through the encouragement by rewards of people reporting cases of the illegal production and sale of vaping products.

    The regulations will govern registered trademarks along with warnings and other messages applied to tobacco packaging, and they hold that e-cigarette advertising will be in line with tobacco advertising, which is consistent with their being regarded as tobacco products. E-cigarette exhibitions aimed at promoting such products are banned.

    Sales of vaping products through “information networks” other than the transaction management platform are banned, as are sales through vending machines and sales to minors, with the onus being on retailers to check identity documents where the age of the would-be purchaser is in doubt.

    The regulations will see the introduction of a product traceability system, and they will control the sites of retail outlets, including in respect of banning such outlets “around” schools. And they will provide for quality control through the inspection, testing, monitoring and evaluation of products under institutions set up to conduct technical reviews based on the submission of application materials, such as inspection and testing reports. Those engaged in production will be required to establish product quality assurance systems and be responsible for the quality of their products.

    Meanwhile, in April, the State Administration for Market Regulation, the standards committee, published the national standards for electronic cigarettes (GB 41700-2022), which provides, among other things, details about the technical requirements for vaping products and relevant test methods, safety standards, permitted ingredients and nicotine levels and concentrations.

    Encouragingly, some reports indicate that the newly regulated industry players will be encouraged to carry out vaping industry R&D in respect of raw materials, finished products and risk assessments, and that they will be encouraged to promote the application of green technology and other environmentally friendly practices.

    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.
  • The Takeaways

    The Takeaways

    Photo: Jhvephotos | Dreamstime.com

    What lessons should regulators learn from the United States?

    By Clive Bates

    The U.S. Food and Drug Administration has had jurisdiction over tobacco products since Congress passed the Tobacco Control Act and it entered into force in 2009. Through its Center for Tobacco Products (CTP), the FDA regulates tobacco products, which include nicotine products such as e-cigarettes and e-liquids in the United States. With the recent retirement of Mitchell Zeller, the CTP’s director since 2013, it is an excellent time to take stock. Here we look at six lessons from the experience that might help guide regulation in other jurisdictions.

    First lesson: Understand how well-intentioned but poorly designed regulation can harm public health. The regulation of newer, safer products should reflect the political reality that the most hazardous products, cigarettes, will remain pervasively available. In the United States, variants of just under 3,000 cigarette products have been on the market since 2009, largely untouched by onerous regulation. The Royal College of Physicians signaled the risks that flow from excessive regulation of safer alternatives in its 2016 report Nicotine without smoke: “… if [a risk-averse and precautionary] approach also makes e-cigarettes less easily accessible, less palatable or acceptable, more expensive, less consumer-friendly or pharmacologically less effective, or inhibits innovation and development of new and improved products, then it causes harm by perpetuating smoking.”

    Regulatory regimes that are tougher on the alternatives to cigarettes function as anti-competitive barriers to entry. Sound regulatory practice requires efficiency, transparency and predictability with burdens proportionate to risk. Unfortunately, the premarket tobacco product application process by which safer products must enter the market to compete with cigarettes is astonishingly expensive and opaque and fails any test of proportionate regulation. It functions to protect the cigarette trade and concentrate the vape market into a monoculture of uninspiring products. This is partly the law itself, but much is down to how the FDA has interpreted its responsibilities under the law.

    Second lesson: Use standards and a notification regime rather than a product-by-product regime. The problem with an authorization regime is that it requires a public health agency to say “yes” to allowing a nicotine product onto the market. For institutional cultural reasons, many will find this challenging to do. Asymmetries in risk aversion mean regulators tend to be far more reluctant to accept the risk of saying “yes” and something bad happening than saying “no” and something good not happening. Both outcomes are harmful, but the former is what energizes regulators while the latter is hidden. A further issue with authorization systems is that they are easily politicized, providing a focus for campaign organizations to press for the decisions they want from regulatory agencies. For example, the FDA has been pushed hard by well-funded campaigns to ban flavored e-cigarette products. In contrast, the European Union has used a notification system with standards codified into the EU’s Tobacco Products Directive and, as a result, has a diverse and competitive market without a huge problem of youth uptake and far less political tension.

    Third lesson: The regulator should accept the same disciplines it imposes on the regulated entities. The Tobacco Control Act, which is the FDA’s regulatory foundation, repeatedly refers to “appropriate for the protection of public health” as a guiding principle. For example, this test is applied to new nicotine products as part of the premarket review process. But does the FDA ensure that its own approach is appropriate for the protection of public health? By setting the burden of proof so high, the FDA has implemented a de facto ban on flavors other than tobacco and (possibly) menthol in vaping products. This is probably a response to intense and well-funded activism. But it will have the effect (if not the intent) of closing all the vape shops and radically collapsing the diversity of products on the U.S. market. Imagine if the FDA had to prove that its approach to flavors is “appropriate for the protection of public health.” That is precisely what it would have to do if it introduced a product standard to ban flavored products. The agency would not be able to do it, and it should not be doing it by default.

    Fourth lesson: Risk perceptions matter, and regulators can help. One of the important purposes of public health regulation is to promote consumer behaviors that improve health. That should include, for example, making it easier and more desirable to vape than to smoke. But that cannot work if consumers do not understand which options are safer. In the United States, despite federal communications budgets of hundreds of millions of dollars, the public risk perceptions about nicotine are in a terrible state and, in many cases, deteriorating. In 2020, less than 3 percent of adults held the correct belief that e-cigarettes are much less harmful than cigarettes, but 62 percent wrongly believed that e-cigarettes are as harmful or more harmful than cigarettes—a view for which there is no evidence. Seventy-two percent wrongly believe that smokeless tobacco is no less harmful than cigarettes. A majority (56 percent) wrongly believe that nicotine is the primary cause of smoking-related cancer. The statements and communications campaigns of regulators and public health agencies like the Centers for Disease Control and Prevention  in the United States can improve these perceptions or make them worse. Either through risk aversion or by design, the leading federal agencies have contributed to the landscape of poor risk perceptions and have hence undermined their own effectiveness. This has especially been the case through agency efforts to deter youth use. These have strayed into the exaggeration of the harms of nicotine vaping and inappropriately capitalized on the scare over the outbreak of lung injuries in 2019 that was widely but falsely attributed to nicotine vaping.

