Category: Print Edition

  • Fired Up

    Fired Up

    Nina Ritter-Reischl, in front of Glatz LIP paper machine
    (Photo: Julius Glatz)

    Having prevailed in an intellectual property dispute, Julius Glatz prepares to reenter the market for lower ignition propensity cigarette papers.

    By George Gay

    Julius Glatz is to reenter the market for lower ignition propensity (LIP) cigarette papers.

    This follows a four-year hiatus during which it was forced out of that market as a result of a patents dispute it eventually won in September last year, after a legal battle that, in total, lasted six years.

    Nina Ritter-Reischl, a managing partner at Glatz, told Tobacco Reporter during an exchange in January that, having overcome the difficulties of those four years, the company, which produces a large range of papers, mainly for the tobacco industry but also for other industries, was keen to return to the LIP market and, indeed, had already started work on doing so.

    And this won’t be a case of starting from scratch, of course. “As we were able to retain at least some of our core personnel, we can build upon their know-how and knowledge to produce LIP papers with the high standard our customers know us for,” said Ritter-Reischl. “Our customers will still find their former contacts in our technical, R&D and sales teams.”

    Meanwhile, the machine that Glatz used in the past to produce its LIP papers has been geared up at the production site where those papers were manufactured previously, in Neustadt, Germany, about 10 km from the company’s base in Neidenfels. “Our LIP machine has been maintained during the down period, some parts have been renewed, and our control technology has been upgraded within the last months,” said Ritter-Reischl. “Those investments were made to ensure production of all kinds of LIP papers.

    “As our application system is very flexible,” she added, “our production range and products are as well. We can therefore produce LIP papers to the specifications our customers were used to, or we can develop papers with new specifications according to our customers’ needs.”

    Of course, during the period when it wasn’t possible for Glatz to manufacture LIP papers, the company didn’t just sit on its hands; it used the time to concentrate on another type of demanding tobacco industry paper. “We were able during those four years to focus on another part of our core competences—our tipping base paper production,” Ritter-Reischl said. “Those papers also are very complex and demanding papers in the industry, and our quality and service for those is a benchmark.”

    That’s not to say, however, that the renewed opportunities that LIP paper production now offer isn’t massively important. In corresponding with Ritter-Reischl, I got the impression that Glatz was not only taking a huge amount of pleasure in being able to restart its LIP papers operation but also relishing the fact that this meant it could once again offer a complete range of tobacco industry papers. “Entering back into the LIP market, we at Glatz can offer our customers not only additional papers, [but] we can again provide them with the full-service range of all papers for the industry, from plug-wrap papers and tipping base papers to cigarette papers, including LIP papers,” she said. “We are able to offer all these papers manufactured to the highest qualities and within the most demanding specifications. And we can offer a flexible service delivered through short lines of communication by a dedicated team of traditional paper makers.”

    Currently, Glatz’s LIP papers production unit is making trial runs to produce papers of various specifications for a number of interested customers, but it expects to have to ramp up its production level to full manufacturing mode during the next few months.

    Ritter-Reischl, who is a lawyer, seemed frustrated that discussions and legal disputes over one LIP patent had taken so long but pleased that that period was now behind the company. “As the patent was held to be invalid, this pulled the rug from under all the accusations made against Glatz,” she said. “But, needless to say, this dispute and the interim consequences were a burden for us over the past four years, and only a company like ours with a very resilient financial, social and competitive structure would have been able to endure such a phase.”

    Julius Glatz is a family-owned medium-sized company with more than 135 years of experience in producing paper in Neidenfels, Germany. “We are a traditional and sustainable asset in the region, being ourselves aware of the responsibility we have toward our employees, our environment, our suppliers and, most important[ly], our customers,” said Ritter-Reischl.

    The company was started in 1885 by Wilhelm Adolph Glatz, Franz Julius Glatz and Hans Haehnle when, between them, they founded the Glatz papermill at Neidenfels in the Palatinate Forest. Almost 100 years later, in 1990, Glatz became the first fine paper manufacturer to offer thin printing papers and cigarette papers of TCF (totally chlorine-free) quality. And, in 1994, Glatz became part of the first Sino-German joint venture in the field of tobacco industry papers with the founding in Yunnan province of Yunnan Hongta Blue Eagle, which quickly went on to produce premium cigarette paper of international quality standards.

    Now, as it navigates 2022, Glatz can look forward to the boost that being able once again to participate in the LIP papers market will bring. But the question arises as to what the future holds for Glatz beyond LIP papers, and Ritter-Reischl started answering this question by admitting that, overall, the outlook for the traditional tobacco industry was not exactly rosy. Everyone knew, she said, that the tobacco market in general was difficult, as regulations and tobacco product taxes were increasing while the number of smokers was decreasing. Nevertheless, she indicated, Glatz was optimistic about the future, and part of that optimism seems to be coming from what is perhaps an unexpected source. “Due to the coronavirus pandemic, customers have come to realize how important local sourcing, flexible service and short communication tracks are,” said Ritter-Reischl. “And those are all services and assets that we can offer firsthand.”

    Another reason for optimism at Glatz was that the idea of sustainability was becoming more and more important and into focus, said Ritter-Reischl. “As a family-owned business with a history of 135 years in paper making, [we] are sustainable by our very nature,” she said. “We value our employees and suppliers, we take care of our environment, and our customers are always in focus as we conduct every aspect of our business.”

    Of course, individual businesses can expand even when the markets they serve are not expanding by, in one way or another, increasing their market shares or by diversifying. And in this regard, Glatz sees opportunities arising in the future as paper products come to replace other materials, such as plastic. “Our thin papers with their special haptic properties can be used in other industries to substitute for foil or other wrappers,” she said. “Therefore, alongside our tobacco papers specialization, we have the opportunity of diversifying into other aspects of fine papers. And this will be one of the options we will focus on in the future and that will help keep us optimistic in the face of the challenges to come.”

    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.
  • A Balancing Act

    A Balancing Act

    Photos: Taco Tuinstra

    Embracing tobacco harm reduction might help Indonesia ease the tension between dependence on tobacco revenues and rising healthcare costs.

    By Stefanie Rossel

    Tobacco or health—for Indonesia, the choice embodied in that slogan presents a real dilemma. On the one hand, the world’s second-largest cigarette market and fifth-largest producer of leaf tobacco is highly dependent on the revenue from the sector. Statista expects revenue from the cigarette segment to reach $24.86 billion in 2022, up 5.8 percent from 2021. On the other hand, the country is facing increasing healthcare costs for the treatment of tobacco-related illness. An October 2021 study by the Indonesian Development Foundation found that tobacco-induced morbidity, disability and premature deaths were responsible for economic losses of IDR375 trillion ($26.04 billion) in 2019—a fifth of the total state budget.

    Indonesia is unlikely to find a way out of this quandary soon. Smoking and tobacco cultivation have been deeply rooted in the nation’s culture since the 19th century. The market is unique in that it is largely dominated by kreteks or clove cigarettes, which represent around 95 percent of all cigarette sales. While tobacco consumption has been declining, Indonesians still smoked a whopping 300.2 billion cigarettes in 2019. With roughly 75 percent, the vast majority of cigarettes consumed are machine-made kreteks. Hand-rolled kreteks account for around 20 percent of the market.

    Indonesia has one of the highest smoking rates in the world. According to a national survey from 2018, the country is home to almost 100 million smokers. More than one-third (33.6 percent) of adults use tobacco. Smoking is a male habit; 62.9 percent of men are smokers compared to only 4.8 percent of women. Worryingly, smoking is also common—and increasing—among minors. Ministry of Health data show that 33.8 percent of youths under the age of 15 smoked in 2018, up from 32.8 percent in 2016. Other data suggest that an estimated 20 percent of children under the age of 10 have tried a cigarette.

    The Covid-19 pandemic, in combination with cigarette excise tax increases, has depressed incomes and pushed smokers toward lower priced products, a trend the industry has met with smaller packages. This, in turn, has driven up demand for higher tar kreteks.

    In 2020, five major corporations controlled almost 90 percent of the Indonesian cigarette market, according to the Southeast Asia Tobacco Control Alliance. Sampoerna led the market with a share of 32.5 percent followed by Gudang Garam (27.5 percent), Djarum (18.7 percent), Bentoel (8 percent) and Nojorono Tobacco Indonesia (3 percent). The remaining 10.3 percent are made up by an estimated 500 small-sized to medium-sized manufacturers.

    Tobacco is a major employer, providing work to 5.98 million people, of which 4.28 million work in the cigarette manufacturing and distribution sectors and 1.7 million in tobacco cultivation, according to the Indonesian Development Foundation. In 2019, this corresponded to 0.34 percent of total employment in the manufacturing sector. As in many tobacco-cultivating countries, leaf is grown mainly by small-scale farmers who rely solely on tobacco. The tobacco farming sector also struggles with child labor. In 2002, Indonesia committed to eliminating it in all forms by 2022. In 2019, the U.S. Department of Labor noted that Indonesia had made “moderate advancement” toward this goal (see “Homework Due,” Tobacco Reporter, February 2021).

    The tobacco industry remains a major employer in Indonesia.

    Incoherent Policies

    With tobacco playing such a large role in the country’s economy, Indonesia’s tobacco control efforts have been halfhearted. It is one of only nine countries that have yet to ratify the World Health Organization Framework Convention on Tobacco Control. Decentralized decision-making has led to fragmented policies. Responsibility for tobacco policy is spread among the president’s office, six national ministries and an independent agency.

    Nonetheless, some progress has been made. Since 2014, cigarette makers must print pictorial health warnings covering 40 percent of each pack. Smoking bans have been implemented for public transport, healthcare facilities, educational facilities, places of worship and playgrounds. Tobacco advertising on TV and radio remains permitted with certain restrictions. There is no minimum age limit to buy cigarettes, and selling cigarettes by the stick is common practice.

    Despite regular excise tax hikes, cigarette prices in Indonesia remain among the lowest in the Asia-Pacific region. The tobacco excise tax remains far below the 75 percent of retail price recommended by the WHO. Indonesia’s tobacco taxation system is also dauntingly complex. Until recently, cigarette tax rates were divided into 10 tiers based on product type, volume and price. The tiers are meant to protect smaller manufacturers and local jobs from competition. Under the government’s 2017 “tobacco roadmap,” the number of tax tiers were supposed to be cut to five by 2021 to reduce the incentive for smokers to switch to cheaper products. The plan, however, was withdrawn in 2019. In November 2018, the coordinating ministry of economic affairs launched a new tobacco roadmap emphasizing the importance of the industry and arguing for its protection until 2025.

