Category: Print Edition

Gaining Momentum

Photos courtesy of Cavandish Llloyd
Cavendish Lloyd is eager to expand shisha tobacco production in Zimbabwe and elsewhere.
By George Gay
When I corresponded in 2022 with the president of Cavendish Lloyd, Koen Monkau, he was bullish about the market for shisha-style, low-nicotine flue-cured tobacco (LNFCT), the production of which his company was trialing in Zimbabwe. And, earlier this year, he was still bullish. The major manufacturers of shisha might have experienced a drop in sales recently, mainly due to vaping, he said, but a lot of new players had entered the market in the past few years, and shisha consumption was still growing worldwide. Five years ago, for instance, there were no shisha bars in Harare, but now there are plenty of establishments that offer shisha. “This is a worldwide trend,” he added.
While this sounds like good news for Cavendish Lloyd, it seems to also be good news for Zimbabwe. As part of an email exchange in May, Monkau told me it was important for Zimbabwe’s tobacco industry that it diversified the portfolio of tobacco it offered buyers and, ultimately, manufacturers. “An industry is not sustainable in the long run if half its crop is sold to one customer, as is the case now,” he said. “LNFCT—and also other tobacco varieties—can assist in diversifying the industry so that it is able to stand the test of time.”
Although Cavendish Lloyd is the only company currently producing LNFCT in Zimbabwe, it is certainly the case that the country’s tobacco industry, at least in the guise of the Kutsaga Tobacco Research Board (TRB), seems aware of the desirability of diversification. Monkau said his company had enjoyed a good cooperative relationship with the TRB, which had this season, 2023–2024, grown 7 ha for it on a commercial basis. At the same time, the TRB was continuing to experiment with alternative growing methods and different shisha tobacco seeds.
This season, Cavendish Lloyd is hoping that its Zimbabwe crop will reach 600,000 kg, and Monkau is looking for investors to help him expand LNFCT production into other countries, including Malawi, South Africa, Tanzania and Zambia. His company, he said, was now looking to hold talks with the tobacco research institutes of these countries, following initial approaches that had been made by the chief executive officer of the TRB, Frank Magama. In fact, Tanzania had already expressed serious interest in growing this crop, and representatives of the country’s Tobacco Research Institute had attended this year’s sales, which were ongoing at the time this story was written.

Many Zimbabwean farmers are growing it for the first time this season.
Challenges
It would be wrong, however, to give the impression that everything has been going without a hitch. Monkau readily admits that his company was hit by financial and other constraints during the 2022–2023 season and that its crop of 150,000 kg was well below what had been initially targeted. And while the 600,000 kg crop expected this season would represent a major increase, it would have been even bigger, perhaps 1 million kg, but for the El Nino weather effect.
But then El Nino affected all tobacco (and other) crops in Zimbabwe (and elsewhere, and the resulting drought was eventually declared a national disaster. The unhelpful weather conditions did not come out of the blue, however, and, in mitigation, Cavendish Lloyd was able to focus on growing an irrigated crop from the start. At the same time, Monkau said, the dryland crop had had to be scaled back to ensure that growers did not plant crops that they would not have been able to sell.
Unfortunately, the current situation implies that things could reverse next season and create problems for those who use irrigation for growing tobacco because there has not been enough rain to fill dams and reservoirs.
Despite these setbacks, it is not proving difficult to attract farmers to LNFCT. Cavendish Lloyd started out on this project three seasons ago with just one grower, who is still on board, but he has been joined by about 40 others, ranging from commercial to small-scale farmers. Monkau said that LNFCT was relatively easy to grow and provided good returns when cultivated well, so farmers had been lining up to produce this variety.
LNFCT is closer grown than standard flue-cured tobacco; it requires the application of less fertilizer; it is not topped; it provides for faster harvesting because more leaves are reaped with each pass; and it requires less energy during curing. All this adds up to efficiency savings and better returns, not to mention environmental gains.
Nevertheless, the switch from growing a regular flue-cured crop to LNFCT requires some adjustments on the part of the grower, who is presented with logistical challenges if he grows LNFCT alongside regular flue-cured. For instance, because LNFCT cures faster than regular flue-cured, growers need good barn management skills when scheduling curing. In fact, Monkau believes it is preferable for growers to concentrate on either LNFCT or regular flue-cured.
To help growers further, Cavendish Lloyd is currently looking at employing more sophisticated ways of crop management than are now used. “By using satellite imaging to monitor crops, we can deploy our agronomy team more efficiently to areas that need immediate and special attention rather than have them do their weekly rounds of farmers,” he said. “It is a relatively cheap way of potentially increasing crop yields dramatically, and it is quite amazing what kind of information can be gathered on a day-to-day basis.”
Looking to the future, I asked if African-grown LNFCT might be used for purposes beyond shisha manufacture, to which Monkau replied that his company had already had inquiries from companies operating in the cigarette and RYO markets that were interested in obtaining a bright, low-nicotine-style tobacco that fitted their established blends. In addition, a recent sale of 10,000 kg of LNFCT to a flavor extraction plant in Zimbabwe had shown that there were other outlets for this type as well.
In finding and establishing these other outlets, it probably helps that as well as being involved in LNFCT production, Cavendish Lloyd has contacts made through some of its other operations, which include the marketing and distribution of cigarettes, and the trade in tobacco, cut rag and tobacco production materials, such as packaging. And since 2023, cigarette manufacturing can be added to that list since the company last year established a manufacturing plant in Lusaka, Zambia.

This season, Cavendish Lloyd is hoping that its Zimbabwe shisha tobacco crop will reach 600,000 kg.
Limits to Production
Looking away from the demand side and toward the supply side of the LNFCT business, I also asked what limited the amount of this type that could be grown. “Limits are mainly defined by how much capital we can raise to fund the growers,” Monkau said. “I believe there is room to expand production to 5 million kg in Africa on a sustainable basis,” he added before providing an interesting comparison, “which would be comparable with the crop size of Germany.”
This comparison chimes with a point Monkau had made to me in response to an earlier question about whether LNFCT could now be seen as an established commercial crop in Zimbabwe. No, it was not, he replied. Many farmers this season were growing it for the first time, so it would be an experiment to see if it worked for them. Only one farmer was growing it for the third time, and for several, it was their second season. Even with the volume of all Zimbabwe’s flue-cured crops expected to total less than 250 million kg this year because of El Nino, LNFCT would account for only 0.2 percent of the total.
That, for sure, seems to be only a modest amount of LNFCT, but I was interested to know if it had been a smooth ride getting to that point. There was no such thing as a smooth ride in Zimbabwe, Monkau told me. The financial/economic situation in the country always kept you on your toes. For instance, on Cavendish Lloyd’s first sales day of 2024, April 5, the government had abolished the Zimbabwe dollar and introduced a new currency, the ZiG, which put the whole financial system on hold for a few days, and the company was still dealing with the fallout from that. Such changes did not make doing business easier, but, apart from that, things had gone quite well. There was a lot of interest and support from the government to make the LNFCT business successful, and the company’s efforts were the subject of regular local press reports.
Of course, the real test of how things are going and will go in the future concerns whether growers are content with the prices they are receiving, and, in the short term, the answer is probably that they are. Nevertheless, Monkau made the point that pricing was something of a thorny issue in respect of LNFCT. His company was required to follow the pricing arrangements specified by the Tobacco Industry and Marketing Board (TIMB), arrangements that could lead to anomalies since LNFCT fell outside the regular classifications of the TIMB. It wasn’t too much of an issue for the tobacco that met shisha standards, but, in the case of lower grades that were unsuitable for shisha, the company was obliged to pay regular market prices for tobacco of substandard quality.
But at least the next season, 2024–2025, should see farmers keen to grow LNFCT—in fact, any tobacco type or variety. “Overall, prices for all tobacco have been good this year, so I don’t see many farmers complaining,” said Monkau. “I expect current prices will push more farmers back into tobacco growing until we see more balance between supply and demand.”
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.

