Category: Print Edition

  • Exquisitely crafted

    Exquisitely crafted

    Science-based regulations may be appropriate for most tobacco products; fine cigars deserve to be regulated as an art.

    By George Gay

    Longer ago than I care to remember, I attended what, if memory serves me correctly, was called a cigar dinner. Now I know, because I have written a story about such matters, that some chefs like to occasionally include tobacco in their more exotic dishes. So I had better explain that the dinner I attended—at one of London’s best hotels—comprised a splendid, tobacco-free meal that was punctuated with fine cigar smoking.

    I cannot remember what the dinner marked or celebrated, but I clearly remember two things from that evening. The first was that the diners on the far side of the room from where I was sitting disappeared. One moment they were there; the next they were not. It was like watching Claude Rains in The Invisible Man as he took off his bandages and clothes, though without the preceding violence, I’m glad to say. In fact, what had happened was that, unnoticed, the huge amount of cigar smoke that had been generated by the large number of guests had filled the upper reaches of the room in which the dinner was held and then gradually descended to about the height of the head of a seated person. The effect didn’t last for long because, I assume, the hotel management was informed of the situation and somebody was dispatched to press the button labeled “extraction system.” Certainly, there was a noise of machinery starting up, and the smoke cloud disappeared within a matter of seconds.

    The second thing I remember about the dinner was that one of the men seated at my table, who anyway owned many fine cigars, told me that he had been left a huge number of such cigars by somebody who had recently died. The interesting thing about his story was that whereas the executors had told him of the existence of the cigars, they couldn’t tell him how many there were nor where they were to be found. So the man was enjoying himself doing the rounds of those London establishments that let out humidor space in his quest to track down the cigars. He had found a great many by the time that he spoke with me, but he was confident there were more to find. For all I know, he’s still searching. There are worse ways to spend your time, I imagine.

    A special species

    I present these two vignettes in the hope of convincing you, the reader—while, at the same time, reminding myself—that there is something special about fine cigars. You see, I have noticed that, in the U.S., there has been a lot of special pleading about how fine cigars should be protected from the worst ravages of the Food and Drug Administration’s (FDA) deeming regulations while—though this is not said expressly—cigars that are not in the “fine” category should be left to their own devices, and initially I was less than comfortable with this argument. I mean, fairness suggests that the products enjoyed by the financially struggling should be protected from the regulations rather than those enjoyed by the better off, who are well-placed to find something else to occupy their time. (Of course, I don’t mean to imply that cigars not described as “fine” are defenseless. Far from it. Many of them are made by major manufacturers that can afford big lobbying spends.)

    But it isn’t that simple. The division between who can afford fine cigars and who cannot is not as marked in the U.S. as it is in Europe. I don’t want to get myself into an argument that I’m not going to win about what constitutes a fine cigar*, but, in the U.S. at least, this is a product that is enjoyed not only by those financially well-off. As I understand it, plenty of people who are modestly well-off smoke fine cigars—policemen and firefighters, for instance.

    Something else that marks fine cigars out as being special concerns the fact that a lot of those that are hand-rolled in the U.S. are the products of small and medium-sized businesses, some of which are family concerns. And, to my mind, it is important for two reasons that such companies are encouraged to continue to operate. One is that they form part of an industrial complex whose strength lies in its diversity, in its multinational, large, medium and small businesses. That their well-being should be threatened by the sorts of rules put forward by the FDA as part of its deeming regulations is, to my mind, so counterproductive as to be absurd.

    The second point has to do with the consumer rather than the business. Look at the consolidation that has taken place within the cigarette industry and the way in which that consolidation has helped the shareholder rather than the consumer. Then look at how relatively diversified the local fine cigar industry is and at how the businesses within it serve their customers with a huge range of products.

    And, as is mentioned above, these are products that can be savored by people from just about any walk of life, though it should be noted that, for whatever reason, this appeal does not extend to those ruled to be underage when it comes to buying tobacco products. Perhaps price is one factor in persuading young people not to indulge in fine cigars, but I suspect, too, that these products involve too much of an investment in time. One of the things that appeals to many fine cigar smokers—sitting around with like-minded people discussing cigar colors, flavors, shapes, densities, bands, boxes, etc.—is probably a turn-off for young people, who need to be doing more important things—things of which, at my age, I am vaguely aware but, thankfully, couldn’t describe.

    Fine cigar boxes, meanwhile, constitute an issue in themselves. Given that fine cigars are smoked only by people who are committed to such products, who would want to sully such beautiful boxes with ugly health warnings? What possible purpose is served by besmirching these creations in this way? Are we saying that the people who smoke fine cigars aren’t aware that their habit carries some risk? And, in any case, don’t we create enough ugly things with our interminable, gratuitous wars?

    Overall, much of the threat faced by fine cigars is caused, I think, by a misunderstanding to do with the word “science.” Some time ago, I noticed that the recently appointed head of the FDA, Scott Gottlieb, on being asked what his intention was in respect of fine cigars, said, “Whatever we do in this regard is going to need to be science-based, of course.” Surely, this is the very opposite of what is needed. Fine cigars constitute an art form, and, as such, though they might be informed by science, cannot rightly be governed by science. The production of the leaf tobacco that is used in making fine cigars can usefully be improved by the application of scientific methods, just as the production of oil paints can be improved by scientists. But then to extend science’s remit to how the oil paint is applied to the canvas or how the viewer perceives the final painting would be nonsense, just as it would be to extend such a remit to how fine cigar tobacco is rolled and how what it delivers is savored by the smoker. And this applies especially to the bureaucracy-dominated science in which the FDA specializes.

    *I would say, however, that, at the very least, a “fine cigar” would have to be made by rolling by hand a bunch of good-quality tobacco leaves within a leaf binder and wrapper.

     

  • Unintended consequences

    Unintended consequences

    The U.K.’s new anti-tobacco measures may not achieve their stated objectives.

    By Giles Roca

    Giles Roca is the director general of the U.K. Tobacco Manufacturers’ Association.

    May 20 saw a series of major changes to the U.K. tobacco market, the most noticeable being the full introduction of standardized or plain packaging. This was accompanied by a suite of other measures, including a ban on all small packs (which previously made up around 75 percent of the U.K. market); a ban on flavored tobacco; new pictorial health warnings; and various restrictions on e-cigarette size, tank size, nicotine liquid strength, etc. On the same day, the government introduced a minimum excise tax.

    All of these measures were introduced directly or, in the case of plain packaging, indirectly under the revised EU Tobacco Products Directive (TPD2) that was transposed into U.K. law by David Cameron’s government in May 2016. While TPD2 does not mandate plain packaging, it allows member states to adopt it as a tobacco control measure.

    To understand the impact of these measures, the Tobacco Manufacturers’ Association (TMA) undertook three waves of consumer polling of 1,000 smokers. The results should worry all of those involved in law enforcement, those in the U.K. treasury who depend on the annual £12.5 billion ($16.22 billion) in tobacco taxation and of course those legitimate independent retailers for whom tobacco often makes up 30 percent of sales.

    Deprived of the ability to purchase smaller and therefore more affordable packs of tobacco, smokers are not, as those in the health lobby claim, simply quitting, but they are moving into buying from the black market or from abroad, thereby avoiding U.K. duty and benefitting the criminal gangs involved in tobacco smuggling. Over the past six months there was a 15 percent increase in smokers buying packs of 20 cigarettes from illicit sources and abroad. Smokers buying larger packs of hand-rolling tobacco from such sources and abroad almost doubled with a 91.7 percent increase. There was a 32 percent increase in smokers buying online from social media and websites advertising cheap illegal tobacco, and there was a 22 percent increase in smokers buying any tobacco product from abroad, thereby avoiding U.K. duty.

    Despite how some like to portray it, the tobacco industry does not believe its products should go unregulated. It is clear about the risks involved, and that is why the industry is at the forefront of developing reduced-risk alternatives. However, it is opposed to measures that are proved to not work, where there is no evidence of their effectiveness or where they are more about totem interventions championed by largely taxpayer-funded health lobbyists.

    Indeed, on some of these recently introduced measures, the health lobby itself cannot agree on their merits. “People buy smaller pack sizes, such as 10s, when they are attempting to reduce their tobacco consumption and quit,” said Martin Dockrell, then head of policy at the U.K. anti-tobacco lobby group Action on Smoking and Health, in 2008. “If you wanted people to lose weight, you wouldn’t take away fun-sized chocolate bars and only sell jumbos. I’m with the retailers on this one.” Dockrell is now head of tobacco control at Public Health England, the lead agency tasked with promoting good health.

    Plain packaging will simply make it easier to produce counterfeit packaging, while there is no evidence that it has been effective in reducing youth access to cigarettes either in Australia, where it was introduced in 2012, or in France, which introduced it at the start of this year and has seen overall sales actually increase.

    Meanwhile, the restrictions on e-cigarettes will have the perverse effect of deterring those who wish to move off combustible tobacco by reducing the experience available in electronic form. It is notable that the recent U.K. smoking prevalence figures, published in June, show a steeper decline since 2013 thanks to emergence of harm reduction technology such as e-cigarettes. This stands in direct contrast to the tranche of tobacco control measures implemented in the U.K. by successive governments over the past decade, which have had minimal effect on smoking rates and negative consequences such as making the problem of black market tobacco even worse.

    The TMA will continue to closely monitor the impact of these measures and is currently conducting a survey of 12,000 smokers across the U.K. that will give unprecedented insight into the impact that they are having. It will make its data fully available for all interested parties to see.

    So what lessons can we draw from this? Clearly, don’t believe the hype that some of those in the health lobby both generate and want you to believe. Measures are advocated with scant evidence while their adoption into law has more to do with keeping such groups quiet—a damaging way to make public policy.