    Fifth lesson: Apply some skepticism and science to the claims of activists. A regulator should be objective and cautious about activists’ claims and draw on the best possible science to guide its actions. Between 2017 and 2019, the rate of vaping among U.S. high school students shot up from 11.7 percent to 27.5 percent, an alarming rise by any standard. This generated a climate of moral panic in the public, media and politics—with flavored vapes and the marketing practices of e-cigarette companies blamed for the rise. Cooler heads advised caution and to look more carefully at the underlying patterns. That was good advice. It turned out that most teen vaping was infrequent, most frequent use was concentrated in young people who might otherwise be smoking, and very few tobacco-naive users showed any sign of dependence. We know that the causes of youth vaping are similar to the causes of youth smoking: characteristics of the individual and their circumstances rather than the products being the primary driver. For many young people, their frequent vaping may have been a beneficial displacement from smoking or diversion from cigarette uptake. From 2019 to 2021, teenage vaping fell sharply, especially among the infrequent users, suggesting that the dramatic rise had been a frothy and transient fad. Yet, by basing a response on the headline numbers rather than the underlying usage patterns, the FDA may have done more harm than good to both adolescents and adult smokers by overreacting to a moral panic based on a false premise. The science and data were there to navigate this crisis with a steady hand, but the FDA chose the path of least resistance and accepted activists’ claims at face value and acted accordingly.

    Sixth lesson: Adopt a realistic economic and behavioral model. How can a regulator use its powers wisely and make proper determinations if it has a poor grasp of the products and behaviors it is regulating? One way of looking at vaping products is that they are a form of smoking cessation device, a kind of pimped-up nicotine-replacement therapy. In that case, a regulator might demand clinical trials to show efficacy in smoking cessation and intervene to reduce “abuse liability”—the risk that the product will attract users for reasons other than its therapeutic indication. The other way of looking at vaping products is that they are competitive alternatives to cigarettes for people who wish to use nicotine for whatever reason. They work by presenting a rival value proposition to smokers. To do this successfully, they must be appealing and pleasurable and meet the needs of people who do not even want to quit smoking (those most at risk from smoking-related harm). Few medical or public health regulators have the conceptual tools to deal with ideas like pleasure or appeal without seeing them as an abuse liability. In reality, vaping and heated-tobacco products are best understood as part of a major technology transition from combustible to noncombustible technologies in the consumer nicotine market. The regulatory regime for such products needs to encourage and not suppress innovation, allowing innovators to do the heavy lifting in securing the eventual obsolescence of cigarettes. That is a far more ambitious aim than placing smoking cessation products on the market. Alas, few regulators, including the FDA, appear equipped for the challenge.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • Fruitful Cooperation

    Fruitful Cooperation

    Photos: Alliance One International

    By partnering with Bayer Crop Science, Alliance One International improves farmer livelihoods.

    By Stefanie Rossel

    Ending poverty is the first of the United Nations’ 17 sustainable development goals, which are supposed to be achieved by 2030. According to the U.N. Food and Agriculture Organization (FAO), the battle to end hunger and poverty must be principally fought in rural areas, which is where almost 80 percent of the world’s hungry and poor live. Success requires investment in “agents of change,” according to the FAO—smallholders, family farmers and other vulnerable groups. To feed more people with less water, farmland and biodiversity, better management and improved techniques in agriculture will be needed.

    Agriculture is central to all activities in smallholder communities. In economic terms, most activities in these communities revolve around being able to develop a system that provides food security and improves the health of its members. The work of smallholders is an economic driver, creating prosperity for the community.

    Keen to enhance farmers’ incomes, Alliance One International recently embarked on a new project. In June 2021, the company announced that its Alliance One Brazil (AOB) subsidiary was partnering with Bayer Crop Science to provide quality maize seeds and agronomic support to smallholder tobacco farmers in Brazil. AOB’s goal is to help its contracted farmers diversify their income by strengthening the quality and yield of a crop that is cultivated complementary to tobacco in the country.

    “For AOI, improving farmer livelihoods is a top priority, and we are committed to maximizing all farmers’ income potential by 2030 through appropriate training in good agricultural practices and the opportunity for crop diversification,” explains AOI President Alex Strohschoen. “Through this partnership, we are making strides to achieve this goal and have already seen positive impacts for growers and their communities.”

    During the 2020 growing season, AOB implemented a pilot project in which 2,300 of its contracted Brazilian smallholder tobacco farmers received a high-quality agronomic package for maize. “While many of our contracted growers in Brazil already grow maize in addition to tobacco, they lacked access to high-quality crop inputs such as seed, fertilizer and agronomic support,” says Strohschoen. “This prevented them from scaling up their production and limited their financial return. This agronomic package provides our contracted growers with access to Bayer’s maize seed varieties as well as fertilizer and hands-on guidance from our agronomists and field technicians, helping improve crop quality and yield, in turn, increasing the farmer’s bottom line.”

    Globally, AOI employs approximately 1,000 trained agronomists and field technicians that conduct more than 1 million farm visits annually. “These individuals regularly share their expertise to support our contracted growers and are key to this partnership,” says Strohschoen.

    Alex Strohschoen

    Research Required

    Bayer Crop Science offers a range of maize varieties with enhanced features. For instance, a maize variety can be more water efficient, high yielding or resistant to typical maize pests than other varieties.  

    In the case of AOI’s contracted Brazilian growers, use of Bayer maize varieties, grown using high-quality fertilizer and agronomic support from AOI, made a difference. “Prior to this project’s implementation, our Brazilian tobacco farmers that also cultivate maize produced on average less than 5,500 kg/ha,” says Strohschoen. “The agronomic package that we provide gives growers access to some of the most advanced technology available on the market, potentially increasing yields to over 10,000 kg/ha.”

    As part two of the initiative, AOB offered the opportunity to participate in the program across its grower base during the 2021 growing season. Following the season’s completion, Strohschoen said, participating farmers saw a 15 percent increase in maize yield compared to the 2020 growing season, increasing a farmer’s income by $270 per hectare on average. “This additional income supplements the livelihood of our contracted growers and is an important piece of addressing other concerns, such as child labor, deforestation, etc.”

    Similar to Africa, where climate change appears to be a big challenge for farmers, extreme weather patterns are impacting crop production in Brazil. Less and less predictable weather patterns make it difficult for growers to determine the right time to plant whereas the worsening precipitation deficit as well as increased frequency and severity of droughts are becoming more prevalent and more concerning. “Food insecurity is a global issue driven by various factors, including increased demand, war and conflict, climate change, and economic slowdowns and downturns exacerbated by Covid-19,” says Strohschoen.

    An AOB leaf instructor (left) and a contracted farmer

    Expansion Envisaged

    Over the next three years, AOB intends to expand the project to include other crops—and other countries. AOI works with nearly 300,000 farmers in 20 countries across five continents, and it is the company’s aim to provide all of its contracted growers with the opportunity to diversify their income and increase their bottom line, says Strohschoen. “To do this, we must evaluate a number of factors to ensure we are implementing projects in the appropriate regions with crops that offer our contracted growers the greatest potential return. For example, we began this project in Brazil because approximately 75 percent of our contracted Brazilian farmers produce maize in addition to tobacco. Since these farmers were already growing maize, many had the infrastructure necessary to produce the crop prior to implementing the project.” 