July 1, 2024
Puffs with Papers

Under the cumbersome U.S. product authorization system, it’s easier to bring new cigarettes to the market than to gain approval for lower risk products such as vapes. | Photo: Jet City Images
U.S. states are passing vape product registry bills to compensate for meek federal enforcement.
By Timothy S. Donahue
Vaping product registry bills are gaining momentum in the U.S. This surge is a direct response to the perceived lack of action from the Food and Drug Administration in curbing the influx of illegal disposable vaping products. Currently, three states have implemented registry rules, with four more set to follow suit in 2025. Several other states are drafting similar bills.
Critics claim that registry bills favor big tobacco companies over independent vape manufacturers, and many continue to condemn the premarket tobacco product application (PMTA) process as excessively onerous. They point out that it’s easier to bring new cigarettes to the market than it is to gain authorization for lower risk products such as vapes.
“The FDA’s Center for Tobacco Products [CTP] is supposed to comply with a statutory, 180-day deadline to review new tobacco product applications, many of which are potentially less harmful than combustible cigarettes,” says Nick Orlando, president of the Florida Smoke-Free Association. “However, as Florida’s vape manufacturers have experienced, working through this process is often a painstaking, costly and onerous ordeal that has resulted in a backlog of thousands of applications that have sat with the CTP for years.”
There are currently 13 million vapers across the U.S., according to Tony Abboud, executive director of the Vapor Technology Association. Out of millions of applications, the FDA has authorized only six different types of e-cigarettes—all made by large cigarette manufacturers, which have the resources to meet the onerous PMTA standards. To date, the FDA has not authorized any nontobacco-flavored vaping products.
Abboud compares the impact of the registry bills to a scenario in which all beer except for Bud Light and Miller Lite are removed from stores. “Bud and Miller would love it, right, because they are definitely going to pick up some more customers,” he says.
Gregory Conley, director of legislative and external affairs at the American Vapor Manufacturers Association, says there is no need to guess why companies like Altria have dedicated massive resources to support the passage of PMTA registries. In its investor reports, Altria has acknowledged that disposable vapes have been hurting the company’s cigarette sales.
“This is not about giving a competitive advantage to [Altria subsidiary] Njoy products; it’s about selling more combustible cigarettes, which kill over 400,000 people each year,” says Conley. “Fortunately, the more politicians learn about these bills, the less they like them, which is why most states that considered these bills in 2023 and 2024 have rejected them.”
Yet plenty of states are pushing ahead. Alabama, Louisiana and Oklahoma already have PMTA registry bills in effect while laws in Kentucky, Utah, Virginia and Wisconsin are set to take effect in 2025. Many vape directories are similar. Louisiana and Oklahoma, for example, nearly mimicked Alabama’s vaping registry rules. It should be noted that both the Alabama and Oklahoma registry rules, while technically in effect, are not currently being enforced. Bills to fund the enforcement of regulations in both states have been defeated by vaping industry advocates.
“This is not about giving a competitive advantage to [Altria subsidiary] Njoy products; it’s about selling more combustible cigarettes, which kill over 400,000 people each year.”
Florida’s Fortune
Florida has a reputation of doing things differently. According to Orlando, Florida’s House Bill 1007 addresses the state attorney general’s concerns without forcing retailers out of business.
Unlike other state registries, Florida’s system will not create a list of FDA products that have marketing authorization or are currently under PMTA review. Instead, Florida Attorney General Ashley Moody will compile a registry of products deemed illegal only after an administrative review process and a public comment period. The law focuses on disposable products and allows for the sale of most open system and pod system products.
“The list does not currently have any products on it. The state must create a list, SKU by SKU, meeting specific criteria,” explains Orlando. “The list and the products listed are then placed on a referral to a rules committee, which would then open up for public comment any items that made the ‘unauthorized’ list. There would also be mediation with the product owner. The real benefit is that this process is very long, and it only deals with single-use products. You can keep a product on your store shelves until the entire process is completed.”
Orlando says several state vapor industry associations are trying to figure out ways to tailor the Florida bill to their respective states.
Not everyone is excited about Florida’s approach, however. “While undoubtedly better than a full-blown ban on 98 percent-plus of the current vaping market, Florida’s bill should not be a model for other states,” says Conley. “Politicizing vaping by putting unilateral control into the hands of attorneys general does not make sense, particularly in light of the decline in youth usage we have seen since 2019 …. Adult use of vaping products has grown significantly since 2020 all while youth vaping has continued to fall. In any other reality, this would be celebrated as a significant public health victory. On the plus side, Florida does have strong due process rights built into its administrative law statutes, so Florida businesses and consumers will have the opportunity to weigh in on future bans and potentially bring litigation.”
Other manufacturers praise the Florida rules. “Properly constructed and effectively enforced product directory laws can be an important supplement to federal enforcement against illegal vapor products,” Juul Labs wrote in a statement.
“Properly constructed and effectively enforced product directory laws can be an important supplement to federal enforcement against illegal vapor products.”
Disciplinary Reaction
Another difference in Florida’s vaping rules is that the regulations have teeth to combat underage retail sales. Any person who sells a nicotine product, including vapes, to someone under 21 for a third or subsequent time will face a third-degree felony charge, punishable by up to $5,000 in fines and five years in prison.
Beginning March 1, 2025, manufacturers that sell prohibited products in the state will face a $1,000 daily fine for each such product until it’s removed from the market. This stricture will also apply to retailers, wholesalers and distributors who ship products into Florida.
Orlando says retailers have embraced Florida’s new rules. The options were either an outright ban on all flavored vaping products or HB 2007, which allowed for adult vapers to have access to a variety of flavors and hardware options to help a broader swath of combustible smokers make the switch to vaping. “Once I explain to them what really happened and they understand the dynamics of it and what it takes, actually, to get something on the list and that open systems are totally excluded, they’re happy with it,” he says.
Orlando says that, at the end of the day, the vaping business needs reasonable regulations and industry players need to be responsible. He believes the Florida regulations are a step in the right direction for tobacco harm reduction. “Let’s get real. Let’s get accountable and start doing business like we should,” he says.
Generational Bans Growing
The idea of banning access to legal nicotine products, even for those born after January 2007, originated in New Zealand. The proposal then spread to other countries, including the United Kingdom and the United States. In the U.S., states such as California, Tennessee and Massachusetts are all pushing for generational smoking bans under the guise of protecting youth and promoting social well-being.
New Zealand ditched its plans after a new government was elected earlier this year. Then, a month later, the U.K. government announced its intention to introduce a bill in Parliament prohibiting nicotine sales for future generations, aiming to phase out smoking among young people.
The U.K.’s Tobacco and Vapes Bill, if passed unamended, will be one of the world’s most rigid anti-tobacco laws and prevent children turning 15 this year or younger from ever being able to be legally sold nicotine products. Under the new law, each year, the legal age for cigarette sales—currently 18—will increase by one year. It means that people born in or after 2009 will never be able to buy cigarettes legally. The law will not affect those who are already allowed to buy cigarettes.
Critics say the Conservative Party’s proposal is “unconservative,” and some have derided it as a desperate attempt by Prime Minister Rishi Sunak to leave a legacy amid an otherwise ineffective tenure. Former Prime Minister Liz Truss is one of several members of the governing party who have said they will vote against the legislation. However, the U.K. bill was put on hold after Sunak called a general election for July. The House of Commons unveiled a list of bills it would take up before the U.K.’s Parliament dissolves ahead of this summer’s elections; the generational tobacco ban was not included. The postponement will not necessarily mean the U.K. will follow New Zealand’s example, however, as Britain’s Labour Party, which is expected to win the elections, has appeared committed to the ban.
In the U.S., generational bans recently gained some legal support after the Massachusetts Supreme Judicial Court upheld a generational tobacco ban instituted by the town of Brookline in 2020. Since the ruling, several other localities in the Greater Boston area have quickly followed suit.
The Boston suburb of Brookline law makes it illegal for anyone born after Jan. 1, 2000, to purchase tobacco products—including cigarettes, cigars and vaping products—for their entire life. The law went into effect in 2021, and despite legal challenges that pushed the ruling all the way up to the Massachusetts Supreme Judicial Court, the law has remained intact.
It was the first time legislation of this kind had become law in the United States. Just three weeks after the court decision, Stoneham, Massachusetts, became the first town to follow Brookline, approving a generational tobacco ban for anyone born after Jan. 1, 2004. Now, several other communities in Massachusetts are also considering generational bans.
Detractors claim generational bans infringe upon civil liberties and could have negative economic consequences, including boosting the black market and causing job losses. These bans also raise concerns about enforcing age restrictions and protecting the rights of adults to make their own choices.
“The tobacco industry and their clients are resurrecting all the old arguments that we have come to expect in their efforts to delay and divert this important legislation,” Martin McKee, professor of European Public Health at the London School of Hygiene and Tropical Medicine, says. “Once again, we see loaded polling questions and discredited claims about increasing illegal sales. Inevitably, these ludicrous arguments will have some traction among MPs [Members of Parliament] that reject any public health measure or have accepted the industry’s hospitality, but most will, rightly, not give them the time of day.”
In Australia, where a ban on disposable vaping products has caused a violent war between motorcycle gangs and other crime syndicates over the illegal trade of black market vapes, dozens of vape and tobacco shops have gone up in flames. According to media reports, police in Victoria were forced to investigate 27 fires linked to the illegal tobacco trade over a seven-month period.
Experts believe a convenience store crime wave could reach Britain, and the black market could explode if the U.K.’s generational ban comes into effect. “These crime groups are in the midst of a dangerous turf war as they try to gain ultimate control over the vape and illicit tobacco black market,” Theo Foukkare, CEO of the Australian Association of Convenience Stores, says. “Tobacconists are being firebombed on a weekly basis. In Victoria alone, there have now been more than 50 firebombings of retail stores in the last 12 months. They target any store that will not sell their black market product.”
The anti-nicotine agenda behind many of the government and public health groups that support generational nicotine bans is relentless and could eventually target other consumer goods, according to experts, who add that the bans are not just about nicotine but about individual freedoms and democracy.
THR advocates say that generational bans are simply another form of prohibition with dangerous consequences.
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.