    We also know that what happens in tobacco will happen sooner or later in other sectors, regardless of any evidence on the effectiveness of the measures—just look at the growing calls for plain packaged food and alcohol both in the U.K. and around the world. We also know what happens in the U.K. will happen sooner or later in other places, particularly following the decision of the U.K. government to provide £15 million to the World Health Organization’s Framework Convention on Tobacco Control to push forward with implementing a U.K. model of tobacco control in other countries.

    Given that many of these measures originated in Europe, we will be calling on the government to look again at them as the U.K. leaves the European Union so that we have an approach based not on legislative totems but on hard facts, evidence and education.

    Giles Roca is the director general of the U.K. Tobacco Manufacturers’ Association.

     

     

  • On the map

    On the map

    (Photos: Taco Tuinstra)

    Keen to remain a leading leaf source, Malawi moves to get a better handle on its volumes while continuing to promote leaf that complies with customers’ increasingly discerning specifications.

    By Taco Tuinstra

    Following several disappointing seasons, Malawi tobacco growers have reason to smile again. At press time, the price per kilogram of leaf averaged $1.91 for all tobacco types, compared with $1.42 in the full 2016 selling season. The highest price for burley at the time of writing was $2.80 per kilogram.

    The price increase reflects both quality and quantity. “The leaf we’ve seen so far indicates a traditional ‘feminine’ ripe Malawi burley crop with good color intensity,” says Craig Perepeczko, planning and efficiency manager of Limbe Leaf Tobacco Co., a subsidiary of Universal Corp.

    It is also in short supply. The Tobacco Control Commission (TCC) estimates that Malawi’s farmers produced 102 million kg of burley, 18 million kg of flue-cured Virginia (FCV) and 3 million kg of dark fire-cured tobacco this year, against an anticipated demand of 152 million kg.

    Last season, by contrast, growers brought to market 195 million kg of tobacco (all types)—considerably more than required. Predictably, prices plummeted, farmers failed to recover their expenses, and many abandoned tobacco—resulting in this year’s small crop.

    The fear now is that this season’s firm prices will prompt Malawians to rush back into tobacco, setting the stage again for overproduction and poor prices, along with renewed frowns in the country’s fragile farming community.

    Keen to break the boom-bust cycle that has bedeviled the Malawi tobacco market since its liberalization, the industry is working to get a better grip on production. It is taking measures to make volumes more predictable, improve farmers’ livelihoods and ensure leaf that complies with increasingly stringent corporate and regulatory requirements. The goal is to keep Malawi competitive in a rapidly changing global leaf market.

    It is hard to overstate the importance of getting it right. Tobacco is Malawi’s main cash crop, accounting for 60 percent of the country’s export earnings. The industry is Malawi’s largest employer after the civil service and one of its biggest taxpayers, according to the TCC. That means the wild swings in production and prices are a problem not only for sellers and buyers but also for the country at large.

    Until the late 20th century, tobacco growing was a tightly controlled activity in Malawi, limited to a privileged few and dominated by commercial production. At the urging of the World Bank, the government opened the business in 1994. Eager to get their share of the country’s “green gold,” Malawian smallholders flocked to tobacco, with most opting for burley tobacco, which is easier and cheaper to produce than the FCV variety.

    Today, the country’s tobacco industry is characterized by small-scale farming and broad participation. Even after the exodus of tobacco growers in the wake of last year’s depressed marketing season, the TCC still registered a whopping 40,000 farmers for the 2017 crop. The typical tobacco farm, however, measures only between 0.1 and 2 hectares.

    Critics say liberalization has increased volumes regardless of demand but lowered quality. Most smallholders lack the assets to finance their own operations or qualify for bank loans, which makes it difficult for them to secure the inputs required to produce the desired leaf quality. The sheer number of growers, meanwhile, makes it challenging to manage crop sizes.

    Fredrick Kamvazina

    To get a better handle on tobacco volumes, the TCC several years ago started allocating production quotas according to anticipated demand and farmers’ plot sizes. “A sustainable burley volume for Malawi is 140 million to 150 million kg,” says Fredrick Kamvazina, technical and operations manager at the TCC. Because the commission lacked resources to verify declared land holdings, however, the practice did little to prevent overproduction. Guided by the philosophy of “more is better,” farmers grew as much tobacco as they could.

    Double registrations were rampant, to the extent that the land declared for tobacco production at times exceeded the territory of Malawi. The practice inspired some to jokingly speculate that farmers were growing tobacco in Lake Malawi, which covers a significant share of the country’s area. Excess land declarations not only facilitated overproduction, but they also paved the way for intermediate buyers—unregistered traders who take advantage of farmers’ vulnerability during the lean period of the tobacco production cycle.

    Intermediate buying is illegal under Malawi law, which states that all tobacco, including that grown under contract, must be sold at one of the country’s four marketing centers. Because intermediate buying requires cash, it is usually practiced not by peasant farmers but by relatively well-off townspeople.

    To be able to sell tobacco, the intermediate buyer unlawfully obtains a registration number by declaring nonexistent land. In the run-up to the selling season, when many Malawi farmers are without income, the intermediate buyer offers “cash now” in exchange for a steep markdown, knowing that he will receive at least the government-mandated minimum price when reselling the tobacco at auction. The transaction prevents the farmer from realizing the full value of his crop. If the tobacco was grown under contract, it also deprives the legitimate buyer of his leaf. For the industry as whole, intermediate buying means reduced traceability.

    Eager to address these issues, the industry this year debuted a new farmer management system (FMS). Funded by tobacco buying companies and administered by the TCC, the system aims to improve the quality of data and step up its enforcement. One of the challenges in registering tobacco growers has been the absence of a national identification document in Malawi; there was no good way of confirming that people were who they claimed to be. A new biometric system should help the industry keep better track. “All applicants are now fingerprinted,” says Kamvazina.

    The system also allows administrators to scrutinize individual growers rather than estates and growers clubs—a feature that will not only make it easier to manage volumes but also increases responsibility. “If a farmer delivers contaminated tobacco or misbehaves at auction, for example, we will be able to hold him to account personally,” says Kamvazina. While it is still early days, the FMS already appears to be paying off. Kamvazina attributes part of the recent drop in farmer registrations to better record keeping. The next step, he says, will be to map Malawi’s tobacco land with GPS technology, which is already being used by some of the buying companies.

    Contracting

    Perhaps more important even than controlling crop volumes is ensuring product quality, a term that encompasses more than just particle size, moisture levels and smoking properties these days. Cigarette manufacturers, especially the “Blue Chip” customers, insist on tobacco that complies with the highest regulatory and corporate standards governing agricultural and labor practices. They have rules on who can work on tobacco farms (consenting adults), what seeds may be used (certified ones) and what crop protection agents can be applied, in addition to regulations aimed at minimizing the environmental impact of tobacco production, through reforestation, for example. Confronted with ever-stricter legislation, customers also insist on full traceability.

    Because it’s next to impossible to comply with such requirements if you are buying tobacco at auction from tens of thousands of anonymous small-scale farmers, leaf merchants started contracting directly with growers. In Malawi, the trend began in FCV around 2003 and later expanded to burley tobacco. In 2009, cigarette maker Japan Tobacco International (JTI) took control of its leaf supply chain by integrating several tobacco leaf operations. It now works directly with farmers in Malawi and elsewhere. In many cases, the contracting agreements include a financial and agronomical support package, known as the integrated production system (IPS). By carefully monitoring inputs and production practices, the buyers ensure they get leaf that closely matches their specifications.

    Hugh Saunders

    The shift has changed Malawi’s tobacco marketing environment beyond recognition. Whereas at the start of the century all tobacco in the country was sold through auctions, today 80 percent of leaf is produced under contracts—although all sales must still take place at one of the country’s four marketing centers, per Malawi law.

    For the leaf merchants, it has meant a tremendous change in their operations and risk profiles. The agronomy department of Alliance One Tobacco Malawi (AOTM), for example, increased from 15 to 300 people in just a few years. JTI employs 114 leaf technicians—about one for every 100 of its growers—and operates an extensive fleet of four-wheel drive vehicles and motorcycles to reach growers in even the remotest parts of the country. Both companies aim to visit each of their contracted growers nine times per season.

    The IPS has boosted productivity. Leaf buyers have witnessed a doubling of burley yields per hectare, to 1,500 kg or more, since implementation of the system. Yet Hugh Saunders, managing director of AOTM, insists there is no great science involved. “It is about doing the right things, at the right time and in the right amounts,” he says.

    The productivity gains not only generate more tobacco income; they also create opportunities for new revenue streams, as land previously reserved for tobacco growing can be released to other crops. “Thanks to the close collaboration between our leaf technicians and the farmers, we continue to optimize the quality and yield per hectare,” says Fries Vanneste, vice president and managing director of JTI leaf services in Malawi. “Today, we need only half the area we needed when we started.”

    Vanneste believes this is a win-win situation. “We get the quality leaf we’re after, and farmers can count on greater incomes,” he says. Not only will growers be able to sell their higher-quality tobacco at a higher price; they can also cultivate the freed-up land with alternative crops, generating new sources of income.

    That is a welcome development. The tobacco industry has been frequently criticized for hogging precious farmland, and Malawi has been under pressure from international health activists to abandon tobacco in favor of food and other crops. Few people with on-the-ground knowledge see a ready substitute for tobacco, however. Not only does tobacco yield higher returns than any other local crop, but it also benefits from the most sophisticated marketing structure in Malawi.

    “We don’t believe there is a crop that can single-handedly replace tobacco,” says Erica Maganga, principal secretary at the Malawi Ministry of Agriculture, Irrigation and Water Development. “But we encourage the cultivation of crops in addition to tobacco.”

    Industry critics may be surprised to learn that Malawi’s big tobacco traders are preaching—and practicing—the same message. IPS support often extends to nontobacco crops. Through its contracted farmers, AOTM produces more maize than it does tobacco, according to Saunders.

