Category: Print Edition

  • Digging deeper

    Digging deeper

    Yunnan scientists believe tobacco roots are the key to higher leaf quality.

    By Congming Zou

    Fgure-1-webZimbabwe and the U.S. state of North Carolina are well-known for their high-quality flue-cured tobaccos. In addition to their suitable climate conditions, their sandy soils provide an excellent rhizosphere for tobacco root extension. By contrast, the texture of most soils in China’s Yunnan province—which produces about 20 percent of the world’s flue-cured tobacco—is silty loam or even clay, which impedes tobacco root penetration.

    This presents a challenge especially in the late period of tobacco growth, when some roots become old and lose function. The insufficiently developed root will limit nutrient acquisition (especially of potassium) and further affect tobacco quality. To address this problem, the Yunnan Academy of Tobacco Agricultural Science (YATAS), an important tobacco research center in southern China, has recently started to investigate tobacco roots in field conditions.

    The tobacco root plays an important role in plant growth and leaf chemistry. On the one hand, it physically supports the plant and absorbs water and nutrients from soil. On the other hand, the tobacco root is where the synthesis takes place of many important compounds, such as alkaloids. Traditionally, agronomists have focused only on the aboveground parts of plant. More recent works suggest that successful crop varieties are due to bigger root systems, which allow the plant to absorb from the soil the required water and nutrients more efficiently.

    Despite its significance for plant growth, the tobacco root has been rarely studied. Some scientists have dug up roots, but that approach is labor-intensive and fails to provide a true picture of root distribution in field conditions. So YATAS has created a rain-protection shed with a belowground lobby, where roots can be viewed under the real production conditions (Figure 1).

    The setup contains three types of soils with different textures, including sandy soil, silty loam soil and clay soil. Through the observation windows in the lobby, researchers observed the longest tobacco roots in the sandy soil and the shortest in clay soil. The roots in the silty loam soil were somewhere in between (Figure 2).

    These results confirmed that sandy soil can produce better-quality flue-cured tobacco. Also, the test site features polymethyl methacrylate tubes with coarse texture media, where tobacco root can be tested for its penetration potential and scanned from the different angles. Figure 3 shows that flue-cured tobacco grown in PMMA tubes can develop roots with depths of up to 175 cm, which is rare under natural conditions.

    Many agronomists believe that roots are the key to a second green revolution. This, they hope, will help solve the unintended economic and environmental consequences resulting from the inefficient nutrient applications associated with the first green revolution.

    YATAS plans to further improve its visualization facility to fuel the development of new and improved tobacco varieties. By identifying the optimal tobacco root architectures and examining agronomic management systems to improve nutrient and water absorbing capabilities, the agency hopes to develop more drought-resistant varieties and increase the efficiency of fertilizer applications.

    Congming Zou is a scientist at the Yunnan Academy of Tobacco Agricultural Science in Kunming, Yunnan Province, China.

     

  • Feeling the chill

    Feeling the chill

    The changing global cigarette market has left its mark on the classical oriental tobacco sector.

    By Stefanie Rossel

    For classical oriental tobacco, 2016 marks an anniversary. It was 10 years ago that in Greece—previously the European Union’s top tobacco producer—tobacco was “decoupled” from EU subsidies. Since then, the global market for the aromatic, sun-cured leaf that gives American-blend cigarettes their characteristic taste has changed considerably. The volume of oriental tobacco produced worldwide today is about the same as that produced by just Greece prior to decoupling.

    In 2015, global production of classical oriental leaf tobacco declined again. According to figures provided by Sunel Tobacco Co., the combined crop of the world’s four leading oriental producing countries (Turkey, Greece, Macedonia and Bulgaria) was expected to amount to 108,000 tons, down from 126,000 tons in 2014 and far from the 154,000 tons in 2013. Including semi-oriental varieties from countries such as China, Thailand, India and Kyrgyzstan, total global oriental production was forecast at 162,000 tons in 2015, down from 184,000 tons in the previous year.

    “Total production of classical oriental leaf in the four countries seems to settle down to a figure much lower than the 2013 crop peak, and much more in line with the current demand for this type of tobacco in the international market,” says Nikos Allamanis, secretary of the Hellenic Inter-Professional Organization of Raw Tobacco and president of the board of directors of the Hellenic Association of Tobacco Processing Industries. Demand, however, is expected to shrink due to declining consumption of American-blend cigarettes in the develop world.