July 1, 2024
Punching Above Its Weight

LTL’s tobacco reclaimers are characterized by their high levels of efficiencies and relatively low running costs. | Photo: LTL
A small family business, LTL holds its own as a supplier of equipment to the global tobacco industry.
By George Gay
While I was corresponding in March with the founder of LTL, Paul Lawton-Bryant, he was involved hands-on with others in his company fulfilling an order for one of its CR120P super-slim format cigarette-tobacco reclaim systems (CTRS). I mention this because LTL is very much a family company, and when asked what its strengths were, Lawton-Bryant said at the end of his reply that one of them was down to his personal drive for perfection in everything he did.
“I am very hands on in the business and spend many hours in our workshop machining parts and building the machines to ensure that the high quality I demand is maintained,” he added. And the point is that I could see this quest for perfection from another angle. Although heavily involved in the new CTRS project, he took the time to answer with precision and clarity every one of a long list of questions that I had sent to him. And he answered frankly: He even made the point that his drive for perfection could also be seen as a weakness.
LTL is owned privately by Lawton-Bryant and his wife, Julie, who is the financial director. They started trading in 1997, though the company, as currently constituted, was founded in 2001. It operates out of premises in the village of Chilbolton,* Hampshire, U.K., where it designs and manufactures primary processing equipment for the global tobacco industry, though, in recent years, it has supplied mainly CTRSes, tobacco feed systems and central dust collection systems. It is involved, too, in nontobacco-related projects, but its core business is focused on tobacco-related products and services.
Quality of Output
The CR120P, which is LTL’s most in-demand reclaim system, and the higher-capacity CR250P are characterized by their high levels of efficiencies and relatively low running costs. “Our systems regularly achieve in excess of 96 percent reuseable reclaimed tobacco yield,” Lawton-Bryant told me in an email exchange. “Energy consumption is quite low, with a total electrical load of 4.2 kW and compressed air usage of just 3.0 cfm for the CR120P and a little higher on the CR250P. In addition to this, the machines use very few consumable spare parts and come with an industry-leading two-year warranty based upon single-shift operation.”
LTL’s reclaim systems are 99 percent standard, though there are different versions for regular and slim cigarettes, and the company will supply units to feed rejected cigarettes into the CTRSes if required. Otherwise, the main customizations take in the usual elements such as supply voltages/frequency and paint color. The CR250P was launched about 10 years ago in response to several inquiries for larger capacity machines and a general trend among competitor companies. However, generally, LTL’s customers still prefer the flexibility of having a smaller capacity machine—running two or more for different blends rather than having one larger-capacity machine.
The focus in developing the CR range of reclaim systems has been on the quality of the output product because, Lawton-Bryant said, once a cigarette had reached the stage where its tobacco needed to be reclaimed, that tobacco was probably at its most fragile and at its most valuable, having been conditioned, blended, cut, expanded, dried and flavored. “The particle size and moisture content of the tobacco within a cigarette means that the tobacco could easily be degraded through unsophisticated mechanical handling and separation processes, and it is in those areas that we have focused our design to minimize damage and maximize yield,” he added.
Return on Investment
The potential monetary savings inherent in efficiently reclaiming processed tobacco that would otherwise become a costly burden would seem to make an indisputable case for CTRSes, but I wondered whether there were other factors in play. In answer to a question about whether tobacco industry ESG (environmental, social and governance) policies had been driving demand for CTRSes, Lawton-Bryant said that such policies would be a consideration in purchasing decisions but that he did not see them as driving demand.
The key drivers in any business had always been and would continue to be the need to make a return on investment. A cigarette was at its most valuable having gone through the full primary process, he said, a fact often given less consideration than it deserved, so any damage and loss occurred at that point in the process would be the costliest that it could be. This fact alone often helped justify the relatively small investment required to purchase a good-quality CTRS, though actual payback periods would vary drastically depending upon individual circumstances.
For example, in the past, LTL had sold a machine to a customer that previously disposed of all its reject cigarettes, which was said to have made the payback very short indeed. “A more usual scenario would be the savings our particular machine can make when compared to a competitor’s machine,” Lawton-Bryant said. “We have seen reuseable tobacco yields as low as 70 percent in other machines available in the market, so with our machine regularly achieving 96 percent yields, a 26 percent increase could mean payback within 12 months.”
Global Reach
LTL supplies machines to a wide range of customers around the world, though, recently, the Middle East and Africa in particular have provided good opportunities. In fact, the project mentioned at the start of this story involved the supply of a CR120P to a customer in the Middle East that is planning to buy a second machine following the installation of the first one. “We are very fortunate in that we have several repeat customers,” said Lawton-Bryant, “and I feel this is one of the best references we could possibly provide.”
At the same time, LTL supplies machines to companies both large and small, though most of its customers tend to be those operating smaller manufacturing facilities with between one and 10 makers. In fact, Lawton-Bryant said that LTL was probably an unusually small-scale company among those supplying equipment to the global tobacco industry and that it was understandable that this could be seen by some customers as a risk. “However, I do feel that our long history of supplying high-quality and innovative equipment to the global tobacco industry proves our commitment to the industry and should provide some assurances,” he added.
This takes us back once again to the start of the story because, clearly, small, family-run businesses offer several advantages. “I think it is our small size which allows us to react quickly and effectively to new challenges and changing customer demands,” said Lawton-Bryant. “A good example of this was our reaction to the recent global pandemic where travel restrictions were imposed. This had a massive impact upon our ability to install and commission equipment, so our team focused upon a remote commissioning solution, which included fitting a router and camera to machines, thereby allowing us to remotely access the PLC, guide the customers on installation, remotely commission the machines and view the product results through the camera.
“Our core team has over 160 years of experience in the industry covering both mechanical and electrical/software engineering and process knowledge, which meant that the new system was conceived, designed and implemented within a matter of weeks, and not one of our customers suffered through our inability to travel to site throughout the restrictions. This remote access remains a feature of the CR range of reclaim systems today and can assist with ongoing support and training if required.”
Enduring Resilience
In fact, it is clear that Lawton-Bryant sees the advantages of running a small-scale operation as outweighing the potential pitfalls of trying to grow the business. “Over almost 30 years of running my own business, I have resisted the pressures to grow into a large company,” he said. “I wish to serve the niche industry that we are in to the very best of our ability, and that requires a very tight level of control throughout the business processes, something which can easily be lost in a larger company.”
When I asked how confident he was about the future of the tobacco industry and, especially, the cigarette industry, that part of the industry LTL mainly served, he was frank in his reply. “For more than 20 years now, I have had regular periods of concern over the sustainability of our business in the tobacco sector, though I am happy to say that so far those fears have been relatively unfounded,” he said. “Of course, the industry has faced several challenges and continues to do so, but generally, it is very resilient.”
And finally, I asked how confident Lawton-Bryant was about LTL’s future. “I am confident that we can respond to the many challenges that running a business encounters,” he said. “Whether that remains mostly in the tobacco industry remains to be seen, but I sincerely hope that it does,” he said.
*Although “only” a village, Chilbolton, too, punches above its weight with an observatory that boasts facilities and expertise in atmospheric science, satellite tracking, radio astronomy and communications that support U.K. academia and industry.
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.

July 1, 2024
The Best of Both

From left to right: Lucas Dockorn, Franz Demeulemeester and Jay Barker at the YTL’s office in Santa Cruz do Sul | Photos: Taco Tuinstra
Newly created Your Tobacco Link harnesses the strengths of JEB International and Tobacco Trading and Services.
By Taco Tuinstra
The concept for the merger was sketched on a napkin during a dinner in Antwerp. “It was very old-school tobacco,” recalls Jay Barker, founder of U.S.-headquartered JEB International Tobacco Co. and one of the partners in the new business.
Yet the resulting company, Your Tobacco Link (YTL), is anything but old school. Operationally and administratively headquartered in Santa Cruz do Sul, the epicenter of tobacco cultivation in Brazil, YTL has been designed with the modern, rapidly changing leaf market in mind. It is lean, well connected and fleet footed, ready to scour the globe at a moment’s notice for the right tobacco at the right price. “We have an unrivaled capacity to secure almost any tobacco,” says Franz Demeulemeester, a key executive who came from YTL’s other predecessor company, Belgium-based Tobacco Trading & Services (TTS).
That ability stems from the rich experience and expansive professional networks of JEB and TTS. Both companies have been in business for more than two decades, but each has different strengths and focus areas. “TTS can supply leaf out of 36 origins, including quite a few niche markets that are difficult to penetrate,” says Demeulemeester. Its sourcing areas include off-the-beaten-path origins such as Azerbaijan, Pakistan and Bangladesh, for example. One area the company was struggling in, however, was the United States—a market where JEB was strong. “Jay had customers we did not have and vice versa,” says Demeulemeester.
By combining their assets, the partners reckoned they could step up their service to their customers. “We saw lots of synergies between what JEB and TTS were doing; it is one of those rare instances where one plus one truly equals three,” says Barker, noting that in some mergers, “one and one doesn’t even equal two.”
Despite the obvious advantages, the “marriage” didn’t happen overnight. Rather, it was preceded by a long courtship. Barker had been running JEB’s Brazilian operations from an office in Santa Cruz do Sul. As the work mounted, he started contracting ever more of it to TTS’ logistics department. A full merger seemed the next logical step, but Barker, a sharp businessman who values his independence, hesitated. The case for joining forces proved too compelling, however, and as time went by, he came around. “I thought, why not; it actually makes a lot of sense,” says Barker.
He has not regretted the move. In the short time since its creation, YTL has already expanded, enlarging its footprint in Brazil with a more robust farmer base and entering Malawi with new growing operations, for example. “Now we also have Zimbabwe on our radar,” says Barker.

Third-party processing has been a sensible and cost-effective solution for YTL and its customers.
Deep Experience
In addition to an extensive network of global origins, the new company can draw on profound industry knowledge. “Annoyingly for Jay, he is dealing with elderly people,” jokes Demeulemeester, who started his tobacco career in 1984, cleaning a sample room in Santa Cruz do Sul. “TTS has a lot of, let’s say, experienced people.” Add up the tobacco tenures of just the company’s most senior executives, which also includes industry veteran John Derek Visser, and the tally handsomely exceeds 150 years.
Which is not to say that the company’s management is dominated by gray-hairs. Aware of the importance of succession planning, YTL has been actively recruiting a new generation of leaders. That crop includes professionals such as Lucas Dockhorn, the scion of a prominent local tobacco family who unlike some of his contemporaries preferred to stay in the Santa Cruz do Sul region rather than move to a city.
“‘Tobacco’ is truly in my blood,” says Dockhorn, referring to the tendency of tobacco leaf merchants to strongly identify with their profession. Despite the industry’s negative public image (even in tobacco powerhouse Brazil), it has been surprisingly easy to attract young people to the business, according to Barker. “It can be harder to get a bank to deal with your business than to find a new young guy,” he marvels.
We saw lots of synergies between what JEB and TTS were doing; it is one of those rare instances where one plus one truly equals three.
Competitive Strengths
Because of its wide variety of sourcing areas, YTL can offer customers substitutes when supply in one area is either short or expensive, or both, as was the case in Brazil this season (see “The Great Scramble,” Tobacco Reporter, May 2024). “We have not only the ability to offer those alternatives but also the knowledge to guide customers to the appropriate replacements—that you can replace BO1 grades from Brazil with Chinese tobacco from the Hainan region, for example,” says Demeulemeester.
Rather than focusing on individual transactions, YTL is keen to establish long-term, friendly working relationships with its customers. “We will take the job from A to Z,” says Demeulemeester. “To us, business is about more than just buying the best quality for the best price. We can help with logistics or propose better freight rates, for example; you will be surprised how creative we can be.”
Low overheads and short communication lines are additional advantages. “We are very flexible and quick to act,” says Barker, explaining that what the company’s sales team lacks in size it compensates for with ambition. To keep down its expenses, YTL outsources leaf processing. This marketing season, it contracted with Brasfumo in Venancio Aires, but the company has worked with other partners as well. Pointing to the excess capacity in southern Brazil, Barker says third-party processing is a sensible and cost-effective solution for YTL and its customers.
As in every merger, both parties faced a learning curve as the companies came together. For Barker, the deal presented an opportunity to learn about new tobacco origins, including some he wasn’t aware of before as leaf suppliers. “Azerbaijan, for example, is a little gold mine with a very solid supply chain,” he says. “I didn’t even know they grew tobacco.” To familiarize himself with all those areas, Barker traveled more in 2022 than he had in many years. “It’s been an exciting journey for me,” he says, stressing the continued importance of face-to-face meetings even in the Zoom era. The TTS team, in turn, was impressed by the dexterity of JEB’s operations. “The decision-making process is much quicker at JEB,” says Demeulemeester. “That’s definitely a plus point for the customer.”
The merger remains a work in progress. Tobacco is a notoriously conservative business, and some customers need time to approve new suppliers, even if they have known the people running those businesses for many years. For the time being, customers of YTL’s predecessor companies will have the option to continue doing business with either JEB or TTS. “The Idea is to eventually have everything under one umbrella—but if needed, we still have the mechanisms to use both JEB and TTS,” says Barker, who expects the merger to be fully completed within a year.
In the meantime, YTL is already thinking about the future. Among other projects, the company is considering expanding into supplemental agricultural commodities, such as hemp fiber and industrial hemp. Such initiatives will provide the firm with additional streams of income in the medium term while also protecting it against the impact of declining global cigarette sales in the long run.
This, in turn, fits well with the partners’ shared ambition to leave a legacy. “Our goal is to create a sustainable company where our youngsters will have a good future,” says Barker. “The decisions we make today will have a real impact on these people and their families. Our job is to provide a stable foundation.” That means being creative and thinking outside the box while at the same time being realistic about the possibilities. “We’ll be chasing real opportunities, not rainbows,” says Barker.
Taco Tuinstra is Tobacco Reporter’s editorial director.Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.On his watch, Tobacco Reporter has won several awards for editorial excellence.Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.