    Compliance

    In addition to greater yields, the IPS has contributed to product quality in the broadest sense of that term. For example, the system is helping the industry tackle deforestation. Although tobacco growing accounts for a lower share (between 7 and 10 percent) of Malawi’s tree loss than some headlines suggest, the sector has accepted responsibility. “Tobacco is blamed with some justification—but we are the only ones doing something about it,” says Perepeczko. Most deforestation in Malawi is due to harvesting wood fuel for cooking. The brick-making business, too, is a major culprit but has managed to remain largely out of the crosshairs of environmental activists.

    Because there is no silver bullet, reversing deforestation requires a multipronged approach. In addition to providing tree seedlings and requiring contracted farmers to reserve a share of their properties for trees, tobacco companies are experimenting with new barn designs. Rocket barns burn wood more efficiently than do traditional ones, and “live barns” avoid the need to cut trees. To further reduce the pressure on Malawi’s forests, tobacco companies have been supplying their farmers with efficient wood stoves and regenerating sources of fuel and building materials, such as bamboo.

    Walter Pohl and Ellington Mataya

    Nontobacco-related material (NTRM), meanwhile, remains a major focus in the industry’s commitment to delivering a compliant product. Needless to say, foreign objects such as strings and plastics must be avoided at all costs. Sand, in particular, is an issue in dusty Malawi—not so much because of toxicity but because of its damaging effect on processing equipment. According to Walter Pohl, managing director of Premium Tama Tobacco Malawi, it can account for between 7 and 8 percent of tobacco weight. “We have the most expensive sand in the world,” he jokes.

    The industry has invested millions of dollars in instruments that detect and remove NRTM during processing. They are technological marvels, considering that some factories process up to 15 tons of leaf per hour, but trade representatives agree that the best place to tackle the problem is at the source, on the farm. Companies require their contract farmers to keep tobacco separate from potential contamination sources, such as livestock and plastic. Some even pay farmers for each piece of plastic that they collect and remove from the farm. “Slattered” baling tables are helping reduce sand by keeping tobacco off the ground.

    The IPS has also been instrumental in addressing child labor—a tricky subject in a country where children are expected to help with family chores, including farm work, from a young age. “It can be difficult to differentiate between child labor and activities that are part of the normal socializing process in Africa,” says Jimmy Gray Kasamale, general manager of Malawi Leaf Co., the country’s only indigenous leaf merchant. “We need to distinguish between child work and child labor,” echoes Maganga of the ministry of agriculture, recalling the many hours she spent in her youth helping with common household chores such as fetching water. Child labor, by contrast, is generally understood to involve activities that expose a child to “adult” risks, such as chemicals or sharp tools, or tasks that prevent them from getting an education.

    The industry has zero tolerance for child labor in its tobacco growing contracts. It is also addressing the issue by investing in education in its sourcing areas. As of June 2016, JTI had provided 121 scholarships and refurbished seven schools, reaching 12,000 pupils in Malawi. Simple measures can have dramatic effects. For example, female enrollment at Chitukula primary school, near Lilongwe, shot up after JTI constructed new classrooms and latrines.

    By drilling boreholes, tobacco companies do more than just provide access to clean water; they help improve living standards. Having clean water readily available does not only support farming activities, but it also helps the community to better hydrate, improve sanitation, prevent diseases and use time more efficiently. Fetching water is traditionally a woman’s job in Malawi, and girls can spend many hours walking between their villages and natural water sources—time that can now be spent on other activities, such as studying.

    The tobacco industry in Malawi is heavily involved in corporate social responsibility initiatives

    The tobacco industry is heavily involved in corporate social responsibility activities, especially in countries like Malawi, where the government lacks the resources to carry out basic duties. Some dismiss such support as patronizing, saying that the industry would do better to pay growers more for their tobacco. Paulo Saath, director of leaf operations at JTI, believes such criticism overlooks the challenge of financial discipline that exists in many sourcing countries. Too often, he says, growers will spend their earnings instantly, leaving no cushion for lean times. Traders tell stories of farmers marrying extra wives or buying multiple bicycles in the wake of their tobacco sales—only to go hungry during the planting period, when income dries up.

    With education and special savings accounts, among other measures, tobacco companies try to increase financial literacy among their contracted farmers.

    Tobacco executives in Malawi are also keen to dispel the notion that they want to keep farmers hooked on loans, as critics have suggested. Because smallholder farmers lack collateral to obtain bank loans required to fund their operations, leaf merchants assist with financing—but this is not the dealers’ preferred business model. “While we are continuously looking for ways to support our farmers, banking should not be our core business,” says Vanneste. “At JTI, we support farmers who want to be able to finance their own operations over time. We work together with them to identify solutions to make sure they eventually become self-sufficient.”

    By increasing yields and quality, the company hopes to improve growers’ earnings and thus graduate them out of loan dependency.

    Moving forward

    While the IPS has increased tobacco yields and quality, and the FMS should help the industry get a better handle on volumes, plenty of room remains for further improvement. Many believe the supply chain could be more efficient, for example. “There are too many middlemen,” says Saath. Between baling, transporting, warehousing and other activities, tobacco is handled 19 times from the time it leaves the farm until it arrives at the factory gate. Not only does this reduce yields through leaf degradation, but it also adds costs, as each service provider demands a fee. Too many levies and rents embedded in the current market structure continue to create a burden, reducing returns for the farmer. Especially transportation represents a high cost to farmers, according to the Phindu Tobacco Growers Association.

    Some would like to get rid of the requirement for contracted tobacco to be purchased at auction, having farmers deliver their leaf directly to the factory instead. Bypassing the selling floors, proponents argue, would save sellers and buyers money. Others favor the current system because they believe it promotes transparency. “It makes it easy for the government to collect taxes and for farmers to compare prices,” says Mark Ndipita, corporate affairs manager at AHL Group, which manages Malawi’s tobacco auctions. Without the public scrutiny of at-auction sales, he says, farmers could be taken advantage of.

    Industry representatives would also like the IPS to be recognized in Malawi’s legislation. Dating from the 1970s, Malawi’s tobacco act was written for a different era, before sustainability, traceability and contract growing. Currently, the IPS operates under a ministerial directive, which in theory could be revoked at a moment’s notice. Tobacco companies prefer the certainty of an act. “We’d like to have a stronger guarantee of our investments, and we must protect the interest of the grower, who is the anchor of our business,” says Vanneste. A new tobacco act was set to be debated in parliament at press time, but industry representatives were skeptical about the prospect of quick passage, considering the glacial pace of the process to date.

    The world, by contrast, is changing quickly. Stagnating cigarette sales and tobacco-saving technologies have reduced demand for tobacco. “Tobacco companies can make a lot more cigarettes from a kilo of tobacco than they could in the past,” says Pohl. New products, such as e-cigarettes, are unlikely to compensate for the decline of combustible cigarettes, as they require less leaf tobacco.

    To reduce cost and complexity, tobacco companies have been bringing down the number of sourcing areas. The task for Malawi is to remain on the map. To remain relevant and agile in the rapidly changing environment, the country will have to ensure its growers are competitive not only domestically but also internationally. Only by producing leaf that meets the highest standards in terms of quality, compliance and traceability will it be able to weather the global downturn in tobacco. Industry representatives acknowledge that Malawi has its work cut out, but they are determined to succeed. As one trader puts it, “We will be the last ones to switch off the lights.”

    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.
  • New pastures

    New pastures

    Retiring from Mane, industry icon Roger Penn will continue to serve tobacco companies and others as a consultant.

    By George Gay

    “When I got back, Mom asked how the exams had gone, and I said, ‘The lunch was great.’”

    There is something about this sentence that seems at first sight to encapsulate the person who uttered it: Roger Penn, who recently semi-retired after a distinguished career in the tobacco flavors business to go out on his own as a part-time consultant. The whole sentence, spoken in response to a question about his early education, suggests, correctly, that he is never too far away from a flippant aside, while the reference to lunch is a pointer to the love of flavors and tastes that has guided him throughout his professional and personal lives.

    But the sentence is also misleading because it conceals the tenacity with which Penn, who was born near Wolverhampton, England, eventually pursued his education, which culminated in his obtaining a doctorate in teratology and medicinal chemistry. After the examination hiccup that the opening sentence implies, the teenage Penn mixed work and study to pass—with high merit—the exams that would allow him to take a degree at Hatfield Polytechnic in what was known as a sandwich course: two years at the polytechnic followed by one working in industry and a final year back at college. After gaining a Bachelor of Science with honors in medicinal chemistry, he was invited to stay on to work on his doctorate and be part of a new medicinal chemistry group set up by the polytechnic’s chemistry and pharmacology readers, where he studied toxicology/teratology and where his interest in toxicity was awakened.

    Illuminating experiences

    The opening sentence is misleading, too, because it belies the seriousness with which Penn discusses matters that are important to him, such as regulation. “I have been totally consistent over the years,” he said in response to a question about increasing tobacco industry regulations. “I am totally for regulation—informed regulation, but not the sorts of laws that are made without any scientific validation or substantiation. Certainly I welcome the provisions within the TPD2 [the EU’s most recent Tobacco Products Directive] that seek to oust the cowboys operating in the e-liquids area. And the same can be said about the FDA [Food and Drug Administration] in the U.S. But unfortunately you also get the uninformed stuff.”

    Regulation is one area where Penn might work as a consultant, though this would possibly involve operating outside the tobacco industry, which he hasn’t ruled out. “You have to ask yourself what you can take to other industries, and one obvious answer has to do with regulation because we’ve already been through the regulation mill,” he said.

    No doubt, however, his long career in the tobacco industry included experiences that other industries might well find illuminating. For instance, he has seen and been part of the massive drive toward consolidation in respect of tobacco manufacturers and their suppliers, so he is well-versed in the new ways of working that such consolidation has brought about. And he, along with the rest of the industry, has had to navigate often hostile regulatory and social environments—a navigation that in recent times, with the advent of reduced-risk products, has seen the tobacco supertanker turn 180 degrees and head for calmer waters.