    “In general we see a slowdown on demand due to reduction in cigarette sales that occurred mainly in the EU and Russia,” observes Frederick de Cramer, general manager of Sunel. Also, weak local currencies have slowed imports in Southeast Asian countries such as Indonesia. “The multinationals are carrying larger durations or stocks than their normal average so they seem to be adjusting them,” says de Cramer.

    Allamanis sees the growing popularity of illicit cigarettes, which typically are made without high-priced classical oriental tobaccos, and e-cigarettes—which don’t contain any tobacco—as further negative factors.

    Nevertheless, the future of oriental leaf production may brighten in at least one big cigarette market, according to de Cramer: “The U.S. decline [in cigarette sales] has slowed down from a traditional minus 4 percent per annum to minus 2 percent or less. This should bring some additional momentum to the oriental market. The volumes are down. … We anticipate a correction, i.e., an increase once we have hit the bottom, which is anticipated with the 2016 crop.”

    Turkey, which produces the classical varieties Izmir, Samsun and Basma, remains the world’s largest exporter of oriental; in 2014, it accounted for 33 percent of global oriental tobacco production. In 2015, however, the figure was expected to be only 60,000 tons, down from 67,800 tons in 2014, according to de Cramer.

    Contrary to the forecasts made at the time of decoupling, Greece is still in the game and ranks second among oriental tobacco producers. In 2015, it accounted for an estimated 15 percent of global oriental production. Its 22,000-ton harvest included 13,500 tons of Basma and 8,500 tons of Katerini, according to Allamanis. As in the other oriental-cultivating countries, Greece’s 2015 crop was smaller than that of the previous year, which stood at approximately 25,500 tons—a reversal of the trend following the overproduction of oriental tobacco in the preceding two years, Allamanis says. Production in Macedonia, which with its Prilep and Yaka varieties accounts for 14 percent of global oriental supply, was expected to reach 22,000 tons in 2015, down from 26,000 tons in the previous year, according to Sunel figures. Bulgaria holds the fourth place among oriental producing countries, with an estimated share of 6 percent or 9,000 tons in 2015.

    Fewer farmers, more alternatives

    Although Turkey, as a non-EU member state, has been unaffected by decoupling, its oriental production volumes, too, are a shadow of what they used to be. The decline started with the 2009 privatization of Turkey’s former state tobacco monopoly, Tekel, which until then had bought all unsold tobaccos at declared prices, thus artificially boosting production, accumulating large inventories and distorting the market.

    The end of state intervention made tobacco growing a less attractive business for farmers, leading to a record-low crop of 41,000 tons in 2011. And there is no guarantee this mark won’t be undercut in the future, according to de Cramer. “The real alarming number is [for] the classical Izmir type, which is down from 49,000 tons to 42,000 tons, or minus 14.4 percent,” he says. “Next year, we expect another drop, to 35,000 tons. This will depend on how much the industry is willing to pay to the farmer, i.e., how much the demand will be.”

    Turkey’s tobacco crop is produced by some 60,000 farmers, a number that has been shrinking over the past years. This development cannot be attributed exclusively to Tekel’s privatization. As Turkey’s economy thrived in recent years, people have been leaving rural areas for better-paying jobs in the cities. De Cramer expects the situation to exacerbate with a rise in the minimum wage that was scheduled to take effect at the start of this month.

    In addition, tobacco today is less competitive as a cash crop than it was in the past. “Alternative crops, such as vegetables, olives, oregano, melons, strawberries and grapes, have given better returns than tobacco, so the farmers are switching,” de Cramer says. The future, he says, will depend on the green price and the support the industry is willing to give. “If the demand is not there and prices are at inflation level or below, we could see a slide of 25 percent or more.”

    Tobacco farmers are also struggling with the impact of climate change. “Weather patterns have changed so the risk of having a low production and/or quality is high,” says de Cramer. “Last year we had continuous rains until the end May so the transplanting was delayed. Then we had eight weeks of extreme heat with more than 38 degrees Celsius, so the low-stalk and, in certain areas, the mid-stalk tobacco was damaged or overripe as the farmer could not harvest the crop on time. This has been the case now two years in a row, so the farmer is also worried that he cannot produce a good and healthy crop. The risk of hail damage has increased with these extreme weather conditions.”