July 1, 2024
Bhutan’s Tryst with Health Imperialism

The author standing with a local in front of a pharmacy stocking NRT gums adjacent to a grocery shop officially selling tobacco. (Photo courtesy of Sudhanshu Patwardhan)
Without offering locally relevant cessation tools, prohibition is doomed to fail.
By Sudhanshu Patwardhan
Bhutan, a country that measures its riches in terms of “gross national happiness,” may have become an unsuspecting victim of a new form of imperialism: health imperialism. A blind copy-paste of Western tobacco control policies, worsened by local gold-plating, may have landed Bhutan in a mess. A visit to the landlocked nation gave the author a unique insight into how prohibition of tobacco without offering locally relevant and innovative tobacco cessation tools threaten this Shangri-la.
The Forbidden Kingdom
A series of district-wide tobacco control measures in Bhutan from the 1980s culminated in the declaration of a nationwide ban on the sale of tobacco products in 2004 through a resolution of the National Assembly. Overnight, Bhutan became a poster child of global tobacco control, an emerging David against the Goliath of transnational tobacco companies. Nanny statists got a lifeline, and the “p” word—prohibition—was resurrected after successive failures of over 150 years in alcohol and drug prohibition movements. The Tobacco Control Act of 2010 further enshrined into law restricted access, availability and appeal of tobacco products and gave sweeping powers for arresting those selling or even possessing tax-unpaid tobacco for personal consumption. Bhutan was all set to become a tobacco-free society. A happy nation was also going to become healthier. In theory.
Market Forces Take Over
The roller-coaster ride between 2010 and 2019 is captured in the World Health Organization’s regional office’s 2019 publication The Big Ban: Bhutan’s journey toward a tobacco-free society. A big achievement in this period was visible reduction in public place smoking. Otherwise, the optimistic title belies the details of the failed ban confessed in the publication. It is a classic tale of good intentions scuppered by poor execution. A highlight of the data reported there is the difficulty in enforcing the ban, evidenced by availability of tobacco products below the counter in most shops in Bhutan. Tobacco use among 13-year-olds to 15-year-olds went up from 24 percent in 2006 to 30 percent in 2013 based on the Global Youth Tobacco Survey findings. The severe penalties required by the initial law resulted in more than 80 people being imprisoned between 2010 and 2013. There was growing discontent about the disproportionality of the penalties among the people of a nation gradually moving from a benevolent absolute monarchy to a democratic constitutional monarchy. Public furor and rethinking among the lawmakers resulted in amendments and milder punishments, and the law’s “claws (were) trimmed,” states the WHO report. Between 2010 and 2014, permissible quantity for personal possession was steadily increased for both smoked and smokeless tobacco products. The ban and its enforcement were proving ineffective and untenable. And then Covid-19 happened.
Reversal of a Failed Ban
The government was obviously losing revenue due to the flourishing black market of smoked and smokeless tobacco products smuggled from India and elsewhere. The fear of tobacco smugglers bringing in the Covid-19 virus was enough excuse to act decisively. In July 2021, the government amended the 2010 Act, thus lifting a decade long ban on local tobacco sales.
The pragmatism of the politicians who reversed the ban presents a sharp contrast to the previous prohibitionist policy. Today, sales and consumption continue, and based on the most recent (2019) WHO STEPwise approach to surveillance (STEPS) data, 24 percent of those between ages 15 and 60 currently use tobacco products. Sadly, the ban did not make Bhutan a tobacco-free society. Anecdotally, e-cigarettes are also available now in some grocery stores in the capital, Thimphu, and attracting use among smokers and never-smokers. These are not regulated nor used as smoking cessation tools, presenting another area of concern for public health. A ban may not be the answer for these products either. Regulation that balances current smokers’ needs for safer alternatives versus prevention of uptake by the youth and nonsmokers will be key.
Peering Through an ‘Addiction’ Lens
I first read about the ban’s overall failure in the 2019 WHO report and then heard about the reversal of the ban during the global Covid-19 pandemic. How did Bhutan land in this situation? There is, of course, economics at play: demand, supply and something to do with a genie being out of the bottle. When I put my doctor’s hat on, a key explanation stares at me: lack of quitting support for the existing 120,000 tobacco users. Reams of self-congratulatory publications and numerous WHO awards to Bhutan since the 1990s have focused on success in awareness-building and restricting access and use. The famous case of the Buddhist monk who was jailed for three years in 2011 for the possession of $2.54 worth of tax-unpaid tobacco misses the point that he was very likely addicted to tobacco and may have needed more than punishment to quit. In the absence of availability of tobacco products, it should have been a human right for him to have access to safer nicotine to manage nicotine withdrawals and achieve craving relief. This assessment should not be used to vilify tobacco users. Instead, it should be a reminder to those in tobacco control that preaching to nicotine-dependent users without offering alternatives is not enough and also unethical. A key demand-side reduction measure, to use Framework Convention on Tobacco Control (FCTC) vocabulary, is that of providing tobacco dependence treatment and services. This is covered under FCTC Article 14 but rarely implemented in low-income and middle-income countries (LMICs), Bhutan included. I saw firsthand recently the country’s struggles with rising tobacco use coupled with a lack of cessation products and services.
Tobacco Cessation: The Poor, High-Maintenance Cousin
In Bhutan, like in most LMICs, overall tobacco control is run by public health experts, and tobacco cessation specifically (and separately) falls under the remit of psychiatrists. Neither groups are excited by tobacco cessation for a variety of reasons. Public health professionals often have little or no experience in treating individual patients and have increasingly been sold a unidimensional narrative that the tobacco epidemic is singularly driven by the commercial vested interests of tobacco companies (the “vector”). For them, the tobacco user is a victim of the tobacco industry, should be labeled an addict and then preached at to quit. Psychiatrists, on the other hand, are generally geared toward treating established mental health conditions and severe mental illnesses and even within the “de-addiction” field prioritize substance abuse treatment and alcohol de-addiction over tobacco cessation. Tobacco cessation with nicotine-replacement therapy and other pharmacological interventions are costly and need a level of training and qualification to prescribe—and are therefore cost-prohibitive to be offered at scale. They are also not without their failures, give around 20 percent quit rates at one year in controlled clinical studies and much less success in real-world settings. The success of quitting cold turkey is overrated and often drives policymakers’ wrong beliefs and attitudes about the ease of quitting. Public health tobacco control awareness campaigns and advocacy, on the other hand, are highly visible, scalable, inherently worthy endeavors, and most do not require impact assessment as proof of success. The FCTC’s Article 14 thus remains a neglected tool for reducing harms from tobacco globally and receives little or no funding from international donors and national governments nor any interest from pharmaceutical companies or tobacco companies to innovate in.
Safer Nicotine Not Widely Available in Bhutan
Nicotine illiteracy among healthcare professionals and lack of availability of safer nicotine alternatives can translate into poor quitting among tobacco user patients. From my field visits to pharmacies and discussions with frontline healthcare professionals in Bhutan, I noted that 2 mg and 4 mg nicotine gums have only recently become available in some pharmacies in Thimphu, but patches are not stocked. Patients come and buy these over the counter, but there is little record of how long they take it for, their quit and relapse rates and whether their doctors support them in their quit journeys. Varenicline or bupropion are not available for cessation. When called, the “national quitline,” contrary to the claim of the 2019 and 2024 WHO publications, do not deal with tobacco cessation support. Most of the healthcare professionals in Bhutan receive their undergraduate and graduate training in India, Sri Lanka and other nearby Asian countries. Similar to the rest of the world, doctors in Bhutan are not confident about prescribing nicotine-replacement therapy and may harbor misperceptions about nicotine itself. They have not received any tobacco cessation-related training in the past five years, and nicotine-replacement therapy is not available for free or at subsidized prices anymore, unlike other medications in Bhutan.
Navel-Gazing Time for All?
The backpedaling by Bhutan on the tobacco ban has not been reported or analyzed widely enough. Bhutan’s failure to rein in tobacco sales and increased use, despite a ban, should be a wake-up call for all parties involved. What was touted as a role model for other countries for eliminating harms from tobacco has instead become a cautionary tale for poor policymaking done to pander to international funders and organizations. The undue influence of a select few Western nations in national health policymaking for LMICs is also a matter of concern as the global geopolitical order rapidly morphs. Projects such as FCTC 2030, funded by the U.K., Norway and Australia, continue to churn out reports such as the Investment Case for Tobacco Control in Bhutan (WHO/UNDP, February 2024), ignoring lessons from the ban, mostly unaware of capacity issues on the ground and not addressing the need of current tobacco users for safer nicotine alternatives. Emergent strong economies such as China and India will no longer tolerate meddling by past colonial powers and imperialist nations in their health policies, but neither should other LMICs.
Toward Gross National Health
For a nation of around 750,000 people, tobacco use is claimed to kill between 200 people and 400 people every year—all preventable deaths (side note: the data for the same year varies dramatically between two WHO reports). Global tobacco control has failed Bhutanese tobacco users and their families. For a nation built on principles of sustainability, risky forms of smoked and smokeless tobacco products have no place in society. The mountains, the clean air, the happy smiles and peace-loving people of Bhutan deserve to own tobacco control initiatives, not be made to adopt hand-me-down Western ideologies or policies. That will require the doctors and pharmacists in Bhutan to understand the science of tobacco cessation and harm reduction and make quitting sexy. Availability of nicotine-replacement therapy products, innovation in safer nicotine alternatives and improved cessation services will need to be ensured and incentivized by the government. That has the potential to keep their nation happier and healthier for the coming generations.
Disclaimer: The author’s work here or elsewhere is dedicated to using ethical and scientific evidence-based approaches to eliminate harms from all risky forms of smoked and smokeless tobacco products. The article is based on the author’s personal conversations with experts and lay people in Bhutan and from shop visits and an analysis of two of the most recent WHO reports on this topic. The intent of this article is to shine a light on a vulnerable LMIC’s experience with unchecked health imperialism to create insight and debate on the impact and implications of such practices. The author holds utmost respect for the nation, the policymakers and the people of Bhutan.
Sudhanshu Patwardhan is a medical doctor, nicotine expert and health tech entrepreneur from India, based in the U.K. He works on projects around the world to reduce harm from tobacco, especially among the most disadvantaged tobacco user populations.