    Following the success of the project’s first two phases in Brazil, it makes sense to expand it to a country with a similar climate and where growers have a seminal relationship with maize. “As we enter the 2022 growing season, we plan to introduce the program to our contracted farmers in Argentina, where a significant portion of our grower base could benefit from improving the quality and yield of their maize crops,” says Strohschoen.  

    In addition to the maize project in Brazil, AOI is also working on other projects around the globe. “For example, in Malawi, we have commercialized new groundnut and soya seed varieties,” says Strohschoen. “We provide interested tobacco growers with inputs, including agronomic expertise, helping them diversify their crop portfolios and produce high-quality crops for domestic, regional and international markets.”

    With tobacco accounting for 54 percent of merchandise exports in 2019 and about 15 percent of GDP, the landlocked Southeastern African country is one of the world’s most economically tobacco-dependent nations. Not only in Malawi does food security remain an issue; it’s also a global problem that is being exacerbated by various factors, including increased demand, war and conflict, and economic slowdowns and downturns aggravated by Covid-19. Currently, Russia’s war against Ukraine is severely jeopardizing food security around the world.

    “AOI is committed to doing whatever we can to transform people’s lives so that together we can grow a better world,” Strohschoen says. “This starts within our immediate network. To do our part to address global crises, we must first look at what improvements can be made within our supply chain. This begins with providing our contracted farmers with the tools they need to diversify their income and create additional food sources in their communities.”

    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.
  • African Ambition

    African Ambition

    Adam Molai (Photo: Pacific Cigarette Co.)

    The Pacific Cigarette Co. continues to gain momentum.

    By Daisy Jeremani

    The Pacific Cigarette Co. of Zimbabwe has made significant progress toward becoming one of Africa’s No. 2 cigarette makers as it now produces more than 3 billion sticks per year, according to company founder and chairman Adam Molai.

    In a recent interview with Tobacco Reporter, Molai said Pacific was on track to becoming the largest indigenous African cigarette manufacturer by 2020 and the second-largest cigarette manufacturer on the continent, but its growth was disrupted by the Covid-19 outbreak.

    “Significant gains have been made toward this objective, growing from inception to over 3 billion sticks per annum. However, the Covid-19 pandemic merely delayed—it did not destroy or disrupt—our ultimate goal. Our vision for global success through value addition and tobacco beneficiation remains undeterred, and we continue to strive to create value for the African economy and enhance the lives of Africans,” he said.

    Born into an entrepreneurial family, Molai attended some of southern Africa’s most prestigious schools, including Peterhouse Boys, northeast of Harare. He worked at Ernst and Young in Zimbabwe and proceeded to the University of Buckingham in the U.K. where he graduated with a business degree in August 1992. Four years later, he left Lakehead University in Canada with a first-class commerce degree.

    Molai returned home and ran some small businesses, but his biggest break came at 31 years old when he, together with Nick Havercroft, founded Savanna Tobacco, later renamed Pacific Cigarette Co. They launched it in 2002 as a threshing enterprise in Africa’s No. 1 tobacco growing country. This entailed buying tobacco stems from farmers, processing them and exporting them. They did not immediately have the resources to import a cigarette manufacturing plant, but investing in threshing and starting to export were the first serious steps that propelled Pacific to be the brand it is now.

    Molai and Havercroft recognized the opportunity that lay in processing tobacco into cigarettes, and through innovative financing structures to raise foreign currency in a market plagued by foreign currency shortages, they were able to import the required equipment and became the first indigenously owned cigarette maker in Zimbabwe. In addition to the challenge presented by the foreign currency shortage, they also had to overcome the difficulties presented by the then poor relations between Zimbabwe and Germany, which is home to some of the world’s leading tobacco equipment manufacturers. At that time, Europe and the U.S. were sanctioning Harare over the land acquisition program and human rights issues. Despite this, Molai was still able to pay for the company’s first cigarette maker and packer to start producing Pacific Blue cigarettes for export in 2004

    While this represented a big break at a personal level, breaking into a market that had been dominated by established brands for decades presented a considerable challenge, according to Molai. Competitors tried to derail and sabotage the newcomer in a variety of ways, at times using underhanded methods, he says.

    Nonetheless, Molai persisted. “Although it was challenging competing with established global multinationals with infinite resources, we used this as a learning experience,” he said.

    “Our competition provided us with the best education on business. They triggered the tenacity, resilience and boldness which has facilitated our growth and expansion into the region.”

    A few years later, Molai turned the company’s focus to tobacco contract farming. He won government approval to establish contract farming in a country still dominated by auction sales. Critics labeled him an economic saboteur who wanted to use contracting to help white farmers, most of whom just had been evicted from their farms under the land acquisition program, externalize funds. But he was not deterred, having realized that the new, resettled farmers lacked the technical know-how, inputs and financing to seriously grow tobacco.

    After two years of lobbying and hard work, the company was finally licensed to contract but with extremely stringent conditions that gave it no recourse against any defaulting farmers. This first contract scheme was called Zimbabwe Tobacco Growing Co., later rebranded to Northern Tobacco.

    “I believe our foremost contribution to the tobacco industry is not cigarette manufacturing,” says Molai. “The most important contribution we made was fighting for permission to introduce contract farming of tobacco in Zimbabwe.”

    Other companies launched their contract schemes later, and today, more than 100,000 farmers produce some 95 percent of the local crop under contracts.

    Four years ago, Pacific partnered with China Tobacco Shaanxi Industrial Corp. (CTSIC), in an effort to serve the Chinese market. In January 2022, Pacific invested $9.5 million to relaunch two of its brands, Pegasus and Branson, to ensure that they would be able to not only cater to the premium segment but also offer world-class quality cigarettes at an affordable price. The Branson brand family was expanded with Branson flame, toasted and mint varieties while Pegasus now comes in a toasted flavor and a Chinese blend named Hong Ma. 

    Molai recognizes that the Chinese blends are still in their infancy but says the company is working to ensure that it is able to grow that market given that China has the world’s largest population, which is getting increasingly affluent and traveling or settling in other countries.

    “As a disruptor and a trendsetter, Pacific will continue innovating to keep ahead of the competition,” he says. “The relaunch of some of our brands was not only driven by our Chinese partnership but also part of our DNA to ensure we satisfy our customers.”