    Effective Jan. 1, 2022, Indonesia increased its tobacco excise across cigarette types by an average of 12 percent. In addition, the number of tax tiers was reduced from 10 to eight. According to the ministry of finance, the tax reform aims to counter the rising healthcare costs caused by increasing smoking prevalence and to reduce the smoking rate among adolescents aged 10 years to 18 years.

    Harris Siagian

    Promoting Tobacco Harm Reduction

    To help the country escape move forward, the Indonesian Development Foundation has proposed a tobacco transformation program that seeks to address certain policy gaps. It has created a roadmap that, among other things, proposes to complement existing policies with harm reduction initiatives. By emphasizing reduced-risk products (RRPs), the foundation believes Indonesia can reach smokers who have been overlooked by the current policies.

    “The draft roadmap targets to diminish substantial economic costs and productivity losses associated with cigarette smoking by introducing a cost-benefit analysis approach to estimate the strengths and weaknesses of alternative, reduced-risk products,” explains Harris Siagian, one of the authors of the report. “It will measure and compare the costs of cigarette smoking-attributable diseases and the economic costs of reduced-risk product use.”

    The guideline also recommends increasing the affordability and accessibility of RRPs. According to its authors, the excise tax on RRPs should be lower than that for combustible products.

    Indonesia classifies noncigarette tobacco products as “other tobacco processing products,” or Hasil Pengolahan Tembakau Lainnya (HPTL). These include molasses-based tobacco products, snuff, chewing tobacco and RRPs, such as e-cigarettes and heated-tobacco products (HTP). All HPTL products are subject to the maximum excise tax rate of 57 percent.

    Among RRPs, e-cigarettes, which hit the market in 2010, are significantly more popular than HTPs, which were introduced to Indonesia in 2019, and the vape market is growing. According to the Indonesian Development Foundation Report, there were 2.2 million vapers in the country in 2020. Apart from provisions on import and excise tariffs, there is no specific and comprehensive regulation of HPTL products yet, and policies appear uncoordinated between regulators. While the Food and Drug Monitoring Agency would like to ban vape products altogether, claiming they could be a gateway to youth smoking, the health ministry wants to regulate e-cigarettes as conventional tobacco products. This, in turn, is opposed by the ministry of agriculture, which fears that such regulation would burden tobacco farmers.

    Indonesia aims to simplify its complex tax ystem.

    Complex Task

    To address such conflicts, the Indonesian Development Foundation committee team advocates incorporating RRPs in the national smoking cessation programs. “The products will be available to users, on an incentive basis, through registered outlets and clinics,” says Siagian. To help fund the initiative, the committee suggests using money from the revenue-sharing fund of tobacco products excise, which collects 2 percent of the total tobacco excise funds at the national level and distributes it to regional governments.

    The roadmap also takes farmers into consideration. Locally grown tobacco will be directed toward RRPs, and farmers will be encouraged to diversify into other crops. To help eliminate child labor, the program calls for strengthening local government initiatives to provide basic education access and other supportive measures for children involved in tobacco farming.

    Affordability is a well-known challenge to the success of RRPs in low-income and middle-income countries. Nonetheless, Siagian is confident that RRPs will succeed in Indonesia: “Over the past 20 years, there has been a significant shift of the vulnerable lower middle-class population that has climbed out of poverty and into the aspiring educated middle class, and these demographic groups are shifting toward more health-conscious and hygiene products, including in their use of tobacco products,” he says.

    “The educated middle class, which currently accounts for 52 million people out of a total population of 273 million Indonesians, are favoring e-cigarettes as part of their lifestyle, and these population groups are more open to healthy-yet-stylish products, which means a great opportunity for RRPs. The Indonesian middle class has been a major driver of economic growth as the group’s consumption has grown at 12 percent annually since 2002 and now represents close to half of all household consumption in Indonesia, which means that price is not a major concern for these groups when purchasing RRPs. A suitable brand ambassador, product choices, accessibility and affordability will play an important role in RRPs for the middle-class groups.”

    Transforming Indonesia’s tobacco control policies will be a tough nut to crack. The Indonesian Development Foundation’s proposed roadmap, therefore, is a multi-step plan, with the first stage of implementation expected to be concluded within a two-year period—provided that the country’s development priority plan, which includes the elimination of child labor, remains under the control of the current government, says Siagian. “The overall program is expected to be accomplished in five years, with an additional three years of implementation under the next government as the continuation of the first-stage program,” he says.

     

    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.
  • Tipping the Scales

    Tipping the Scales

    Tipping papers serve both functional and aesthetic purposes. Not only do they help ensure the integrity of the rod-filter construction and play a role in cigarette ventilation, but they also provide useful real estate for decorations. Using sophisticated printing and embossing technologies, manufacturers can appeal to senses of sight and touch. For this article, Tobacco Reporter interviewed two prominent industry suppliers about their innovations relating to tipping papers.

    What you see is what you feel—the growing interest in embossed tipping papers

    It is always interesting when opportunities are identified and exploited within business sectors, such as the traditional tobacco products market, that are, overall, less than vibrant. It seems to indicate that somebody, a team perhaps, or even a whole company, has been thinking outside the box—or, in one case at least, thinking big inside the box.

    Toward the end of last year, the Tann Group told Tobacco Reporter that for the past five years it had been enjoying a “tremendous” increase in interest for embossed tipping papers—an increase that had required it to make major investments in machinery and personnel to keep up with demand. And it seems that, for at least three reasons, this increase in interest is likely to be maintained. One is the vital feedback loop that is powered by consumer demand and that is clearly working hard in this case. Another is that while the increase in demand has been widely spread, it has not gone global—yet. And yet another is that, working within the letter and spirit of even strict regulations, cigarette manufacturers can use some embossed tipping papers to help maintain the attractiveness of their products even when and where those regulations are being imposed so as to reduce product appeal.

    But more of that later. Firstly, it is necessary to explain for those not already familiar with embossing as it applies to tipping paper, something about the types of embossing that are available for such applications, which comprise macro-technology, micro-technology and nanotechnology. Macro-embossing delivers a haptic effect, one that doesn’t require any special surface treatments of the tipping paper, such as printing or coatings, and that is experienced by a smoker through her fingers and lips because the bosses produced by this process, which are in the submillimeter range, are large enough for them to be detected by touch. By contrast, in the case of both micro-embossing and nano-embossing, the surface deformations produced are respectively within the micrometer and nanometer ranges, which are too small to be detected by touch but which interact with visible light and in this way provide some spectacular visual effects.

    In the case of micro-embossing, the structures produced influence the reflection of visible light, so this technology is used only on tipping papers that have metallized surfaces, such as those produced by metallic hot foil stamping, and not on plain paper. Without micro-embossing, the light reflected by stamped hot foil items, such as lines and logos, would be clear and shiny as it would be when reflected by polished metallic surfaces. But with micro-embossing, the light reflection becomes diffuse and scattered as it is on matte metallic surfaces, and this gives the hot foil designs a satiny appearance.

    The nano-embossed structures, meanwhile, cause the light that strikes them to be diffracted in such a way as to produce an interference effect—to be split into the spectrum of colors and thereby to deliver rainbow visuals, holographic impressions and the “tilted image” effects that are strongly dependent on the angle at which they are viewed. Nano-embossing, which requires the tipping paper to have a full-surface color, produces its strongest effects the darker that the background color is.

    Of the three types of embossed tipping paper on offer, the Tann Group says it is the macro-embossed one that is currently most in demand because it communicates with consumers on both a haptic and a visual level, something the company describes as a “what you see is what you feel” concept. But it is the case that embossed tipping papers, whether they employ macro-embossing, micro-embossing or nano-embossing, are used mainly on premium brands, partly because of the haptic and visual upgrades they provide but also simply because of the higher prices that such tipping papers command.

    It follows, then, that embossed tipping papers, whether macro-embossed, micro-embossed or nano-embossed, are particularly popular in those places where premium brands are most in demand, including duty-free outlets. Currently, demand for embossed tipping paper is mainly coming from the countries of the CIS and Asia, including China and South-East Asia, but it is expected that the trend will move to parts of Europe and Central and Latin America.

    Of course, due to stricter regulations that will govern tobacco products in the future, including those imposed through the EU’s second Tobacco Products Directive, it will become more and more difficult in certain regions to apply to tipping papers special features, such as special inks, aromas/flavors and metallic elements. However, embossing technologies—and especially macro-embossing—provide potential options to maintain the appeal of tipping papers while complying with such regulations, because no extra chemical treatment of the tipping paper or application of special inks is required. With the help of purely mechanical converting of tipping papers, there will still be opportunities for effective design upgrades that do not come into conflict with regulatory or sensory/toxicological restrictions.

    Given the importance of maintaining product appeal while complying with regulatory requirements, it is worth mentioning, too, that the embossing techniques described here can be applied also to printed paper inner liners, which is the first point of interaction, contact and, therefore, communication that the consumer has with a brand after opening a pack of cigarettes.

    Examples of off-the-shelf macro-embossed, micro-embossed and nano-embossed tipping papers are available from the Tann Group, which also offers a design service as part of development projects in which customers get to see and feel the finished product prior to a market launch. —George Gay

    Into the Void: The Fine Art of Cigarette Ventilation

    Thinking recently about the perforation of cigarette tipping paper, I was reminded that Leonardo da Vinci is credited with once having said that among the great things that are found among us, the existence of nothing is the greatest. I’m sure you can see where this is leading. The perforation of tipping paper allows for the controlled dilution of tobacco smoke, so, given that in many parts of the world, controlling the deliveries of tobacco smoke constituents is the subject of government regulation, it is no overstatement to say that perforating technology plays a vital role in cigarette manufacture. And so here is a case where a vital role is played by perforations—holes if you like, and what are holes if not nothing?

    Of course, this introduction is somewhat misleading because, in the case of perforations, the nothingness “created” is defined by the material in which they are made—the tipping paper, though it is still the case that some such papers are not perforated.

    But in the main they are. Axel Nather, head of sales and marketing at Micro Laser Technology (MLT), told Tobacco Reporter in an email exchange early this year that a few manufacturing processes still used electrostatic perforation, which worked well where only very low levels of ventilation were required. However, he said, as government regulations and end users demanded cigarettes with increasingly lower deliveries, laser perforation was ultimately the solution. Laser perforation could be used to produce very stable low-ventilation, medium-ventilation and high-ventilation levels, and ventilation level adjustment was very simple, requiring only changing the hole sizes, track numbers and hole quantities.