June 1, 2024
Heated Breakthrough

Greentank is at the forefront of innovation with the launch of its patented Heating Chip technology.
By Timothy S. Donahue
The vaping industry is in a constant state of innovation, primarily driven by advancements in hardware. A significant focus has been on enhancing battery quality as well as the electronics and circuitry within vaping systems. Notably, there have been substantial advancements in atomization technology. This includes the development from traditional wire coils and wicks to a more progressive adoption of ceramic materials.
Atomization technology is crucial because the heating element functions as the core of a vaping system. The coil’s role in atomizing e-liquid is pivotal; the more efficient the element, the better the aerosol production, consistency and flavor. Recently, a leading technology company announced its breakthrough in heating technology, set to revolutionize the market.
It has been seven years since a significant advance has been made in atomization technology. Enter Greentank: a company with a wholly new design representing a dramatic step-change from the conventional ceramic and wicked coil systems prevalent in many of today’s vaping products, promising enhanced safety, performance and experience.
Greentank is a business-to-business technology company that specializes in the design, development and manufacturing of precision-made inhalation devices and atomization technology, according to CEO Dustin Koffler. Greentank’s latest innovation in atomization is called Quantum Vape. It replaces cotton wick and ceramic heating elements with a state-of-the-art patented Heating Chip.
According to Koffler, the Heating Chip outperforms all other leading atomization products. For example, the Heating Chip performs better on key safety metrics such as harmful and potentially harmful constituents (HPHCs) and heavy metal testing than other leading technologies in the market. It also produces the “absolute greatest” release of flavor and the most consistent consumer experience from the first draw to the last, he says.
“With this breakthrough in inhalation science, we’ve catapulted beyond the current generation of atomization technology,” said Koffler. “Our Heating Chip is set to disrupt the global market. It’s a distinct departure from anything currently available. While many companies focus merely on tweaking the substrates and print materials used in ceramic-based systems, they remain bound to the same ceramic foundation.
“They’re refining ceramics—making components slightly smaller, slightly tighter, experimenting with new materials and formulations. Greentank, however, is pioneering an entirely novel approach that’s unlike anything witnessed in the industry before.”
The Heating Chip is small. It comfortably fits on a fingertip and is one-fifth the size of today’s heating solutions. However, Koffler said its high-performance standards are due to advances that have never been achieved before with atomization. Typically, in a ceramic heating element, over time, flavor starts to dissipate naturally. This is because there is caking or buildup inside the pores of the ceramic, causing the temperature throughout the ceramic to vary after each use, leading to thermal cycling. With the Heating Chip, there is zero potential for thermal cycling, according to Greentank; every puff tastes the same as the first.
“The Heating Chip employs a unique capillary action to draw the oil through the heating element, ensuring that each puff initiates a fresh cycle of material,” explained Koffler. “Many products boast consistent flavor throughout use, yet we’re all aware that the current market offerings fall short in maintaining this throughout the life of the product. In contrast, the Heating Chip integrates nanofabrication into its design.
“The entire manufacturing process is proprietary, involving novel methods to assemble materials into the Heating Chip that emits no ceramic particle emissions and contains the lowest levels of harmful and potentially harmful constituents. While it’s not feasible to claim complete absence, third-party testing and rigorous chemical analysis have found these HPHCs to be at undetectable levels.”
Additionally, Greentank only recently completed a longevity study using the Heating Chip in one of the company’s proprietary electronic nicotine-delivery system devices with a target of 15,000 puffs. “We easily achieved this target while demonstrating consistent vapor output from the first puff to the 15,000th puff,” explained Koffler. “Furthermore, we provided these same devices, along with new ones, to Labstat International to conduct aerosol analysis for both carbonyls and metals. The results showed that there was no difference in the safety efficacy from the first puff to the 15,000th puff.”

Technically Speaking
To a scientist, it’s a micro channel-based aerosol generator that delivers sub-micron particles according to its proprietary design. To the average consumer, it’s a smoother experience with maximum flavor intensity in a less-risky delivery than currently marketed e-cigarette and cannabis vape products. The Heating Chip isn’t anything like ceramics, said Koffler. Porosity isn’t inconsistent. It’s a chip with thousands of small holes and microchannels that allow for a superior level of precision and control in the atomizing process.
One of the major challenges in designing the Heating Chip was finding the right talent to help develop the manufacturing process, said Koffler. The manufacturing of the Heating Chip requires specialized equipment, and bringing together a system that worked was incredibly complicated. The manufacturing of the Heating Chip can be compared to producing semiconductors.
“By adapting pioneering techniques from other advanced industries and tailoring them to meet our specific requirements, we’ve enhanced our technology’s performance,” Koffler revealed. “The expertise of our global team, the precision of the equipment we utilize and our methodical focus on perfecting one aspect of the process at a time has been instrumental in overcoming the challenges we faced.”
The next generation of atomization technology is moving away from ceramics, according to Koffler. The Heating Chip technology avoids all heavy metal leaching and ceramic particle emissions and ensures the lowest HPHCs all while permitting an unprecedented taste and consistency over a longer lifetime.
It also offers a smoother experience and better mouth dispersion. Interestingly, the device is also able to create particulate matter small enough to reach lower lung absorption levels for nicotine, much like combustible cigarettes. This could be a giant innovation in getting smokers to adapt to less risky nicotine-delivery systems.
“Utilizing microfluidic channel technology, we’ve engineered a system that precisely controls aerosol nucleation and optimizes particle size, enriching the sensory experience while maximizing intensity without any harshness,” Koffler detailed. “Our design includes independently arranged channels and a thin film interface that safeguards against chemical reactions and thermal decomposition. This architecture not only enhances flavor fidelity and ensures consistent temperature but also elevates safety standards and reduces potential harm significantly. From the outset, our goal was to achieve unparalleled performance and safety.”
The size of the Heating Chip is incredible. It’s tiny. It’s one-fifth the size and 100 times the precision of any ceramic atomizer on the market today, according to Koffler. Its reduced size creates greater design flexibility and quicker response times. The Heating Chip is produced on sophisticated micro- electromechanical systems (MEMS) machinery. MEMS is a general term for forming a micron-level three-dimensional structure on a support substrate such as a silicon wafer and integrating functions such as electronic circuits, sensors and actuators.
“Unlike the broad, imprecise methods typical of ceramic manufacturing, our approach from start to finish is meticulously controlled and exact,” explained Koffler. “This precision is why developing the right equipment for producing the Heating Chip was an extensive process. The level of control we achieve with the MEMS technology not only enhances consistency but also opens up revolutionary possibilities in precise dosing for pharmaceutical applications. This capability to finely tune dosages is a game changer in both vaping and medical fields.”