    Pacific’s deal with CTSIC, he said, was the first of its kind, where Chinese brands got licensed to an African entity. The partnership, which is in line with Zimbabwe’s “Look East” investment policy, remains a key part of the strategy to build Pacific’s market share, considering that China has the world’s highest number of smokers and there are an estimated 10,000 Chinese living in Zimbabwe.

    It takes time to establish and grow a brand, says Molai, so Pacific is working tirelessly to gain the trust and loyalty of consumers.

    “Our aspiration was to get African cigarettes into the Chinese market,” he says. “Africa is the only continent without a quota to supply cigarettes into China, and with Zimbabwe being the largest tobacco player on the continent, it was therefore my responsibility, on behalf of our continent, to make this happen.”

    Pacific is also making inroads into neighboring South Africa, and they recently launched their Acacia brand and intend to continue expanding. As Covid-19 hit in March 2020, Pacific had to innovate and began a campaign centered on its mission that “People are the recipe for maximizing stakeholder value,” so they have been cementing and capitalizing on the relationships that they have on the market to ensure that they get the desired product placement and sales traction.

    Speaking on the prospects for the African economy, Molai said the economy can only grow when businesses identify opportunities for beneficiation and increase their levels of domestic value addition, creating employment and industrializing while enhancing and developing its people. Value addition is especially imperative for Zimbabwe, which exports 98 percent of its tobacco raw and processes just two percent of local production into cigarettes.

    “My personal objective was to democratize the tobacco industry from a highly racialized industry to one whose participation mirrors the continental demographics. This has been largely achieved with indigenous Zimbabweans now major players from growing to cigarette manufacturing.

    “It is our responsibility, and as Pacific, we remain committed to the well-being and long-term sustainability of Zimbabwe’s golden crop by manufacturing and distributing products of international quality,” he said.

    The businessman said his personal ambition has now expanded beyond tobacco and is now also focusing on the industrialization of Africa and beneficiation of other value chains so that the continent becomes an alternative supply chain to the world. Covid-19, he added, has exposed the risk concentration of current supply chains, thus Africa has a phenomenal opportunity to industrialize and create opportunities for it’s very young and unemployed youth.

    In November 2020, his self-titled foundation launched JUA Kickstarter, a $1 million initiative to support startups on the continent. With support from partners, the fund was doubled in January 2021. Announcing the development, Molai recalled the grueling journey he traveled to launch a successful brand and felt the need for him to assist startups.

    “With 65 percent of our population below 35 years of age, this population represents a significant threat or opportunity for our continent,” he told Tobacco Reporter.

  • Fighting for Farmers

    Fighting for Farmers

    Photo: BAT

    ITGA’s past and present CEOs, Antonio Abrunhosa and Mercedes Vazquez, reflect on the prospects for tobacco farmers in a rapidly changing business environment.

    By Stefanie Rossel

    In November 2021, Mercedes Vazquez took over as CEO of the International Growers’ Association (ITGA). She succeeded Antonio Abrunhosa, who announced his retirement after serving in the position since 1998. In a three-way conversation with Tobacco Reporter, the tobacco industry veterans shared their views on the past, present and future of tobacco farming.

    Tobacco Reporter: Mr. Abrunhosa, in your 22 years at the helm of the ITGA, how has the leaf growing sector changed?

    Antonio Abrunhosa: The main changes I witnessed in my tenure were the moves to decrease production in high-cost countries and move it to developing or underdeveloped countries, with much lower costs of production, especially salaries, which are the main [cost] component in many producing countries. Production went down by almost 1,200 million kg in the USA, Canada and the European Union in 30 years, and it increased by a similar amount in Brazil, Zimbabwe and Malawi, Tanzania and Zambia in the same period. Sales also switched from the auctions system, which prevailed in the U.S., Canada, Zimbabwe and Malawi, to contract growing—the Brazilian system. All this meant a substantial decrease in the [significance] of commercial, large-scale farmers—especially in Zimbabwe after land reform—and a radical loss of bargaining power of millions of growers all over the world [who were] facing seven main buyers with an oligopolistic power seldom seen in other sectors.

    Then there was the invasion of tobacco regulation into all aspects of common life, in almost all countries, at different speeds and with different impacts, but [it] translated into the almost total absence of smoking in any public areas anywhere outside of China, and the disappearance of tobacco advertising from almost all media and sponsorship of public events. A visual example of this change can be seen by watching the difference between the Mad Men series and any recent movie of people in offices today.

    That regulation got a totally different scale with the creation of the Framework Convention on Tobacco Control (the FCTC) by the United Nations, the first world treaty of the World Health Organization, which turned many dispersed local anti-tobacco initiatives into international law and created an enormous, rich and global anti-tobacco industry with thousands of NGOs [nongovernmental organizations] and companies, funded by public money, covering the whole world.

    Furthermore, the technical revolution started by electronic cigarettes, vaporizers and heated-tobacco has deeply changed the consumers’ market and will continue to do so.

    In the past years, the world has become much more aware of the dangers of reckless economic development based on the depletion of vital natural resources and the impact of such economic models on the planet’s capacity to sustain a population that has increased more in the past 30 years than it had in all the [previous] centuries. This awareness is impacting all kinds of businesses, especially in agriculture and, thus, in tobacco growing. That attention has pushed tobacco companies to request more and more stringent conditions of production from growers, especially in sensitive areas like labor conditions and child labor, deforestation, use of chemicals and water management.

    These four changes have created a completely different tobacco sector compared to the one we had 20 years ago.

    Antonio Aburnhosa (Photos: ITGA)

    What has the ITGA done to help its members cope with these challenges?

    Abrunhosa: Those changes impacted ITGA heavily, as some of its founder members lost thousands of growers and volume of production. 

    The widespread move to contract growing also meant a much more dependent relationship between growers and buyers, requiring a more intervenient role of ITGA in those relations and in the relations between growers and their governments.

    ITGA’s role was also radically modified due to the inclusion into the FCTC of articles conditioning the ways in which growers could produce tobacco in the future or even aimed at ending tobacco production altogether. This required a much stronger presence of ITGA in international fora and a continuous participation in all kinds of members’ initiatives related with national or international issues affecting their businesses.

    How much has actual tobacco farming changed during your tenure?

    Abrunhosa: The pressure from the public and the published opinion about environmental and business sustainability, especially in a sector as controversial as ours, prompted the main buyers to [implement] radical measures in the management of their supply chains.

    As it happens often in corporate praxis, research was done, plans were designed and screaming orders came down the corporate ladder, with little attention given to the opinions of the final and central recipients of those orders—the growers.

    The typical case is GAP [good agricultural practices], about which I have said in many meetings that it threatens growers with the big stick of contract suppression in case they disrespect the unending list of mandatory rules for their production but seldom, if ever, shows the carrot of better prices to cover the increased costs that those rules imply.