    Penn has been part of an industry that has gradually worked to stricter standards, with many of those standards being self-imposed. And he has worked with manufacturers whose production speeds rose to heady heights when long-run cigarette brands were all the go, and he has worked with them as those speeds have come down as the focus has turned toward niche products and, especially, next-generation products. Finally, his has been a truly international career, during which he was closely involved in the opening-up to Western influences of the tobacco industries of the USSR and China.

    But almost certainly most of his consultancy work will be linked with the tobacco flavors business, in which he has specialized almost since finishing his doctorate.

    “With the experience I have had working with tobacco companies around the world, I think I can offer a range of services or inputs,” he said. “The first one would be evaluations of R&D projects and products. I could help with policy decisions, in particular with those concerning emerging technologies. I could mediate in management policies in respect of R&D programs. And finally, I could bring an outsider’s perspective to companies’ brainstorming sessions.”

    That is quite an offering, and it is hard to avoid the idea that Penn is going to have his work cut out not winding up with a full-time job in consulting, though he is adamant that he doesn’t expect his door to be broken down. At the same time, he cannot be blamed for being curious about where the consultancy might lead. “If you’re working for a company,” he said, “you find out what you’re worth when you leave that company.”

    But he should have no concerns in that regard. His qualifications are impressive, as are the range of collaborative projects he has worked on. He was involved in what was the first heat-not-burn product, Premier, which was developed by R.J. Reynolds Tobacco in the U.S. in the 1980s. And while the product was not a success, it had at its base an idea whose time would come and for which Penn was already primed.

    Adding value

    But Penn sees as one of his biggest contributions to the tobacco industry the work he did in providing, through the application of flavors, consumer satisfaction in respect of low-delivery products. And while low-delivery products have attracted controversy because of what some people see as their unwarranted link with ideas of “lower risk,” these products have been embraced enthusiastically by consumers. Low-delivery cigarettes have become part of every market and the mainstays of some markets.

    Penn has collaborated in many commercial undertakings, but he has also given his time over many years to noncommercial collaborations within the scientific bodies, such as Coresta. And he has provided much input also into events that, while they include science, are also about regulations and policies, such as TMA conferences and the annual Global Tobacco & Nicotine Forum.

    The experience he has brought to these collaborations is immense partly because his working life has been spent almost entirely within the tobacco industry. His first job, however, the one at which he worked for three years while studying part time for the exams that would get him on to his degree course, was at the family-run firm Manders Paint, which at that time was an international paint and printing ink company. And on obtaining his doctorate, he went to work for Unilever’s flavor company, Food Industries, which tasked him with setting up a laboratory but where he worked also on food additives toxicology.

    After three years at Unilever, he moved to British American Tobacco’s (BAT) Group R&D division in Southampton, England, which at the time was looking for a flavor specialist with a toxicology background. “I was there for six and a half years,” said Penn. “I had this wonderful mentor or trainer, Ted Aulty, from the BAT Liverpool factory who basically trained me over five years as a tobacco flavorist—who trained me in the 1,000 raw materials that you had to know and use in those days. So there was the research side with the analysis, there was the flavor creation side—that’s where I really got into it—and also the manufacturing of flavors for BAT operating companies around the world.”

    Penn’s next move, to Firmenich, saw him take on a more commercial role within the tobacco flavors business. “Firmenich at the time were doing a lot of chemical synthesis and tobacco analysis in order to build up their sales of tobacco flavoring,” he said. “But while they had brilliant chemists, they had nobody much to show their products to potential customers or to discuss with customers what they needed and then retrofit them. So I was taken on in the marketing department in Geneva to commercialize the fruits of all of their research work.”

    The move to Geneva meant, of course, a move to a French-speaking city, though this was more of an upheaval for Penn’s young family because he was to spend much of his time traveling, mainly to the Americas. At that stage, U.S. manufacturers were spending a lot of money on what they considered to be expensive oriental tobacco, and what they wanted to do was to reduce that cost using liquid flavors.

    Penn stayed in Geneva for seven years and then moved to the U.S. when Firmenich decided it wanted to beef up its operation in Princeton, New Jersey, where he spent 4 1/2 years. “It was a great time for the kids,” he said. “Princeton was a great school area, and they were in their early teens. It was the American experience. Everybody should spend at least one year in an American industrial environment. It is totally different to Europe, mainly because of the scale. Everything is 20 times bigger than in Europe.”

    Penn left Firmenich when the company decided to pull out of the tobacco business and joined International Flavors & Fragrances (IFF) in what was a natural move. Whereas his journey to Firmenich had involved him leaving his house, turning left and driving 20 miles down Route 1, his journey to IFF involved leaving his house, turning right and driving 20 miles up Route 1. Not that he was to make the journey to IFF very often during the early part of his time with that company. “IFF had this guy called Carl Richter, who I’d known from a few meetings and who was an icon in the tobacco flavor industry worldwide, and especially in China,” said Penn. “So I spent three days in my new office in East Brunswick and then left with Carl for a six-week trip in China.”

    “That was quite an event,” he said. “It was at least 23–24 years ago, at a time when Beijing international airport was still in the hands of the military, as was the tobacco industry, which comprised about 165 factories. It took four hours to get from the airport to downtown Beijing, sometimes driving on farmers’ crops that had been laid on the road so that the traffic that passed over them helped with the winnowing.”

    Penn was with IFF for only two years before that company too pulled out of the tobacco industry, at which time he moved to Mane Fils, which had been trying, with only limited success, to move into the tobacco business. “They had a flavorist in the south of France and a technician, but the contacts and the products weren’t sufficient for the world market,” said Penn, who, as director of flavor marketing, set about changing that situation. Later, he became director of the group tobacco business unit, a position that he took with him when he moved to Mane SA in Switzerland.

    Moving on

    Penn was successful in helping to make Mane one of the top tobacco flavor companies, but he believes that now is the time to hand things over to somebody else. “I’m at the legal age of retirement, my family is increasing, and I want to see a bit more of the world without working,” he said. Penn will spend some of his spare time walking in the mountains near his home in the south of France, though his exertions will be limited to what he calls “the more horizontal faces,” not the vertical faces that he used to tackle as a teenager in Wales and Scotland. And he will also spend a lot of time cooking, the business he says he would probably have gone into if he hadn’t been taken with the flavors industry.

    Although it’s a wonder that his enjoyment of food wasn’t spoiled by an experience he had in one of the countries that were behind the Iron Curtain when he visited with a colleague. In a dimly lit restaurant in a dimly lit hotel, he recalled, the two of them had scoured the menu and chosen one of the few things they thought they recognized—sheep chop with vegetables. “We waited for about 20 minutes, by which time we got onto the second bottle of wine—because we were hungry,” said Penn. “Then the waiter came along with two silver platters with domes on them, and I thought, this is a bit pretentious. But then he put them on the table and lifted off the covers to reveal a sheep’s head cut in half—oh right, I thought, sheep chop. It still had grass in its teeth, and the eyes were still in the head. I sat there thinking, get another bottle of wine—quickly.”

    Roger Penn will operate his business based in south France as La Casucha Consulting; email: penn.roger@outlook.com; telephone: +33 769502797.

  • Patching the pouch

    Patching the pouch

    By reducing snus’ notorious sting, a Swedish inventor wants to make it easier for smokers to go smokeless.

    By Taco Tuinstra

    Bengt Wiberg was devastated. He had just been diagnosed with a third-degree lesion, and the dentist blamed snus. The only way to restore oral health, his dentist insisted, was to quit smokeless tobacco.

    “It was the worst day of my life,” says Wiberg.

    A snus aficionado and former smoker, Wiberg did not want to stop snusing—and he certainly did not want to revert to smoking. The pain was so intense, however, that he could not even stand to hold snus in his mouth. So, back in his office, Wiberg started pondering his predicament.

    The cause of his oral discomfort was clear: Snus has a high pH level, which assists nicotine uptake and delivery time but can also irritate the gum and oral mucus membrane. If the snus is pressed against the same spot of the mouth for a prolonged period—like snusers tend to do—it can cause a lesion. The affected area becomes extremely sensitive, and the spicy juices released by snus can sting like salt in a wound.

    That analogy gave Wiberg an idea. “What do you do when you cut your hand?” he asks. “You put on a Band-Aid to keep out the dirt and sweat.” So, he took one from his employer’s first-aid kit, patched one side of a snus pouch and cut away the excess material. He then stuck the pouch in his mouth with the patched side facing his gums. “The pain disappeared immediately,” he says.

    Remarkably, the flavor and nicotine absorption were unaffected by his improvised patch. Because nicotine is water soluble and absorbed by all the mouth’s mucous membranes, the snusing experience was as satisfying as before—but without the discomfort.

    Wiberg continued snusing, experimenting with different patch materials, such as surgical tapes. After a year, he returned to his dentist, who was astonished to find no evidence of gum or mucosa irritation. Despite Wiberg’s ongoing snus use, the lesion had disappeared, and the color of his gums had changed from swollen red to healthy pink. “My oral health was excellent,” beams Wiberg.

    Bengt Wiberg (left) and his dentist, following a satisfactory checkup

    Getting started

    Convinced that other snusers might benefit from his experience, Wiberg composed a long message to Swedish Match, the world’s largest snus manufacturer. He described his solution in detail, along with the market potential, but just as he was about to click “send,” he stopped himself.

    Instead of giving away his idea, he contacted Start-Up Stockholm, a Swedish government-financed nonprofit consultancy for entrepreneurs in the startup and early growth stages of their ventures. Start-Up Stockholm helped secure a sek20,000 ($2,300) government grant to get started. “I am probably the only person in Swedish history to receive government money for a tobacco-related invention,” Wiberg says with a grin.