Future Markets
Based in Toronto, Canada, Greentank doesn’t produce nicotine. It doesn’t manufacture e-liquids or cannabis products. At its core, Greentank is a technology and product development company with a focus on safety, performance and reliability. The Heating Chip is not made from ceramics. While the material is proprietary, Koffler insists the technology is something new and its application in inhalation products is only scratching the surface of its potential. It is designed specifically for multiple verticals, predominantly electronic nicotine-delivery systems but also pharmaceuticals and wellness products.
“We have expanded to over 100 employees across Canada, the U.S., the U.K., Singapore and China, with the majority focused on research and development,” Koffler detailed. “We’ve assembled a highly skilled manufacturing team to produce our innovative chip and have strengthened our engineering and material science capabilities. Last summer, we acquired Numerical Design, a company specializing in microfluidics and microfabrication, boasting an extensive portfolio of patents that further strengthen our intellectual property. This strategic expansion underscores our commitment to leading the edge in technology and manufacturing excellence.”
Greentank spent over three years developing and testing the technology surrounding the Heating Chip and its manufacturing process. Additionally, it has been created with a robust intellectual property portfolio involving more than 50 patent families to bring forward a variety of advancements. The company’s technology is manufactured in ISO-certified labs, and all products undergo third-party testing.
The technology is completely different from what exists in today’s inhalation devices. It gives Greentank the flexibility to be adopted into various inputs and varying viscosities. For example, it works well with both low-viscosity water-based e-liquids and high-viscosity resin oils from cannabis materials.
In March of 2023, Greentank announced that it successfully closed a $16.5 million Series B financing round led by a strategic investor group with more than 15 years of manufacturing experience. The total investment in Greentank to date is now reported at $38.5 million.
“Our Series B funding was a strategic move to elevate our operations from industrial prowess to global commercialization,” said Koffler. “We’ve established a 20,000-square-foot cutting-edge R&D and manufacturing facility, a project that spanned 18 months to build and equip with the most advanced technology needed to scale our Heating Chip.
“This facility not only pushes the limits of what’s possible with specialized equipment and expertise but is also designed with flexibility in mind. Our vision was to create a model that can be replicated anywhere in the world, preparing us to expand into any other market as we continue to grow our business.”
The expansion of the business is about phases, and Koffler said that during the next phase, whether that be the medical or wellness industry, Greentank needs to be able to produce chips to meet global demand with scale in mind. Koffler said this means that the company will look to leverage automation.
Koffler emphasized that the real measure of Greentank’s success will be seen as the next generation of inhalation devices hits the market. He highlighted that numerous devices are on the cusp of being launched, with the Heating Chip poised to redefine industry benchmarks for safety and efficiency. Currently, Greentank is aiming to influence tobacco harm reduction significantly.
“At Greentank, our commitment extends beyond mere compliance with regulatory standards; we are dedicated to establishing new paradigms of transparency and consumer safety,” said Koffler. “We are not just participating in the market—we are leading it toward a safer and better future.”
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.

June 1, 2024
Revenant Rule

Image: MarijaBazarova
Canada’s new health minister is breathing new life into a 2021 proposal to ban vape flavors nationwide.
By Stefanie Rossel
Thomas Kirsop
There’s life in the old dog yet: In March 2024, Canada relaunched a three-year-old plan to ban all vape flavors except tobacco, mint and menthol. The regulations were first published in June 2021 in the Canada Gazette, signaling the government’s intention to implement the flavor ban within six months after the obligatory public consultation. But the rule that was supposed to launch in January 2022 never came, and Canada’s health authorities never mentioned the flavor ban again—until Health Minister Mark Holland, in office since July last year, recently revived the idea.
Outrage about the proposed ban among vapers, consumer advocacy groups and the vape industry was as huge in 2021 as it is now: Canada’s planned rule goes further than most flavor bans, which tend to prohibit only certain “characterizing flavors” or flavor descriptors. Under the Canadian proposal, all sweeteners in vaping products would be prohibited, and vape manufacturers would be allowed to create their liquids using only approved ingredients.
They would have to select from a list of 82 approved compounds, 40 of which can be used to impart a tobacco flavor and 42 of which can be used to impart flavor of mint, menthol or a combination of the two. “Menthol tobacco” or a “mint tobacco” are off limits under the rules.
“Should the flavor ban be adopted as it was written in 2021, Canadian users of vaping products will see the removal of nearly all existing flavor profiles in the legitimate vaping products market within 180 days of publication of the proposed order and regulation from 2021,” says Thomas Kirsop, managing director of Canada’s Vaping Industry Trade Association (VITA).
“The only two products on the market that would not require removal or reformulation would be ‘unflavored’ liquids and unadulterated ‘menthol.’ All existing ‘tobacco’-flavored vaping products would need to be removed from the market, reformulated to remove sweeteners and flavoring compounds not on the permitted constituents list and then reintroduced to the Canadian market.”
The proposed rule would also prescribe “sensory attributes standards,” which are defined only vaguely, stipulating, for example, that a vaping product or its emissions should not have “sensory attributes that result in a sensory perception other than one that is typical of tobacco or mint/menthol,” thus limiting manufacturers’ ability to make vape products that have “a highly pleasant smell or taste.”
“Sensory attributes regulations are referenced over 40 times in the proposal, but there is no specific section explaining how these regulations would be drafted, implemented or enforced in a clear manner,” says Kirsop. The VITA interprets this part of the planned regulation as meaning that manufacturers can make their liquids using the 82 permitted compounds, and at some time in the future, the government will pay a third party to smell, taste and possibly vape this product. “If that third party thinks that the liquid does not align with the permitted flavor profiles or is ‘too palatable,’ then that formulation will be prohibited regardless of its adherence to all the objective standards in legislation,” says Kirsop.
Relapse to Combustibles Expected
The impact of such a regulation on Canada’s 1.5 million vapers would be dramatic, according to Kirsop. His organization anticipates a major relapse to combustible cigarettes among consumers. “The number of cigarettes consumed per capita will increase,” he says. “It is well understood that vaping products and combustible products are economic substitutes in the nicotine market. A regulatory impact on one will result in an inverse reaction of the other.”
Kirsop refers to a 2023 study by Abigail Friedman that investigated the effects of e-cigarette flavor restrictions on tobacco product sales in the U.S. and found that while the flavor restriction did impact vaping rates in the manner intended, the impact on legitimate cigarette sales was substantial, with 12 extra cigarettes sold in the legitimate market for every 0.7 mL pod not sold due to a flavor ban. The VITA has similarly calculated that a nationwide flavor ban in Canada would result in additional cigarette sales of almost 4 billion sticks per year.
For the country’s independent vape manufacturers and estimated 1,800 specialty vaping product shops, such a measure would have a significant, possibly existential, impact, according to Kirsop. “It is the variety of flavored vaping products that make a specialty store economically viable,” he says. The illicit market, by contrast, would receive a boost, especially if the flavor ban comes on top of the 12 percent federal vape product tax hike planned for July.
“From any historical reference point, the removal of a product with significant consumer demand from the legitimate market will result in that demand being met by the illicit market,” says Kirsop. “Our investigations lead us to believe that the black market will expand quite rapidly to fill the void. Our only question is whether that illicit trade will favor small players, producing flavored liquids in garages and basements, if it will follow the Australian model, with organized crime groups importing flavored disposable vaping products from overseas, or if it will be some hybrid combination of both.”
There are plenty of cautionary examples close to home. Six of Canada’s 13 provinces and territories have already restricted the sales of e-cigarettes to tobacco-flavored varieties. “In Nova Scotia, over 40 percent of specialty vape stores closed immediately following the flavor ban, and when VITA commissioned an investigations company to survey the market, we found significant illicit trade and a consumer outlook that supported that illicit trade,” says Kirsop. “News reports showed that in the year after the flavor ban, tobacco excise collection increased 13.6 percent. We also identified that consumers are starting to adapt by adding their own third-party commercial flavoring products to vaping liquids.”
Goal Missed
Maria Papaioannoy
Kirsop says it’s too early to determine the impact of flavor bans on youth usage. However, the VITA has found no data that differentiate Nova Scotia, which was the first province to ban flavored vaping products, from provinces that kept them on the market or banned them at a later date. “Nova Scotia shows youth past-30-day vaping behavior has dropped from 25.1 percent to 23 percent since their flavor ban,” says Kirsop. “However, all provinces except Quebec saw youth vaping rates drop in the same category during that time frame, and some of them did significantly better. Alberta saw youth use drop from 19.9 [percent] to 14.8 percent, British Columbia 27.6 [percent] to 16 percent, Manitoba 21.5 [percent] to 16.7 percent and Saskatchewan 29.6 [percent] to 23.7 percent. All the latter have no bans on flavors.”
So, while the intended impact on adolescents remains questionable, the effect on adults would be devastating, according to Maria Papaioannoy of Rights4Vapers. “Flavors are a critical part of what makes vaping such an effective alternative to cigarettes,” she wrote in a letter to Prime Minister Justin Trudeau. “If a person who smokes decides to move to vaping, they do not want to be reminded of the taste of tobacco.” A ban on flavors as proposed, she argues, would mean a prohibition of the entire category through the back door. “Who would pay for an unpalatable product?”
In 2021, Rights4Vapers started a letter-writing campaign, resulting in more than 20,000 Canadians submitting arguments to Health Canada against the proposed regulation. Papaioannoy has organized a similar campaign now. To date, the government has received more than 27,000 letters from adult consumers raising concerns over this ban. In mid-March, Papaioannoy spoke at Health Canada’s stakeholder meeting but left disillusioned. “Consumers had a huge voice in vaping regulation with previous health ministers,” she says. “In this call, all I felt from Health Canada representatives was sympathy, not compassion.”
Like many, Papaioannoy believes that the proposed flavor prohibition is not so much an action of bureaucracy but a mandate being driven by Holland, who formerly worked for the nongovernmental organization Heart and Stroke, a known opponent of vaping.
Both tobacco harm reduction activists hope that as lawmakers debate the measure, reason will prevail. “The wild card is the minister of health,” says Kirsop. “Generally, one would think that policy decisions that could impact millions of Canadian smokers and 1.5 million adult Canadian users of vaping products would be based on scientific data and academic literature and not driven by emotional talking points and flag waving.
“This minister has demonstrated that he has no grounding in literature or the science, and it does not appear at this point that he cares much for it if it does not align with his ideology or that of his former peer group. Ideology forms a very poor starting point for public health decisions.”
Papaioannoy is more optimistic, noting that the proposal still has to go through the Treasury Board of Canada, with the time frame between proposing and enacting being long and opposition strong against a measure that would affect small businesses. “Besides, I believe in the institution,” she says. “Someone from the government will raise the flag.”
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.