    Child labor is a typical case. Moving production to a country like Malawi requires acknowledging the fact that local infrastructures for childcare are limited or nonexistent. This means that parents have nowhere to leave their children while working—in environments with wild animals. And, in recent years, particularly now, significant increases in the costs of production have not been followed by correspondent increases in tobacco prices. That means additional difficulties for growers to hire workers.

    Acknowledging these problems, ITGA, together with IUF, the main worldwide trade union for agriculture workers and almost all the important tobacco companies, except Indian and Chinese ones, created an international foundation, the ECLT, based in Geneva, which, for more than a decade now has been implementing projects in tobacco areas all over the world to address the problem.

    What achievements are you most proud of?

    Abrunhosa: I am most proud of having established ITGA as the world brand for tobacco growers in spite of the increasingly difficult regulatory, structural and financial conditions of the sector; of our members and of ITGA’s office, which always had between two and four officers. This was particularly relevant when the anti-tobacco lobby, much reinforced by the FCTC, aimed at legally banning tobacco production. 

    I am also proud of having been able to pass this heritage to the highly capable hands of my successor, Mercedes Vazquez.

    Ms. Vazquez, what, in your view, are the most pressing issues for farmers now and in the midterm?

    Mercedes Vazquez: Pricing and sustainability, which are intrinsically linked. Sustainability includes all social and environmental challenges but also—and most importantly from farmers’ point[s] of view—the economic survival of their businesses. Without it, other sustainability issues become irrelevant. For years, we have been trying to make this message get through, especially during the prolonged period of stagnation in prices combined with rises in costs of production everywhere.

    Now, considering the unprecedented times we are living in, after two years of the pandemic and still comprehending the realities of the war in Ukraine, “long-term” in tobacco production is 12 months. Consequently, in some countries, growers are moving to more profitable crops. If we consider the generational problem in agriculture where youngsters do not feel attracted to follow their family businesses plus this demoralizing scenario, in countries not too dependent on tobacco, companies will face a gap to fulfill their demand for clean, good-quality crop.

    For highly dependent countries, there is not a cent that has not been squeezed to the limit. Unless substantial changes are made—mainly in poverty alleviation to grant margins that will allow growers to be in compliance with good agriculture practices—sustainability of the sector will be ever more at stake. Changes will only happen with all main players involved, and ITGA will do its part on behalf of our growers’ associations and tobacco growers in general.

    Mercedes Vasquez

    What are your plans to help ITGA members to cope with these challenges?

    Vazquez: ITGA is at the core of the tobacco conversation. We have been around for almost 40 years. Our experience and global network capacity make us a pivotal player in all discussions related to tobacco around the world. More than ever, we need to work as the vehicle to spread growers’ messages and to promote dialogue among key players in the sector. Outside the sector, ITGA is liaising with agriculture agencies and entities to make sure tobacco growers are taken into account in the global sustainability agenda. With this, we also mean to normalize our sector in the global context, getting rid of the negative connotation we have carried all these years.

    Our main concerns are related to those developing countries that are very reliant on tobacco production. There is no transition plan for the near future. To a certain extent, this is due to the lack of collective work done in this regard. After two years of pandemic with limited access or none to our growers’ gatherings, ITGA is committing its time and resources this year to meet them, to bring them together and make their voices be heard. We feel that there is momentum to raise this united collective voice, and growers are responding to this call.

    This shouldn’t require a special mention in the 21st century anymore, but you are the first female CEO in the ITGA’s history and one of only a few women at the top of a tobacco-related organization. What is it like?

    Vazquez: It seems pretty normal to me because during my more than 10 years of work in ITGA, I have never had reason to think that this could not be possible at some point if I made my work meaningful to our members. I never worked thinking about becoming the CEO, though, and this was important, too, because it did not get me distracted and allowed me to focus on my duties and in making my work worthwhile. The process was very natural, but I think the turning point was my personal investment, going to visit all members’ associations and getting to know their boards and staff. Now I can say—and I think my members would agree—we have built a personal relationship, and I am very close to most of them.

    Are we going to see a stronger ITGA focus on gender equality and the issues facing women in the tobacco cultivating sector?

    Vazquez: I will do everything in my powers to advance this agenda. Before becoming the CEO, I have always done my best to shed light on women working in the tobacco sector and more specifically those involved in tobacco production. I introduced this item into ITGA’s key priorities with no objection [from others]. The current edition of our flagship publication, The Tobacco Courier, pays tribute to women in tobacco, and we managed to interview many of them from various parts of the globe. I highly recommend the reading of these interviews to learn about their realities. What got my attention was to see that regardless of their specificities, they all agree about the need of education and capacity building. They all want to improve and become more relevant in business decision-making. I have met many of them, and they are all a source of inspiration.

    What are the ITGA’s goals for the future?

    Vazquez: The future has never been as uncertain as it is now. ITGA must keep advancing the growers’ legitimate and independent agenda. Tobacco production has dramatically changed over the years, diminishing growers’ control over their product. Twenty years ago, the scenario was very different with auctions operating at a higher rate than contracts. ITGA is here to assess the impact of these changes, to help growers make informed decisions through market analysis and [to improve] our tools to provide accurate information. We aim to bring the sector together and expand our network to run efficient advocacy. At this moment, we need to put pressure in the pricing improvement as a paramount issue, and growers are telling us that this is the time to act and to speak out, so we will be up to these expectations.

    Provided the challenges for the tobacco growing sector, such as the continuous global decline of cigarette consumption, will persist, where do you see the ITGA and its members 22 years from now?

    Vazquez: In 22 years from now, I honestly believe that unfortunately some, not to say many, tobacco farmers and ITGA members will be out of this business. This can happen overnight, as we witnessed with the case of Colombia. Only the ones with the ability to absorb the increasing demands and with a diversified portfolio will remain. Some will be forced to disappear; some others will simply move out.

    Tobacco growers’ associations are rare these days. Those remaining are ITGA members. Unless their governments reinforce their role and make sure they are included in every conversation taking place about tobacco, its contribution, its future, its sustainability … at some point, they will be made redundant by companies, taking over their part with the direct contract system.

    As for ITGA, we will stick to our commitment even after that. If there is no tobacco production the way we see it now, there will have to be a transition for those vulnerable growers forced to quit. Consumption is declining at a fair pace to permit the changes needed for this sector to adapt. The problem is that farmers are getting ambiguous messages that stimulate productions in some regions while depreciating it in others, and that situation continuously changes. Our partners should be more consistent in that regard because this uncertainty is certainly harming this industry.

