Category: Print Edition

  • In the Shadow of War

    In the Shadow of War

    Image: Robert

    With normal supplies cut off due to the Hamas-Israel conflict, cigarettes are selling for $30 per stick in Gaza.

    TR Staff Report

    Israel’s market has seen an upswing in cigarette consumption as war-related stress and anxiety take a toll on the population, especially on soldiers and their families. In the meantime, on the other side of the barricades, traders are selling cigarettes at some of the world’s highest prices, according to observers.

    Import dynamics and tax receipts are two key indicators describing the state of play in the Israeli cigarette market.

    In 2022, tobacco companies paid NIS7.5 billion ($2 billion) to the national treasury, according to the Tax Authority. Import volume was consistent throughout most of 2023, until October, when it jumped by 21.5 percent, the official data indicated.

    A senior official in the customs brokerage industry, speaking to a local publication Finance Walla, suggested that the war could potentially contribute an additional NIS500 million to the national budget, thanks to the increased cigarette sales.

    Tobacco consumption in Israel has long been the subject of increased attention and strong concerns among government officials and anti-smoking organizations.

    According to a 2021 report by the Taub Center for Social Policy, nearly 20 percent of Israeli adults consume tobacco, which is higher than the Organisation for Economic Co-operation and Development average. A quarter of men and 15 percent of women smoke, with rates higher among Arabs than among Jews.

    The Israeli Health Ministry estimated that tobacco consumption in the country declined between 1998 and 2019. The Covid-19 pandemic triggered a slight increase in cigarette consumption, though the impact seems to be incomparable to that of the Gaza war.

    Hedva Elmackias, deputy director of finance and marketing operations at the Taub Center, told Tobacco Reporter that no up-to-date information was available to judge how the Gaza war impacted the tobacco market in Israel.

    However, the Gaza war has brought tobacco sales in the country to heights not seen for a long time. The link is obvious: People smoke more to combat stress and anxiety.

    “The situation is obviously incredibly distressing,” Yahel Silberberg Vulej, a spokesman for Philip Morris International, told Tobacco Reporter, declining to discuss what impact the war produced on the company’s business in the country. “Throughout this situation, our priority has been to look after our people, ensuring our colleagues and their families are safe,” he added only.

    Nevertheless, the impact of the war on Israeli tobacco sales is undeniable.

    “A great deal of money has entered our business since the beginning of the war, millions of additional shekels,” What Alon, the owner of a cigarettes and smoking products distributor, told Finance Walla.

    In physical terms, cigarette sales in Israel jumped to nearly 400 million packs against 352 million packs in the previous year, the official statistical data indicated. This is equal to 8 billion cigarettes.

    While the surge in tobacco industry taxes may seem beneficial in the short term, economists caution that the long-term implications of the current trend in the Israeli tobacco market demand urgent attention and action from the authorities and social organizations.

    The Abrahamson Network of addiction treatment centers allows every regular soldier to receive free smoking cessation treatments at any of its eight locations in Israel.

    “This is a volunteer program in which all 50 of the company’s employees, therapists, service and support staff, nutrition consultants and Abrahamson’s operations and logistics team participate,” said Ehud Abrahamson, the company chief.

    The World’s Most Expensive Cigarettes

    Meanwhile, in Gaza, cigarettes are selling for record prices.

    According to the Progressive Survey of Chronic Diseases conducted by the Palestinian Ministry of Health in 2022, the percentage of smokers in Palestine is the highest in the Middle East, reaching about 34 percent.

    The survey results indicate that 55.1 percent of males and 12.1 percent of females are smokers, and more than a third of smokers are young people aged between 18 and 29.

    While reliable data on the impact of the war on tobacco consumption in Palestine is scarce, local resident Ayad Thabet told Al Akhbar that the percentage of smokers has surged since the conflict began, painting a stark picture of the situation.

    This happened even though a single cigarette can sell for $30 in the Gaza market, as estimated by the local press.

    Currently, the Gaza tobacco market is primarily composed of poor-quality cigarettes of unknown origin smuggled from Egypt. Cigarettes of international brands can be rarely met here since the conflict started. The market is also highly speculative.

    A local cigarette seller told Al Akhbar: “A few days before Hamas agreed to the Egyptian truce proposal, the price of a cigarette was NIS30 [$8], and minutes after Hamas agreed, its price dropped to NIS20, and after Israel and Netanyahu in their stubbornness rejected the truce, its price jumped to NIS100.”

    Speaking about cigarette consumption, however, he argued that it went down dramatically due to a lack of supply and because people had no money to spare. He estimated that before the war, he used to sell 40 packs of cigarettes per day, but now he is lucky to sell two packs.

    Cigarettes have become like a new gold in Gaza, a U.N. official described the present market situation to The Wall Street Journal.

    Juliette Tourwa, director of communications for the United Nations Relief and Works Agency, told Tobacco Reporter that the organization doesn’t have reliable information about the state of the tobacco market in the Gaza Strip.

    Cigarettes are smuggled to the Gaza Strip primarily from Egypt, sometimes even in the humanitarian aid trucks. Some reports indicate that the flow of contraband cigarettes has somewhat narrowed since the Israeli army attacked Rafah in early May.

    Reselling cigarettes has become an extremely perilous profession in the Gaza Strip, as sellers are frequently targeted by desperate consumers.

    Khaled Omar, another local resident, told Al Akhbar that when it comes to the tobacco market, “Gaza is like another planet” as the price per pack of cigarettes of international brands can reach $600 per pack. He assumes there is no place in the world where the price would be that high.

    Omar also blames unscrupulous sellers for the market manipulation, assuming that they “are waging war against Palestinians, just like the Israel Army.”

    Revival of the Illegal Segment

    Not only did Gaza experience a jump in cigarette smuggling amid the ongoing war. The surge in tobacco sales in Israel, coupled with the general war-related turbulence, reportedly triggered a rise in cigarette smuggling to the country too.

    In 2023, the Israeli Customs Service seized 36 containers filled with contraband cigarettes against only 17 in the previous year. Law enforcement agencies also warned at the airports and Israel’s land borders with Jordan and Egypt that the smuggling of cigarettes has become particularly frequent. In addition, thousands of packs of illegal cigarettes are regularly being seized at the seaports.

    Smuggling cigarettes has become increasingly profitable among criminals in recent years due to the growing price differences between cigarettes in Israel, which are taxed at a high rate, and their prices in the neighboring countries, not only Jordan and Egypt but also European countries.

    In 2024, the tobacco market is braced for another tax hike. The sales tax on cigarettes will rise from 270 percent and a price of NIS444.03 per thousand cigarettes to NIS850.62 per thousand cigarettes, to 270 percent and NIS 524.50 per thousand cigarettes, up to not less than NIS930 per thousand cigarettes.

    The purchase tax on processed tobacco is also set to jump from 270 percent and NIS634.34 per kilogram to NIS1,215.18 per kilogram, to 270 percent and NIS749.29 per kilogram to NIS1,328.57 per kilogram.

    In addition, the sales tax will be increased on other tobacco products, including tobacco-heating devices that use tobacco units and tobacco-heating devices that use tobacco. A tax of NIS113.39 per kilogram will be imposed on packages of loose tobacco for cigarettes.

    At the end of 2023, cigarettes in Israel cost 80 percent to 100 percent more than in the neighboring Middle Eastern countries. The new tax increase should make the gap even wider.

    A senior official at the Tax Authority told a local news outlet, Ynet, that law enforcement agencies are now bracing for a surge in the number of smuggling attempts, citing the existing price situation as the reason.

  • Get Packing

    Get Packing

    Once the EU Packaging and Packaging Waste Regulations come into force, tobacco companies will have around 18 months to ensure all their packaging in the market is compliant. | Photos: Parkside

    Preparing for Europe’s new waste regulations

    By George Gay

    In July, Parkside issued a press note describing some of the ways in which flexible packaging might be used to help manufacturers in responding to the EU’s nascent Packaging and Packaging Waste Regulations (PPWR), ideas that Tobacco Reporter followed up on in a conversation with the company’s sales account manager of tobacco, Laura Haggerty.

    Parkside’s Recoflex range includes plastic and paper-based materials that are suitable for recycling.

    Tobacco Reporter: Would you please explain to those not entirely familiar with the world of packaging how you define the term “flexible packaging?”

    Laura Haggerty: Flexible packaging refers to any item of packaging that is made from a nonrigid material. In the tobacco industry, it’s most commonly seen in the form of loose-tobacco pouches, the shrink-wrap film that we use to protect cigarette cartons, and cigarette carton liners.

    However, flexible packaging can be made of almost any material, including plastic, bioplastic, paper and aluminum foil. Each material has its own pros and cons, which is why they are often combined in the form of laminates. A tobacco packaging will often contain several laminate materials to help keep its contents fresh by protecting against moisture and oxygen.

    Your press note says a preliminary deal on the PPWR was reached in April. Do you know when the regulations will be finalized?

    The provisional text of the deal has been finalized and will come into force at the end of 2024, but some key details will not be decided for several years.