June 1, 2024
A Spark in the Dark

Photos courtesy of Mathijs Aliet
Not all is lost for brand owners operating in dark markets.
By Stefanie Rossel
In February, the Canadian Cancer Society released a report detailing the global progress on tobacco health warnings and plain packaging, which requires cigarette manufacturers to market their products in uniform, unattractively colored packs without brand imagery and print their brand names in generic fonts.
To date, 25 countries or territories have adopted standard packaging, the most recent ones being Myanmar, Oman and Georgia. A further 14 countries are preparing legislation, and three more have it “in practice,” meaning that they import cigarettes from a country with plain packaging requirements, as happens, for example, in Monaco, which buys its cigarettes from France. In addition, the report notes, the graphic health warnings mandated by some governments are so large that they resemble plain packaging. In nine countries, graphic health warnings account for at least 85 percent of the front and back side of the pack.
Recommended in the guidelines for implementation of Article 11of the World Health Organization Framework Convention on Tobacco Control (FCTC), standardized packaging is viewed by its supporters as an efficient means to reduce the appeal of tobacco products and increase the effectiveness of health warnings. By removing the visual cues that prompt existing users to purchase the product and by preventing new customers from developing brand loyalty, proponents argue, plain packaging ultimately leads to better public health.
Plain packaging is also a comparatively inexpensive intervention that can be implemented more easily than other FCTC measures, such as establishing a national tobacco cessation system. But despite abundant research since standardized packaging made its global debut in Australia in December 2012, there is still no reliable evidence that the measure achieves its objectives, as studies remain inconclusive or even contradictory. Opponents claim that the removal of branding has merely led to commoditization, causing well-established brands to lose market share to cheaper alternatives.
The Power of Word of Mouth
Mathijs Aliet
For tobacco companies, marketing products in such “dark” markets is a challenge, even more so because most of the countries that require plain packaging also ban tobacco advertising and product displays at the point of sale (POS).
A 2023 report by the U.S. Federal Trade Commission underlines the importance of the POS for the industry. In 2022, U.S. tobacco manufacturers spent more than $8.3 billion promoting cigarettes and smokeless tobacco at the POS, accounting for over 97 percent of their total marketing expenditure for those product categories.
Yet, despite the loss of conventional marketing instruments, dark markets are not lost for brand owners, according to Mathijs Aliet, founder of Square44, a brand design agency based in Bangkok. “Consumers decide if they want a product or not,” he says. “There are still needs that are fulfilled, and word of mouth is a big thing. Regulations will not stop people from talking to each other, comparing experiences and making recommendations.”
Consumers also play an essential role during the launch of new brands in dark markets, when there is zero association in the buyer’s mind. “In markets that are extremely dark, it’s often people watching people that triggers new trends,” Aliet explains. “People that meet friends that have a new product are seen as trendsetters—this is something that is hard to stop.”
Square44 operates in 20 different markets across Asia, the Middle East and North Africa and has worked for tobacco companies such as Philip Morris International, BAT and Japan Tobacco International. Due to the widespread restrictions on cigarette branding, however, tobacco jobs are “rare and few,” according to Aliet. In dark markets, Square44 has profound experience working for manufacturers of alcoholic beverages in Thailand, Myanmar, Nepal and Indonesia.
“Many markets have individual rules, and most face dark market challenges in various degrees,” says Aliet. “Brand support extends into different spaces—the smoke zones at airports, brand environment design, creating bespoke structural solutions or working on new product development concepts for test are areas where we support tobacco clients. Building connections to the trade or retail channels as well is an opportunity where still quite a bit of activity takes place, such as dealer events, partner get-togethers, etc. This is an example of spending the marketing budget in dark markets in the right way with entertaining, training and incentives to make them sell your brands.”
Generally, Aliet advises his clients to be proactive. Manufacturers who anticipate change can build a loyal following for their brands before any restrictions take effect.

Plain packaging is a comparatively inexpensive intervention—for governments anyway—that can be implemented more easily than other FCTC measures.
Innovation Is Key
Another strategy to sustain brand awareness is developing surrogate brands in an unrelated, nonrestricted category, according to Square44. “Back in the days in Europe, the Camel brand invented outdoor clothing to keep their brand alive beyond cigarettes,” says Aliet. “This was at that point a clever way out. The brands that survive are the ones that pay extra attention to channels or touchpoints where they are still allowed to connect.”
Surrogate brands also help with events, according to Aliet. “You can get the brand out and organize something around a smoke-infused snack or beverage that happens to carry the same name,” he says. “B2B events are largely unregulated and an important influential factor for most manufacturers that play an important word-of-mouth role. Building solutions that drive value, solve problems or address needs there are will always result in success.”
Generally, brands that survive in dark markets establish their unique identifying brand assets and elements well, observes Aliet. “Use that across touchpoints in 2D graphics, even 3D environments. Colors, shapes—anything where we don’t show brand but queue recognition is what comes to mind.”
Social media can play a role too. “Depending on the location of platform, a manufacturer might not be able or allowed to localize messaging, but we see user-generated content pick up big time, especially on social selling channels,” says Aliet. “We’re luckily not that far yet that governments are telling platforms to ban images of consumers smoking or using product. Using influencers is getting heavily restricted market by market.”
Self-regulation and brand innovation are other vital, Aliet points out. “There’s no doubt that brands should pivot,” he says. “Governments are making legislation tougher, and certain categories will most likely not survive. We see this in the energy space as well, where fossil fuels are facing a lot of negative press. The smart companies pivot and innovate beyond category—cannabis, vaping, liquid drinks—as people are still looking to fulfill a need. Brands can reinvent themselves around needs with newer solutions that appeal to a clean, next-gen lifestyle. That’s what brands must do regardless—innovate around market movements and changes in consumer preference.”
A Different POS
Depending on the degree of restrictions, the point of sale may turn from a place of communication and product variety into a wasted space. In Australia, for example, customers who want to buy cigarettes must ask the store clerk. There are no signs directing smokers to the POS, according to Christoph Moser, managing director of POS Tuning, a German company that offers POS shelf and storage solutions to customers worldwide.
According to Moser, priorities are different at a dark market POS. “In classic dark markets, product availability is getting ever more important. Shelves are equipped with sliding doors or flaps, and the opening time is limited. There is a defined time slot during which presentation and removal of a pack takes place, which makes it more important that the merchandise can be seen immediately at the time of opening. Push-feed systems are therefore essential, as they facilitate access for the salesperson.”
His company offers mechanical as well as digital systems that allow customers to take stock immediately. “This works with an indicator for the inventory or with a digital push-feed system that records inventory levels in real time and signals when stocks are too low or if there is an out-of-shelf [situation],” he says.
In many dark markets, the placement of tobacco products has changed. Instead of being displayed on the back wall of the store, as is often the case in less restrictive markets, cigarettes are placed under the counter, where they are invisible to customers. “Sixty percent of sales at petrol stations are generated with tobacco products,” explains Moser. “If displaying the products is banned or restricted, it has consequences. POS Tuning has developed specific push-feed solutions to place the vast variety of tobacco products that are usually stored in the back wall in the limited space of a counter. These solutions allow for placement of several brands in one row behind one another, meaning the same amount of product can be placed on a significantly smaller surface.”
Moser observes that many retailers in countries changing to a dark market try to put off the transition as long as possible—and are thus insufficiently prepared. “Fast and efficient solutions are required that enable the covered presentation of goods in existing shelves. We offer various retrofit kits for this,” he says.
Just like the appearance of the POS, the attitude of consumers in dark markets has changed, notes Moser: “Customers get used to this kind of [product] presentation,” he says. “In most cases, it’s a planned purchase, which means customers prefer a certain brand, which they then buy, thereby accepting other pack sizes.”
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.

June 1, 2024
Controlled Kick

TJP Lab’s oral nicotine factory in Pickering, Ontario, features high-speed pouch filling equipment and sophisticated technology to ensure consumer safety and product efficacy.
TJP Labs’ novel nicotine particulate significantly speeds up nicotine delivery.
By Stefanie Rossel
David Richmond-Peck | Photos: TJP Labs
More than two decades after the debut of the first commercial e-cigarettes, delivering consumers the right degree of nicotine—the “perfect kick”—remains a challenge for manufacturers of reduced-risk products.
To solve this issue, Canada-based TJP Labs has developed a novel nicotine particulate, for which it filed for patent protection in April 2024. The new technology dramatically increases the speed of nicotine release compared to polacrilex, a resin complex commonly used in nicotine-replacement therapy (NRT) products, and other forms of nicotine that presently exist in recreational products, according to David Richmond-Peck, chief relationship officer at TJP Labs.
“Our technology allows for control and extreme flexibility in terms of the finished product’s nicotine release profile,” he says. “It is quite versatile and can be used with different forms of nicotine—whether it’s tobacco-derived, synthetic, a prodrug or an analog. This inclusivity helps with its applicability across a wide range of products. Quite notably, the development can aid in addressing concerns with tobacco-specific nitrosamines, which are minimal or absent, especially in synthetic forms. Further, our innovative development has the potential to provide an enhanced consumer experience by providing a faster and more efficient nicotine release, aiming to provide a more satisfying and potentially safer alternative.”
According to TJP Labs, the nicotine particulate offers versatile particulate size customization, ranging from ultra-fine to several hundred microns, for precise product design as well as precision-targeted binding. “When utilized in combination with other features, our technology allows us specific customization capability to tailor products for faster or more controlled release, addressing various consumer needs and improving efficacy. Such control can lead to cost-effective production and better overall product performance, enhancing the success rates of smoking cessation efforts or providing more enjoyable recreational options.”
The product can also be used with a broad spectrum of core materials, including porous or nonporous, biodegradable and various organic compounds, notes Richmond-Peck. This enhances the company’s ability to innovate and tailor nicotine-delivery products. “This versatility means products can be designed to mimic the nicotine uptake of combustible tobacco more closely, potentially improving their effectiveness as smoking cessation aids or recreational alternatives,” he says. “The flexibility in core material choice allows for innovations that can help to meet diverse consumer preferences and regulatory requirements.”
The particulate can be utilized in both NRT products and recreational nicotine products. “This includes applications in gums, patches and lozenges, especially in modern oral nicotine pouches, where controlled nicotine release is crucial,” says Richmond-Peck. “Our technology is designed to enhance both the efficacy and consumer satisfaction of these products, making them viable alternatives to traditional smoking products.”
Pouches with Potential
Other advantages include efficient raw material use, allowing for nicotine loading several orders of magnitude over polacrilex, and optimization for organic and inorganic forms, including biodegradable resins, according to TJP Labs. The technology is designed for seamless integration, enabling easy incorporation into nicotine pouch formats and related products.
A wholly owned subsidiary of Kik Ass Products, TJP Labs is a full-service, global contract manufacturer of next-generation products, specializing in modern oral buccal delivery pouch manufacturing. It is also a newcomer to the industry. In 2021, it began developing innovative pouched products for energy and nutraceutical uses. In September that year, it opened Canada’s first modern oral nicotine contract manufacturing facility for oral nicotine pouches in Pickering, Ontario. Spread over a rapidly expanding campus, the plant features high-speed pouch filling, in-line photography, check weighers and integrated finished product metal detectors to ensure high standards of consumer safety and product efficacy.
“We are currently expanding our production capabilities, aiming to achieve an impressive output of over 100 million retail units annually by mid-2025,” says Richmond-Peck. “As market dynamics evolve, we plan to double this capacity to 200 million retail units by 2026. Our operations extend beyond manufacturing to include robust research and development efforts, all driven by our commitment to advancing harm reduction.”
In addition to contract manufacturing for international brands, TJP Labs has also launched its own brand, L!X nicotine pouches, which was first marketed by its subsidiary L!X Innovations. In early 2022, TJP submitted a premarket tobacco product application to the U.S. Food and Drug Administration for L!X nicotine pouches.
In June 2023, Imperial Brands acquired 14 L!X pouch variants for an initial consideration of £65 million ($81.57 million) and an additional deferred sum based on sales volumes over five years. The deal is meant to enable Imperial’s U.S. operation, ITG Brands, to expand its next-generation product offerings in the United States. Following further consumer testing, ITG Brands launched the range in the U.S. under the brand name Zone in the first quarter of 2024, with TJP Labs continuing to manufacture the pouches under contract.
“Our primary focus in the nicotine industry has consistently been on harm reduction,” says Richmond-Peck. “Although we started as a manufacturing company, we have broadened our capabilities to include research and development. In 2023, we facilitated Imperial Brands’ entry into the U.S. market by selling them our range of nicotine pouch products and serving as their contract manufacturer. We retained the global rights to our L!X pouches outside the U.S. and are actively seeking market opportunities and partnerships in additional territories. Currently, our development efforts are concentrated on providing consumers with innovative pouched products that incorporate energy and other nutraceutical ingredients.”
To TJP Labs, modern oral pouches are an innovative delivery system with the potential to deliver various active ingredients, with applications ranging from pharmaceutical to recreational use. “In 2021, we began to develop a separate category of energy products for adult consumers. These products are now market-ready and slated to launch later this year,” says Richmond-Peck.
For its new nicotine particulate, TJP Labs anticipates to receive initial evaluation data by the end of the second quarter this year. Next steps will involve exploring partnerships or licensing opportunities to leverage the technology effectively for harm reduction, according to Richmond-Peck. “Depending on the product application, regulatory approvals will be necessary, such as certifications from medical agencies for NRT products or FDA approval for recreational nicotine products in the U.S. Our objective will be to sell or license the intellectual property to the party that can most effectively contribute to global harm reduction.”
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.