    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.
  • Inching Closer

    Inching Closer

    Photo: New Africa

    The FDA has taken a major step toward banning menthol cigarettes in the U.S., but there’s still a long way to go.

    TR Staff Report

    It’s hard to overstate the significance of the U.S. Food and Drug Administration’s plan, announced on April 28, to ban menthol cigarettes in the United States. While authorities have banned menthol cigarettes in other jurisdictions, such as Brazil (2012), Canada (2017) and the European Union (2020), the impact of those measures was less severe because relatively small shares of smokers preferred menthol cigarettes in those markets. In the U.S., by contrast, menthol products accounted for a whopping 37 percent of all cigarette sales in 2020, according to Statista.

    Public health advocates dislike menthol because it reduces the irritation and harshness of smoking, which makes it easier for consumers to take up the habit. According to the FDA, menthol also interacts with nicotine in the brain to enhance nicotine’s addictive effects. “The combination of menthol’s flavor, sensory effects and interaction with nicotine in the brain increases the likelihood that youth who start using menthol cigarettes will progress to regular use,” the agency writes on its website. “Menthol also makes it more difficult for people to quit smoking.”

    Unlike in other markets, the debate about menthol cigarettes in the U.S. is also about racial disparities. According to the FDA, nearly 85 percent of African Americans smoke menthol cigarettes compared to 30 percent of white smokers who smoke menthols—a situation industry critics attribute to decades of “predatory marketing” of menthol cigarettes to Black communities.

    “By issuing proposed rules today to prohibit menthol cigarettes and all flavored cigars, the FDA is taking historic and long-overdue action to protect our nation’s kids, advance health equity and save lives, especially among Black Americans and other populations that have been targeted by the tobacco industry and suffered enormous harm from the predatory marketing of these products,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

    The FDA expects its menthol ban to reduce the appeal of cigarettes and reduce deaths and disease among current menthol smokers by decreasing cigarette consumption and increasing the likelihood of cessation. “Published modeling studies have estimated a 15 percent reduction in smoking within 40 years if menthol cigarettes were no longer available in the United States,” the agency writes. “These studies also estimate that 324,000 to 654,000 smoking attributable deaths overall (92,000 to 238,000 among African Americans) would be avoided over the course of 40 years.”

    Not everybody is convinced a menthol ban would achieve the desired health effects, however. “We strongly believe that there are more effective routes to deliver tobacco harm reduction than banning menthol in cigarettes,” said BAT Chief Marketing Officer Kingsley Wheaton in a statement. “Evidence from other markets, including Canada and the EU where similar bans have been imposed, demonstrates little impact on overall cigarette consumption.

    “The scientific evidence shows no difference in the health risks associated with menthol cigarettes compared to nonmenthol cigarettes, nor does it support that menthol cigarettes adversely affect initiation, dependence or cessation. As a result, we do not believe the published science supports regulating menthol cigarettes differently from nonmenthol cigarettes,” said Wheaton.

    Guy Bentley, director of consumer freedom at the Reason Foundation, says supporters of menthol prohibition have been disappointed by lackluster results in other jurisdictions that have banned the products. “The most common result of menthol prohibition has been for the majority of menthol smokers to switch to equally dangerous nonmenthol cigarettes, continue to buy illicit menthol or use devices to flavor nonmenthol cigarettes,” Bentley wrote on the Reason Foundation’s website.

    Morgan Stanley expects most American smokers to switch to nonmenthol cigarettes, obtain their mentholated cigarettes illicitly or switch to mentholated vapor products in the wake of a menthol ban. In addition, the investment bank predicts that consumers may “self-mentholate.” This practice would be legal, and menthol is readily available for purchase online on platforms such as Amazon.

    According to Morgan Stanley, menthol bans in Europe and Canada did not have a measurable impact on the cigarette market, though the category was significantly smaller. “The impact in Europe was moderate because it was less aggressive in enforcing menthol rules, had loophole clauses (e.g., menthol filters), a low menthol smoker population (about 5 percent), and [it] did not skew toward a certain demographic group like it does in the U.S.,” the bank wrote in a note to investors. “The most significant impact was in Poland (about 25 percent menthol [smokers]), which saw a rise in illicit trade from neighboring countries.”

    However, a study of Canada’s experience, published in Tobacco Control, noted that among daily smokers, menthol cigarette smokers were more likely than nonmenthol smokers to have quit smoking in the wake of that country’s menthol ban. If the United States’ experience mirrors that of Canada after it banned menthol cigarettes, 1.3 million people would quit smoking, and potentially hundreds of thousands of premature deaths could be averted, Geoffrey Fong, principal investigator of the International Tobacco Control Policy Evaluation Project, was quoted as saying by The New York Times.

    Regardless of its impact on public health, a U.S. menthol ban would considerably impact the operations of tobacco manufacturers operating in that country. According to Morgan Stanley, BAT is most exposed to the category, with menthol cigarettes representing 55 percent of U.S. volumes and 60 percent of U.S. profits (and about 30 percent of group profits). The investment bank estimates that menthol represents 19.5 percent of volumes and 15 percent of profits for Altria group.

    While the FDA’s April 28 announcement is significant, Goldman Sachs notes that there is still a long way to go for the plan to become reality. The agency must still take multiple steps before it can issue and implement a final rule, starting with a 60-day public comment period, which ends on July 5. After that, the Office of Management and Budget must review the proposed rule to ensure the FDA adequately addresses all public concerns, including unintended consequences, followed by a statutory delay of between one year and two years before implementation. Legal challenges could delay the ban even further. “Ultimately, it is a complex and lengthy process that, based on precedent, could likely take several years to be successfully implemented, if at all,” wrote Goldman Sachs in a note to investors.

    Expect tobacco companies to generously share their views during the comment period. “We are reviewing the details of the proposed regulations and will continue to actively participate in the rulemaking process by submitting science-based comments to FDA,” said Wheaton.

  • Coming Clean

    Coming Clean

    Photo: Yakiv

    Stakeholders debate the challenges presented by cigarette litter.

    By Stefanie Rossel

    Cigarette butts are the most littered item on earth. The World Health Organization estimates that two-thirds of all smoked cigarettes are discarded into the environment. For 2021 when consumers smoked 5.21 trillion cigarettes, according to Euromonitor International, this corresponds to approximately 3.47 trillion littered cigarette butts.

    Made of cellulose acetate (CA), a polymer that is slow to degrade in the environment, cigarette filters take up to 18 years to disintegrate. In addition, used cigarette filters are full of toxins, such as nicotine, formaldehyde, arsenic and ammonia, which can leach into the ground and damage living organisms that come into contact with them.