    The EU will investigate the viability of bio-based materials in 2027 while the design for recycling guidelines will not be set until 2028. This means PPWR will not take its final form until the end of the decade at the earliest.

    When will the regulations be enforced?

    While PPWR comes into force at the end of this year, businesses have 18 months to ensure they comply with the new rules. That means, in practice, they will be enforced from mid-2026.

    What will be the main differences between the packaging regulations under PPWR and those under the Packaging and Packaging Waste Directive (PPWD) already in force?

    The main difference is that PPWR is a regulation whereas PPWD is a directive. In EU law, directives set a goal that is legally binding, but member states have a degree of freedom in how they reach that goal. Regulations are entirely legally binding, setting out policies that member states must follow in full, even if that means rewriting that country’s laws. This will also harmonize regulations across the EU, which should help with implementation.

    This is important as it will see extended producer responsibility (EPR) rollout across the EU. EPR is a policy approach that makes packaging producers responsible for the cost of packaging waste management. These costs are meant to encourage producers to design out unnecessary packaging while also incorporating recyclable materials where possible.

    PPWR also introduces new, more ambitious targets for waste reduction that each country must meet. These targets are to reduce packaging waste per capita by 5 percent by 2030, 10 percent by 2035 and 15 percent by 2040 compared to 2018 levels. It includes mandatory reuse and refill targets for certain packaging types, more restrictions on single-use plastics and PFAS [perfluorinated and polyfluorinated alkyl substances] chemicals, and new labeling requirements, among many other things.

    What are the main ways in which the new regulations will affect the tobacco/nicotine industry?

    The introduction of EPR will have a major effect. Tobacco companies operating in the EU will have to cover the costs of waste disposal, so they will find margins squeezed unless they can redesign packaging to be easier to recycle—or use less packaging altogether. When the design for recycling guidelines is finalized, this may become mandatory.

    This will affect the use of materials like shrink-film, which is currently problematic to recycle in existing infrastructure, so tobacco companies may have to look at other barrier materials to protect their products through the supply chain.

    Part of PPWR also includes new labeling requirements, which tobacco companies will have to incorporate alongside their existing strict labeling obligations.

    At this stage, can and should tobacco/nicotine product businesses start considering their options and even taking steps to change at least some of their packaging?

    Tobacco companies should absolutely look at ways they can change their packaging. Once PPWR comes into force, they will have around 18 months to ensure all their packaging in the EU market is compliant. This does not leave much time to evaluate, redesign and produce new packaging. Remember that as tobacco packaging is already highly regulated in the EU, any changes must also comply with existing legislation.

    Looking at the wider tobacco industry, including its new-generation nicotine products, which of its packaging materials will be affected by the likely changes brought in by the PPWR?

    Flexible packaging like pouches will likely be affected as they rely heavily on soft plastics, which are difficult to recycle. As mentioned, this will also affect the shrink-wraps and the inner liners commonly used in flip-top cartons and other rigid packaging, so it will likely have wide-reaching consequences for all tobacco packaging.

    Should the industry try to eliminate all “plastic materials” from its packaging, however that term is defined, or should it aim to eliminate only those plastics that do not break down in an environmentally friendly manner and become “forever” particles?

    Plastic is often painted as a villain, but the truth is much more nuanced than that. Unnecessary plastic use is a problem, but solving it needs a holistic, considered approach. Simply eliminating all plastics would have a disastrous effect on the environment in the form of increased product waste.

    Compostable materials are a possible solution and an area where we are a market leader. We produce accredited compostable pouches that can break down in domestic compost heaps and industrial organic recycling facilities. These materials are commonly used for pouches, but they also have applications as wraps for cigars and liners for cartons.

    Which of the Parkside packaging innovations mentioned in your press note would be appropriate for tobacco industry application?

    We work closely with our customers in the tobacco sector, so many of our solutions are ideal for tobacco packaging applications. Our Recoflex range includes plastic and paper-based materials that are suitable for recycling and can be tailored with high barrier coatings, metallization and more. We produce pack wraps, individual wraps for cigars, inner liners, resealable lock-and-peel pouches, and compostable pouches, all of which are suited to many applications within tobacco packaging.

    Will the arrival of the PPWR regulations provide an opportunity for the tobacco/nicotine industry to make radical changes to its packaging, or do tobacco/nicotine industry-specific regulations make such moves impossible or unlikely?

    The strict industry-specific regulations do pose some challenges when it comes to labeling. Packaging will need to contain labeling that describes its material composition and recyclability, so incorporating these new labels in a way that complies with existing restrictions may require some redesigning.

    Restrictions on pack shape, such as restrictions on slimline cartons, mean it is difficult to radically rethink many tobacco packaging formats. However, it may be possible to reduce the weight of packs using lighter weight materials combined with water-based barrier coatings to ensure performance.

    Presumably, there will be a cost associated with tobacco industry players changing their packaging. How can they minimize such costs while remaining compliant?

    We recommend working closely with a trusted packaging partner. At Parkside, we have worked closely with many tobacco companies for many years. That means we have developed the expertise needed to tailor packaging solutions to ensure they meet the needs of our customers in terms of both pack performance and compliance. This ensures packs can be designed and produced efficiently, which is always the best way to minimize costs.

    Progressive businesses are generally not opposed to reasonable regulations provided they are evenly applied and competition remains on a level playing field. Do you have any insights, based on your experience with the PPWD, of how strictly and how evenly the new regulations are likely to be applied?

    Part of the idea of PPWR is to harmonize regulations across the EU, so that would indicate the intention is to create a level playing field. However, it could still be subject to some variations as different member states have differing infrastructures. A country that already has robust recycling and waste management infrastructure in place will find it much easier to adapt.

    As a result, we anticipate PPWR will be applied more evenly than PPWD was—but there may still be some divergence in places.

    Finally, while the EU is hugely important to your business, does Parkside focus on other parts of the world?

    Certainly. We have invested heavily in our Malaysian site in recent years, meaning we now offer a comprehensive suite of services and solutions to tobacco companies across APAC [Asia-Pacific] countries as well as Europe. This gives us a greater level of agility and flexibility to operate on a global scale.

    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.
  • At the Crossroads, Again

    At the Crossroads, Again

    Photo: jorisvo

    There are still more unknowns than knowns about the shape of future European regulation for novel nicotine products.

    By Barnaby Page

    Europe’s relationship with novel nicotine products has always been a mixed one. On the one hand, the more extreme forms of hysteria about youth vaping or supposed health risks have been relatively absent from the European scene; the U.K. in particular has been regarded as perhaps the most pro-vaping major economy in the world. And regulation—in most countries, heavily shaped by the European Union’s Tobacco Products Directive (TPD)—is in some respects light-touch.

    Most notably, rather than following the U.S. model, which in theory requires marketing authorization by the Food and Drug Administration before products can be sold, the EU has eschewed the premarket approval approach and simply asks for products and businesses to be compliant with the TPD’s requirements.

    But if Europe (which for the rest of this article mostly means the EU and its member states) has been looser in its regulatory approach than the U.S. in some ways, many of the requirements that it does make are quite onerous: the 20 mg per milliliter limit on nicotine strength, for example. It is also well known that the TPD as originally conceived was going to be far more restrictive and was only scaled back after pressure.

    And there have been distinct signs lately of Europe becoming more cautious. Most flavors were banned EU-wide in heated-tobacco products; several countries have enacted, or will enact, disposable e-cigarette bans; the Netherlands, usually famed for its tolerance, is an example of a country that has started showing a lot of skepticism toward novel nicotine products; even in the U.K.—no longer an EU member—government support for tobacco harm reduction seems to be ebbing away a little, though it certainly hasn’t turned into outright opposition yet.

    Set against this background, there is concern that the next version of the TPD may make major changes to the EU’s regulatory framework for novel tobacco products, reflecting conservative positions.

    So far, nothing is known for sure about the actual content of the next TPD or about any updates to the lesser-known Tobacco Advertising Directive and Tobacco Excise Directive—though a European Commission spokesperson did confirm to Tamarind Intelligence, late last year, that vaping would be a focus of the TPD. The commission’s job with the TPD is essentially to formulate the legislation, which representatives from all the EU member states, in the European Parliament and the Council of the European Union, then vote on.

    However, looking at what is already happening across Europe gives some indicators of what’s possible—action against disposable vapes in France and Belgium, for example, or against flavored products in Finland and Hungary. Though it’s true that EU policy certainly does not derive directly from localized policy in member states, there are trends visible that are bound to be reflected in Brussels. It’s also worth noting that the much-anticipated swing to the populist right in the most recent European elections failed to fully materialize, which may well mean that the EU will continue to favor tight, precise regulation and not care too much whether it is seen as “business-friendly.”

    First, disposable bans: There have been debates or even legislation in most major European countries over banning disposables, partly because of youth usage but also because of environmental impacts. Even if not all of these come to pass, the fact that an outright prohibition on disposable vapes is so widely seen as a reasonable, proportionate regulatory response—not an unrealistic or extremist one—must make an EU-wide ban a possibility.