    With MLT systems, the operator can instigate these adjustments, and, in the case of online equipment, additional parameters can also be set, so, for example, thicker cardboards can be perforated or cut.

    The use here of the word “cut” needs some explanation as does the reference to “online” equipment. When it started in business 20 years ago, MLT developed and supplied offline laser perforation machinery, but during the past 10 years, it has also been offering and supplying online equipment. This means the company has three main groups of tobacco industry customers comprising cigarette manufacturers of all sizes, paper converters and machine builders that integrate MLT’s laser equipment into their production lines.

    Offline machinery, which comprises stand-alone machinery, is almost always supplied directly to customers. On the other hand, online equipment can, as stated above, be taken up by manufacturers when MLT’s equipment is fitted to OEM cigarette making machinery, and it can be retrofitted to existing manufacturing lines either by MLT or by specialist rebuilders. And finally, there are laboratory systems, which, Nather said, could be delivered with many technically exciting elements.

    Finally, that is, in relation to perforation machinery and equipment. The tobacco industry also uses MLT’s systems for laser cutting and laser scribing, mainly in the production of cigarette packaging, where cardboard and foils are cut and scribed. But MLT’s laser perforating and cutting systems have come into their own with the rise of heat-not-burn (HnB) products. Mostly, HnB products are made with relatively thick materials, such as cardboard, said Nather, so for this reason, MLT had developed laser systems that could generate extremely short pulses of very high powered lasers. This allowed the creation of very small, clean holes, and it also meant that many thousands of “cardboard sticks” could be perforated per minute. And if the speed was still not sufficient, two lasers could be used simultaneously to double the speed.

    All this adds up to what Nather described as a pleasing and increasing level of project inquiries and sales, despite the fact that in 2020 the coronavirus pandemic had had a significant impact on the entire tobacco industry, with projects often being delayed. Nather mentioned in particular steadily increasing inquiries in the area of online perforation and HnB products. And he said MLT’s service department was currently very busy because, in part, it now maintained older laser systems produced by other suppliers and refurbished their laser sources.

    One of the reasons that Nather gave for the increasing level of interest was the innovative nature of the tobacco industry, especially in the area of new product developments, for which MLT’s laser systems were often needed. “This is, of course, very gratifying; development projects are always a great pleasure when exciting products are created,” he said. “As a medium-sized company, we are very flexible and can react relatively quickly.”

    The one challenge Nather mentioned concerned the effects of the coronavirus pandemic, and I asked him what difficulties MLT had faced and what steps it had been able to take to ameliorate those difficulties. Some tobacco industry projects had been postponed and others had taken longer than normally would have been the case, he said, especially during 2020 and early 2021. In addition, travel had been difficult, and, in some cases, it had not been possible to enter some countries, such as the U.S., for a relatively long time.

    In response, MLT had created the circumstances whereby systems could be put into operation virtually, often by helping customers through webcam-based remote maintenance. Interestingly, Nather added that while MLT was glad traveling had become easier again, it would continue to use or even expand the possibilities offered by online maintenance and commissioning. —George Gay

     

     

     

  • The Chosen Few

    The Chosen Few

    Amanda Wheeler (Photo: Malcolm Griffiths)

    The FDA is getting rid of the little companies that created the vaping industry while using the big companies to take the industry to new heights of scientific overkill.

    By George Gay

    Amanda Wheeler is angry.

    I know this because I listened to her presentation on day two of the Global Tobacco and Nicotine Forum (GTNF), which was held in London in September 2021.

    I know, also, that she has every right to be angry—very angry. But despite the provocation she has suffered, her anger was not immoderate or discourteous. It was a controlled, calmly articulated anger—the sort that, if it had been aimed at me, would have had me checking where the door was. Indeed, I think I checked anyway—you can never be too careful.

    Who is Wheeler? She is the founder and owner of the U.S.-based e-liquid manufacturer and retail store JVapes and president of the American Vapor Manufacturers’ Association.

    Who is she angry with? I think it would be fair to say she is angry with a lot of people and organizations, but mainly she is angry with the U.S. Food and Drug Administration, some politicians, large swathes of the U.S. media, “scientists” who put their names to the findings of flawed research into vaping and people who use their wealth and influence to spread misleading stories about vaping, sometimes based on flawed research.

    Why is she angry? Well, the shenanigans and pettifoggery the above organizations and individuals have been getting up to has resulted in almost the entire U.S. vaping industry being faced with an existential threat. And just in case you have been on an interplanetary mission for the past 10 years, let me explain why this is, to say the very least, disappointing. Vaping comprises a harm reduction tool that actually works—that, because it mimics reasonably closely all the enjoyable and satisfying aspects of tobacco smoking but at a tiny fraction of the risk, provides people who want to quit smoking with an exit route that leads to a significantly improved quality of life. To put things in perspective, I am told, even by those opposed to vaping, that in the U.S., more than 400,000 people die of smoking-related diseases each year.

    Undermining an Obvious Solution

    And yet, outside the vaping industry and the village of smokers and vapers, vaping generally goes down like a lead balloon in the U.S. Why? Well, a cynic such as me can think of a whole raft of reasons, none of which reflect well on the intellects or ethics of those opposing vaping. But it’s the inconsistency I simply cannot understand. Why would politicians charge the FDA with reducing the problems caused by tobacco smoking, but then, when a solution—vaping—dropped into its lap, undermine that solution wholesale? It makes no sense. Why, when given the current circumstances, you have to assume politicians wanted smoking—and the flow of money it draws in—to continue, did they ask the FDA to intervene in the first place? After all, they didn’t, as far as I know, ask the FDA to intervene in the case of alcohol, even though the U.S. comes fourth on the worldwide league table of populations who get drunk the most.

    “Oh, but what about the problem of vaping among young people?” will come the anguished cry from some politicians, the FDA and an army of other organizations. Well, let’s examine the facts. I am told that about 11 percent of U.S. high school students recently reported using a vape once in the previous 30 days while 3 percent of U.S. high schoolers reported vaping nicotine daily. Also recently, about 20 percent of 10th graders and about 34 percent of 12th graders reported using alcohol in the previous 30-day period while about 9 percent of 10th graders and 20 percent of 12th graders reported being drunk in the past 30 days. By the way, for the sake of our interplanetary travelers, I should include the reminder that it is not possible to become drunk by vaping nicotine.

    Perhaps the answer to these inconsistencies lies in tradition or tradition’s running mate, inertia. In Australia, which comes top of the worldwide league in respect of the number of times people report getting drunk during any one year and in respect of seeking emergency medical treatment because of alcohol poisoning, you can buy alcohol at drive-through bottle shops. But you must have a prescription to buy nicotine-based vaping products, and you can buy them only from pharmacies or through the Personal Importation Scheme. Come on, you know it makes sense.

    A Flawed Process, Not Flawed Products

    In can be illuminating to discover what some individuals and organizations think of as making sense. In a piece on Open Access Government on Dec. 13 titled, “Tobacco control and prevention efforts in the U.S.,” the director of the FDA’s Center for Tobacco Products (CTP), Mitch Zeller, was quoted as saying, in part, “After receiving millions of premarket applications [premarket tobacco product applications—PMTAs] for e-cigarette products last year, the agency has recently issued marketing denials [marketing denial orders—MDOs] for over one million flavored ENDS [electronic nicotine-delivery systems].” And later, he was quoted as saying, “… R.J. Reynolds Vapor Company [RJRVC] … received marketing authorization in October 2021 for an ENDS device and tobacco-flavored e-liquid pods after FDA determined ….” This, a more or less one-in-a-million approval rate, is what the FDA seems to see as a success.

    OK, it would be easy to accept the FDA’s glee at having blocked a million products if these products had been flawed, but, on any reasonable judgment, this seems not to be the case. The million products seem to have fallen foul of a flawed process, one in which the goalposts might have been moved after applications were submitted. I would direct anybody interested in what went on to a piece in Filter by Alex Norcia, “FDA Memos Reveal its ‘Fatal Flaw’ Rejection Plan for Flavored Vapes” (see https://filtermag.org/fda-memos-flavored-vapes). As Norcia makes clear, the situation is complex, but some things seem reasonably clear, at least to the cynic in me. The FDA seems to have found an expedient way of getting itself out of a trap created by a pincer movement in which, on one side, anti-vaping organizations, using the courts, had forced onto the FDA a totally unrealistic deadline for approving or denying millions of vaping product marketing applications while, on the other side, baying politicians had picked up the scent of a populist crusade—one opposed to vaping flavors.

    Simply put, the vaping scene in the U.S. seems to be chaotic. The regulatory environment in which the vaping industry operates should and could be effective but simple. After all, it concerns a consumer product, not something to blast you into interplanetary space. But this environment has instead been rendered enormously complex and chaotic. And, as a consequence, the industry has been rendered at one and the same time both chaotic and, product-wise, moribund, an almost miraculous misachievement.

    Playing Catch-Up

    The odd thing is that things could be worse. At present, what is happening in the U.S. amounts to a phony war. While the existential threat exists, within the chaos and complexity, life goes on, in part covered by a legal fudge. Vaping product owners and vaping shops are still selling some of their products, and consumers are still able to access some of their favorite brands. This is because some products, especially tobacco-flavored and menthol-flavored ones, while not having been approved, have not been issued with MDOs, even though the deadline for PMTA decisions has passed. In addition, some MDOs are the subject of court challenges, some products that have been the subject of MDOs have been left on the market, presumably because their owners figure it is going to take time for the FDA to catch up with them, and some brand owners have switched their e-liquid formulations from tobacco-derived nicotine to synthetic nicotine, which does not come under the authority of the FDA.

    Not yet, it doesn’t. At his FDA commissioner nomination hearing on Dec. 14, Robert Califf reportedly said there were in synthetic nicotine two enantiomers of nicotine, one of which did not occur in nature and whose properties were not known. He then went on to say that because of this, it would be necessary to close this loophole, which I take to mean he thought it was time for the FDA to take authority over synthetic nicotine. There are at least three problems with this as far as I can see. Firstly, synthetic nicotine does not comprise a loophole. It has been around long enough that the FDA must have been aware of it and have chosen not to include it when it performed its nontobacco-into-tobacco deeming sorcery.