    With regulatory pressure on single-use plastic (SUP) consumer goods increasing globally, tobacco companies hence face a new challenge: In a world where CA is still considered the gold standard for filters as far as smoking chemistry is concerned, they will have to find a way to make their products more sustainable. During a webinar staged in late April by Schweitzer-Mauduit International (SWM) and Essentra Filters, participants explored this and other challenges relating to cigarette filters.

    Shane McGuill

    Shane MacGuill, head of nicotine and cannabis at Euromonitor, said environmental sustainability was a double-edged sword for the tobacco industry, presenting both threat and opportunity and driven by a potent combination of consumer, investor and regulatory demand. According to his company’s research, 66 percent of consumers try to have a positive impact on the climate through day-to-day actions whereas 46 percent expect to be more worried about climate change in the future.

    MacGuill predicted that more investors will look at sustainability in tobacco; presently, around 40 percent of MSCI ESG (environmental, social and governance) indexes exclude tobacco. Between 2016 and 2018, he noted a 30 percent compound annual growth rate of ESG integration.

    In the tobacco and nicotine industries, product waste is one of the key drivers of sustainability legislation. The EU’s SUP Directive, introduced in 2021, emerged from a desire by European regulators to significantly reduce waste from cigarette butts by 2030.

    It places extended producer responsibility (EPR), a reinforced application of “the polluter pays” principle, on cigarette manufacturers to mitigate the impact of discarded cigarette butts. The regulation, MacGuill pointed out, was likely to be replicated in other regions.

    Supply chain integrity is another factor driving sustainability regulation; leaf cultivation is linked to environmental impacts such as deforestation, lack of crop diversity, chemical use and water utilization. Highlighted in the WHO’s 2017 report, these issues will likely attract increased scrutiny, MacGuill forecast.

    The most environmentally damaging stage of the cigarette production process is manufacturing and supply, for which legislation thus far has been limited. MacGuill noted that major tobacco companies have significantly stepped up self-regulation and focused on reducing their carbon and energy use, aiming, for instance, to achieve net-zero carbon emissions from their value chains by 2050. Product waste ambitions, however, currently remain largely limited to packaging.

    Increasing Awareness

    Alice Jassaud

    As end users, smokers play an important role in promoting sustainable cigarette consumption. A survey in Canada, Brazil, Germany, South Korea and France commissioned by SWM and Essentra Filters found that smokers generally are interested in sustainability, but only half of them know that filters contain plastic. Plastic content was overestimated in Germany while South Koreans underestimated it. Half of the smokers had a correct perception of the time needed for a plastic filter to decompose whereas South Koreans tended to overestimate it. According to the survey, filters were mostly dispensed in the trash or ashtrays in the countries investigated. Most smokers said they were willing to accept changes in the visual appearance of filters with accelerated biodegradability features. “There is a great opportunity for the industry to change tobacco products’ perception and their impact on the environment,” said Alice Jaussaud, product manager for filtering media solutions at SWM.

    Hugo Azinheira

    Hugo Azinheira, global innovation and marketing director at Essentra Filters, compared the biodegradability of various existing filters. In recent years, the industry has focused its R&D efforts on developing filters made of sustainable alternative materials. The sustainable filters used in the comparison, Azinheira said, were biodegradable while at the same time offering similar levels of performance and filtration as traditional materials.

    Carried out according to ISO 14855-1, a protocol to evaluate biodegradability of plastics under controlled composting conditions, the test compared biodegradation to reference cellulose after 105 days. While 100 percent of the reference cellulose had decomposed after this period, only 8.7 percent of CA had disintegrated. The latter item was the only one still visible at the end of the test. The four samples made of alternative material all reached a biodegradation above 90 percent after 105 days.

    Stricter Rules to Come

    Frédérique Martinache

    Regulation trends in the EU and beyond indicate that there is a strong political will on sustainability issues, said Frederique Martinache, product compliance senior specialist at SWM. Since 2014, the U.N. Environmental Assembly (UNEA) has been calling on states to address the environmental impact of marine plastic litter and pollution of SUP products. Regulatory approaches include imposing SUP bans, implementing taxes and/or economic incentives for sustainable alternatives, introducing EPR schemes and setting product standards and labeling requirements.

    In March 2022, UNEA member states agreed to propose by 2024 a legally binding treaty to end plastic pollution on land and in the water. Cigarette butts are the most common plastic litter on beaches. They represent a major hazard for marine life as animals can ingest the trash, exposing them to harmful chemicals. These can also make their way up through the food chain, threatening human health on a global scale.

    To promote the development of regulatory strategies that specifically address the impact of cigarettes on human health and the environment, the U.N. Environment Program has launched the Clean Seas campaign in which it partners with the Secretariat of the WHO Framework Convention on Tobacco Control (FCTC). Article 18 of the FCTC addresses protection of the environment and the health of persons in relation to the environment. This year’s WHO World No Tobacco Day focused on the adverse impact of tobacco cultivation and cigarette production and use on the environment, encouraging regulators to step up legislation, including implementing and strengthening existing schemes to make producers responsible for the environmental and economic costs of dealing with tobacco waste products.

    In the EU, tobacco filters have been required since July 2021 to bear labels informing consumers about the presence of plastic in the products, means of inappropriate waste disposal and the negative impact of littering. By Jan. 5, member states must have set up EPR schemes to fund litter cleanup initiatives, awareness campaigns and data gathering and reporting projects. Innovation and product development to provide viable alternatives to filters containing plastics are encouraged. By July 3, 2027, the European Commission shall propose binding measures to reduce the post-consumption waste of plastic filters.

    For the time being, the greatest regulatory pressure on filters comes from the EU and Norway, which has also implemented the SUP directive. But other jurisdictions are mulling measures as well. The U.K. Department for Environment, Food and Rural Affairs, for example, is considering the adoption of an EPR scheme. In the U.S., the Break Free from Plastic Pollution Act of 2021 intends to phase out throwaway plastics made from fossil fuel, hold the plastic industry responsible for its waste and pause construction on any new plastic-making plants. Apart from this federal legislation, there are a number of state initiatives. While Canada is contemplating regulation, the Australian government in 2021 launched the National Plastics Plan, which calls for an industry-led cross-sectoral stewardship taskforce to reduce cigarette butt litter in Australia.

    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.
  • Out of the Box

    Out of the Box

    Photo: 3dsculpto

    Roya Ghafele believes the industry should think more creatively about intellectual property.