    Second, flavors: There is a precedent for some kind of vape flavor ban in the existing EU ban on flavors in heated tobacco, and a number of EU health ministers have given such a measure their support. This would be a greater blow to the industry than a disposables ban, though a crucial question would be exactly what is outlawed and what is permitted.

    The most draconian position would be a reduction of the market to tobacco and perhaps menthol/mint flavors. There could, however, be a middle ground with some other flavors allowed that still removed the more outre and (supposedly) youth-tempting ones from the market; there have also been suggestions that a ban on extreme flavor descriptions, rather than the actual flavors, could achieve the same end. So there are quite a lot of options on the table when it comes to regulation of flavors, and this is perhaps the area to watch most closely.

    Other major areas likely to come under consideration include taxation, and an extension of the existing EU ban on snus (from which only Sweden is exempt) to tobacco-free nicotine pouches.

    An equally big question, however, is when any of this will happen. The process of revising the TPD has been underway for more than two years now, suffering several delays and changes in its schedule.

    For example, the European Commission’s Directorate-General for Health and Food Safety (DG Sante) had originally promised to finalize its evaluation report on tobacco policy last year, but when the commission published its work program for 2024, it made no mention of revising tobacco policy. Therefore, it seems unlikely that there will be major announcements on the TPD or other Europe-wide tobacco regulation in 2024.

    When it eventually does happen, it will be the culmination of a process that started more than two years ago, when the commission launched a call for evidence, which ran from May 2022 to June 2022. This was then followed by a public consultation from February 2023 to May 2023. Eventually, the results of these consultations should be taken into account by the commission when it drafts a directive to be discussed by the Parliament, but so far … nothing.

    So it’s been a long period of near silence even though many expected action—and debate—much sooner. The delays may be partly down to divergence in member states’ positions on tobacco control—it’s going to be hard to come up with Europe-wide policies that at least partially satisfy enough member states and enough competing principles.

    Although the European Commission will be the one to propose the new policies, it is the legislators in the Parliament (and the Council of the European Union, the other “house” of the European legislature) who ultimately vote for or against it. So, while the commission may well be likely to maintain a conservative or even quasi-prohibitionist stance, it’s very possible that Members of Parliament (MEPs) may disagree. Some MEPs who spoke with ECigIntelligence said that they were prepared to fight conservative approaches to novel nicotine products that may be counterproductive for harm reduction, and the influx of new MEPs after this year’s election adds a further level of uncertainty.

    Moreover, positions on novel nicotine products cannot easily be predicted from political affiliation. Generally, the more right-wing a party is, the more easygoing toward novel nicotine products it tends to be (and this would in theory make the broadly rightward trend in politics a positive one for harm reduction’s proponents), but this is far from consistent and there are many exceptions (as indeed there are to that rightward trend).

    For example, arguments prioritizing consumer education and freedom of choice over strict policies, historically usually attributed to right-wing parties, are often also shared by left-wing parties. The national origin of a politician may be just as significant as their nominal position on the left-right spectrum—a left-winger from a country with very strict regulation of tobacco products is often likely, we find, to be more sympathetic to that kind of legal regime than a left-winger from a country with a much lighter touch.

    So there are plenty of unknowns, and of course the unusual position of the U.K.—the biggest market for novel nicotine products in Europe—is another one. When the last TPD appeared, the U.K. was still a member of the EU, and so it adopted the TPD’s measures into its own domestic legislation (as all EU member states must do with European directives). But it has since left the union, via Brexit. The current British government certainly seems to have a hardline attitude on disposables, but there are also indications that it remains supportive of harm reduction, so how aligned the U.K. will remain with the rest of the EU in the future is very much an open question. One distinct possibility is that even if Britain starts to tighten regulation on some aspects of novel nicotine products, it remains more liberal than an EU that gets even tougher.

    Barnaby Page has been covering the tobacco harm reduction business as a journalist for more than 10 years as editorial director at Tamarind Intelligence, a pioneering data intelligence and strategic insight provider offering global market and regulatory data analysis for businesses operating in fast-growing industries. Tamarind currently covers the vapor sector with ECigIntelligence, other tobacco and nicotine alternatives with TobaccoIntelligence, and cannabis with CannIntelligence. This article also incorporates research from other Tamarind staffers.
  • All-Rounder

    All-Rounder

    Due to its versatility, homogenized tobacco remains key to tobacco companies’ operations.

    By Stefanie Rossel

    For reconstituted tobacco leaf (RTL), the only way seems to be up. Valuates Reports estimated the global RTL market at $305.47 billion in 2023 and expects it to reach $370.85 billion by 2030, which corresponds to a compound annual growth rate (CAGR) of 2.7 percent between 2024 and 2030.

    Also known as homogenized tobacco or recon, RTL was developed by Schweitzer-Mauduit International (SWM) in the 1930s. Initially, RTL was designed to reduce waste. By recovering “leftovers” such as tobacco dust, scraps and stems, and reintegrating them into the production process, manufacturers can save valuable raw materials.

    Today, homogenized tobacco has a wide variety of applications. Apart from its use as a material to reduce tobacco product filling cost, it is an essential ingredient in cigarette blend design, offering cigarette manufacturers a convenient tool to lower the nicotine content of their products. The advent of heated-tobacco products (HTPs) has created new opportunities for the product. RTL allows tobacco companies to develop blends that deliver the desired taste and nicotine when heated to a comparatively low temperature.

    According to SWM, the recon market is driven by several trends. For starters, the cigarette market is expected to exhibit a CAGR of minus 3.5 percent between 2023 and 2028. The trend, the company points out, is obviously not the same in every country, with the U.S. and Japan leading the decline and Africa and the Middle East enjoying slight growth. At the same time, the HTP market is projected to witness a 15 percent CAGR between 2023 and 2028. SWM anticipates global sales of HTP consumables to reach over 300 billion sticks by 2027.

    The traditional cigarette market and the HTP market are influenced by the same factors. Cigarette or stick designs have an impact due to their recon inclusion rate per stick while there is also customer capacity to self-source the recon, as for example Philip Morris International does. In addition, the availability and price of leaf tobacco can also drive interest in RTL. SWM stresses that the drivers are not the same for recon used in conventional cigarettes and recon used in HTPs.

    A Product With Many Benefits

    Tapuwa Pswarayi

    In traditional RTL, SWM works closely with its customers to develop materials for innovative applications, says SWM’s product manager, Tapuwa Pswarayi. “In addition, our ancillary services allow us to perform in-depth analysis of materials to ensure that recipes meet all regulatory specifications. We firmly contribute toward reconstituted tobacco having been a key part of the tobacco blender’s toolkit for decades. In recent years, more major tobacco players have been innovating with SWM recon solutions in an increasing number of applications—from cigarette blends [to] roll-your-own to shisha. The many benefits of recon span across operational efficiency, regulatory compliance and cost stability.”

    With increasing volatility in tobacco markets globally, the relative price stability of recon presents a great opportunity to mitigate the impact of fluctuating costs. “The past growing season was challenging for many tobacco farmers, resulting in reduced quantities produced and sharp price increases in the majority of the tobacco-producing world,” he says. “Reconstituted tobacco is therefore a valuable tool for creative blenders—performing complementary roles in blend segments while offering a more competitive price.”

    The functional advantages of recon produced with SWM’s papermaking process are also an important factor, according to Pswarayi. “It’s made from tobacco by-products, such as stems, scraps, fines and dust, which are mixed with water before undergoing a two-step papermaking process to produce a uniform sheet, known as a ‘web.’ The web closely mimics the aesthetic and physical properties of tobacco leaf. This means it can be processed in the same way as tobacco leaf—whether it’s intended for cigarettes, cut rag or roll-your-own—with several additional benefits for the manufacturer.”

    Moreover, the product fits in well with current efforts to make production processes more sustainable. RTL allows for waste reduction through optimized utilization. “While the standard process typically generates waste during leaf-processing to packing and manufacturing, recon degrades less during production,” Pswarayi says. “This allows manufacturers to retain more material in the finished product, resulting in greater efficiency and reduced costs.”

    Almost any combination of tobacco by-products can be used to create high-quality recon, he says. SWM uses two main supply models—buying recon from its established portfolio of taste and performance characteristics, and developing unique recon blends. “To achieve this, we take the raw materials supplied by the customer and convert them into recon at our state-of-the-art facilities, with the customer owning exclusive rights to use the recipe that you create.”

    Beyond Tobacco

    Bruno Stefani

    SWM started to work on reduced-risk products in 2014. In 2017, it set up a dedicated reduced-risk products (RRPs) team, which today employs about 50 people, 20 of whom work in dedicated laboratories. “Our heat-not-burn recon solutions are designed to be easily used in existing cigarette-manufacturing assets,” explains Bruno Stefani, SWM’s HTP product manager of RRPs. “This allows our customers to go fast.