    Secondly, Califf was apparently saying synthetic nicotine and tobacco-derived nicotine were different, so they had to be treated the same, which is a non sequitur. Thirdly, it seems as though, in saying what he did, Califf has created a false and ultimately unhelpful dichotomy. I am told by people who know about such things that the important issue is not about the difference between tobacco-derived nicotine and synthetic nicotine but between nicotine that complies with U.S. and European pharmacopeias and nicotine that doesn’t comply. I believe that in some cases, synthetic nicotine outperforms tobacco-derived nicotine in this regard.

    Favoring the Big Guys

    There is one other notable thing about this fatally shambolic situation, and that concerns the wedge that is being driven between the major tobacco manufacturers and the smaller vaping companies. During a panel session at the GTNF mentioned at the start of this piece, somebody asked how long the U.S. public should be patient with the FDA while it got its vaping act together. In response, another participant seemed to defend the FDA, in part by saying that even given most products fell foul of the agency’s PMTA process, the public would still have the choice of two products. Both of these products were owned by major tobacco companies—one was an oral product and one was IQOS.

    I cannot help feeling that though the PMTA process favors the major tobacco manufacturers and is clearly helping them in their competition against the smaller companies, the majors need to look at and be seen to look at the interests of the smoking and vaping public, which are clearly not being served by the FDA. Like Wheeler, they need to state publicly that what is going on is counterproductive. As somebody once said in relation to another matter, if you economize on the foundations of a building and spend the money saved taking it higher, sooner or later, the whole edifice is going to come tumbling down. And this is what the FDA seems to be about. It is de facto getting rid of the little companies that formed the foundations of the vaping industry while using the big companies to take the industry to new heights of scientific extremism and overkill.

    Just how dangerous such a strategy can be has been demonstrated by the fact that one of the two “products of choice,” IQOS, has been banned from the U.S. market over a patent dispute. Does anybody think it’s okay to reduce consumer choice to one oral product—and, of course, let’s not forget the RJRVC product—no matter how good it might be? We’re talking more than 400,000 lives a year, remember.

    To my way of thinking, the major manufacturers need to join Wheeler and become constructively angry.

    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.
  • Superior Solution

    Superior Solution

    FEELM CEO Frank Han

    Using a new ultra-slim bionic film ceramic coil, the FEELM Air represent a considerable improvement over previous closed-system devices.

    By Timothy S. Donahue

    The vaping industry won’t reach its full potential until its products can deliver nicotine to the body as effectively as a combustible cigarette. The new FEELM Air fully integrated vaping solution brings the industry one step closer to that goal. The FEELM Air offers several improvements on previous closed system vaping devices, including the next generation of FEELM’s industry-leading ceramic coils.

    FEELM Air brings together three new innovations for its ultra-slim bionic film (USBF) ceramic coil, calling the new coil the world’s thinnest ceramic coil vape pod solution. During a launch event in London on Jan. 18, representatives of FEELM and the flagship atomization technology brand’s parent, Smoore International, detailed several of FEELM Air’s technological breakthroughs in the vaping experience, including ultimate design, reliability, flavor and an exceptional interactive experience.

    There are three major improvements to FEELM’s latest coil technology that are the cumulative achievements of a team of 500 scientists and nearly seven years of research, according to FEELM. “FEELM Air is the outcome of cross-disciplinary research and a revolution to [the] ceramic coil,” said Frank Han, president of FEELM, at the opening remark of the launch event. “It replaces the single-layer film with a seven-layer bionic ultra-slim film. The thickness of the film is reduced from 80 micrometers to 2 micrometers, which is 40 times thinner than the last generation.”

    The overall improvements of FEELM Air are attributed to a new generation of USBF ceramic coils, which incorporate a seven-layer composite heating film made of bionic material for the first time in the vaping industry. FEELM representatives said that each layer leads to an equally enhanced functionality.

    The second innovation in the USBF coil is its use of a nanoscale vacuumed film-forming technique to help the heating film distribute heat more evenly across the coil for accurate temperature distribution. The final innovation is a microporous bionic structure that provides smooth ventilation as well as a strong e-liquid locking layer to prevent any leakage.

    Additional improvements to FEELM’s USBF coil allow the overall FEELM Air to bring major breakthroughs to the vaping experience, including an integrated micro-electromechanical system (MEMS), the industry’s highest level of energy efficiency and its smallest linear motor, according to FEELM.

    “It has the world’s first seven-layer composite heating film made of bionic material. Most of the existing ceramic coils are single layered, and now we have a seven-layered composite heating film,” a FEELM representative explained. “It can improve the harm reduction and improve the energy efficiencies, and each layer will lead to a corresponding functionality improvement.”

    FEELM Air improves the overall harm reduction performance by 80 percent of previous generation ceramic coils. The numerous major breakthroughs the new device provides include:

    • The hybrid composites heating layer and the nanoscale protection layer provide corrosion resistance, thereby reducing the emission of heavy metals by 78.6 percent. The temperature control layer with its thermal conductivity can reduce the emission of aldehydes and ketones by 80.7 percent due to localized overheating.
    • In terms of energy optimization, FEELM Air boasts the world’s highest energy efficiency of 1.3 mg/W by virtue of three layers of composite materials. The nano silver electro layer can reduce invalid energy consumption while the porous thermal resistance layer can effectively reduce heat loss.
    • The patented microporous flavor lock layer improves average flavor release by 33 percent. It’s terraced temperature zone and multilayered atomization allow for a tailored flavor release in different temperature zones and produces aerosols in smaller particle size for consumers to taste the flavor thoroughly and allow for a lower lung absorption than previous generation coils.
    • FEELM Air also uses a second generation of the company’s “puzzle leak-proof” technology that decreases leakage rates by 237 percent. It introduces an upgraded capillary structure and an innovative choke valve to prevent condensation alongside a superabsorbent lock layer that can effectively prevent e-liquid splashing.
    • The innovative FEELM Air also uses the world’s smallest linear motor, which offers a unique shock-wave mode that allows users to include delicate vibrations that allow consumers to feel the resonance in every puff. The power consumption of vibrations per charge is as low as 0.06 percent (equal to two puffs).
    • The FEELM Air also has the industry’s first superpower management system, TOPOWER, which allows for eight hours of vaping with only a 10 minute charge. The energy density is increased by 20 percent, and the battery life is increased by 30 percent over previous generations, according to FEELM. The device also adopts an integrated MEMS, which functions as a reliable airflow switch, to improve the sensitivity of the device while preventing mis-activation.

    “Ever since the launch of the world’s first black ceramic atomization coil with metallic film in 2016, FEELM has changed the whole competitive landscape, ushering in a new era of ceramic coil. It has largely enhanced harm reduction with accurate heating temperature control and revolutionized vaping experience with smooth and pure taste till the last puff,” said Han. “More importantly, FEELM has effectively addressed the industry’s pain points of leakage and dry hits.”

    To keep up with the enhanced vaping experience the FEELM Air provides vapers, the company announced the launch of its second generation of the FEELM taste evaluation model during the FEELM Air launch event. To better understand taste experiences while vaping, FEELM introduced its first taste evaluation model in December 2020 that gave FEELM researchers the ability to describe the taste of atomization scientifically. Composed of four dimensions—flavor, strength, note and vapor—and 51 specific indexes, the model establishes a system to evaluate the human senses of mouth, tongue, nose and throat.

    “Now, it’s five dimensions and 65 indexes. It’s more complicated in evaluating aroma, aftertaste, taste/mouthfeel, impact and vapor property. We built up an in-house sensory evaluation team. We have experts with certain backgrounds in tobacco science and vaping taste evaluations,” a FEELM representative said. “The team’s experience in the science of evaluating flavors ranges from five years to 13 years. They are the experts in evaluating vape ingredients.”

    During the event, Han also announced a brand refresh for FEELM. The new brand concept is composed of five words: feel, engine, exploration, lifestyle and memory, echoing the five letters of the brand’s name. He has also unveiled the new logo, which has the contour of a ceramic coil in the shape of a window. It symbolizes “FEELM’s ‘window to ultimate sensation,’” said Han. “The ‘open window’ stands for the infinite pursuit of a better sensory experience, representing FEELM’s commitment to ultimate sensation.”

    The FEELM Air may be the bridging device that brings vaping magnitudes closer to the nicotine delivery and sensory experience combustible cigarette smoking offers, only in a format that Public Health England has said is 95 percent safer. It’s too early to tell, but the FEELM Air may motivate an even greater number of cigarette smokers to switch to vaping than previous devices.

    “Vaping devices loaded with FEELM atomizers have been exported to over 50 countries in Europe, America, East Asia, Africa and Oceania with an accumulated sales volume of over 3 billion pieces,” Han said. “FEELM has never stopped the constant exploration for ultimate sensation. By virtue of FEELM Air, equipped with the ultra-slim bionic film ceramic coil, FEELM is ready to drive another paradigm shift in the global vaping industry, leading the second sensory revolution of ultra-slim devices and ceramic coils.”

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • The Evil Twins

    The Evil Twins

    Photo: Taco Tuinstra

    Prohibition and illicit trade

    By Clive Bates

    The remote Himalayan Kingdom of Bhutan was the poster child of tobacco control for many years. It appeared that Bhutan had drawn the obvious conclusion from decades of scientific research and had finally done the right thing. In 2004, the kingdom banned the sale of all tobacco products. Tobacco control activists were delighted.

    Jump forward to 2020, and the picture is not so rosy. In a joint report by the government and the World Health Organization office in Bhutan, “The Big Ban: Bhutan’s Journey Toward a Tobacco-Free Society,” Health Minister Dechen Wangmo, sets out the situation: “The black market, one that emerged after the ban, is the number one challenge that Bhutan is faced with when it comes to tobacco control. The Global Youth Survey 2013 reports an increase in the number of school children between ages 13 and 15 using tobacco products. It increased from 24 percent in 2006 to 30 percent in 2013.”

    According to the WHO, Bhutan has high levels of ongoing tobacco use despite prohibition. The WHO representative to Bhutan, Rui Paulo de Jesus, provides a candid explanation: “So long as the demand within the country persists, it will continue to fuel the illicit market that has expanded since the ban of its sale in early 2000. Unfortunately, as studies indicate, Bhutanese youth are at the center of this growing illegal trade in tobacco and its products.”