    To support oriental tobacco growers, Sunel is trying to help them increase their yields and acreage. This, it hopes, will give farmers a better return without jeopardizing their tobacco quality. Meanwhile, the industry has introduced a system, known as the sock method, to cure more efficiently. With the help of a machine that ventilates the leaves, oriental tobacco is inserted into a hose-shaped net, which is then hung up between two poles under a plastic cover for sun-curing. The new method requires less effort and, importantly, saves labor cost.

    The steps of the process must be carried out meticulously, however, because failing to stick to the guidelines can affect tobacco quality. “This is an ongoing exercise that we are conducting on a trial basis,” explains de Cramer. “Unfortunately some companies have jumped the gun and introduced the curing method without giving the farmers the necessary explanation, and this is deteriorating the quality. Once we know that the quality can be achieved with the sock method then it will be spread on a large scale.”

    As in Greece, organic oriental leaf has been making inroads in Turkey, led by Sunel. De Cramer anticipates a total organic crop of 2,700 tons in 2015. “The farmer is happy with the additional 20 percent green price return and also support on fertilizer, organic pesticides, land lease support, etc.,” he says. “Yields are slightly lower [compared with] the traditional oriental, but with time this gap should be minimized. The additional work due to extensive spraying is the main disadvantage.”

    Back to the golden leaf

    Greece has recently experienced a rather opposite development to Turkey. Looking back at the decoupling 10 years ago, Allamanis sees both negatives and positives.

    “On the negative side, the sector of tobacco cultivation, processing and commerce has been considerably diminished with a significant loss of GDP for the country,” he says. “The main losers were the people offering services to the tobacco cultivation business and not the growers.”

    The tobacco processing industry, in particular, was hit hard. Out of 22 tobacco processing factories operating in 2005, only four remain, according to Allamanis. Some 70 percent of the employees and the service providers in the sector lost their jobs.

    On the positive side, the supply of raw tobacco came more in line with the types and the quality of tobacco demanded in the international market, and consequently prices have increased considerably. “Although 70 percent of the production has been lost and the volume of exports of Greek tobacco decreased by approximately 60 percent comparing crop year 2005 to 2014 figures, the value of these exports decreased only by one third,” says Allamanis.

    In addition to oriental styles, Greek farmers grow small amounts of burley and flue-cured Virginia (FCV), with 300 tons and 8,000 tons, respectively, grown in 2015. Allamanis is content with the country’s latest crop: “Prices of village tobacco in Greece were considerably lower for the 2014 crop, due to the very poor quality of this crop, which itself was solely due to adverse weather conditions,” he explains. “2015 was a fair to very good crop, and prices [per kg] are expected to average at €4.25 ($ 4.66) for Basma, €3.80 for Katerini and €2.20 for FCV, as compared with 2014 crop’s €3.70, €3.40 and €2.00, respectively.”

    Alexandros Kontos, general manager of tobacco company Seke, believes the better 2015 crop prices will boost production of Basma and Katerini. His company, he says, was the first to introduce organic tobacco cultivation in Greece and has been focusing on this kind of production during the past three years (see also “Holistic approach” on page xx).

    In contrast to Turkey, Greece’s GDP has been declining continuously since the country went into a recession in 2008. In 2010, the country had slipped into a government debt crisis that culminated in 2015 and remains unsolved. For Greek tobacco production, however, the economic crisis has had a rather positive impact, as Allamanis points out.

    “The economic depression halted the urbanization trend, since unemployment is hurting the cities far more than the countryside,” he says. “There are no recent statistics available, but it is obvious that many people moved back from the big cities to their villages or their towns, or have emigrated abroad. Many growers who had abandoned tobacco cultivation in the past came back to this activity; FCV growers are a good example, as the production of this type in 2006 to 2009 was nil. Some new growers also came into the business. The number of tobacco growers in the country increased from the low of 13,000 post-decoupling to approximately 16,500 today.”