    “In that spirit, one of our pillars is to identify and select interesting tobacco grades for HTP application within tobacco material portfolio already sourced by customers for their cigarette production, which simplifies and secures the tobacco material sourcing. Every HTP is an inseparable combination of an aerosol-generating material—i.e., our recon, a consumable and a heating device. To create a unique consumer experience, we master the understanding of these three elements and their interactions.”

    The fact that SWM also manufactures cigarette paper allows the company to supply HTP wrapping papers and paper-filtering media to help customers reduce the plastic content of their products, according to Stefani. “We also invest a lot in securing freedom to operate to facilitate the access of this HTP market. Our role is also to identify potential reliable partners which can contribute to the final solution, covering all aspects of customers’ need and expectation.”

    SWM also benefits from its long-time experience in botanical fiber production. Botanical reconstituted with or without nicotine is another driver for growth in the HTP sector, says Stefani. “There is a strong interest for such tobacco-free products,” he says. “The big tobacco companies have really started to be active in this market since last year with the launch of Veo by BAT and then Levia by PMI and iSenzia by Imperial Brands. As we can process very different kinds of material shapes, leaves, nuts, roots, fruits, flowers and so on, reconstitution offers a very interesting solution to get an industrial product made with natural ingredients with well-mastered specifications and which is designed to smoothly run in an existing customer’s primary department. We also tightly master the addition of nicotine or other active ingredients to be added to the botanical on customers’ request.”

    Stefani says that SWM continuously scouts the market for new trends and needs, as well as the manufacturing technology offer, in order to be ready to develop and supply new materials and comply with its customers’ new developments. Judging from recent innovations in the HTP sphere, there’s certainly more to come.

    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.
  • Warm Reception?

    Warm Reception?

    Photo: Ina

    How heated tobacco might change the US

    By Cheryl K. Olson

    A new kind of nicotine alternative is sidling back onto the U.S. market. Modern heated-tobacco products (HTPs) were gone before most Americans knew they even existed. After a limited test, a patent dispute took them off U.S. shelves in 2021.

    The gradual return of HTPs has just begun, with a single brand. Within a few years, Americans will likely have access to multiple options now sold in other nations. 

    Conversations with a close family friend, a former pack-a-day smoker, piqued my interest in the potential of heated tobacco. While working for the European Union from Spain, he had sought out and rejected cigarette alternatives, from vapes to nicotine gum. For him, heated tobacco was a “radically different” revelation.

    “It soothed my needs. It felt right and reassuring,” he told me. “From the moment I bought my IQOS, in 2017, I never smoked a cigarette again.”

    Here’s a quick introduction to heated tobacco and its potential to attract and benefit Americans who smoke.

    What HTPs Are and Aren’t

    I asked Corey Henry, director of U.S. communications at Philip Morris International, to help me understand this product category. Basically, an HTP involves electronically heating a stick or capsule of tobacco to beneath the point of combustion, so it releases an aerosol but doesn’t burn. The design of the heating element varies.

    The primary difference between an HTP and an e-cigarette? “A heated-tobacco product has to have some tobacco presence, whether it’s a leaf or paste,” says Henry.

    HTP ancestors included Premier and Eclipse from R.J. Reynolds. These products were not electronic. The heat came from lighting a carbon tip (which glowed like a piece of charcoal on a barbecue); it was distributed through a rod. This approach did reduce some toxicants. PMI introduced the first electronic HTPs, including Accord in the U.S. and Heatbar in Germany.

    According to the Financial Times, HTPs have enjoyed steady worldwide growth, exceeding that of vaping. The global HTP retail market value is estimated to reach $38.9 billion this year. The largest markets thus far include Japan, Italy and South Korea. In addition to IQOS, major brands include BAT’s Glo and Japan Tobacco’s Ploom. 

    American Evolution

    The U.S. Food and Drug Administration first authorized the marketing of an IQOS “heat-not-burn” system in 2019. This included a holder and charger device plus several types of heated-tobacco units, called Heatsticks. That year, IQOS was gradually introduced in several Southeastern U.S. test markets by Philip Morris USA/Altria. Due to a dispute with R.J. Reynolds over technology patent infringement, IQOS left the U.S. market after just two years.

    In early 2024, PMI took over from Altria the exclusive U.S. commercialization rights to the IQOS tobacco-heating system. After some delay, the IQOS3 model (authorized by the FDA in 2021) will test-launch in Austin, Texas, this fall. Henry noted that internationally, IQOS launches usually start in one or two cities. “You can make assumptions going in, but then you’ve got to test those assumptions and adjust, adapt.”

    The national rollout of IQOS awaits the FDA’s OK of the latest evolution of IQOS, called Iluma. Applications were submitted to the FDA in October 2023; marketing authorization is anticipated in the second half of 2025. Iluma features various upgrades, including a slightly different heating technology and distinctive tobacco sticks. IQOS Iluma is available internationally in over two dozen markets.

    “There’s a great level of interest to see how IQOS does in the U.S., so they want to see it launch and expand rapidly,” says Henry. “What we say is patience. There’s 28 million smokers, there’s 50 states—it’s basically like the European Union.”

    U.S. HTP competitors are on the horizon. For example, a BAT submission for Glo has been under FDA review since 2021, along with a modified-risk tobacco product application submitted in 2023. Altria has partnered with JT Group to submit a PMTA to the FDA with the goal of bringing Ploom to the U.S. 

    The FDA’s list of authorized e-cigarettes includes a Logic Vapeleaf product that vaporizes capsules that contain tobacco. This is technically a heated-tobacco product. The product appears to be no longer marketed.

    Attractions and Risks

    One reason for a slow U.S. rollout is the low level of familiarity with heated tobacco. People need to get clear on the basics: It generates an aerosol; it doesn’t burn tobacco.

    “There’s always an initial period of awareness and education that you have to do with adults who smoke, to help them understand what it is and what it isn’t,” says Henry. “When people hear the concept, the reaction is, ‘So … it’s like vaping?’”

    We don’t even know how much awareness or confusion may exist. A large government survey fielded in May 2019 asked whether adults had heard of or tried heated-tobacco products (or heat-not-burn). Overall, 8.6 percent said they had heard of heated tobacco, and one-half of 1 percent had tried it. Here’s the catch: The brands mentioned in the survey questions were IQOS, Glo and Eclipse. Respondents who claimed knowledge of heated tobacco were likely thinking of the outdated Eclipse.

    Responses to the 2023 National Youth Tobacco Survey are another example. One percent of respondents (representing 370,000 teens) claimed to have used an HTP. Given that the category was not sold anywhere in the U.S. at the time, this is impossible; it can only be a misunderstanding. The next few youth surveys in the U.S. will require cautious interpretation of this topic.

    What makes us think people who smoke will switch to HTPs? Randomized controlled studies have shown that vaping works to help people stop smoking, even those without plans to quit. For HTPs, we’re not there yet. That kind of evidence would raise the comfort level of health professionals and public health advocates. An Italian trial found good results for HTPs, comparable to e-cigarettes, for smoking cessation.

    Japan makes a good test of HTPs’ potential; sales of e-cigarettes are restricted, and oral products are culturally unappealing. Reduced-risk products are reportedly close to 40 percent of total tobacco industry volume in Japan, with cigarette sales nearly halved since 2015. The latest estimates suggest nearly 12 percent of adults use HTPs. It’s less clear yet how many switch completely from cigarettes to HTPs.

    According to Henry, PMI’s research finds that internationally, about 72 percent of smokers who switch to IQOS do so fully. He anticipates similar results in the U.S.

    Do people have lower exposure to some toxicants and carcinogens when they use HTPs instead of cigarettes? A Cochrane review of randomized controlled trials found moderate-certainty evidence for that. Also, the FDA authorized IQOS 2.4 and 3.0 versions to be marketed with reduced-exposure messaging. Specifically, “Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.”

    ‘Easier to Navigate’

    HTPs are designed to mimic the physical sensations of smoking. “We think that bridge is a little easier to navigate with heated tobacco because there’s a level of familiarity,” says Henry. For example, “Your experience with an IQOS heat stick is six minutes or 14 puffs, about the same time that a smoker will smoke a cigarette.”

    Due to this familiarity, my friend in Spain found switching to heated tobacco a quick and smooth adjustment. “With a coffee, when talking with someone, the routine in which I use IQOS is identical to my routine when I smoked,” he said. He learned to keep an extra charger at his office and in his car.

    “The charger you hold in your hand has a very nice feel,” he said. “It’s light, it fits anywhere. So I didn’t miss having a cigarette in my hand,” he said. He also praised the absence of stale smoke smell in his home, car and clothing.

    What else might attract Americans to heated tobacco? One U.K. survey of nicotine users found that common reasons for trying HTPs included curiosity; lack of smell, smoke and ashes; greater social acceptability; wanting to cut down or quit cigarette use; and enjoying the flavors or taste.

    A Harm Reduction Journal study of the U.S. IQOS experience found that people who switched to the initial version were somewhat more educated and higher-income than the average smoking adult. That’s not unusual for early adopters of a new technology. It will be interesting to see how use patterns evolve as people get familiar with the device and see others switch to it. 