    After due diligence revealed that nobody had claimed credit for a similar technology, Wiberg filed for patent protection in Sweden and, later, in the United States and at the European Patent Office. Sweden granted the patent in early 2017, and Wiberg is confident that the other jurisdictions will follow suit. “My country is quite fussy when it comes to recognizing patent applications,” he notes.

    In the meantime, Wiberg kept perfecting his solution. After trying many different patch materials, Wiberg settled on an impermeable, soft and ultrathin (0.025–0.035 mm) membrane that has been approved by Sweden’s national food agency. Harmless and unnoticeable for the snus user, the material also complies with all applicable EU regulations.

    In June 2016, Aftonbladet, a leading Swedish newspaper, published a big story about Wiberg’s invention. With 600,000 unique impressions, it became the paper’s most read article that day. In December 2016, the Venture Cup recognized the innovation, labeled “Sting Free Snus,” as one of the best business ideas in Sweden that year.

    Harm reduction

    While the patch can help prevent oral discomfort for existing snusers, Wiberg believes its real value lies in removing a hurdle to the adoption of snus by cigarette smokers. Snus has already proved to be an effective stop-smoking aid, delivering the enjoyment of nicotine without the disease-causing byproducts of combustion (snus is estimated to be up to 99 percent less unhealthy than smoking). A study by L.M. Ramstrom and J. Foulds revealed that more than 70 percent of snus users in Sweden were former cigarette smokers who had quit smoking permanently.

    Wiberg suspects that snus could help even more people quit smoking if it wasn’t for the product’s characteristic sting, which he compares to the “pins and needles” sensation a person may feel after his foot has fallen asleep. This sting is experienced not only by users with compromised mucus membranes but also by the typical, healthy user (the “injured” users just experience it worse). In a consumer survey conducted by Wiberg, four out of 10 respondents said they found the sting unpleasant. A minority considered the sting an attractive feature in the way that some diners enjoy the “pain” associated with spicy foods, while others were indifferent. By dulling the snus sting, Wiberg’s solution could therefore contribute to public health.

    The inventor is now working on the commercialization of his creation. Swedish Match has signed up for a nonexclusive licensing agreement for the rights to utilize Sting Free Snus technology for its products. That leaves Wiberg the options to start his own manufacturing operations, contract more licensees or sell the patent to a third party.

    According to Wiberg, Sting Free Snus is an attractive business proposition. Incorporating his membrane, he says, adds little to the cost of production, but snus companies would be able to charge a premium for the sting-free varieties of their brands. Tobacco retailers stand to benefit, too. Even if increased snus sales would come at the expense of cigarette sales, they would still gain because retail profit margins (in Sweden, anyway) are almost 100 percent higher for snus than those of cigarettes.

    The patch also creates opportunities for new, innovative products. A separate patent covers a two-in-one pouch, with two flavors separated by an impermeable membrane. Depending on his preferences, the user can flip the pouch with his tongue so that the desired flavor faces the lip (snus users taste their snus by striking their tongue over the front-facing side of snus pouch). Wiberg compares it to the popular crushable filter capsules that allow smokers to flavor their cigarette smoke. But whereas the crushable-capsule concept is irreversible—once crushed, there is no way of returning to the original flavor—the two-in-one snus pouch allows the user to keep switching flavors indefinitely. “For example, you can enjoy whiskey flavor and then quickly switch to strong mint before kissing your wife,” he says.

    For the time being, the snus market is limited primarily to Scandinavia ($1 billion in annual sales) and  the United States. Snus is banned in all EU member states except Sweden, but that may be about to change. The European Court of Justice is set to review a challenge brought by Swedish Match and others, and experts are cautiously optimistic that it will throw out the ban. If that happens, it could make snus available to more than 100 million smokers.

    China, too, has approved snus. According to Wiberg, the China National Tobacco Corp. recently launched two flavors: “Black Tea” and “Deep Frozen.” China, of course, is the largest cigarette market in the world. If only a fraction of the country’s 350 million smokers converted to snus, the gains for public health—and snus sellers—would already be immense. And they would be even greater if Chinese smokers would have access to a non-stinging snus variety.

    Snus lovers around the world have responded enthusiastically to Wiberg’s invention, describing it as a milestone. Retailers in Sweden report frequent inquiries about the product, which has not even been launched yet. But perhaps the biggest endorsement came from Curt Enzell, a professor of organic chemistry, a retired Swedish Match R&D director and the father of the snus pouch.

    Tired of washing from his fingers the brown stains associated with loose snus, Enzell in 1967 placed his snus into an empty tea bag and thus inspired the creation of an entirely new product category. Portioned snus is still regarded as the most significant breakthrough in snus, as it has made the product more user-friendly and increased its consumer base. After evaluating Wiberg’s product, Enzell declared Sting Free Snus the greatest innovation relating to the snus portion since his pouch.

    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.
  • Gathering steam

    Gathering steam

    Tobacco harm reduction took center stage at the recent Global Forum on Nicotine in Poland.

    By Stefanie Rossel

    The fourth annual Global Forum on Nicotine (GFN) took place in Warsaw, Poland, June 15–17. Under the theme “reducing harm, saving lives,” this year’s conference attracted 350 delegates from 54 countries. Attendees not only had the opportunity to listen to almost 50 lectures, but they could also study a variety of posters explaining the most recent research in the field of reduced-risk products.

    The GFN is funded exclusively by registration fees, and it attracts a broad base of stakeholders involved with new and potentially safer nicotine products. Participants include academics, public health experts and parliamentarians, along with manufacturers and distributors. Consumers and consumer advocacy groups are involved as well.

    The conference was preceded by ISoNTech, an international symposium on nicotine technology, which made its debut this year. Opened by Hon Lik, widely regarded as the inventor of the modern e-cigarette, it gave tobacco companies an opportunity to present research related to their nicotine delivery devices. Tobacco-heating products (THPs) featured prominently this year. Studies conducted by manufacturers suggest these devices deliver significantly lower levels of toxins than do combustible cigarettes.

    The GNF was opened by Ethan Nadelmann, former director of the Drug Policy Alliance (DPA) in the United States. The DPA is a nonprofit organization that seeks to decriminalize responsible drug use and promotes harm reduction. In an emotional lecture, Nadelmann urged governments to learn from the mistakes in America’s war on drugs and cautioned against prohibitionist policies for smoke-free nicotine-delivery devices. The illegal market, he warned, would flourish.

    Changing roles

    The main part of the conference, divided into two tracks with partly parallel sessions, explored the changing roles of public health and manufacturers of reduced-risk products (RRPs) and looked at the conditions under which the interests of tobacco companies and public health might coincide. It also raised the question of whether the rules of engagement, regarding, for example, Article 5.3 of the World Health Organization’s Framework Convention on Tobacco Control, which bans the tobacco industry from participating in tobacco control policy negotiations, needed to be changed now that tobacco companies have products that could benefit public health.

    The question about the credibility of tobacco companies’ new research, given their past misuse of science, was partly answered in a presentation on the rapidly developing science on nicotine use. Comparing e-cigarettes, THPs and conventional cigarettes, Konstantinos Farsalinos, a cardiologist at the University of Patras in Greece, reached conclusions similar to those of Philip Morris International (PMI). In Farsalinos’ study, PMI’s iQOS delivered higher levels of nicotine to the aerosol than do e-cigarettes but lower levels than do conventional cigarettes.

    The definition of combustion was hotly debated at the conference. A combustible cigarette burns at between 600 degrees and 950 degrees Celsius, according to Thomas McGrath, manager of RRPs at PMI. During the exothermic reaction that takes place inside the cigarette, the tobacco is burned to ash and generates smoke that contains more than 7,000 chemicals. THPs, by contrast, operate at considerably lower temperatures. According to McGrath, the temperature of the tobacco next to the heating element in iQOS reaches a maximum of approximately 300 Celsius—well below the temperature required for combustion, which exceeds 400 Celsius—while most of the tobacco is significantly below 250 Celsius. Contrary to combustible cigarettes, the temperature in iQOS decreases when air is being drawn through the device.

    By now, several THPs are available on the market, but there is no standard way yet of assessing whether a product is heating rather than burning tobacco. To comprehensively assess this aspect, a team of British American Tobacco scientists has developed a five-step approach, which they introduced during the poster presentations.

    The complex phenomenon of dual use of vaping products and combustible products was another focal point of the GFN. As dual use is a highly individual issue, existing data provide only limited insight. Tom Kirchner, clinical associate professor of public health, medicine and urban science at New York University, described a new model that shows the number of combustible cigarettes displaced by e-cigarettes and essentially is a categorizing or classifying approach.

    Nicotine: just another culprit?

    The conference demonstrated that the role nicotine plays in tobacco harm reduction for the time being will remain a matter of discussion. Neal Benowitz, professor at the University of California in San Francisco, acknowledged that his concerns about nicotine kept changing as new studies were released. Focusing on the question of whether physicians should recommend nicotine uptake in vaping, he stressed the pharmacological effects of nicotine, which he said include cardiovascular disease, reproductive toxicity, cancer and chronic obstructive pulmonary disease. He concluded that short-term nicotine use posed little cardiovascular risk, whereas long-term use might be harmful.

    While the focus currently is on delivering nicotine more safely, Eric C. Donny, from the department of psychology at the University of Pittsburgh, argued that people should be pushed to positive behavior change by reducing nicotine in combustible smokes. While acknowledging that nicotine was not the direct cause of harm, he claimed that it sustained the use of a “vehicle” that was deadly. The availability of alternative nicotine-delivery devices might not be enough to rapidly reduce smoking, he noted; therefore policies were needed that minimized the appeal of cigarettes relative to RRPs. Reducing nicotine in combustibles and enabling the growth of RRPs, Donny said, might be synergistic, complementary approaches to ending smoking.