    Kontos has observed the same development. “Young people who faced limited job opportunities in other sectors turned their interest to, among other [activities], tobacco cultivation, seeing it as a chance to ensure an income, especially in regions where any other type of cultivation, such as cotton, wheat, maize or sugar beets, is neither profitable nor feasible.”

    In 2013, the European Commission introduced, as part of its revised Common Agricultural Policy (CAP), a new direct-payments regime to support EU farmers in the form of uncoupled income subsidiaries, the so-called single-farm payments. Allamanis believes the shift toward a hectare-based income support, irrespective of the type of production and its labor costs, will diminish considerably the support to tobacco growers who have been benefiting from a high per-hectare subsidy in the past.

    “Although the new CAP provides for a certain level of coupled support, through a political decision, tobacco has been excluded. Finally, specific measures for the support of tobacco cultivation through agro-environmental subsidies have been terminated. We can therefore state that tobacco growers, apart from the diminishing income subsidy, enjoy no other specific support from the EU CAP and the sector is realizing that it will have either to stand on its own feet or collapse.”

    Nevertheless, Allamanis believes that tobacco growing will have a future in Greece: “Our forecast, notwithstanding the threats currently affecting the tobacco sector in general, is that the oriental leaf production will remain stable in Greece at the level of around 22,500 tons in the foreseeable future.”

    The country’s tobacco sector is supported by leading cigarette companies such as Philip Morris International (PMI), which has invested significantly in its Papastratos subsidiary over the past two years. PMI has also entered into a three-year strategic agreement with the Greek government for the purchase of Greek oriental tobacco; discussions about a renewal of the agreement are underway, according to Allamanis. “It is obvious that this policy brings considerable stability in the demand and therefore in the production of Greek oriental,” he says.

     

     

     

  • Natural reaction

    The  FDA says descriptors such as ‘natural’ or ‘additive-free’ are no longer acceptable for tobacco products, including the top-selling super-premium cigarette brand in the U.S.

    By Timothy S. Donahue

    It seems no words are safe. After more than 30 years of selling “natural” and “additive-free” products, Santa Fe Natural Tobacco Co. (SFNT) has been instructed to stop making such claims on its packaging and in advertising. The warning is an unwelcome development for the North Carolina, USA-based cigarette manufacturer, which has built a successful business selling natural and additive-free tobacco products. In recent years, sales of its American Spirit brand skyrocketed even as the overall U.S. cigarette market plummeted.

    In a regulatory filing posted on its website, Reynolds American Inc. (RAI), SFNT’s parent company, states that American Spirit is the leading super-premium cigarette brand and a top 10 best-selling cigarette brand. “It is priced higher than most other competitive brands and is differentiated from key competitors through its use of all-natural, additive-free tobacco, including styles made with organic tobacco,” the company writes.

    The U.S. Food and Drug Administration (FDA), however, takes a dim view of such claims. Promoting tobacco brands with terms such as “natural” or “additive-free,” it believes, misleadingly suggests that they are less harmful to health than are other tobacco products—even though SFNT has been careful to add a disclaimer to its products and advertisements stating that natural tobaccos are not safer than others.

    In late August, the agency duly served SFNT with a warning letter about its use of the descriptors.  SFNT was not the only target. ITG Brands, the U.S. arm of U.K.-based Imperial Tobacco, and Nat Sherman also received warning letters stating that their cigarette brands carry alleged modified-risk tobacco product (MRTP) descriptors on their labeling without an FDA MRTP order that permits a tobacco product to be introduced as such into interstate commerce.

    “The FDA found that this labeling represents that the products or their smoke does not contain or is free of a substance and/or that the products present a lower risk of tobacco-related disease or are less harmful than one or more other commercially marketed tobacco,” explains Patricia Kovacevic, general counsel and chief compliance officer for Nicopure Labs and former in-house counsel for several large tobacco companies. “These findings amount to violations of Section 911 of the Tobacco Control Act.” Section 911 defines MRTP as “any tobacco product that is sold or distributed for use to reduce harm or the risk of tobacco-related disease associated with commercially marketed tobacco products.”

    The recent warning letters are the latest development in a long-running crackdown on purportedly misleading product descriptors. Over the years, authorities around the world have outlawed labels such as “mild” and “light,”forcing cigarette manufacturers to come up with alternative tags to communicate to consumers the tastes of these brands. The EU ban on product descriptors may have even contributed to Japan Tobacco’s decision to change the name of its Mild Seven brand to Mevius.