    A Role to Play

    Some health advocacy groups have criticized PMI’s claims, suggesting that benefits of IQOS had been overstated. I’ve often wondered how my public health colleagues would view vaping if it had been framed differently at the start. Vaping burst into wide awareness as the subject of a youth-use moral panic. That first impression is hard to overcome. I applaud a careful, gradual, unflashy U.S. reintroduction for HTPs.

    As one industry observer pointed out to me, the few e-cigarettes now authorized for sale by the FDA represent older technologies. New HTP technologies entering the market may benefit from that contrast. Another unknown affecting the fate of HTPs is whether sticks will be taxed like cigarettes or at a lower rate that encourages switching.  

    Now that nondeadly alternatives to smoking exist, it’s critical to speed up switching for those who can’t or don’t want to quit. More options are most welcome. 

    “There really isn’t a silver-bullet solution for smoke-free product alternatives,” says Henry. “It’s important that we distinguish heated tobacco from e-vapor, but in a way that isn’t disparaging. They each have a role to play.”

    Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Advisors. She spent 15 years on the faculty of Harvard Medical School.
  • Unfinished Business

    Unfinished Business

    Photos courtesy of FOREST

    Despite changing attitudes, FOREST still has an important role to play, says Director Simon Clark.

    By George Gay

    Simon Clark readily admits that some people, even some people operating within the tobacco/nicotine industry, see the Freedom Organisation for the Right to Enjoy Smoking Tobacco (FOREST), of which he is the director, as something of a dinosaur. Indeed, he feels it is part of his job to counter this idea by letting it be known that FOREST is fighting for timeless principles—those of freedom of choice and personal responsibility.

    Not only are these principles timeless, in fact; they are universal in the sense that they apply to all consumer products, not only tobacco in its smoked form, as the name of the organization suggests. For the past 45 years, while not promoting the consumption or use of any product, FOREST has defended the rights of adult consumers, properly informed, to enjoy, without being harassed by excessive regulation, any product that may be sold legally in the U.K.

    But what is of course most impressive is that FOREST, almost uniquely, has been willing to stand up publicly for the rights of cigarette smokers, who, though still amounting to more than 6 million people, have been treated like outcasts by much of polite society—like people of the wrong class, people considered to be without agency, without the mental capacity to make the “right” choices for themselves.

    And, regrettably, it is not only the public health community that has tried to “denormalize” cigarette smokers in this way. In recent years, so too have large swathes of the tobacco/nicotine industry—those who would sell cigarette smokers alternative lower-risk nicotine products, some of them while still selling cigarettes. Many of these companies and organizations have acquiesced in the face of claims that smoking is a “problem” that must be solved rather than a legal activity that provides enjoyment, in various ways, to those who indulge in it.

    The Slippery Slope

    Clark, a nonsmoker, should not be seen as a dinosaur, however, because he and FOREST have long supported the idea of offering cigarette smokers alternative lower-risk products, but the emphasis is on “offering.” He views with dismay verging on disdain the way that some in the tobacco/nicotine industry are willing to throw cigarette smokers under the bus by supporting government efforts to eradicate cigarette smoking and, indeed, tobacco consumption in all forms. And he has a point. Shortly after I met up with Clark in London in July, an email dropped into my inbox with news from the U.K. Vaping Industry Association, toward the end of which was this sentence: “Furthermore, the vaping industry is all about [my emphasis] achieving a smoke-free Britain, and we look forward to working with the new government’s initiatives that support this, as long as it doesn’t damage the vast potential of vaping as our best hope for getting there.’”

    Hmm, you really must be careful what you wish for, and Clark has a salutary message for tobacco/nicotine companies and organizations that align closely with public health, including Philip Morris International, which, while selling combustible cigarettes, are calling for their eradication. He is convinced that once those public health organizations that are now trying to eradicate tobacco smoking do so to their satisfaction, they will go after nicotine consumption using the successful playbook they have honed in respect of cigarette smoking. And, in part, those offering the main forms of alternative products are laying the groundwork for their own demise. By trying to promote their products as therapeutic devices whose only purpose is to provide a way for smokers to quit combustible cigarettes, they are setting a time limit on these products’ useful lifespans. And by supporting the government’s efforts to meet its 2030 target (in England—other nations within the U.K. have their own targets) of ending tobacco smoking, they are further limiting those lifespans.

    Perhaps it might be as well if those attempting to wipe out cigarette smoking revisit their dinosaur imagery. When the dinosaurs were wiped out in the great extinction event of more than 60 million years ago, about three-quarters of all animal species went with them—for the same reasons. Surely, the time has come when it is necessary for those promoting vaping and other tobacco-smoking alternatives to say that they are so confident about the safety of their products that they see no reason why nonsmokers should not consume them.

    Looking Ahead

    I met up with Clark because I was interested to know if, in this, FOREST’s 45th anniversary year, he believed that the organization would be around to celebrate 50 years. “I’m more hopeful now than I was a few years ago that we will get to our 50th,” he said. “I wouldn’t keep FOREST going just for the sheer hell of it. I genuinely think we still have a part to play in the political process.”

    But he is cautious, saying he takes one year at a time, partly because he doesn’t take FOREST’s funding for granted. Philip Morris, never a major source of funding, made its last donation to FOREST in 1997, two years before Clark became FOREST’s director, while BAT, the first company to support the organization, pulled its funding three years or four years ago. That leaves Imperial and Japan Tobacco, the two major tobacco companies on the U.K market.

    Perhaps the split with BAT was inevitable. While Clark says he understands the political and business reasons behind the shift in focus toward lower-risk products, I think the company’s latest claim to be creating a better tomorrow by building a smokeless world would be a little paternalistic and get stuck in the craw of this lifelong libertarian. The trouble here is that by claiming to be able to create a better tomorrow, BAT seems to be saying that everybody must sign up to the same idea of what constitutes a better tomorrow, riding roughshod over Clark and FOREST’s cherished principle of freedom of choice.

    This is not to say that Clark is trying to bite the hand that feeds FOREST or that used to feed it. This is part of what he had to say at a gala dinner marking FOREST’s 40th anniversary, sentiments that he stands by today. “Finally, I’d like to thank the tobacco companies who have supported FOREST for 40 years. We don’t take the companies’ support for granted, and we know that society’s relationship with smoking has changed and will continue to change, and we also know that the companies are changing and moving toward safer nicotine products, as indeed they should.

    “FOREST’s focus is also evolving to embrace and support risk reduction products, but as long as there are adults who choose to smoke, enjoy smoking and don’t want to quit, we will never abandon them because it’s our belief that choice and personal responsibility are paramount.”

    Work Remains

    FOREST is not making a big thing of its 45th anniversary because it believes there is so much going on regarding tobacco smoking regulations that a celebration would have been self-indulgent. Even at its annual lunch, held at the Boisdale restaurant in London in May, which would have provided a suitable vehicle for a celebration, Clark demurred, instead using the occasion to carry forward its campaign to Beat the Ban—the generational ban on selling tobacco products, which, at that time, was making its way through parliament with cross-party support.

    As it turned out, an election was called, and the tobacco and vapes bill that included the ban was abandoned. But that, of course, is not the end of the matter. The new government has committed to resurrecting the bill, though what form it will take is not clear.

    And there is more to come. All tobacco issues in England are likely to be geared around 2030, when smoking is due to have been eradicated from the country—or, rather, in line with the strange way of such matters, is due to be reduced to about 5 percent from the current 13 percent. Clark expects that efforts will be made to reduce the number of outlets allowed to sell cigarettes, and he predicts that pressure will be applied to ban smoking in more outdoor areas, including beaches, which is ironic given that for many people, beaches have become no-go areas due to the illegal but wholesale dumping of untreated sewage into our seas and waterways. He also believes that the generational tobacco sales ban will collapse under the weight of its own absurdities but rather than be abandoned will form the basis for public health, having itself upset the generational balance and harmony, to call for the generational playing field to be leveled up by banning the sale of cigarettes to everybody. Politically, this sort of strategy is called “Building on failure.”

    Education Instead of Coercion

    To be clear, though, Clark has no problem with falling smoking rates; as he says, societies change, but he is concerned that the apparently arbitrary 2030 target date is going to be the springboard for more draconian regulations as the government sees that it has no chance of meeting it. He believes the government’s role should extend no further than educating people about the dangers of certain activities, including smoking, though he emphasizes that education should not include propaganda and fearmongering. Once governments start to exaggerate health risks, they lose their audience, he says. And he has no truck with the use of punitive rates of taxation, which amount to attempts at social engineering and in part lead to the government’s losing control of the market to illicit operators at the expense of the retail sector.

    One of Clark’s big concerns is that governments are, in this way, increasingly interfering in all manner of people’s lifestyle choices by attacking those choices rather than their likely causes. Noting that smokers are more prevalent in deprived areas, governments have chosen to double down on anti-tobacco activities in those areas rather than taking the more difficult route of attacking the cause of the deprivation.