    Prohibition as a Perturbation

    Unusually for the WHO, the words above contain some essential truths about tobacco policy and prohibitions. The first and most important insight is that while demand for a product persists, a prohibition will just change how the product is supplied. A prohibition does not make a product disappear, even if that’s what politicians and policymakers would like. Instead, a prohibition is a perturbation of a dynamic market: a disruption that reconfigures the behavior of suppliers and consumers, changing who supplies the product, what products are available and under what terms. Prices can go up to reflect the costs and risk of illicit supply. Alternatively, prices can fall as no tax is paid on illicit goods. Illicit commerce is unregulated and ultimately controlled by violence rather than by consumer protection or contract law. An unregulated illegal market creates real dangers to consumers. The 2019 outbreak of severe and often fatal lung disease was caused by adding a harmful additive, vitamin E acetate, to illicit cannabis (THC) vapes as a cutting agent. Arguably, this disaster would never have happened had cannabis vaping products been widely available legally and without excessive taxation.

    Participation in Criminal Supply Chains

    The second insight is that young people may see the opportunity to make fast money as foot soldiers in an illicit irregular supply chain. It should be a significant consideration in assessing the case for prohibitions supposedly aimed at “protecting kids.” If adolescents want access to the banned products, then a prohibition policy will likely draw young people into the illicit supply chain and an early experience of criminality. Alternatively, the illegal supply of, say, cannabis could diversify to provide prohibited nicotine products as well. For example, in the United States, the Monitoring the Future survey shows that past 30-day cannabis use among 12th grade students has been around 20 percent for the last 25 years. That means there is a ready-made illicit supply chain for providing tobacco or vaping products to young people, should that prove attractive to cannabis suppliers.

    Types of Prohibition

    Not all prohibitions are as pervasive and straightforward as Bhutan’s. Let’s consider two further categories. First, many tobacco and nicotine policies have a partial prohibition element. By this, I mean the policies are intended to deter the use of the product rather than to protect the user. For example, a ban on flavored e-liquids has a prohibitionist purpose, but a ban on a toxic ingredient in e-liquids has a consumer protection purpose—an important distinction. Caps on nicotine strength or requiring a prescription to access vaping products are partial prohibitions. In On Liberty, John Stuart Mill famously equated taxes on stimulants to prohibition: “To tax stimulants for the sole purpose of making them more difficult to be obtained is a measure differing only in degree from their entire prohibition and would be justifiable only if that were justifiable.”

    The United States and New Zealand have proposals to reduce nicotine in cigarettes to a minimal “subaddictive” level. This is essentially a prohibition of cigarettes dressed up as a sophisticated regulatory intervention. Without adequate nicotine, cigarettes are worthless for most users, and they might as well be prohibited. The practical question is what would happen next: Would users quit altogether, move to illicit cigarettes or, for example, switch to vaping? The least likely outcome is any significant or sustained use of low-nicotine cigarettes.

    Second, a particular category needs to be defined for the prohibition of products that are beneficial to the user. The snus ban in the European Union has persisted since 1992 despite a mountain of evidence that snus has had a radically positive impact on public health in Sweden and Norway, where it is widely available. There may be arguments for prohibiting harmful products like cigarettes, even if there are doubts about the practicalities, perverse consequences and ethical implications for adult autonomy. But how can anyone defend the prohibition of much safer products that function as alternatives to cigarettes? Yet, there is now a lavishly funded international campaign to do exactly that. The international respiratory health organization The Union is calling for vaping and heated-tobacco products to be banned in all low-income and middle-income countries. That would cover 80 percent of the world’s smokers. This crazy logic is equivalent to campaigners against sexually transmitted diseases pressing for the prohibition of condoms in the hope that it would deter sex by making it more dangerous.

    More Enforcement?

    Although the WHO’s representative in Bhutan concisely described the problem, he still followed the eternal prohibitionist playbook and called for more enforcement effort. “WHO shares the country’s concerns, and it appears timely that Bhutan embraces the Protocol to Eliminate Illicit Trade in Tobacco Products the country is yet to ratify.”

    But this idea, embracing hi-tech track-and-trace technology, seems implausible in the environment of a developing country and an informal economy in tobacco products. Further, more enforcement muscle brings problems of its own. It is expensive, violent and prone to bribery, corruption and abuse of office. Drug prohibition in the United States is notoriously associated with racism. As the Drug Policy Alliance puts it, “People of color experience discrimination at every stage of the criminal legal system.”

    Prohibition by Trial and Error

    Perhaps the big policy questions cannot be answered until a prohibition has been tried and experience gained? Beware! The danger is that temporary prohibitions may have irreversible effects. Prohibitionists should turn to the 2020 experience in South Africa in which the government banned tobacco sales with a justification based on a Covid-19 response. Research by independent economists at the University of Cape Town concluded that the legal supply had been replaced by illicit supply with a substantial loss of tax revenue. But now that tobacco users have found illegal suppliers to evade prohibition, what is to stop them from continuing to avoid tobacco taxation?

    Responsibility and Accountability

    One characteristic of prohibition advocates is a reluctance to assess the consequences of their work. The prohibition policy is their real goal, but the real-world consequences are of lesser concern. For example, the UN Office on Drugs and Crime has dogmatically resisted calls to conduct a thorough assessment of the benefits and detriments of the drug prohibition treaties it oversees. This mindset is already evident in the tobacco and nicotine field. In 2019, India’s federal government imposed a comprehensive ban on vaping products. In 2021, the WHO awarded India’s former health minister, Harsh Vardhan, its highest tobacco control medal “for spearheading the government of India’s legislation to ban e-cigarettes and heated-tobacco products”. However, this award was made without any evaluation of the impact of the prohibition on illicit trade, no consideration of the likely perverse consequences leading to more smoking or any reflection on the ethics of denying India’s 100 million smokers lawful access to much safer alternatives.

    Proposals for prohibitions, in all their forms, need a much stricter assessment of the likelihood of illicit trade, perverse but easily foreseeable consequences and the ethics of using the force of law to control individual risk behaviors. That has been a conspicuous failure with illicit drugs and alcohol. Let’s hope that policymakers learn those lessons and don’t repeat the mistakes with nicotine.

    Finally, a postscript. Following a temporary lifting of Bhutan’s tobacco ban in 2020 for Covid-19-related reasons, Bhutan’s National Assembly passed the Tobacco Control (Amendment) Bill 2021 and Tax Bill of Bhutan 2021. This lifts the ban and legalizes the selling, buying, possession, distribution and transportation of tobacco and tobacco products. The signature prohibition of tobacco control has officially failed.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • Appropriate for the Protection of Health?

    Appropriate for the Protection of Health?

    Photo: 22nd Century Group

    The FDA’s focus on nicotine is coming at the expense of true harm reduction.

    Cheryl K. Olson

    I was gobsmacked last December when the U.S. Food and Drug Administration issued modified-risk tobacco product (MRTP) authorizations for two reduced-nicotine combustible cigarettes, 22nd Century Group’s VLN King and VLN Menthol King. Both contain non-GMO tobacco that’s very low in nicotine (VLN). If 22nd Century Group can reduce the disastrous health effects of smoking by offering low-nicotine combustible cigarettes, that’s great. What took me aback was the implicit message from the FDA on its priorities.

    VLN products such as these were supposed to be part of a smoking harm reduction landscape—one that includes approaches proven to reduce the risks of illness and death among cigarette smokers, such as vaping, heat-not-burn and smokeless tobacco. But this ideal, data-driven society in which addicted smokers bob gently down the famous continuum of risk via the path they prefer (perhaps starting with VLN cigarettes, perhaps with another product and ultimately landing at their low-risk nicotine maintenance or tobacco-free destiny) isn’t where we’re living.

    Such a Candide-like world would feature a rainbow of reduced-risk products that match the needs of individual smokers and smokers and people who influence them (such as doctors) fully aware of these products and of how and why they’re lower risk. They’d also know that traditional approaches to quitting (hello, “cold turkey” and nicotine-replacement therapy) have proved depressingly ineffective, especially among heavily addicted, low-income, longtime smokers: the folks who need our help the most.

    The FDA claimed to envision such an environment when Scott Gottlieb, then the agency’s commissioner, stated in 2017 that “Nicotine lives at the core of both the problem and, ultimately, the solution to the question of addiction and the harm caused by combustible forms of tobacco. … So, how can we take a new and comprehensive approach to nicotine?”

    Gottlieb continued, “Armed with the recognition of the risk continuum, and the reality that all roads lead back to cigarettes as the primary cause of the current problem, we need to envision a world where cigarettes lose their addictive potential through reduced nicotine levels. And a world where less harmful alternative forms, efficiently delivering satisfying levels of nicotine, are available for those adults who need or want them.”

    Instead, the FDA prioritized very low-nicotine cigarettes and dropped the ball on that last, essential part: the “less harmful alternative forms.” Those products, despite considerable and growing scientific evidence of their real-world effectiveness, have been left in limbo.

    A Passing Grade on the Wrong Test

    What exactly happened? An MRTP is simply a request to the FDA that a tobacco-related company be allowed to make some specified changes in how it describes a product or set of products to the general public through its packaging, marketing, advertising and other forms of promotion and communication.

    In this case, 22nd Century Group wanted to state that each of its products contains “95 percent less nicotine,” “helps reduce your nicotine consumption” and “VLN smells, burns and tastes like a conventional cigarette but greatly reduces your nicotine consumption.” They provided the scientific evidence to back up those claims.

    Among the hurdles for a successful MRTP authorization is that the manufacturer demonstrates that the product is “appropriate for the protection of the public health,” or APPH. In other words, that the requested modifications do or have the potential to do more good than harm if approved. That’s a core question that needs to be addressed in any tobacco-related application or authorization request to the FDA.

    The Tobacco Control Act of 2009 begins with the words, “To protect the public health ….” That shows the clear focus and intent of the legislation. While the phrase “appropriate for the protection of the public health” appears several times in the act, it’s frustratingly vague and subject to interpretation.

    What’s clear, however, is that the FDA should prioritize those aspects of smoking that are the most harmful to individual and public health. While reducing nicotine intake is appropriate for the protection of the public health, it should be nowhere near the top of the list.

    It’s Not the Nicotine That Kills

    Morbidity and mortality among smokers, including cancers and heart disease, are caused by the “tars” and other byproducts of combustion—what researchers often call harmful and potentially harmful constituents (HPHC). Because it’s addictive, nicotine is also considered an HPHC. As Michael Russell famously put it, “People smoke for the nicotine, but they die from the tar.”1

    In its February 2020 presentation on its products to an FDA Tobacco Products Scientific Advisory Committee panel, 22nd Century Group clearly states, “VLN cigarettes yield essentially the same HPHCs as conventional cigarettes. The benefits of VLN accrue from reduced cigarettes per day and reduced abuse liability.” That’s consistent with their authorization request since they’re only claiming a reduction in the amount of nicotine.