    In the U.S., Judge Gladys Kessler, of the D.C. District Court, banned the use of certain descriptions for traditional cigarettes that include “low tar,” “light” and “ultra-light,” saying cigarettes marketed in that way have been found to be no safer than others. The ban was part of Kessler’s landmark 2006 ruling that found tobacco manufacturers had deceived the public about the dangers of smoking and whether certain products were marketed in a way that implied they were lower-risk. The FDA banned the use of the terms in June 2010.

    Bryan Haynes, partner with Troutman Sanders law firm and an experienced tobacco attorney, says the regulatory agency first dealt with “light” and “mild” because those descriptors were specifically called out in the statute. “Why did they wait so long for ‘natural’ and ‘additive-free’?” Haynes asks. “Congress could have called out those descriptors but they didn’t.” According to Haynes, the real reason for action now may have been a recent SFNT advertising campaign coupled with a joint complaint letter from several anti-smoking organizations. “They complained the disclaimer is now less prominent than it was in the past, and the advertising campaign put these claims in the public limelight,” says Haynes. “It’s hard to ignore the coincidence of the timing of the letter compared to the receipt of the complaints.”

    “[The] FDA did not prioritize examining possible violations of Section 911 of the [Tobacco Control Act] with respect to the ‘natural’/’additive-free’ claims until such time [that] at least one anti-tobacco organization became very vocal about this issue earlier this year,” echoes Kovacevic. The Winston-Salem Journal noted that the FDA warning came about a month after SFNT began a national advertising campaign with full-page ads in magazines, but what the Journal failed to report was that the company has had such ads for at least a decade.

    The FDA letters requested responses to the warnings within 15 days to explain what actions the companies would plan to take to “remedy the violation” or, if they do not believe that they are in violation, provide reasoning and supporting information. The companies’ responses were not publicly available at press time.

    FDA Center for Tobacco Products director Mitch Zeller says the FDA has the responsibility to ensure that tobacco products are “not marketed in a way that leads consumers to believe cigarettes with descriptors like ‘additive-free’ and ‘natural’ pose fewer health risks than other cigarettes, unless the claims have been scientifically supported.” This marks the first time the U.S. government has attempted to regulate the use of the word “natural” in relation to a consumer product other than poultry and other meats.

    Haynes says the companies are likely considering lawsuits to protect their right to commercial free speech. “They are probably looking at whether the FDA has sufficient evidence that these words constitute a modified-risk claim,” says Haynes. “Another thing is whether this is the type of action that requires further rule-making. This has been all good for so many years, why now? Is this a fundamental change that requires new rule-making? These are questions the industry will expect the FDA to answer.”

    Kovacevic points out that the FDA has lost several First Amendment challenges, notably in Thompson v. Western States Medical Center, where a U.S. Supreme Court ruling concluded that government restrictions on the advertising of compounded drugs were too broad, as well as other cases involving labeling of dietary supplements and off-label drug uses (which did not directly address the First Amendment issue but is nevertheless relevant).

    The recent FDA letters have already led to some serious legal issues for the companies. A Florida law firm has filed a class-action lawsuit against SFNT and RAI, claiming the cigarette maker’s packaging and advertising are intended to mislead smokers into thinking American Spirit cigarettes are healthier than other tobacco products. A representative of SFNT said that company policy prevented him from commenting on the lawsuit.

    The complaint seeks damages for smokers who “smoke American Spirits because they have been deceived by claims, labels and advertising into regarding them as safer than other cigarettes.” Descriptions such as “additive-free,” “natural” and “organic,” the lawsuit says, “are patently deceptive, especially in today’s market, where these terms have a potent meaning for the health- and environmentally-conscious consumer.”

    In a Tobacco Reporter straw poll of 33 American Spirit smokers, 27 said they preferred American Spirits because they were not owned by Big Tobacco (In reality, SFNT has been part of Reynolds American for years). The fact they were additive-free was overwhelmingly the second reason.