    Snus ban challenged

    The second track of the GFN dealt with policy, advocacy and practice. The EU’s longstanding ban on snus featured prominently in this session. Although snus gives a similar nicotine dose as does a combustible cigarette without presenting the same risks for cancer, the product is banned in all EU countries bar Sweden. Looking at 50 years of increasing snus use in Sweden, Lars Ramstrom of the Institute for Tobacco Studies in Sweden stated that patterns of dual use of combustible cigarettes had changed considerably over this period, with snus use gradually replacing smoking. Today, Sweden has a prevalence of daily smokers of 5 percent, by far the lowest in the EU, as well as the lowest tobacco-related mortality rate. If the EU allowed the sale and use of snus, 320,000 smoking-related deaths could be prevented each year, he calculated.

    In July 2016, Swedish Match filed a legal challenge to overturn the EU snus ban. Even though its previous challenge, in 2003, failed, experts are optimistic about the outcome of the current case, given that there is now significantly more scientific evidence available to support snus’s harm reduction potential. In addition, because it has so far not been available on the EU market, snus could be claimed to be a novel tobacco product, for which the revised Tobacco Products Directive (TPD2) contains a regulatory path to market.

    Unlike snus, e-cigarettes are available in a large number of markets. Nevertheless, electronic nicotine-delivery devices face many challenges as lawmakers struggle to decide the new technology’s place in society, as snapshots of various countries during the conference proved. E-cigarettes are technically illegal in Australia, where nicotine is classed as poison. In spite of restrictions, people are embracing vaping, and the sector has been growing. It remains legal in Australia to import nicotine liquids for personal use. In February 2017, the medicines regulator rejected an application to legalize nicotine-containing e-cigarettes, which leaves combustible cigarettes more accessible than a safer alternative.

    New Zealand, which has similar legislation on vaping products, in March shifted its policy. Reflecting the general consensus that vaping is safer than smoking, the government plans to legalize e-cigarettes to help the country become smoke-free by 2025. While sales would be restricted to adults and vaping would be banned in nonsmoking areas, the vapor products would not be subject to tobacco taxation and plain packaging laws.

    In Europe, the TPD2, which came into force in May 2016, has significantly changed the business environment for the vapor industry. In countries such as Poland and the U.K., researchers have witnessed the effects on public perception of negative coverage of the vapor industry in the mass media, which is often based on poorly designed and misleading studies.

    Other issues tackled at the GFN included the availability of less hazardous tobacco products for certain groups in society, such as people with mental disorders, individuals with addiction issues and poor people (groups that tend to have high rates of smoking prevalence). As far as future regulation of novel nicotine products was concerned, conference speakers said that legislators should promote innovation, set standards on product safety, and give the tobacco and vapor industries appropriate marketing freedom to build new brands. Consumers, on the other hand, should get appropriate freedom to use those products, while they needed to be informed about the risk.

  • Looking sharp

    Looking sharp

    HTMS revamps a venerable tobacco cutter to meet modern-day requirements.

    By Stefanie Rossel

    Usually, money is the main reason behind the decision to breathe new life into older tobacco equipment. Tobacco companies that have their machinery revamped do so because they will get an up-to-date version of their reliable workhorses without having to invest in significantly more expensive new equipment. In turn, they accept that they may not have the latest technologies associated with new machinery at their disposal—technologies that might be more efficient than even an “as new” rebuild.

    But what if equipment developed way back in the past is simply more robust and flexible than anything currently available? In that case, rebuilding may be a sensible choice. On behalf of a leading manufacturer of large machine-made cigars, Hampshire Tobacco Machinery Services (HTMS) of the United Kingdom recently transformed a Molins MK1 cutting machine, comprising five units originally built as a tobacco stems cutter, into a cutter that is now also capable of cutting a range of tobacco leaf—uncased, semi-cased or fully cased—in compliance with U.S. Food and Drug Administration (FDA) regulations. The development extended to cover anything from heavily cased cigar blends to the currently much-favored shisha tobaccos.

    Testifying to the quality of Molins’ original cutters, HTMS used a variety of MK1 donor machines built as early as 1934 and introduced new features. “The old MK1 cutter can cut heavily cased tobacco much better than modern-day horizontal rotary axis cutters,” says Ron Woodthorpe, managing director of HTMS. “Besides, it also has a more robust structure and a compact design. We have used all the advantages of the MK1 and MK4 to build a cutting machine to meet today’s demands for FDA-compliant cigar production.”

    HTMS replaced the original epicycle gearbox, which worked with a five-blade rotating vertical cutting head, with a compound gearbox and introduced a new feature: a pneumatically controlled weight box conversion. Using a dependable, adjustable design by supplying pneumatic pressure to create a force to the top band via the mechanics of the existing link arms onto the tobacco, it forms a solid “cheese” for the final cutting of threshed tobacco products at 22 percent moisture. Outside of the cigar range, the MK1 modifications are most suitable to cover the RYO and MYO sectors, with the added attraction of cutting for shisha tobacco.

    By using a selected change gear, the range of cutting widths has been significantly extended. The rebuilt cutter is able to provide extra-coarse cuts, ranging from 5 cuts per inch (cpi) for specialized products to 180 cpi. Flexibility of the cutter has been further enhanced. The redesigned gearbox allows a simple change. It can even be extended to 220 cpi by adding the change part of the MK4 eight-blade knife head. New configurations are available to extent capacity for all products, including lamina conditioned leaf blend, up to 2 tons per hour.

    Using only four blades of the knife head to provide 5 cpi, the revised MK1 can theoretically apply 4 cpi, producing a particularly coarse cut as a possible substitute for threshed leaf blends.

    “The range of tobacco cuts on this machine is structured to give options for a ‘cut blend’ for leaf, rather than threshed leaf for cigars,” says Woodthorpe. “This covers the cutting of 5 cpi to 24 cpi to substitute for threshed leaf particle. This is understood to meet the requirement of the FDA and the user to create a platform of accuracy and performance for the composition of a cut blend.

    “The application can vary relating to width of cut and volume, this coming into a blended format to meet the design of the favored blend, under the known value of substances that are predetermined within the proposed leaf blend, which means that you can identify the tar, nicotine and sugar in the tobacco before it is cut, to give the analysis of the volumetric format before it is actually blended.

    “This as an essential prerequisite in times of comprehensive legislation of tobacco products.”

    By being able to cut known conditions of leaf for cigars, manufacturing will allows the processing of reclaiming of about 10 percent of tobacco use as addback on line production.

    The cutter has been comprehensively automated. The constant throughput of tobacco is controlled electronically by an incoming feed system and a sensor-based, tobacco-level detection system. Feed rate and conditions for compression of the cheese are also constantly checked.

    The sticky stuff

    The original MK1 was designed principally for dry-stone knife sharpening. At the time, there was little need for cutting heavily cased tobaccos, which is a far more demanding task. Casing requires that the tobacco be soaked in or sprayed with a “sauce” that may contain sugar, molasses, licorice, rum or whiskey, along with various flavorings, natural or otherwise. Heavily cased tobaccos can contain up to 40 percent nontobacco ingredients and become very sticky, which makes the cutting process more complex and also adds to contamination of the cutting equipment. This is especially true for the increasingly popular water pipe tobacco.

    To meet the production requirements of this product, HTMS equipped the MK1 cutter with a wet-stone application capable of cutting a variety of flavored tobaccos that carry molasses or sticky fruit flavors, as well as the traditional shisha tobaccos. To keep the machine clean between blend changes or after the processing of heavily cased tobaccos, the company has built in a “wash down” hose facility.

    Woodthorpe says that his company’s modification covers almost 99 percent of MK1 cutting machines produced by Molins. Built to the latest European safety standards, the new MK1 cutter, complete with infeed conveyor, comes with a one-year warranty—a remarkable achievement for a technology developed more than 80 years ago.  “With our modified cutter, we are able to offer high flexibility in a low-cost machine,” says Woodthorpe.

     

  • Chewing the fat

    Chewing the fat

    Manufacturers, aficionados and researchers talk snus in St. Louis.

    By Taco Tuinstra

    Snus enthusiasts gathered on May 27–28 in St. Louis, Missouri, USA, for the first Snus Con, a conference featuring experts from Sweden and the United States. Organized by Chad Jones of the popular snus blog www.snubie.com, the event tackled topics such as tobacco harm reduction, regulation and science. It also highlighted a remarkable innovation—Sting Free Snus—and featured several tasting panels.

    Snus represents only a small share of global tobacco sales, but the product has a dedicated following, which became clear during the St. Louis meeting. Attendees passionately discussed their beloved smokeless tobacco, sharing news, tips and experiences. Illustrating the attachment some snusers feel to their product, one prospective participant was detained by U.S. immigration authorities after refusing to surrender a snus can containing Cuban tobacco.

    The main snus markets are Sweden, with about $1 billion in annual sales, and the United States, with annual sale of approximately $800 million. The product is also gaining popularity in Norway. Due to a misguided risk assessment, snus is illegal in all EU member states bar Sweden—although that may change soon. The European Court of Justice is set to hear a legal challenge to the ban, and industry representatives are cautiously optimistic it will rule in snus’s favor.

    Without the disease-causing byproducts of combustion, smokeless tobacco is considerably less harmful to health than are cigarettes. Unlike smoking, it presents no significant risk for emphysema, heart disease and stroke.

    Brad Rodu at Snuscon 2017
    Brad Rodu

    Brad Rodu, professor at the department of medicine of the James Graham Brown Cancer Center at the University of Louisville in Louisville, Kentucky, USA, kicked off the conference by detailing “the Swedish experience.” Sweden has the lowest rates of lung cancer and other smoking-related diseases in Europe, which Rodu attributes to tobacco consumers using snus instead of cigarettes. The country has the highest rate of male smokeless tobacco use and the lowest rate of male smoking in Europe. “If men in other EU member states smoked at the rate of Swedish men, almost 274,000 lives per year would be saved,” said Rodu.