    Think about that for a moment. The premise that reduced nicotine in combustible cigarettes will reduce harm is based on an assumption that the number of cigarettes smoked will decrease. That’s because the other HPHCs—the substances that lead to illness and death—are the same in the very low-nicotine and the regular cigarettes. Will they?

    Compensatory Smoking

    Maybe. Maybe not. It’s an empirical question that requires research with these specific products. Researchers studying smokers who switched to earlier generations of low tar and low nicotine cigarettes, known as low-yield cigarettes, found that many engaged in what’s known as compensatory smoking.

    According to the Centers for Disease Control, “Most people who smoke are addicted to nicotine. They may compensate when smoking low-yield cigarettes in order to take in more nicotine.”5

    A historical review of tobacco industry approaches to marketing low-yield cigarettes concluded, “Unfortunately for the industry, smokers did not care much for the taste of reduced tar cigarettes and, as expected, the lower nicotine levels became a problem as well. Smokers were not receiving the same nicotine ‘satisfaction’ and therefore began to compensate for the reduction in nicotine by smoking more cigarettes, thus increasing their health risk.”2

    These earlier studies were conducted on combustible cigarettes with significantly higher levels of nicotine than the VLN products. Some well-respected smoking harm reduction experts such as Clive Bates theorize that the nicotine levels in this generation of cigarettes is so low that compensatory smoking will not be a problem. But how, then, is this different from the low success cold turkey approach? Also, what about dual use? There is nothing to prevent a smoker from using both types of products.

    What’s the Real Harm?

    But this distracts from the fundamental problem. The FDA’s focus is on the wrong chemical: nicotine. It’s often the first or only chemical most people can name when describing tobacco. That’s one of the reasons why the addictive quality of nicotine is so often conflated with combustible tobacco’s relationship with heart disease and cancer.

    Several studies of physicians’ knowledge about the clinical effects of nicotine find misperceptions are frustratingly common. Roughly four out of five doctors surveyed incorrectly linked nicotine to cardiovascular disease (83.2 percent), chronic obstructive pulmonary disease (80.9 percent) and cancer (80.5 percent).9 They should know better.

    This distortion of the role of nicotine among smokers, and some of the people who counsel them when they try to quit or at least reduce their medical risk, can interfere with their motivation to use some of the proven pathways away from combusted tobacco.

    This focus on nicotine reduction and the misunderstanding of its risks may be precluding addicted smokers from switching to products that significantly reduce harm. According to Public Health England, “One assessment of the published data on emissions from cigarettes and e-cigarettes calculated the lifetime cancer risks. It concluded that the cancer potencies of e-cigarettes were largely under 0.5 percent of the risk of smoking. Comparative risks of cardiovascular disease and lung disease have not been quantified but are likely to be also substantially below the risks of smoking. Among e-cigarette users, two studies of biomarker data for acrolein, a potent respiratory irritant, found levels consistent with nonsmoking levels.”

    My frustration is that the FDA, through its priorities and recent actions, is inadvertently reinforcing misinformation that interferes with the goal of protecting the public health by focusing on nicotine reduction at the expense of true harm reduction.

    Last year, I interviewed former industry scientist Justine Shaw Jackson for another Tobacco Reporter column; she spoke of the need to give people nicotine “without all the nasties in the smoke.” That phrase stuck in my head, creating a mashup of her words and Russell’s insight: “It’s not the nicotine that kills—it’s the nasties in the smoke.” Let’s embroider that phrase on pillows and send one to every doctor and nurse in the world.                

    Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors. She spent 15 years on the faculty of Harvard Medical School.
  • State of Euphoria

    State of Euphoria

    Photos courtesy of Demecan and the German Cannabis Association

    Germany’s new government plans to legalize cannabis.

    By Stefanie Rossel

    With Germany’s new government, a coalition of the center-left Social Democrats, the Green party and the liberal Free Democrats, taking office on Dec. 6, 2021, a long-awaited change moved closer to becoming reality. The country, the parties announced in their coalition agreement, will legalize the sale of cannabis to adults—that is, consumers from the age of 18—for recreational purposes. Although no details were mentioned and no timetable was set, the announcement sent cannabis stocks to new heights.

    The Financial Times described the announcement as “game-changing precedent for the global business of growing and selling marijuana” that would be closely watched by other countries. With its proposal, Germany would join a movement of cannabis reform around the world. Canada, Uruguay as well as 19 U.S. states and the District of Columbia have already legalized recreational cannabis. In the European Union, Malta in mid-December became the first country to permit the use and growth of weed for recreational purposes. Sales, however, will remain prohibited.

    After legalization, Germany will be the biggest EU cannabis market by far. For the time being, the recreational consumption of marijuana in the country is not explicitly illegal, but sales, imports and cultivation are prohibited. Germany legalized medicinal cannabis in 2017.

    With further legalization, the government aims to dry out the illegal market, lower criminal justice expenditures and protect public health. According to the German Cannabis Association, illegal marijuana is often contaminated with sand, sugar, glass or spices. Increasingly, synthetic cannabinoids, up to 100 times stronger than natural psychoactive cannabinoids, are used to dilute the weed.

    The proposal also includes preventive measures, such as the creation of facilities where consumers can check cannabis from the black market for harmful additives. Marijuana advertising will be strictly regulated. The coalition has agreed to keep the ban on private cannabis cultivation. Whether foreign nationals will be allowed to buy cannabis in Germany, too, remains unclear. According to the coalition agreement, the measure will be evaluated after four years, especially in terms of youth protection.

    Georg Wurth

    Details Unknown

    What cannabis regulation in Germany will look like exactly remains unclear. The coalition is expected to introduce a cannabis tax; a recent study by Heinrich Heine University Duesseldorf estimates that such a tax could contribute €1.8 billion ($1.14 billion) annually to the state treasury. Legalization would bring in an estimated €4.7 billion per year due to additional revenues from corporate tax, trade tax and value-added tax as well as from savings in prosecution and the judicial system. It could also create 27,000 new jobs, the study found.

    Apart from pharmacies, the licensed dispensaries mentioned in the coalition agreement reportedly might include tobacconist shops and perhaps even dedicated coffee shops as in the Netherlands, which tolerates recreational cannabis for personal consumption. The new government is expected to define thresholds for the content of tetrahydrocannabinol (THC), the psychoactive ingredient in cannabis, in the products to be sold. The government might also review Germany’s traffic laws, which currently allow 1 nanogram of THC per milliliter of blood serum.

    The legalization proposal, long opposed by previous Christian Democrat party-led governments, has triggered a heated debate in Germany. Physicians specializing in addiction treatment warn that it would boost consumption and encourage related issues, such as dependence, depressive and anxiety disorders, psychoses and developmental delays in young people. Meanwhile, law enforcement officials are skeptical that legalization will erase the black market. A tax, they claim, would make legal cannabis significantly more expensive, thus leading to competition between legal and illegal sources.

    Georg Wurth, managing director of the German Cannabis Association, does not share law enforcement’s concerns. “The black market will at least be pushed back,” he says. “Every single euro of revenue that will be generated on the legal market will be retracted from the illicit market, and every percent that moves from the black to the legal market is a progress. I’d rather have a legal and a black market than a 100 percent illegal market. If you take cigarettes as an example, there is also a black market, but there are no plans to prohibit cigarettes in order to rein that in.”

    The right pricing will be decisive for deflating the illegal market, Wurth adds. “All three coalition partners are aware that they shouldn’t overplay their hand if they really want to force back the illegal market. I am confident that they will succeed if they find the right approach at pricing. In Canada, it took about two and a half years until half of the cannabis revenues came from the legal market.”

    Illicit cannabis currently retails at €10 per gram in Germany. Interestingly, this is also the sales price for medicinal cannabis in pharmacies. “Cannabis already is relatively inexpensive in Germany,” says Adrian Fischer, co-founder and managing director of Demecan, which supplies medicinal cannabis. “We presume that consumers will be willing to pay a higher price for legal cannabis for recreational purposes that has a better quality than illegal weed, but the price shouldn’t be much higher than €10. In addition, it has to be guaranteed that there are a sufficient number of points of sale for marijuana. If a consumer must drive 50 kilometers to the next legal dispensary, he is more likely to stick with his dealer round the corner.” If legal cannabis is priced competitively, Fischer forecasts that the German marijuana market will be worth €5 billion in five years.

    While the German Cannabis Organization opposes a limit on the THC content, Fischer suggests linking it to certain age limits, as with alcohol. In Germany, drinks with a low alcohol content, such as beer or wine, can be legally purchased from the age of 16 while liquor drinkers have to wait until they turn 18. “Similarly, cannabis with a lower THC content could be made available for 18-year-olds and with a higher THC content for 21-year-olds,” says Wurth.

    Adrian Fischer

    Important Considerations

    The German Cannabis Organization believes the coalition should consider four aspects in shaping regulation. For starters, it should permit private cultivation for personal consumption. “In other countries that have legalized marijuana, such as Uruguay and some U.S. states, this is part of the law,” says Wurth.

    Traffic laws are another issue. “Presently, limiting values and criminal proceedings are extremely strict. Cannabis users may lose their driver’s license even though they did not drive stoned, only because they have remainders of cannabis in their blood from consumption days ago that don’t have any effect on their driving behavior anymore,” says Wurth.

    He also insists on an amnesty for the cannabis users who are currently listed as criminal offenders. “Their entries have to be deleted,” says Wurth. “In the U.S. states where marijuana is legal, this is regularly being done.”

    Lastly, the sale of legal cannabis should remain restricted to specialist shops, according to the German Cannabis Organization. This would also guarantee better youth protection.

    However, neither the legalization of cannabis for adults nor prohibition can prevent marijuana consumption among youths, cautions Wurth. “Legalization would nevertheless have a positive impact on youths, even though it cannot principally prevent youth consumption,” he says. “Youths are more susceptible to prevention measures, hence the latter should be stepped up significantly and reformed.

    “Currently, police give preventive lessons in schools. They tend to get the message across that youths shouldn’t touch cannabis or else they would end up in the gutter, lose their driver’s licenses, etc. I hope that with the legalization there will also be more investment in better education and credible prevention measures so that youths seek drug counselling help earlier.”

    If youths do consume cannabis, Wurth adds, it is safer if their older friends or siblings bring them legal weed from a licensed dispensary rather than potentially contaminated marijuana from a street dealer as is the case now.

    Companies currently supplying medical cannabis say they will be able to scale up production rapidly when Germany legalizes recreational cannabis.