    The legal filing in Florida states that SFNT exploits its marketing message by, among other items, selling its cigarettes in health food stores. The filing also states that SFNT “accompanies its cigarettes with literature from ‘America’s leading natural foods teacher,’ who claims that the cigarettes are medicinal and that Native Americans smoke such additive-free cigarettes without developing cancer.”

    Haynes believes the FDA action adds no validity to this class-action claim. “It’s just another example of plaintiffs’ lawyers looking for another way to make money,” he says, adding that SFNT is already subject to a Federal Trade Commission consent order, issued in 2000, that requires the company’s advertising to include a disclosure that “no additives in our tobacco does NOT mean a safer cigarette.”

     

  • A compelling intersect

    A compelling intersect

    Im age: Vivida Photo PC

    Convening in Bologna, industry stakeholders detect a win-win-win scenario—provided that certain conditions are met.

    By Taco Tuinstra

    Held Sept. 15–17 in Bologna, Italy, the Global Tobacco & Nicotine Forum (GTNF) took place shortly after Public Health England’s remarkable acknowledgment that e-cigarettes are substantially safer than their combustible counterparts—the strongest such recognition yet by a prominent government-sponsored agency. The announcement fit into a pattern that many GTNF participants had already detected but that hard-line industry critics remain reluctant to acknowledge: the unprecedented alignment of commercial, consumer and public-health interests.

    The win-win-win scenario was cited repeatedly throughout the conference. But even as speakers extolled the potential for tobacco harm reduction, they recognized that the window of opportunity is small and that the hope represented by next-generation tobacco products could easily be extinguished by ill-conceived regulation, excessive taxation and misinformation.

    The Bologna gathering was the sixth iteration of the event, which Tobacco Reporter pioneered in 2008 under the name Global Tobacco Networking Forum. After its debut in Rio de Janeiro, subsequent GTNFs in Bangalore, India (2010); Antwerp, Belgium (2012); Cape Town, South Africa (2013); and West Virginia, USA (2014) each attracted a greater diversity of participants than the one before it. In addition to senior executives from the tobacco and vapor industries, the 2015 forum brought together suppliers, academics, public health advocates, government officials, consumer groups and representatives of the financial community, among others, demonstrating that these widely divergent groups now have more in common than ever.

    The “tobacco” industry, of course, has changed significantly since 2008. Many of today’s products—vaporizers, tobacco heating devices, nicotine strips, etc.—bear little resemblance to combustible cigarettes; some don’t even contain tobacco. In recognition of the evolving market, Tobacco Reporter, at the urging of the GTNF advisory board, changed the name Global Tobacco Networking Forum to Global Tobacco & Nicotine Forum.

    The Bologna forum was the first to convene under the new moniker. It also marked the end of David O’Reilly’s tenure as chairman of the GTNF advisory board (also see sidebar). O’Reilly, who is group scientific director and R&D director at British American Tobacco (BAT), has led the GTNF board for the past two years and is credited with elevating the event to new heights, bringing in speakers of unprecedented caliber and fostering top-notch discussions.

    Tobacco Reporter’s publisher and global events director, Elise Rasmussen, presented O’Reilly with a plaque to thank him for his guidance and leadership. She also gave him an inscribed silver tankard, teasing that if he wasn’t already a drinker, the GTNF-related stresses and responsibilities would have surely driven him to become one. O’Reilly’s successor as GTNF advisory board chairman is Mark Kehaya, chairman of Alliance One International.

    Like previous GTNFs, the Bologna event was hosted by Patrick Basham of the Democracy Institute, a think tank with offices in London and Washington, D.C. Basham jokingly compared his recurring performances to those of Sisyphus, a Greek mythological figured condemned to repeatedly push a boulder up a hill, only to watch it roll back down.

    He said Bologna was an inspired choice as host for the GTNF. Affectionately known as La Dotta—“the learned”—the city is home to the Western world’s first university, established in the 11th century. (Bologna is sometimes also referred to as La Grassa—“the fat”—for its fine cuisine, and La Rossa—“the red”—for its characteristically colored roofs and left-leaning politics. But while the food served during the GTNF more than lived up to the city’s reputation, none of the speakers advocated greater state intervention.)