    By George Gay

    Having spoken with Roya Ghafele, I cannot imagine her giving a PowerPoint presentation, though I could imagine her giving two or three separate presentations simultaneously on the same subject with each delivering different, cogent arguments and plausible conclusions. This is not to say she is uncommitted. When it comes to the big picture, she is almost unbending. She believes in the efficacy of, among other things, capitalism, markets and private property, including intellectual property (IP), on all of which she is fully qualified to comment. But, encouragingly to my way of thinking, she is not afraid of embracing contradictions. She clearly understands that the devil is in the details and that people and companies have to make choices when considering questions about, for example, IP management strategies.

    The good news is that Ghafele has an encouraging message for the tobacco industry. Because the industry, at least the product manufacturing sector of the industry, is relatively new to patents, it has, she says, an opportunity, indeed, a responsibility, to use them to advantage—to the advantage of the companies involved and the public at large. But there’s a snag. Ghafele believes that realizing this opportunity and fulfilling this responsibility won’t be easy. It will involve avoiding pitfalls set by some deeply ingrained but unhelpful thinking around patents—thinking that could slow the industry’s transition at a time when progress toward less risky products, the main subject of patents within the tobacco and nicotine manufacturing sector, needs to be fast.

    Ghafele’s academic and professional credentials are too numerous to list here but suffice to say her doctorate was awarded the Theodor Koerner Research Prize by the president of Austria, and she previously worked for both the Organization for Economic Co-operation and Development and the U.N.’s World Intellectual Property Organization. She is the founder and managing director of the law and economics consultancy OxFirst, which has won a number of prestigious awards for its work on IP.

    Roya Ghafele believes the nicotine industry should move away from the current disputative approach to patents and toward a collaborative approach, citing the example of Austria’s Empress Maria Theresa. Instead of indulging in the sorts of wars beloved of most people obsessed with empire building, Maria Theresa in the 18th century created strategic marriages for her children, thus ensuring the prosperity and expansion of Austria within a relatively peaceable Europe.

    One of the first points Ghafele made during a telephone chat in April was that, particularly in the tobacco industry, there needed to be a change in how those involved in such matters thought about IP. Not that current thinking was necessarily wrong, it was just that it wasn’t out of the box. She wants people to be creative about their IP and innovative in the way they think about patents. But what they had largely done so far, she said, was to follow the precise wording of the IP and patent rules set in stone since time immemorial. Companies had hired top law firms, and, given that litigating over patents was a lucrative business for lawyers, the result had been inevitable.

    This was not the place the industry needed to be, according to Ghafele. Tobacco companies currently sold toxic combustible cigarettes, a business model without a future, so the only chance these companies had to survive largely in their present form rested on changing the business model by using innovation to produce better, less risky products and innovation required, or at least was greatly assisted by, the creative use of patents. Litigation over patents would merely slow the transition to better products, which was not in the best interests of either the companies concerned or consumers.

    It is important to note, though, that this is not some pipe dream where companies turn into charitable trusts and markets turn into love-ins. Patents could be used as building blocks and instruments of change in order to grow businesses and make them better, Ghafele said. They could be used constructively to gain market share and trust and to fulfil the public health responsibilities companies have by providing as many consumers as possible with technologically better, less risky products and in the fastest time possible.

    If some of this sounds lacking in specifics, it’s not surprising, I think. The opportunities on offer are wide ranging, and they could be applied only in accordance with a number of variables that would apply uniquely to the business model of the company concerned, the products in question, the potential for technological development of those products, the company’s consumer profile and the public interest, to name just a few.

    But one problem with much of the above is that it seems difficult to understand how a company could use patents without at times litigating against those who infringe them, and Ghafele is well aware of this, admitting that what she was advocating sounded like the peaceful use of weapons—a contradiction. It was true that patents provided exclusivity in the market and a 20-year monopoly, but there were other ways of looking at things, especially if the field were opened up to the thinking of people from outside the usual IP establishment, even people with crazy ideas.

    Ghafele, an Austrian, made the point that she thought we needed to move away from the current disputative approach to patents and toward a collaborative approach. And she gave as an example of what she meant the case of Empress Maria Theresa of Austria, who, in the 18th century, instead of indulging in the sorts of wars beloved of most people obsessed with empire building, created strategic marriages for her children, thus ensuring the prosperity and expansion of Austria within a relatively peaceable Europe.

    At a fundamental level, Ghafele is concerned about the way businesses approach the whole process of patent management. To her way of thinking, business cases need to be aggressively thought out before new technologies and patents are devised and sought, whereas, too often, patents are created before it is figured out whether the underlying technology would ever be needed by the company. This could be done way better by, from day one, expending energy on examining the business proposition. How is this technology and how are these patents going to help us gain market share; how are they going to help us expand into new markets; how are they going to help us gain more friends …?

    You can see this idea coming through in her wider thinking about IP, a term she prefers to intellectual property rights because the former puts the business center-stage while the latter tends to put the spotlight on the law. Ghafele sees IP and patents not mainly as rights but as assets, as presenting an “amazing economic opportunity” because private property, including knowledge, could be handled in many different ways. It could be used in trade, she said; it could be taken to another country; it could be used to better communicate a company’s value and thereby to attract investors; it could be used to communicate a public health interest and how it is doing good; it could even be used as a donation. To use such assets only as rights and to litigate was to undervalue them massively.

    Although Ghafele is committed to considering new ways of looking at patents, she is not in the business of doubting whether patents should have a place within a free market. Concepts around private property were essentially down to political choices, she said, and it was her take that having in place private property rights was a way of structuring markets. She made the point that research had shown that, in the absence of private property rights, markets, in developing countries for instance, didn’t work. And she added that she tended to the opinion that, historically, positive economic growth rates had shown a direct relationship with the presence of property rights, something that held for IP rights. This was the area of Ghafele’s ideas that I found the least convincing, partly because I fail to see how research into the economic benefits of the patents system could produce valid outcomes, and I did manage to extract something of a concession here. “On the other hand, does an economy have to grow?” she mused out loud. “Would we all not be more happy and less stressed out without chasing growth rates all the time?”

    But this was a short interruption to her flow, and she went on to say that innovation drove growth, so it was important to examine the whole spectrum of how to innovate, which included the management of patents but went beyond patents into areas such as open access innovation, a subject too vast to look at here. But again, she doubled back by saying that while growth was important, it had to comprise equitable economic growth. And that was why public interest considerations had to be built into patents management. There was nothing inherently good or bad in patents. It was how people managed patents that counted. And, inevitably, there was a lot of debate currently about where the consumer stood in all of this.

    Finally, Ghafele said it should be remembered above all that IP was an asset, an economic opportunity, and it needed to be traded in a way that this economic opportunity could help people. Behind all the jargon, the message, to the tobacco industry at least, was very simple: If you have property rights over your technology, you should use them in a responsible way—to save lives.

    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.