    Gold Rush

    The German illegal marijuana market is estimated at about 400 tons, most of which is imported from Morocco. Since Germany is a signatory to the 1961 United Nations Single Convention On Narcotic Drugs, the country will not be allowed to import or export cannabis for recreational purposes once the substance has been legalized. This means the coalition will either have to negotiate new conditions or stipulate that all cultivation has to take place in Germany.

    Presently, only medicinal cannabis is grown in Germany. That business is controlled by three companies: Tilray, Aurora and Demecan. Under supervision of the state-owned cannabis agency, they jointly cultivate 2.6 tons of medicinal cannabis annually to cater to a market that is estimated at 12 tons to 15 tons per year, with demand increasing, according to Fischer. Due to the strict rules and standards, the companies grow the plants in hermetically sealed buildings, with product stored in high-security vaults. The first domestic crop reached pharmacies only last summer; a large amount of medicinal cannabis is still imported.

    After legalization of recreational cannabis, manufacturers say they will be able to quickly expand production. Demecan has opened a center for medicinal cannabis in Ebersbach and recently finalized construction of Europe’s largest indoor marijuana production site. It presently has the capacity to produce 1 ton of medicinal cannabis but can supply 50 percent more at short notice, according to Fischer. “Within a year, we could step up capacity to 4 tons and in the mid-term to 10 tons per year. We are prepared to cater to growing demand. Our aim is to cultivate life quality and to ensure patient care, hence it is important to us that legalization of recreational cannabis doesn’t happen at the expense of patients. Therefore, we have built large production capacities to cater to both markets.”

    The three providers of medicinal cannabis alone will nevertheless not be able to meet the demand for recreational cannabis, he admits. “To reach this target, legislature must tender licenses for the cultivation of marijuana in Germany relatively quickly and right on time before the actual legalization.”

    With medicinal cannabis being a medicine, all aspects of production are subject to the narcotics act and must be compliant with good manufacturing practices and good agricultural and collection practices guidelines. A relaxation of production regulations for the cultivation of recreational weed, Fischer says, could contribute to less costly production.

    Medicinal cannabis has been legal in Germany since 2017

    Role Models

    Wurth expects it to take another one or two years until the law takes effect—and even longer until the first licenses will be allocated, cultivation gets started and the first shops open. “The quickest part of such a law would be the decriminalization of consumers. The U.S. have shown that this can happen immediately.”

    In shaping the law, he says, Germany has several role models it could draw upon. “The Netherlands are no example of a legalized market as the coffee shops are only tolerated, and supply is not regulated, so that criminal structures have emerged like everywhere else. But the coffee shops are a good example of allowing consumption on-site, which is not the case in most other countries that have legalized marijuana. As for points of sale, Germany should look to Canada and the U.S.—licensed specialist shops in a limited number; no access for youths; exact declaration of the products, their origins and their CBD and THC contents. Uruguay allows cultivation for personal use; people can even join grower communities to cultivate their weed or have it cultivated.”

    In the end, the legalization of cannabis in Germany might go more smoothly, critics fear. In February 2021, the Cato Institute published a study on the legalization of marijuana by some U.S. states. It found that both proponents and opponents overstated their cases. Except for tax revenues, which exceeded some expectations, the report says state legalizations have mainly had minor effects.

    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.
  • Eye of the Tiger

    Eye of the Tiger

    Photo: byrdyak

    Turning Point Brands is embracing next-generation tobacco and alternative products by taking calculated risks.

    By Timothy S. Donahue

    It’s hard to argue the success of Turning Point Brands (TPB). In business since 1988, during the past decade, the company has been turning the typical tobacco business model on its head. It is involved in almost all aspects of the industry, generating nearly $450 million in sales every year. From its iconic brands like Zig-Zag to its more recent investments in the growing legal cannabis industry, TPB is turning heads.

    Headquartered in Louisville, Kentucky, USA, TPB’s business includes three operating segments. Its main line of revenue comes from its “smoking” segment, which includes the rights to the Zig-Zag brand in the U.S. and Canada, according to Scott R. Grossman, TPB’s vice president of corporate development. Zig-Zag is one of the oldest, most recognized “other tobacco products” (OTP) and cannabis accessory brands. “Founded over 150 years ago, Zig-Zag holds the No. 1 share of both rolling papers and wraps in North America, and its products can be found in more than 200,000 retail outlets,” says Grossman. “Given that Zig-Zag generates roughly 40 percent of TPB’s revenue and a majority of our operating income, the brand and its growth initiatives are a major focus for us.”

    TPB’s second segment is “smokeless,” which is predominantly the Stoker’s brand, a leading player in the moist snuff tobacco and chewing tobacco markets. The company also owns the Beech-Nut brand and a diverse collection of other chewing tobacco products. Another compelling segment of the TPB operation is its new generation of products (NewGen), which covers the company’s electronic nicotine-delivery system (ENDS) and cannabis brands.

    NewGen includes an assortment of brands serving multiple industry segments, such as TPB’s business-to-business (Vapor Beast) and business-to-consumer (International Vapor Group) distribution platforms and its new product engine, Nu-X Ventures. The company has online platforms under brand names such as VaporFi, South Beach Smoke and DirectVapor. TPB also owns the e-liquid brand Solace and within its NewGen segment includes recent minority investments in the emerging cannabinoid space, including brands such as Old Pal, Dosist, Docklight and Wild Hemp.

    TPB was one of the first traditional tobacco companies to publicly announce its foray into the legal cannabis market. That decision came under the leadership of TPB’s former president and CEO, Larry Wexler, who retired from the company and was succeeded by Yavor Efremov on Jan. 11. “Larry took the company public in 2016 as an OTP business, and over the next five years, he successfully drove significant initiatives to drive value, including the investment in new talent to drive TPB forward,” says Grossman. “We’ve been strategically focused on introducing new products to serve both B2B and B2C customers across on-premise retail and online channels.”

    Yavor Efremov

    Bump in the Road

    Being a business with major assets in ENDS comes with challenges. TPB was one of the first major companies to receive a marketing denial order (MDO) from the U.S. Food and Drug Administration after the agency’s Sept. 9, 2021, deadline to decide on premarket tobacco product applications (PMTAs). Convinced that the FDA’s decision was unjustified, TPB immediately filed a legal challenge. Before the lawsuit made its way through the courts, the FDA rescinded the MDO it issued to TPB. The term “Fatal Flaw” was used by the FDA for PMTA submissions that lacked certain studies. The term has been at the center of nearly all lawsuits filed against the FDA for its handling of the PMTA process.

    “The Fatal Flaw standard is obviously one that departs from the pre-September 2020 guidance. In fact, it’s in direct conflict with that guidance. It’s helpful that [our MDO] was rescinded and that the agency admitted it had not reviewed certain [TPB] studies,” explains Paul Blair, TPB’s vice president of government affairs, adding that TPB made the decision to file suit because there was information that the regulatory agency overlooked in its review process. TPB wasn’t unique in that respect; however, the agency didn’t look at specific study data for several businesses.

    “[The rescission] is an important recognition that our denial was not related to nitpicking over data. The science we submitted about transitioning combustible cigarette consumers to our products in particular … It was an oversight. And that’s helpful not only as we try to navigate the process moving forward but also because it doesn’t seem it was an attack on the body of our application generally,” explains Blair. “We maintain that we provided data that is sufficient for the agency to authorize the marketing of our PMTAs. It’s fair to say, though, there’s not a publicly announced standard for the approval process, whether it’s for open system products, closed system products, flavors and, honestly, even tobacco and traditional flavored products.”

    That’s what Blair believes the FDA is doing now; the agency is probably reviewing its communications plan on how to reassess the PMTA process and come to some conclusions on deciding on a standard for authorizing products. Traditionally, the FDA would engage in good faith conversations with businesses trying to get products approved and offer some clarity on what information the agency needs. According to critics, the FDA’s Fatal Flaw analysis for ENDS products proved this isn’t the case anymore.

    Paul Blair

    Embracing Change

    Unlike most traditional tobacco companies, TPB isn’t shy about its cannabis investments. The company’s management team and its board have embraced legalization, according to Grossman. Currently, 37 U.S. states have legalized medical cannabis and 18 have approved it for recreational use. During the past few years, the company has invested in several cannabis operations. In 2021, TPB completed an $8 million strategic investment in Old Pal Holding Co., a cannabis lifestyle brand, and an $8.7 million strategic investment in Docklight Brands, a consumer products company led by its anchor brands Marley Natural and Marley CBD. In 2020, TPB entered into a long-term distribution and profit-sharing arrangement with Wild Hempettes, the Texas-based manufacturer of Wild Hemp Hempettes brand smokable CBD, and made a $15 million strategic investment in the global cannabinoid company Dosist.

    Grossman says that while every investment needs to be able to stand on its own, TPB’s strategy is focused on finding highly synergistic companies that strengthen the current TPB platform. Old Pal is a good example of how its strategy is being deployed—Old Pal sells roll-your-own (RYO) cannabis products with rolling papers inside the packaging. “Zig-Zag has historically been mainly focused on the convenience store channel, so this investment enables TPB to further accelerate growth in under-indexed stores such as dispensaries and head shops while supporting the growth of Old Pal,” says Grossman.

    In August, TPB made its first move into the international market by increasing its stake in ReCreation Marketing, a Canadian distribution company with ties to Canada’s recreational cannabis culture. In December, ReCreation Marketing rebranded as Turning Point Brands Canada. “TPB Canada has a number of proprietary branded products in its portfolio, and we are exploring strategies to leverage that proven model and its portfolio to increase distribution within the U.S.,” says Grossman. “We are one of a select group of established companies—especially public companies—that are actively looking to deploy capital in the cannabinoid space. Historically, we’ve been predominately focused on brands given our expertise, but we’re exploring many verticals within the cannabinoid sector. Our pipeline is very healthy, but at the same time, we have to remain highly disciplined with how we spend our time and capital.”

    It’s not just vaping and cannabis products in TPB’s future. In July, the company acquired certain cigar assets of Unitabac. The acquisition was for a portfolio of cigarillo products and all related intellectual property, including cigarillo non-tip, homogenized tobacco leaf, rolled leaf and natural leaf cigarillo products. “The cigar business is a $2.5 billion wholesale business in the United States. We’ve historically participated in that market, but we didn’t have the scale necessary to be really competitive. The Unitabac acquisition allows us to further extend into the cigar market,” says Grossman. “You’ll see a number of initiatives with that asset rolling out natural leaf products and other cigar assets, both under the Unitabac portfolio of brands as well as extending it to Zig-Zag.”