    The Bologna region later stood at the cradle of the Renaissance, a period of scientific revolution, skepticism of authority and respect for individuals—beliefs that are now under threat, according to Basham. Describing the present as “the age of unreason,” Basham bemoaned what he saw as a push to limit choice and thwart technology, particularly in the tobacco and nicotine sectors. Basham insisted that progress would happen only through innovation, reminding his audience that “the Stone Age did not end for lack of stone.”

    The themes of innovation and reasonable regulation were echoed by Marco Mariotti, senior vice president of corporate affairs at Philip Morris International (PMI). Now is an important time for the industry, he noted, with tobacco harm reduction objectives and commercial objectives starting to align.

    While combustible cigarettes are likely to remain at the core of PMI’s business for years, the company has been investing heavily in next-generation products. In 2014, PMI launched its revolutionary iQOS product (manufactured near Bologna), which heats rather than burns tobacco, and as a result greatly reduces the smoker’s exposure to toxicants. The heat-not-burn principle, of course, has been tried—and abandoned—before, but advances in technology suggest the current generation of products stands a greater chance of being accepted by both regulators and consumers.

    Mariotti said governments have three options when dealing with new technologies—they can stop, slow down or accelerate their development. Unsurprisingly, Mariotti preferred the last: “Regulators should incentivize smokers and innovation,” he said. “They must promote trials, allow communication and set high standards—but not so high as to discourage innovation.”

    The next speaker, Japan Tobacco International’s (JTI) senior vice president of global leaf, Paul Neumann, covered another issue prominently on the minds of many attendees—sustainability. In 2009, the cigarette manufacturer entered the leaf tobacco business through the purchase of Tribac and Kannenberg, among other initiatives. But contrary to what some might think, saving money was not the objective, according to Neumann. “The purpose was to take responsibility and secure a long-term supply of tobacco,” he said. Among other things, this meant addressing environmental and governance issues, such as deforestation and child labor. The company also wanted to send a message to growers that tobacco farming, if done properly, can be profitable. From JTI’s perspective that entails being loyal and paying fairly, according to Neumann. “We are working to make the tobacco supply chain a model for other agricultural businesses,” he said.

    Sticking with the topic of leaf tobacco, Airton Hentschke, senior vice president and chief operating officer of Universal Corp., detailed his company’s efforts to increase the efficiency of its field operations through technology. Following the philosophy that you cannot manage what you cannot measure, the company pioneered an information technology system, Mobileaf, that allows it to gather and process field data in real time using computer tablets connected to a central database. The reduction in paperwork, together with the higher quality of information, allows the company to better plan its operations, respond faster to field developments and, ultimately, produce tobacco more cost-effectively. Mobileaf is also a boon to traceability, a topic that will become even more important as Universal expands into the liquid nicotine business.

    Wan Saiful Wan Jan, CEO of the Institute for Democracy and Economic Affairs, a pro-market think tank based in Kuala Lumpur, Malaysia, said he had been surprised to receive an invitation to speak at the GTNF, the conference of a “sin industry.” But after contemplating the location—“a city with so many churches”—he had felt comfortable accepting, quipping that finding redemption would be easy in Bologna. Wan said he was not a supporter of the tobacco industry—just like he didn’t support the pharmaceutical or automotive sectors. “In fact, I don’t support any industry,” he said. “But I support the market and consumers’ right to choose.”

    Wan cautioned against the habit of multinational companies operating in developing countries—particularly in Southeast Asia—to speak only to government representatives. While businesses happily engage with civil society in developed countries, he observed, their views mysteriously change “on the flight from Washington or London.” As a result, when issues come up in the developing world, companies have little leverage to influence policies.

    The recent calls in Southeast Asia to exclude tobacco from free trade agreements are a case in point, according to Wan. “The industry has few friends left who are willing speak up for it,” he said. Wan suggested tobacco companies change their strategies. “It’s not enough to talk to power. You must engage the public and hope for more organizations complementing our work.”

    The ensuing panel discussion on trade issues saw an impassioned plea by Francois van der Merwe, chairman and CEO of the Tobacco Institute of South Africa, to protect the most vulnerable members of the tobacco supply chain—farmers. “It’s easy to talk about the impact of trade from air-conditioned offices in Geneva,” he thundered. “We must make governments recognize the contributions of tobacco.” The damage done to farming communities by extreme anti-tobacco measures is greater than the advantage to public health, according to Van der Merwe. “The industry must draw a line in the sand.”