    While such things make him angry, so that at times he can come across as quite cross, he also tends to see the funny side of things. With a twinkle in his eye, he told me it was interesting how many senior politicians whose periods in power were going pear-shaped would choose an easy target, such as smoking, to bolster their flagging legacies. Theresa May, as prime minister, had hit on the 2030 target date, seemingly without much evidence to support the relevance of that year, and Rishi Sunak, as prime minister, had lifted the generational tobacco sales ban from an opposition idea.

    Finally, it would be amiss not to mention the word enjoyment, which is very much part of the FOREST name and credo but can get overlooked because the organization is continually fighting fires. Clark said that one of the things he was most proud of during his time as director of FOREST was his commissioning eight years ago of a study by the Centre for Substance Use Research in Glasgow, Scotland, into the attitudes of about 600 confirmed smokers: people who smoked and didn’t want to quit. “The pleasure of smoking: The views of confirmed smokers” found that more than 90 percent of respondents smoked because they enjoyed it and derived pleasure from smoking. Just over half said they were probably addicted to smoking but didn’t care because the pleasure outweighed the addiction.

    The results of the study did not receive a great deal of media attention, probably because it goes against the received idea that smoking is a disgusting habit that most smokers wish they had never started and would not start given their time again. But one of the things that I take away from the study is Clark’s courage in commissioning it in the face of such received ideas. And partly because of his courage in standing up for what many think is a lost cause, smokers can be thankful that this “dinosaur” hopes he will be in charge as FOREST approaches its 50th anniversary. “I still enjoy my job,” he said. “I still think I have something to offer. I still get a kick out of it. And I still think we have a role to play.”

    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.
  • And the Winners are …

    And the Winners are …

    Announcing the 2024 recipients of the Golden Leaf Awards

    TR Staff Report

    Tobacco Reporter presented its 2024 Golden Leaf Awards Sept. 25 during a festive ceremony at the Agora Riviera Restaurant in Kavouri, near the site of this year’s Global Tobacco and Nicotine Forum in Athens. Sponsored exclusively by paper and packaging solution provider BMJ of Indonesia, the Golden Leaf Awards recognize excellence in the nicotine sector in the midst of our industry’s unprecedented transition.  

    Photos: Timothy Donahue

    ARAC received a Golden Leaf Award for its outstanding service to the industry. Renowned for its expertise in social and behavioral sciences, the company specializes in data-driven research and analysis, providing customized solutions to manufacturers, public health advocates, regulatory agencies and industry consultants globally.

    ARAC’s comprehensive services include surveys, interviews, focus groups, label development, usability studies and clinical behavioral studies, all aimed at advancing tobacco harm reduction.

    The company has transformed from a consultancy to a fully staffed contract research firm. The expanded team brings unmatched expertise to every project, ensuring comprehensive and impactful results. ARAC’s internal team of psychologists, statisticians, behavioral scientists and business development specialists boast over a half-century of industry expertise.

    The in-house survey methodologist and medical monitoring team enhances its standardization and facility training with on-site clinical assessments and proper sample distribution.

    ARAC assists clients worldwide in product development and consumer research supporting innovation and next-generation products, with a focused expertise on the regulatory sciences for U.S. applications, including premarket tobacco product applications, modified-risk tobacco product applications and substantial equivalence procedures.

    Greentank was recognized for its Quantum Vape, a state-of-the-art heating chip that replaces traditional cotton wick and ceramic heating elements. The technology outperforms other leading atomization products on key safety metrics, including harmful and potentially harmful constituents (HPHCs) and metals. It also delivers superior flavor and a consistent consumer experience.

    The Quantum Vape represents a breakthrough in inhalation science with the potential to catapult the industry beyond the current generation of atomization technology. Whereas most developments in recent years have amounted to tweaks of substrates and print materials, Greentank’s is the first in years to explore an entirely new foundation.

    Among other benefits, the heating chip eliminates the risk of thermal cycling, therefore ensuring unprecedented levels of flavor consistency. Innovative assembly technologies ensure the heating chip emits no ceramic particle emissions and contains the lowest levels of HPHCs. While it’s not possible to claim complete absence, third-party testing and rigorous chemical analysis have found HPHCs to be at undetectable levels.

    With its Quantum Vape, Greentank aims to lead the market toward a safer and better future.

    Koerber took home the BMJ Most Committed to Quality Golden Leaf Award for its unwavering support of the nicotine business for nearly 80 years. Since its creation, the Hamburg-based company has consistently pushed the envelope with groundbreaking technologies, enabling the nicotine industry to produce ever more efficiently without compromising quality.

    Koerber’s filter machines continue to set the global standard while its legendary Protos cigarette-making machines lead the market worldwide. Over the years, the company has added, organically and through acquisitions, many competences, including in physical measuring, foreign matter detection and smoke analysis, along with primary machinery, recon equipment and flavors.

    As the nicotine business moves to its next chapter, Koerber is again at the forefront, developing equipment for the manufacture of cigarette alternatives such as tobacco-heating products.

    In creating the technology to manufacture tomorrow’s products, the company leverages not only the expertise developed in the traditional tobacco business but also the pioneering mindset that has kept it at the cutting edge of nicotine technology for more than three quarters of a century.

    Photo: Taco Tuinstra

    The Kutsaga Tobacco Research Board was recognized for its efforts to promote sustainable growth. Eager to capture more value from its tobacco business, Zimbabwe aims to build a $5 billion industry by 2025 by expanding cultivation and moving up the value chain. With seed sales of more than 1 million grams as of Aug. 1, according to The Herald, the nation is poised to set new production records in the upcoming growing season.

    To promote farmer viability and minimize the environmental impact of growth, Zimbabwe aims to increase production without laying claim to significantly more farmland. Kutsaga has contributed to those goals by developing seed varieties that are not only more productive but also more resilient, helping farmers cope with challenges such as pests and climate change.

    In addition, the research board has been helping growers become more productive by reducing post-harvest losses. Zimbabwean tobacco production is dominated by smallholders who use wood as a fuel for tobacco growing. To address deforestation, Kutsaga has been developing sustainable wood sources and more efficient curing methods.

    SindiTabaco received a Golden Leaf Award for its role in coordinating relief efforts after Brazil’s Rio Grande do Sul state in May suffered the worst floods in living memory. In all, the deluge impacted 1,929 rural properties in 75 municipalities. Candelaria was worst impacted, with 214 tobacco farmers suffering losses.

    As one of the world’s leading tobacco-growing areas, Rio Grande do Sul plays a key role in global leaf supply. To help flood victims, SindiTabaco and its member companies donated basic food items, cleaning supplies, hygiene kits and furniture. They also provided personal loans for reconstruction and offered mental support from psychologists. In addition, tobacco companies and associations made available power generators and water tanks as well as boats and vehicles to rescue stranded people and animals.

    The efforts helped many tobacco farmers and their dependents recover from disaster. According to a survey, 96 percent of the affected farmers intend to continue producing tobacco. SindiTabaco expects tobacco production from the impacted area to remain close to the projections estimated for the 2024–2025 growing season.

  • Lifting the Veil

    Lifting the Veil

    A peek at the future of vaping technologies

    By Stefanie Rossel

    David Newns

    As sales of combustible cigarettes continue their downward spiral, reduced-risk products (RRPs) keep gaining ground. Euromonitor International estimated the retail value of the worldwide RRP market at $19.34 billion in 2023 and expects further growth.

    Plxsur, the world’s largest group of independent vaping companies, reckons that the 12 markets it operates in are together worth $20.8 billion and will grow to $59 billion by 2033. The company expects RRPs to overtake cigarettes over the next 10 years. “Looking at the U.K. alone, the number of cigarette users is currently at parity with RRP users at around 12 percent of the population, with the latter expected to become the dominant format this year,” says Plxsur’s chairperson and co-founder, David Newns.

    In terms of technology trends, a decade is a long time. In the past 10 years, vapers have moved from “cigalikes” to pods then to disposables and now back to reusables again. However, many current vape products still have shortcomings, particularly in areas such as user-friendliness, nicotine delivery and sustainability. Going forward, Newns sees two main considerations driving people to RRPs. “The first is cost-effectiveness, with reusables more cost effective than disposable vapes and certain cigarettes,” he says. “The second is user experience. Technology is constantly evolving, and the category continues to advance RRPs to replicate the delivery of nicotine in a cigarette in terms of speed of delivery and satisfaction.”

    Innovation in the category, Newns points out, will depend on two key factors: the delivery of nicotine in a reduced-risk format that satisfies users to a point that they don’t feel compelled to return to cigarettes and the behavioral aspect of smoking. “In order to ensure RRPs are attractive to smokers, the behavioral patterns must not differ dramatically,” observes Newns. This, he says, explains why nicotine patches or gum alone often aren’t successful in helping smokers quit. “Smokers are most successful at quitting when using vapes, either on their own or in combination with other products,” says Newns. “Given the ritualistic elements that vapes provide, which [are] similar to smoking, they are often seen as a natural next step for those looking to quit.”