    Regrettably, this enviable state of affairs doesn’t extend to Swedish women, who are less likely to obtain nicotine through snus than are their male counterparts. According to Rodu, Swedish women are more likely to smoke. But while snus is still considered a male habit, women under 30 appear less hesitant to pop a pouch underneath their upper lip. If the trend holds, quipped Rodu, “it would be the first time in history that women adopted a healthier behavior from their husbands.”

    Joe Ackerman at Snuscon 2017
    Joe Ackerman

    Joe Ackerman, director of marketing at Swedish Match North America, spoke about his employer’s vision: “a world without cigarettes.” He described a continuum of risk, with cigarettes residing at the very top and smokeless products near the bottom. “We operate at the safer part of the continuum,” he said. Ackerman marveled at the sheer variety of nicotine products, which had come about in response to concerns about the health effects of smoking.

    The cigarette remains the ultimate nicotine-delivery device, he noted. “Without the health concerns about smoking, the other categories would not exist.” Ackerman went on to describe one of Swedish Match’s latest offerings, Zyn, which is currently being marketed in the western United States. A smoke-free and spit-free nicotine pouch, Zyn contains nicotine salt derived from tomatoes and tobacco leaves, along with food-grade ingredients, such as pH balancers and sweeteners. Careful to avoid health claims, Swedish Match markets Zyn as a “clean” product.

    Swedish Match’s commitment to responsibility became evident also from the fact that Zyn’s child-safety lid—a first in the industry, according to the company—is sufficiently secure to deter even some adults. “I can kill a bear with my hands, but I am unable to open your can,” a burly audience member complained to Ackerman.

    Jonas Yden at Snuscon 2017
    Jonas Yden

    Jonas Yden, global director of Skruf Snus, told the story of his company’s meteoric rise. Created only in 2003, Skruf has managed to carve out a respectable niche in a business dominated by centenarians. In its first year of operations, the company packed 400,000 cans of snus; this year, it expects to manufacture 94 million.

    While such rapid growth is exciting, it also presents challenges. “We are building the rocket ship while flying it,” said Yden. With machines running 24/7, it is difficult to test new innovations. Yden attributed Skruf’s success to its startup culture, which includes “the freedom to screw up,” and the fact that the company offers to snus users “something other than tradition.” Impressed by the company’s performance, Imperial Tobacco (now Imperial Brands) took a minority stake in Skruf in 2005 and purchased the remaining shares in 2008. As Scruf continues to grow and becomes more corporate, Yden said it must take care to retain its entrepreneurial spirit.

    Larry Waters at Snuscon 2017
    Larry Waters

    Larry Waters of SnusCentral introduced himself in the way a heavy drinker might present himself at an alcoholics support group meeting. “Hello, I am Larry, and I am a nicotine addict,” he said to an amused audience. A former smoker, Waters credits snus with the fact that he’s alive today. He started snusing with R.J. Reynold’s Camel Snus—a product that was simultaneously scoffed (for its taste) and lauded (for introducing Americans to the category) throughout the St. Louis conference—and quickly “upgraded” to Swedish snus.

    Within one week, Waters transitioned from using cigarettes and snus side by side to using only snus—and like a true convert he couldn’t stop telling people about his experience. He started blogging, reviewing products, sharing tips and commenting on industry developments. “I wanted to create a site where Americans could find everything about Swedish snus—a one-stop shop,” said Waters. In 2009, he visited Sweden at the invitation of snus manufacturers, who recognized the potential of the U.S. market. Unable to contain his excitement at being in the “Walhalla of snus,” Waters kissed the tarmac upon arrival.

    Lars Rutqvist at Snuscon 2017
    Lars Rutqvist

    A particularly interesting contribution to the St. Louis conference came from Lars Rutqvist, senior vice president for scientific affairs at Swedish Match, who also managed to quit smoking with snus. Prior to joining Swedish Match, Rutqvist led the oncology department of the Karolinska Institutet in Stockholm. Among other projects, he researched the risk factors for head, neck and mouth cancers.

    Rutqvist’s studies quickly confirmed the roles of smoking and drinking but not the link with snus use. Because his findings went entirely against conventional wisdom in the 1990s, the department was reluctant to accept them. “In medical school we were taught that snus is a major risk factor for cancer,” said Rutqvist. But even after rechecking the basic data, he got the same results: Snus was not a contributor to any of the researched diseases. As it turned out, many of the prior studies supposedly linking snus to cancer related to powdered snuff instead.

    When Sweden joined the EU, it received an exemption on cultural grounds from the bloc’s snus ban but was required to start printing cancer warnings on cans. Confronted with the new science, the EU in 2001 allowed Sweden to replace the warning with a more generic one. Rutqvist is hopeful that the EU will soon take the next step: lifting the snus ban. While the European Court of Justice rejected an earlier legal challenge, many things have changed since 2004, according to Rutqvist. Not only is the science more conclusive today; the European Commission has, under pressure from consumers, also been forced to accept e-cigarettes in its new Tobacco Products Directive. What’s more, leaving the snus ban in place would be discriminatory now that a regulatory route for novel products has been introduced.

    Rutqvist was also optimistic about Swedish Match’s modified-risk tobacco products (MRTP) application in the U.S.—to the extent that he felt comfortable to bet a bottle of whiskey on its approval in 2018. In its MRTP application, Swedish Match asked the U.S. Food and Drug Administration (FDA) for permission to modify snus health warnings to more accurately reflect the current science. Even though the agency denied Swedish Match’s initial petition, it left the door open by allowing the company to submit an amended application.

    Rutqvist noted that the level of scientific expertise at the FDA’s Center for Tobacco Products is much higher than that among its EU counterpart, which he said is staffed primarily by career administrators.

    During Snus Con, speakers repeatedly stressed the importance of consumers, who are able to interact with authorities in ways that snus manufacturers cannot. Inspired by the World Health Organization’s Framework Convention on Tobacco Control, many lawmakers keep tobacco companies at arm’s length, preventing meaningful discussions and often resulting in ill-informed legislation.

    Alex Clark, executive director of the Consumer Advocates for Smoke-free Alternatives Association (CASAA), which is best known for its work on behalf of vapers, stressed his organization’s support of snus users in the U.S. “People know us as ‘the vaping people,’” he said, “but CASAA talks about all alternatives to smoking.”

    Rutqvist, too, spoke approvingly of consumer involvement. “I once naively thought that science could solve all problems—but politics trump science,” he said. Fortunately, Rutqvist added, politicians in many countries are beholden to consumers, who are also potential voters. The EU exception for snus in Sweden and the European Commission’s capitulation on e-cigarettes can both be attributed to consumer pressures, according to Rutqvist. “So, consumers trump politics,” he said. “That’s why conferences such as Snus Con are so important.”

    The next Snus Con will be held in the summer of 2018. The date and location will be announced at www.facebook.com/snuscon.

     

  • African anthology

    African anthology

    New data underscores the diversity of Africa’s tobacco markets.

    By Shane MacGuill

    This month, Euromonitor International is adding 20 markets to its direct research coverage, bringing the number of markets under its scope to 100, representing 98 percent of global cigarette volumes.

    In this article, the market intelligence company offers a preview of its research findings from Angola, Ivory Coast, Ethiopia, Ghana and Tanzania. These markets share no single unifying constant other than that they have recently been added to Euromonitor’s coverage. In fact, their diversity in traditions and outlooks indicates that the prospects for tobacco are far from homogenous across the African region.

    Angola: Tobacco losing relevance but not volume

    Angola, the largest market by value of the five, is one where tobacco has played a substantial role in the past but where smoking is becoming increasingly denormalized. As is the case in other regional markets, traditionally tobacco has been of economic importance in Angola as an employer and revenue generator. But as other sectors expand and government regulations—such as a 2017 law banning tobacco advertising—began to bite, the industry’s importance has declined.

    Angola has an estimated smoking prevalence rate of around 17 percent, though this is believed to be decreasing among both males and females (slightly more rapidly among the latter than the former). Nonetheless, with overall population growth, the outlook for cigarette volumes is broadly stable, with the total market expected to remain around 4.5 billion sticks between 2016 and 2021. Widespread availability through kiosks of affordable cigarette brands such as SL, Aspen and Yes is contributing to this volume stability.

    The manufacturer of SL and Yes, British American Tobacco (BAT), controls some 65 percent of the market, with Japan Tobacco International (JTI) accounting for a further 20 percent through its Aspen brand. Illicit cigarette volumes represent about 20 percent of total consumption in Angola, with most illicit products being sourced from China.

    Unlike some other markets in the region, Angola is home to an active anti-tobacco lobby. Health advocates argue for enforcement of existing tobacco control legislation, as well as the imposition of further restrictions. This means that Angola’s growing population is likely to be balanced by lower prevalence in the short to medium term.

    Ivory Coast: Price-conscious smokers fuel growth

    In contrast to Angola, use and acceptance of tobacco in Ivory Coast has increased in the past decades and appears to be still growing. Smoking prevalence among males, around 25 percent, far surpasses that of females (less than 1 percent) but is growing in both cohorts. Female smoking is becoming more socially acceptable, and female prevalence is much higher in younger generations than it is in the population as a whole.

    Cigarette volumes stood at an estimated 4.7 billion sticks in 2016, and the market is forecast to grow to 5.5 billion by 2021. Despite a rapidly declining share, Imperial Brands still leads the market, with its Fine brand accounting for about a half of all consumption. Smokers in Ivory Coast are price conscious, with more than three quarters of volumes shared between Fine and Craven A, BAT’s low-priced brand.