June 1, 2024
Losing Steam

Photo: Ned Snowman
Heated-tobacco products continue to eat into the sales of combustible cigarettes in Japan, albeit at a slower pace than before.
By Stefanie Rossel
This year marks the 10th anniversary of IQOS’ debut in Japan. Within a decade, Philip Morris International’s heated-tobacco product (HTP) has changed the country’s tobacco market beyond recognition. HTPs accounted for 37.9 percent of all tobacco sales in Japan last year. In January 2023, HTP sales for the first time overtook cigarette sales in Tokyo, accounting for 50.4 percent of consumer takeoff, according to PMI figures presented at the CAGNY conference in February 2024.
Perhaps the only tobacco market to have experienced a similarly seismic shift among product categories is Sweden, where the popularity of snus has altered consumption patterns to such an extent that its smoking rate will likely fall below 5 percent at some point this year. In both countries, smoking rates declined not as a result of anti-tobacco policies but due to consumers spontaneously opting for safer alternatives when presented with such options.
Until the advent of the new category, Japan was long considered a smokers’ paradise, and it still is one of the world’s largest tobacco markets, with more than 17 million Japanese smoking regularly. Japan’s ministry of finance still owns 30 percent of Japan Tobacco, the successor to the country’s tobacco monopoly, thus benefiting from high tax revenues.
For decades, the industry was able to flourish in a relatively unrestricted market. Low prices and moderate regulations facilitated consumption, with smoking incidence peaking at close to 50 percent of the population in the 1960s. Smoking, mostly a male habit in Japan, started declining slowly after the introduction of a series of anti-smoking regulations. More measures took effect when Japan hosted the 2020 Olympic Games and faced external pressure to crack down on the habit. Extensive public smoking bans contributed to a drop in smoking prevalence from 28 percent in 2002 to 16.2 percent in 2022, according to the Foundation for a Smoke-Free World. But while cigarette sales decreased at a leisurely annual rate of 1.8 percent between 2011 and 2015, they started dropping much faster after the arrival of HTPs.
Japan is an ideal place to study the impact of HTPs. The country prohibits the sale of nicotine-containing e-cigarettes, which are classified as pharmaceutical products and can be purchased only with a prescription in medically licensed shops whereas non-nicotine vape products are freely available. In addition, Japanese consumers are health-conscious, tech-savvy and receptive to new gadgets. Values such as discretion and politeness are deeply rooted in Japanese culture, meaning that smokers in the densely populated country are keen to avoid bothering others, for example, through secondhand smoke.

Heated-tobacco products continue to enjoy a tax advantage over combyustible cigarettes in Japan, but this may change in the future. (Photo: Taco Tuinstra)
A Mature Market
Ten years into the introduction of the category, however, fascination appears to have worn off a little, with HTP sales plateauing during the past few years. According to Euromonitor International, the retail value generated by HTPs in Japan fell from $11.14 billion in 2022 to an estimated $11.13 billion in 2023 and will reach $11.23 billion this year. Japan nevertheless remains by far the leading market of the category, representing almost a third of the expected global retail volume of $40.59 billion this year, well ahead of Italy, which now ranks second with an estimated HTP market value of $6.511 billion in 2024.
IQOS continues to dominate the Japanese HTP market with a share of 70.5 percent in 2023, according to PMI. A survey commissioned by Statista revealed that IQOS Iluma was the most popular HTP in Japan between July 2023 and August 2023, with more than 21.1 percent of respondents using the product. IQOS Iluma One was the second most popular heating product, with a share of 20.7 percent of respondents. It was followed by JT’s Ploom X with 19.4 percent and British American Tobacco’s Glo Hyper+ with 12.9 percent.
The maturity of Japan’s HTP market has sparked a fierce battle for market share among the leading manufacturers. Price competition is increasing, and consumers are experimenting with other brands and devices while manufacturers are subsidizing products and launching new models.
In October, BAT lowered the prices of six Lucky Strike consumable variants for its Glo Hyper device after it had already cut the prices of 19 of its Glo Hyper products by ¥40 ($0.25) to ¥50 on Aug. 1, 2023, in an attempt to boost its market share. A pack of 20 Lucky Strike heat sticks now retails at ¥400.
Tax Differential in Danger
Japan also saw a series of new HTP launches in the past year, all focusing on improved performance and enhanced flavor delivery. In July 2023, JT introduced With 2, an infused tobacco vapor device under its respective new brand With. The product features JT’s infused technology, which generates vapor while an atomized liquid passes through a capsule containing granulated tobacco, and has been available at convenience stores and tobacco stores in Japan since September.
According to the company, there is no delay in nicotine delivery, as tobacco vapor is generated the moment it’s inhaled, and there is almost no tobacco smoke with the product since tobacco leaves are not directly heated. Following the launch, JT discontinued its Ploom Tech, Ploom Tech+ and Ploom Tech+ With devices for infused tobacco capsules. The recommended retail price for the With 2 device is ¥1,980, including tax, while a pack of the respective tobacco capsules under the Mevius brand retails at ¥580.
In November 2023, JT started selling Ploom X Advanced in Japan. The device, which replaces the Ploom X model, comes with an upgraded heating system. Named “Power Heatflow,” this technology increases the maximum heating temperature from 295 degrees Celsius to 320 degrees Celsius to provide a richer flavor experience. Charging time is reduced from 110 minutes for the previous model to around 90 minutes. The device is sold at a suggested tax-included retail price of ¥1,980.
In January, BAT presented the most recent version of its Glo heating device, Glo Hyper Pro, in Japan. Charging takes about 90 minutes, allowing for use for 20 sessions. This compares to 210 minutes for Hyper X2, 120 minutes for Hyper Air and 135 minutes for IQOS Iluma, according to BAT. The Glo Hyper Pro also features a new screen displaying performance settings and information as well as a new “HeatBoost” technology for better taste. At ¥3,980, the device sells in the same price category as IQOS Iluma, which retails at ¥3,980 to ¥9,980, depending on the discount, but is more expensive than the now discontinued Ploom X, which could be purchased for as little as ¥980 after discount.
To mark the 10th anniversary of IQOS’ introduction in Nagoya, PMI in March 2024 chose Japan for the launch of its Iluma i-series, the next generation of Iluma devices, which comes with a series of new features, such as a touch-screen that allows users to view the relevant information easily, and a pause mode that enables users to stop and resume their use and thus reduce waste. The device is adaptive to use patterns, and the holder’s battery has a longer life span, according to PMI. Retail prices range between ¥3,980 for Iluma One i and ¥9,980 for the premium model, Iluma Prime i.
Intensive competition has caused IQOS devices to be significantly less expensive in Japan than in other markets.
As manufacturers fight for market share, they may lose another advantage. One factor that helped HTPs gain ground in Japan was their favorable taxation. When the products debuted in this market, they were taxed at between 10 percent and 70 percent of the combustible cigarette rates due to their small amount of tobacco.
Takes hikes between 2018 and 2022 raised those levels to between 70 percent and 90 percent. Seeking to boost its defense spending, the Japanese government in late 2022 proposed to gradually raise HTP taxes until they reach the level of cigarettes in 2027. According to The Mainichi newspaper, the government had not made a decision on the tax hikes by early 2024. If it decides to move forward, however, the measure will likely further decelerate the growth of Japan’s HTP market.
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.

June 1, 2024