    According to Newns, devices will likely also feature more connectivity functionality in the future.

    Enhancing Nicotine Delivery

    Michael Wang

    Optimizing nicotine delivery has been front and center in recent innovations. The German startup Splash, for example, has developed a product that generates a foam instead of vapor (see “Bubbles of Bliss,” Tobacco Reporter, December 2023) while U.K.-based Qnovia has designed an inhaler that works without heating (see “High Tech Quitting,” Tobacco Reporter, March 2023).

    Ispire Technology Co-CEO Michael Wang expects constant introductions of novel and unique entries into the nicotine-delivery space going forward. “However, the key factor to consider is efficacy—the actual effectiveness of nicotine delivery, its impact on the body and its absorbency,” he says. “Methods like Splash, which deliver nicotine through a foam in the mouth, or pouches like Zyn result in a different neurological uptake of nicotine. These methods take longer to be absorbed into the bloodstream, delaying the time it takes to reach peak effect. Research supports [the idea] that aerosolization is the most efficient and optimized way to deliver nicotine into the bloodstream for immediate absorption. This efficiency is largely due to particle size and how it is distributed in the body. Aerosolized nicotine, delivered to the lungs, ensures rapid absorption and immediate effect, unlike oral or sublingual methods, which take longer to act.”

    Both Wang and Newns anticipate the development of better heating systems that eliminate the metal emissions associated with nichrome wire-based heating systems. “The performance and safety of the core vaporizer technology are critical concerns,” says Wang. “Many devices rely on ceramic heating elements, which, while cost-effective and easy to manufacture, present risks. If the manufacturers do not hold themselves to the highest standard in their manufacturing process, then over time and with repeated heating cycles, ceramics can become brittle and potentially release harmful particles into the vapor. This underscores the need for the industry to move away from ceramics and adopt safer alternatives.”

    Wang views the introduction of heating chip technology, as recently launched by Greentank (see “Heated Breakthrough,” Tobacco Reporter, June 2024), as a significant step forward as it performs better on key safety metrics, including the reduction of harmful and potentially harmful constituents. “By using biocompatible materials and moving away from ceramics and heavy metal-producing heating elements, we can improve the safety and performance of vape devices. These innovations aim to minimize health risks and enhance user experience by providing cleaner and more efficient vaporization.”

    Precision dosing and dosing control, Wang stresses, are essential yet often inadequately addressed aspects of vaping technology. “Accurate nicotine delivery is crucial for both consumer satisfaction and regulatory compliance,” he says. “There is a growing demand for solutions that help users manage and reduce their nicotine intake effectively.”

    Age-Gating is Key

    Progress will be driven not only by hardware developments but also by the characteristics of nicotine. “Certain clean technologies such as synthetic nicotine could further reduce risk and improve delivery,” says Newns. “We are already seeing this rolled out in markets across the world. We believe that such development can only be a positive thing if the developments are carried out from a scientific point of view. That is, keeping in mind the nicotine user’s journey from cigarettes to safer alternatives, complying with regulation and placing responsibility to the customer and environment front of mind.”

    Wang expects novel nicotine particulates to enhance the speed and efficiency of nicotine delivery, building on the foundation laid by innovations like nicotine salts. “Nicotine salts improved the speed of delivery and provided a stronger throat hit, closely mimicking the experience of smoking combustible cigarettes,” he says. “This similarity, along with the availability of various flavors, greatly contributed to the success and adoption of reduced-risk products.”

    According to Wang, the success of flavors in helping smokers transition to e-cigarettes underscores the importance of continuing to develop advanced nicotine-delivery systems that provide a satisfying and effective alternative to traditional tobacco products.

    Preventing underage access to nicotine products will remain an important objective for manufacturers. To ensure its products never get into the hands of minors, Puff Store rolled out MyChekr, a technology that uses artificial intelligence to estimate the ages of would-be buyers (see “Beyond Face Value,” Tobacco Reporter, December 2023). The system is being adopted by a growing number of companies.

    Ispire Technologies offers an age-verification system that uses a combination of Bluetooth and blockchain technology. “This system employs biometric verification, ensuring that only authorized users can access the devices, thus preventing underage usage effectively,” says Wang. “The integration of blockchain technology sets our solution apart from the competition by offering an unparalleled level of security and transparency. Blockchain’s immutable nature ensures that all age-verification data is securely stored and cannot be tampered with, providing a trustworthy system for both consumers and regulators. The use of Bluetooth enables a seamless and efficient user experience, making our age-gating technology not only secure but also highly accessible and convenient for users.”

    Transitioning to Reusables

    Meanwhile, disposable e-cigarettes face an uncertain future due to environmental concerns, with some markets banning the entire category and others considering restrictions. “Although the U.S. may not see immediate FDA [Food and Drug Administration] mandates on disposables, the long-term trend will likely favor pod systems and reusable products, significantly reducing e-waste and aligning with environmental sustainability goals,” says Wang. “We are confident that disposable vapes will either disappear altogether or become a smaller player in the market over time. While disposables are incredibly convenient, their environmental impact is prompting a shift toward more sustainable options. Moving forward, we anticipate a greater emphasis on devices with removable batteries and the adoption of pod systems to reduce waste.”

    Newns believes that vaping companies have a responsibility to ensure that new regulatory restrictions, such as a ban of disposable vapes, do not prevent adult smokers from transitioning to safer alternatives. “We also know that disposable vapes, given the products’ convenience and price point, are vital for many adult smokers in the initial phase of the switch from cigarettes,” he says. “We hope to see regulation as a driving force for new technology and innovation to allow safer products to be developed with better inhalation techniques and quality.”

    With this in mind, he says, Plxsur remains focused on supporting customers to migrate from disposables to pod-based systems. “We have worked closely with our partner companies to put commercial strategies in place to achieve this,” says Newns. “For example, in Q4 last year, Puff, the number one vaping company in Italy and part of Plxsur, successfully migrated many of its customers to pod and open devices, with these alternative products now outperforming disposable devices by volume for the company. As we remain focused on our responsibility to reduce our environmental impact, we continue to see such efforts on migration across the group.”

    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.
  • Global Ambitions

    Global Ambitions

    Photo: Taco Tuinstra

    Having firmly established itself as a regional player, Tabaterra of Azerbaijan is preparing to take its operations to the next level.

    By Taco Tuinstra

    Azerbaijan has been on a tear recently. Whereas in the past, the country was known primarily for fossil fuels, its economy is rapidly diversifying, with investors taking advantage of Azerbaijan’s strategic location along the ancient Silk Road and at the intersection of modern commerce between Europe and Asia. In addition to hosting major international events, including the Formula One Grand Prix this month and the Conference of the Parties to the United Nations Framework Convention on Climate Change in November, Azerbaijan has also been enjoying a boom in manufacturing and services, with companies investing in areas as varied as information technology, logistics and agriculture.

    Among the new factories that have sprung up in recent years is also a cigarette-making facility. Eager to localize imports and create the conditions for exports, Tabaterra in 2018 built a factory in Sumgayit, just north of Azerbaijan’s capital, Baku, with eight production lines and an annual capacity of 18 billion cigarettes.

    Confident in their partner’s abilities, BAT and Japan Tobacco International immediately assigned their entire Azerbaijani portfolios to Tabaterra. In the fourth year of contract manufacturing, BAT and JTI also awarded Tabaterra their volumes for neighboring Georgia. The multinationals have not regretted their decisions judging by the number of customer accolades displayed at the Sumgayit facility. When JTI evaluated its worldwide contract manufacturers in 2023, for example, Tabaterra finished first.

    Tabaterra aims to achieve unprecendented levels of efficiency in its operations.

    Building Brands

    Buoyed by the success of its contract manufacturing operations, Tabaterra started developing its own brands. The first private label cigarettes, including Argo, Kingston and Senate, rolled off the Sumgayit production lines in 2019. More recently, Tabaterra debuted the Lincoln and X7 brands for export. Additional launches were scheduled for this fall.

    Of course, introducing new brands is notoriously challenging in the cigarette business. Not only must newcomers compete against long-established international trademarks, but they must also do so in increasingly “dark” markets. Like many other countries, Azerbaijan restricts tobacco promotions to the point of sale, severely limiting opportunities for developing brand awareness.

    “Brand building is not easy,” acknowledges Tabaterra Director Elman Javanshir. “It takes time and money.” In addition to competing with the name recognition of foreign cigarettes, he explains, local brands must overcome the prejudices of consumers, who in Azerbaijan and other markets tend to perceive global brands as “better,” even if the quality is comparable to that of their locally produced counterparts. “So you have to make sure that your brand is much better than its international equivalent,” says Javanshir. “That also means you must spend more than your competitors—even though you are smaller than them.”