    Between 2002 and 2011, the country went through a severe internal political crisis, with the New Forces controlling the country’s northern region for large parts of this time. During this period, illicit sales of cigarettes grew immensely, especially in the northern part of the country, reaching 30–35 percent of the total cigarette volume sales. Following the country’s reunification in 2011, the illicit trade started declining. Today, it accounts for between 5 percent and 10 percent of total cigarette sales.

    The government is doing little to inform consumers about the risks of tobacco or to discourage people from taking up the habit, and this is reflected in growing smoking rates. There is currently little to no domestic civic anti-tobacco organization activity in the country.

    Ethiopia: Significant scope for growth

    The largest by volume of Euromonitor’s five new markets, the Ethiopian tobacco market is exhibiting strong signs of growth. Historically, tobacco has played a small role in society, being consumed primarily by elders in a traditional manner. However, in recent years the prevalence of tobacco smoking, especially cigarettes, has increased within the country’s towns and cities. Even though tobacco was—and, to some extent, still is—considered taboo by a majority of the society, the social acceptability of smoking has clearly increased in the past decade or so. Prevalence remains relatively low in Ethiopia; according to a 2015 study by the World Health Organization (WHO), 8 percent of males and 1 percent of females were smokers. However, there is reason to expect this rate to continue to grow—at least in the short term—particularly in the absence of concerted government or civic anti-tobacco activity.

    Just under 7 billion cigarettes were consumed by Ethiopian smokers in 2016, according to Euromonitor estimates, and this figure is forecast to grow by more than one-third in absolute terms up to 2021. The value of the cigarette market is expected to almost double to $600 million in the same period.

    Data points such as these perhaps go some way to explaining why JTI was willing to part with $510 million for a 40 percent stake of the state-controlled National Tobacco Enterprise, which dominates the market, selling four in every five cigarettes consumed there. BAT and Philip Morris International share the remainder of volumes.

    Illicit penetration, estimated at above 30 percent of total consumption, is much higher in Ethiopia than in any of Euromonitor’s other five new African markets. Indeed, it is elevated even at a regional level. Driven by demand for lower-priced products among consumers, illicit brands are often sold through formal distribution channels, particularly outside major urban areas.

    Ghana: A tale of two (or more) regions

    The smallest by volume of Euromonitor’s new African markets, Ghana has a relatively low engagement with smoking, even though there has been a multinational presence in the country since the 1950s, when BAT Ghana was incorporated.

    Sales boomed in the 20 years after the country gained independence in 1957, but this growth was not as sustained as it was in other markets. Contributing factors include (eventual) state-ownership of tobacco companies, unfavorable economic conditions (which made products unaffordable and difficult to manufacture) and relatively restrictive regulation.

    Best estimates of smoking prevalence in Ghana indicate that the rate is below 10 percent among males and around 1 percent among females, though national estimates are complicated by significant regional variations. Smoking is concentrated in Ghana’s three northern regions, where more than a third of adults smoke—in comparison to the capital, Accra, where around one in 20 do. In areas with lower rates of smoking, tobacco consumption remains relatively socially unacceptable and often publicly invisible.

    After a decade or more of volume growth, cigarette consumption in Ghana appears to have peaked in 2012 at just under 1 billion cigarettes. In 2016, an estimated 850 million cigarettes were consumed, and this is expected to decline further up to 2021. Despite ceasing local production in 2006, BAT continues to dominate the market and is the only official importer of cigarette products. Leading brands include Rothmans, Pall Mall and London.

    Tanzania: A substantial but declining role for tobacco

    Tobacco is of substantial importance to the Tanzanian economy. In 2016, according to the Bank of Tanzania, the country exported $312.7 million worth of tobacco, representing nearly a third of exports including cashew nuts, coffee, cotton, tea, cloves and sisal. The industry still employs thousands of people and is among the top revenue contributors to the government, with annual contributions of about $40 million. Historically, this has impacted attitudes to tobacco and tobacco consumption in Tanzania. In recent years, however, anti-tobacco activism has begun to influence public and government thinking, which, in turn, is becoming increasingly opposed to the product. During the past decade, smoking has become much less socially acceptable, particularly in public spaces.

    According to 2013 WHO data, an estimated 16.3 percent of the population aged 15 and older in Tanzania is made up of tobacco smokers, though this rate is higher for male adults aged 25–64, of whom more than a quarter are regular smokers. It is still socially acceptable for men to smoke in Tanzania, albeit increasingly less so. In contrast, it is socially unacceptable for women to smoke, something reflected in an estimated prevalence rate of 2–3 percent. Heightened anti-tobacco and health awareness campaigning, such as that conducted by the Tanzania Tobacco Control Forum, along with enhanced government restrictions are expected to drive prevalence down in the short to medium term.

    As a result, there appears to be a secular decline of about 1–2 percent in Tanzanian cigarette volumes, with a market size of about 5.5 billion sticks in 2016 forecast to decline by about 300 million cigarettes by 2021. However, in contrast to other markets in the region, illicit trade penetration is relatively low (around 5 percent), and the value of the legal cigarette segment (a little more than $300 million) is set to grow despite volume losses. The Tanzania Cigarette Company (owned by JTI) will be the major beneficiary of this value growth. It dominated the market in 2016 with more than 80 percent of sales. Portsman, Sweet Menthol, Club and Safari are among the most popular brands.

    Shane MacGuill is head of tobacco research at Euromonitor International.
  • A clean slate

    A clean slate

    Bond Street’s heat-not-burn technology aims to overcome some of the limitations associated with reconstituted tobacco.

    By Joseph Matus Fuisz

    Joseph Fuisz is an attorney and a graduate of Yale and Columbia law schools. He started and sold Fuisz Tobacco, a tobacco dissolvables company. He works in drug delivery and next generation tobacco products and is an inventor on more than 30 issued U.S. patents, including the largest patent estate in oral thin film drug delivery. Fuisz is a partner in Bondstreet Manufacturing LLC(www.bondstreetwax.com).

    Heat-not-burn tobacco is a relatively mature segment that is finally getting attention. This is attributable to several drivers, including an increasing desire for products with reduced toxicants relative to combustibles, the success of the vapor industry (pointing to previously underestimated consumer demand for combustible alternatives) and an increasing understanding of the types of alternative products that engage adult smokers.

    Philip Morris International’s (PMI) iQOS is the most remarkable tobacco product launch in living memory. IQOS has achieved a success in Japan—admittedly a nonvapor market—that is the envy of the sector. PMI achieved this by dedication to a platform—the electronic heating of a specialized reconstituted tobacco sheet—that had negligible consumer success in its Accord and Heatbar variants. British American Tobacco has now rushed to join the party with Glo, which follows this same reconstituted tobacco approach.

    At our company, Bond Street, we view the reconstituted tobacco approach as counterintuitive. Why lock up components—intended to be aerosolized—in a solid sheet matrix? Moreover, this approach (like any) has inherent limitations. Because reconstituted tobacco sheet requires specific mechanical properties, and because of the nature of film and sheet formulation, there are practical limits on the amounts of glycerin (vapor agent) and flavor that can be included. Moreover, there is the possibility to get unwanted flavor notes from the excipients (typically cellulosic polymer) needed to make the sheet.

    That iQOS receives such positive consumer feedback is a tribute to the strong evolutionary work of its product developers. Akin to the Porsche 911’s inherently challenging rear-engine architecture, the platform underlying iQOS has been coaxed to product excellence despite the peculiar reconstituted tobacco sheet approach.

    On Bond Street, we approach the heat-not-burn space from a clean page: Our solution is to employ a wax partition taken from a cured tobacco blend. The wax partition brings over the rich flavors of the blend and nicotine—the elements that consumers want and that make adults enjoy tobacco. This wax partition is mixed with vapor agents and, optionally, with flavors. The patent-pending process and compositions have no unwanted flavor notes because all the components inherently taste good. Nontobacco excipients are solely present for flavor and additional vapor—i.e., to enhance the user experience—not for mechanical properties.

    In addition to rich tobacco and other flavors, the Bond Street wax approach compositionally affords unlimited vapor and unlimited flavor. Nicotine levels are controlled as well, from 0.5 percent to 6 percent. Because the composition does not need to be formed into a sheet, new compositions can be readily created.

    Perhaps most interesting is the preservation of the blender’s art in the new field of next-generation heat-not-burn tobacco products. Whether making a cigar wax, a combustible replacement or a shisha-type product, the craft of tobacco blending comes through in high fidelity.

    Bond Street views its wax platform as having broad potential in various tobacco channels, including combustible cigarette alternatives, cigar alternatives, shisha and blunt-style products.

    Our combustible alternative is called iPek, from the Greek “κερί,” meaning wax. IPek is a modern lifestyle brand to compete in the heat-not-burn space for adult cigarettes. The cigarette blend will be sold in Nespresso-style pods that are used in a personal vaporizer. Taste, vapor product and nicotine delivery all compare favorably with the competitive set, as confirmed by sensory evaluation. IPek is offered in tobacco, menthol and adult flavors.

    Our cigar alternative is sold under the Havana Wax brand. Bond Street recognizes the challenge of successfully selling heat-not-burn products into this channel that is so deeply committed to flavor and experience—an as yet unprecedented step. Yet we believe the rich flavor of our wax platform makes the cigar market too enticing to pass up.

    Govern’s is directed to the sophisticated hookah user. With an ingredient listing nearly identical to shisha (minus the nonvaporizable molasses) our heavily flavored Govern’s should be a dream for the shisha fan heretofore tethered to her shisha pipe and unimpressed by nonsensical attempts to rebadge vapor products as e-hookah.

    Our Blunt wax brand is geared to the blunt smoker who wants to enjoy a blunt experience in a contemporary vapor/wax pen.

    We believe the future for Bond Street is bright in the exciting trail being blazed by iQOS and Glo around the globe. For a small independent manufacturer, navigating the global markets for heat-not-burn products across multiple channels is a substantial undertaking. We think we’ve chosen the right page to start from, and we are looking forward to the road ahead.