    Scott Grossman

    Facing Uncertainty

    The FDA will soon have a new leader (Biden’s appointee, Robert Califf, had yet to be confirmed at press time). The FDA’s Center for Tobacco Products (CTP) will also have a new leader; its current director, Mitch Zeller, plans to retire in April. Blair says that the individuals in those positions will have a significant role to play in determining how the agency and CTP will work with stakeholders and communicate policies about how those regulations will go into effect. The FDA, he says, doesn’t have any previous experience regulating vaping products, so there is going to be a lot of action, reaction and learning along the way.

    “It’s not as if Congress explicitly wrote how the approval or denial process might look. In fact, they didn’t write the details,” says Blair. “At least [the FDA is] thinking about the process, and they’re thinking about the consequences. But there is this opportunity beyond vapor product PMTAs in 2022 for a future generation of products to have some certainty because at the end of this, whether it’s because of litigation, because it’s further issued guidance, because it’s approvals or denials, there will be a pathway for companies and a better understanding of how the process works.”

    Blair says that overcoming the challenges of getting a PMTA approved will be stepping stones toward determining how the company approaches the future regulation of other products, such as cannabis. He says there is a real opportunity for TPB to play a critical role in the future of cannabis regulation and policy. “I think our action is going to be guided by our business’ experience as a regulated tobacco business. There are other tobacco businesses that have cannabis interests or investments, but there aren’t many that are willing to publicly engage in the way that ours is as an advocate for legalization, as an advocate for appropriate regulations. There needs to be a balance of consumer protection with entrepreneurship and opportunities in the investment space.”

    Grossman says the future of TPB is to align itself with the growth of the cannabinoid industry and possibly make more direct cannabis investments outside its current portfolio. “We are concentrated on trying to learn and execute on a variety of cannabinoid initiatives,” he says. “Although we’ve historically focused on brands, we are deeply embedded in the sector and are actively studying many verticals across value-added products and services, brands and distribution. We believe the U.S. cannabis market will exceed $50 billion over the next five to 10 years, which we clearly think will benefit TPB over the long term.”

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • The Ties That Bind

    The Ties That Bind

    Photos: HB Fuller and Baumer hhs

    Despite challenging times, optimism prevails among manufacturers of adhesives and adhesive application equipment.

    By Stefanie Rossel

    Tobacco industry suppliers have gotten used to annual statistics revealing declining cigarette consumption. News about additional restrictions is unlikely to shock them. Covid-19, however, took challenges to a new level, including for suppliers to tobacco adhesives.

    “A prolonged period of high demand and tight supply is resulting in the highest inflation of raw material costs this industry has seen in living memory,” says Selda Akbasli, global business manager for rolled paper and tips at H.B. Fuller in the U.S. “Most forecasts indicate that costs will continue to increase through at least the end of the second quarter of 2022.”

    Selda Akbasli

    Logistics also remain an issue, with global demand for containers remaining high and rates likely to further increase in 2022. “The logistics industry continues to be disrupted by Covid-19 and capacity shortages. Container availability and air capacity remain tight; waiting times for vessels outside of ports remain lengthy, and warehousing capacity continues to be a bottleneck,” says Akbasli. “Congestion at both ocean and rail terminals and container freight stations, namely in the U.S., persists. In Greater China, power outages and blackouts are impacting manufacturing outputs; however, demand for shipping container space is still high in the region. Our goal is to keep our customers informed as we monitor this dynamic and essential situation for our business.”

    According to Akbasli, 2021 was a year like no other for manufacturers, with the supply chain crisis delaying goods and creating raw material shortages. “What it really highlighted is the importance of a robust and secure supply chain,” she says. “At H.B. Fuller, we are proud of how our teams in sourcing, manufacturing and logistics worked together with our global and regional supplier partners to ensure minimal disruption for our customers. Our range of adhesives with global formulations really proved their worth in providing manufacturing and sourcing flexibility.”

    For 2022, the company will focus on people’s safety, sustainable product innovation and security of supply. To this end, H.B. Fuller is working with responsible global vendors who have strong partnerships within their supply chains networks, according to Akbasli.

    Baumer has increased the performance of its products and solutions to ensure maximum reliability.

    Fit for the Future

    Judging from market forecasts, Akbasli is confident that the value of the global tobacco business will continue to increase in the next years. “This industry is constantly evolving, and our customers are always open for opportunities to improve their product performance and overall manufacturing efficiencies,” she says. “We believe the changes we made over the past years, including our organization realignment and our approach to doing business differently during the pandemic, will serve as a competitive advantage in the years ahead.”

    Tobacco remains an important segment for H.B. Fuller. The company, which had a fiscal net revenue of $2.8 billion in 2020, develops adhesive products for many markets across the world, from packaging to solar panel assembly, electronics to automotive, disposable hygiene to woodworking.

    Floriano Erario

    Floriano Erario is business development manager of tobacco packaging at Baumer hhs, a manufacturer of glue application and quality control systems. The company is headquartered in Germany and present in more than 90 countries through an international network. Erario is equally optimistic. “Although the decline in cigarette users worldwide is a fairly consolidated fact, our activity of designing and manufacturing glue systems for various types of projects is in continuous development, and we continue to assist our customers day after day constantly,” he says.

    Baumer remains focused on innovation for the tobacco sector. By creating a tobacco competence center, which was opened in October 2018, Baumer brought its expertise for the cigarette market to Milan, Italy. “The Italian team, assisted by the headquarters in Germany, has a very broad portfolio of solutions for the traditional—or commonly called high-risk—cigarette business,” he says. “These solutions are by now consolidated and range from systems for filter makers, combiners or tubes. We are strongly active in the packer machine to finish with the production of cases for cigarette packets and the end-of-line case packer. We also design and customize dedicated systems and dedicated solutions for our customers every day.”

    H.B. Fuller’s focus, meanwhile, is to create a global portfolio of innovative adhesives and systems that significantly reduce costs, improve efficiency and make products more sustainable. Recently, the company introduced Swifttherm 6200, a hot melt for all filter types. According to H.B. Fuller, Swifttherm 6200 delivers a superior bond strength, both during production and storage, increasing productivity while reducing the share of rejects. With a long “open time” and short setting time, it can be used for conventional and new-generation products, reducing complexity. According to H.B. Fuller, customers can reduce the number of filter hot melts to just one adhesive.

    The company has also launched a solution for bonding untreated filmic carton board, such as Transmet, laminated and metallized boards. Ipacoll 2948 is a water-based adhesive.

    With the Ipacoll 2600 series, the company has developed a range of high-performance tipping adhesives that allow customers to simplify their adhesive needs across their entire manufacturing network, Akbasli says.

    Catering to a Highly Regulated Market

    Regulatory compliance remains among the most important requirements. “The tobacco industry is one of the more highly regulated markets in which H.B. Fuller operates,” says Akbasli. “We have specialized industry expertise and know-how to keep products compliant with manufacturing requisites and regulation that, as you can imagine, are completely different in each market and each region,” she says.

    “To navigate the complex world of regulatory matters, we have dedicated regional regulatory teams within our regulatory global function that work directly with industry associations, governmental agencies and our own technical and sales units to make sure we are engineering the right products for today and the future. The specific adhesive performance requirements can vary from customer to customer, but in general they require a consistent adhesive performance that enables their production to run seamlessly without any adhesive-related downtime. That consistent performance includes clean application through the adhesive equipment and profile-optimized adhesive setting for the range of machine speeds and substrates, secure adhesion both during production and in the hands of the consumer.”

    Sustainability has become another driver in the tobacco industry. “We have seen a rise in demand for greener products as regulations around the handling of chemicals have become tighter, especially in Europe,” she says. “Around the world, natural-based articles are in high demand, and it’s a trend set to continue apace. The global tobacco market changed dramatically over the last ten years, and we expect this pace of change to continue. Adhesives are a key enabler for our customers to produce more sustainable products, whether they are natural/bio-based, compostable or recyclable.”

    H.B. Fuller has multiple projects involving top scientists designing and engineering technologies that contribute to the circular economy and help customers meet their own sustainability goals. Projects range from formulating adhesives using bio-sourced raw materials to developing new, natural and responsible sourced adhesive raw materials. “We already have an advanced solution that enables our tobacco customers to significantly reduce the carbon footprint of their production facilities,” says Akbasli. “It requires them to work in a slightly different way, but the customers partnering with H.B. Fuller are excited to see what they can achieve in 2022 and beyond.”

    H.B. Fuller aims to create a global portfolio of adhesives and systems that reduce costs, improve efficiency and make products more sustainable.

    Dedicated Solutions for NGPs

    Next-generation products (NGPs), too, are high on the agenda of adhesives and adhesive application manufacturers. “Baumer hhs has been active in the New Generation Project (low-risk cigarette) market since its inception,” explains Erario. The company has also been exploring opportunities beyond tobacco. “We also have ready-made solutions for the new—even if it’s not really ‘new’—cannabis market or even pre-roll hemp. Our knowledge in terms of contact and noncontact glue application, the knowledge of world players will help our consolidated customers and new ones in this new business.”

    For the new generations of cigarettes and the packages that contain them, Baumer is drawing on its know-how of the traditional cigarette market. “We have developed dedicated solutions and at the same time increased the performance of our products and solutions to ensure maximum reliability for our customers’ machines,” says Erario. “Today, this is recognized by having systems on the market that guarantee flexibility, sturdiness and ease of use, our customers say.”

    H.B. Fuller says it has a market-proven range to produce consumables for all NGPs, regardless of brand. The key differences in the production of heat sticks for heated-tobacco devices involve the design of the stick, the filter, the materials used to manufacture the stick and the mode of operation, explains Akbasli.

    “The filters are designed differently using new materials, and they have a more complex construction,” she says. “With this comes new and additional issues related to adhesive performance requirements. Higher grammage papers used are stiffer in nature, the nonwrap acetate filter material is harder to bond and the smaller length used presents process challenges. All this combined requires the use of an adhesive with higher wet tack and a stronger setting bond.

    “Overall, the heat stick and filter consist of more parts versus a conventional cigarette. Many of these parts have a reduced level of elasticity when compared to conventional cigarettes, and this means they are harder to form into the desired shape for the stick during production. This has been a challenge for suppliers and NGP producers to overcome through extensive collaboration that required the design of new machines, materials and adhesives. And lastly, the mode of operation for these products is different. They are only heated and not burned, posing different challenges for the adhesive to remain functional whilst the cigarette stick is being used.” 

    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.