    One way to compensate for limited resources is by being creative. For example, Tabaterra developed a smart phone app for its retail partners with information about the company’s portfolio. In addition to detailing product features such as low-odor technology, sweetened filters or cherry flavors, the app allows sellers to earn points that can be exchanged for products, mobile phone credits or cash. The goal, according to Business Development Manager Elchin Murtuzov, is to spread awareness of Tabaterra’s products among vendors. “So when the buyers come, retailers will know these brands and can educate the customers about Tabaterra’s value proposition,” he says.

    Following the success of its contract manufacturing business, Tabaterra started producing its own brands.

    Relocation

    While Tabaterra’s Sumgayit factory is barely six years old, the company has already outgrown the facility. To accommodate its growing volumes and elevate production quality and efficiency to the next level, the company has built a new plant in Aghdam, nearly 400 km west of Sumgayit. The relocation process will start in October, and the company plans to move two production lines every month. In addition, it will install two new lines at the Aghdam factory, bringing the total to 10. The process is scheduled to be completed by the end of February.

    According to Javanshir, Tabaterra is going out of its way to make the relocation attractive for its workforce. In addition to increasing salaries by between 30 percent and 50 percent, the company has purchased six buildings with 210 apartments in Aghdam. The residences will be fully furnished and offered free of charge, including utilities and residential fees. “All inventories are supplied by the company,” he says. “Employees just need to bring their clothes and personal possessions.” In addition, Tabaterra will change the work schedule from three eight-hour shifts to two 12-hour shifts, and provide regular transportation to Baku. This means that staff will be off one week every three weeks—time that they can spend in Aghdam, Baku or elsewhere. “The choice is to the employee,” says Javanshir.

    Many employees have already indicated their interest in relocating, and Javanshir is confident that a significant share of the workforce will follow their employer to Aghdam. Recently, Best Places to Work, an international ranking organization, recognized Tabaterra as one of the top employers in Azerbaijan for 2024–2025, with 90 percent of employees indicating they were happy with their working conditions.

    When you have efficiency, you make the machine work; when you do not have efficiency, the machine makes you work.

    Elman Javanshir, director, Tabaterra

    Working Smarter

    Of course, building a factory from scratch presents not only challenges but also opportunities. Starting from a blank slate permitted Tabeterra to design the factory exactly as it wanted without the constraints of its existing facility. According to Javanshir, the new factory will not only be 30 percent bigger than its Sumgayit plant but also significantly “smarter,” with state-of-the art technology and a high degree of digitalization. “We will have a visual representation of the plant at our Baku head office,” he says. “Management will be able to see in real time which line is working, what brand is being produced and what are the efficiency and waste rates.” In addition, the smart factory will enable Tabaterra to keep track of individual employees’ performances, enabling it to improve both its employee recognition system and efficiency.

    Down the road, Tabaterra also wants to integrate artificial intelligence into its operations, allowing it to further boost efficiency and carry out preventative maintenance, for example. Such applications already exist at some multinationals, but Javanshir insists Tabaterra, as a regional player, must create a good basis first. “We will build everything in a rational way,” he says. “The first task is to get all the data visualized and online.”

    If done correctly, this should allow Tabaterra to achieve unprecedented levels of efficiency in its operations, which in today’s competitive environment is essential, according to Javanshir. “When you have efficiency, you make the machine work; when you do not have efficiency, the machine makes you work,” he observes.

    A growing share of Tabaterra’s output is exported.

    Tabaterra’s commitment to quality and efficiency have served it well. Not only has it won the trust of leading cigarette manufacturers, but it also has managed to establish a respectable private-label business in a relatively short time. The company’s brands currently account for 11 percent of Azerbaijan’s 14.5 billion-stick market, and they are making inroads in Georgia and Iraq.

    But Tabaterra is not content to rest on its laurels. “Eleven percent is not our target,” says Javanshir. “Our aim is to get 20 percent of the market in Azerbaijan.” Meanwhile, the company is already looking further afield, analyzing opportunities in additional overseas markets. To further raise awareness internationally, the company regularly participates in international tobacco expositions. This month, for example, it is scheduled to exhibit at Intertabac in Dortmund, and in November, it will participate in the Word Tobacco Middle East show in Dubai. The company has also been investing in leaf production.

    Asked to explain the company’s success, Javanshir cites good relationships with industry leaders and an eagerness to learn. For example, in preparation for its Sumgayit factory, Tabaterra sent many of its staff members to its partner companies’ facilities. In return, experts from the multinationals came to Azerbaijan to provide hands-on training. The company has also benefited from the recent trend toward localization, with businesses rediscovering the value of physical proximity to end markets.

    A healthy combination of ambition and realism has helped as well. Even though cigarette volumes in Azerbaijan have been stable, Tabaterra is well aware of the dimming outlook for traditional tobacco products worldwide. That’s why the company has also started exploring new platforms, such as heat-not-burn devices. “If you want to be sustainable, you must keep up with technology,” says Javanshir, noting that many companies who failed to do so don’t exist anymore. “We will not have the same fate,” he says.

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

    Kicking Butt

    Photo: Filtrona

    With its plastic-free products goal at the forefront, Filtrona’s new filter technology allows for a sustainable RYO option. 

    By Marissa Dean

    When thinking about filters, most people immediately picture pre-rolled cigarettes. They think of discarded butts and microplastics. But those images are changing as the industry evolves and consumers demand more sustainable options. Filtrona is working to fill those needs with its recently debuted trademarked Rip-a-Tip plastic-free filter for the roll-your-own (RYO) market. 

    “Made entirely from cellulose, the Rip-a-Tip is designed with convenience and configurability in mind,” says Filtrona CEO Robert Pye. Cellulose is a naturally occurring molecule made up of carbon, hydrogen and oxygen, and it is found in plant cell walls as part of the main structure. Being made completely of cellulose means that the filters will break down entirely upon disposal—removing the potential of microplastics leaching into the environment.

    The product is also highly customizable. “It also gives RYO tobacco companies the freedom and options to customize the filter to a preferred diameter, pressure drop and choice of substrate—such as white or unbleached sustainable materials,” says Pye.

    “In practical terms, each Rip-a-Tip stick is expertly crafted to hold six individual filter tips measuring 14 mm in tip length. Rip-a-Tip features the EasyRip System, which allows users to rip off the filter tips easily and quickly along the perforated line. This not only delivers an easy and enjoyable user experience but also importantly ensures there is no wastage after the filter tips are ripped off from the outer wrap,” Pye says.

    According to Pye, the outer wrap of the product can also be customized with color or print, and the design of the packaging boxes for the filters, which come in flip top, cigarette, push and slide, and side push and slide formats, can be customized. 

    The Boreas CoolBridge combines Filtrona’s sustainable cooling segment, ECO Bridge, with monoacetate and the company’s patented Fine Wall Acetate Tube.

    A Sustainable Future

    Like most companies, Filtrona has environmental, social and governance goals that it aims to reach every year. By 2050, Filtrona’s goal is to offer a complete portfolio of plastic-free products.

    The Rip-a-Tip supports that goal as “a biodegradable RYO filter solution that meets growing consumer regulatory demand for tobacco products grounded in sustainability,” according to Pye. It “marks an exciting material advancement in the RYO market,” which is expected to reach $45 billion in global value by 2033. 

    Along with the Rip-a-Tip filters, Filtrona has also launched its trademarked Boreas range of heated-tobacco product (HTP) filters, filling a market need as more consumers switch from traditional combustible cigarettes to HTPs and other reduced-risk products.

    The new range includes Boreas SideFlow, a patent-pending filter with a simplified design, and Boreas CoolBridge, a filter that combines Filtrona’s sustainable cooling segment, ECO Bridge, with monoacetate and the company’s patented Fine Wall Acetate Tube to create a balanced retention and cooling mechanism.

    “With this new Boreas range,” says Pye, “we are giving customers the option to create a customized, multi-segment filter by combining various types of base rods that are available in Filtrona’s comprehensive collection. As more of our customers move into the rapidly growing HTP market, we are thrilled to be able to support our customers with a dedicated range of HTP filters that bear the hallmark of our innovative and unique designs.

    “As consumer demand for HTPs continues to grow, our new Boreas range will enable HTP manufacturers to deliver the next generation of products that deliver the expected level of quality and user experience compared to conventional cigarettes while also meeting regulatory requirements.”

    What’s Next?

    The industry is constantly changing and evolving as regulations, requirements, health concerns, environmental concerns and consumer desires morph. According to Pye, Filtrona is well positioned to cater to the rapidly changing business environment.

    “We have a century of filtration experience and chemistry delivery expertise at Filtrona, coupled with an unparalleled drive for innovation and R&D and world-class global manufacturing capabilities,” Pye says. “In addition, our Scientific Services laboratories in Indonesia offer independent and accredited testing facilities for all our products.

    “Our industry knowledge helps companies to catch emerging trends, adapt to changes and build strong brands. We see an exciting future ahead in the industry where Filtrona will play a significant role in driving change and enabling business growth through product innovations, advanced technology and sustainable solutions.”

    Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor.Since that time, she has taken on additional responsibilities, including feature writing.Her skills span the publishing industry from layout and design to copy editing to content creation.