    Karen Blakeley, a senior lecturer at Winchester Business School, led an inspiring discussion about ethics, a field that deals with issues of right and wrong but is easily confused with questions of, say, what is practical. Needless to say, the issue of ethics features prominently in the tobacco industry, whose products—especially its combustible ones—present a well-established risk to health. But while the tobacco industry has contributed to the problem, some suggest it is increasingly part of the solution, as new technologies have enabled the development of potentially less-harmful products.

    Kgosi Letlape, president of the African Medical Association, reminded the panelists of the doctor’s oath, which is “do no harm,” rather than “do less harm”—but then he quickly pointed out that doctors practice harm reduction already, because that’s all they can do. “In the end, people die anyway,” Letlape said. The question for tobacco ethicists, he explained, is how to deal with human vice and reduce suffering. Clive Bates, director of Counterfactual, presented the audience with a thought experiment: Would you accept half the number of smokers if it meant twice the number of nicotine users? Developing harm-reduction products makes sense from both a commercial and an ethical standpoint, the panelists agreed.

    Day 2

    The second GTNF day had the same format as the first, featuring a plenary session focusing on the industry’s grand themes in the morning followed by breakout sessions on more narrowly defined topics in the afternoon (to read more about individual breakout sessions, please visit www.gtnf-2015.com).

    Kingsley Wheaton, managing director of next-generation products at BAT, kicked off the morning with what he described as a reassuring yet challenging message.

    Over the past three years, BAT has invested a staggering $750 million in researching and developing next-generation products. Eager to lead the segment, the company aims to offer consumers a choice of products across the risk the continuum, including vapor, tobacco-heating and licensed medicinal products. According to Wheaton, BAT was the first international tobacco company to launch an e-cigarette (Vype). Its licensed medicinal product (Voke) will be the world’s first cigarette-shaped, breath-activated nicotine inhalation product. Later this year, BAT plans to test-market a tobacco-heating product.

    While combustible cigarettes—the product ranking highest on the risk continuum—would remain the mainstay of BAT’s commercial delivery for a long time, that business also generated the funding required to develop less-harmful next-generation products, noted Wheaton.

    Wheaton believes that next-generation products have the potential to create a win-win-win situation—a win for society as public health aims are advanced, a win for consumers as exciting new products become available and a win for shareholders as sustainable value is generated.

    However, for next-generation products to deliver on their promise, he said, several conditions would need to be met: Companies would need to have the freedom to develop and market compelling products, governments would need to enact appropriate regulatory frameworks to ensure consumer safety, a “coalition of the willing” should communicate cohesively on the benefits of next-generation products, and fiscal treatment should be aligned with the continuum.

    Providing useful context to the discussions about next-generation products, Jack Henningfield, vice president of research, health policy and abuse liability at Pinney Associates, reviewed the history of tobacco harm reduction. Henningfield disagrees with the often-heard criticism that harm reduction undermines smoking cessation, which is generally accepted as the healthiest course of action. Harm reduction, he said, is practiced successfully in many areas, such as when motorcyclists wear helmets or intravenous drug users participate in needle-exchange programs or use government-approved replacement drugs for heroin.

    Encouraged by the U.S. government, tobacco companies in the 1950s and 1960s focused on reducing tar deliveries through filtration and other technologies. “Light” cigarettes did not result in lower rates of smoking-related disease, however, and as a result developed a bad reputation in the tobacco control community. In the 1980s a consensus emerged that harm reduction had failed. Pharmaceutical companies stepped into the void with nicotine-replacement therapies (NRT), but with limited success. Regulators resisted the use of NRT as a harm reduction tool to reduce smoking.

    Henningfield suggested smoking cessation should be viewed as a means, not an end, to better health. Endorsing harm reduction for those who can’t or won’t quit is a potentially important complementary means to better health, he said.

    The 2009 U.S. Family Smoking Prevention and Tobacco Control Act includes harm reduction, but with very high standards—a fact that Henningfield attributed to lingering mistrust of the tobacco industry.

    E-cigarettes provide the best harm-reduction opportunity yet, according to Henningfield, but they have divided the public health community and confused regulators, leading to travesties such as vapers being forced to use their devices in smoking rooms, where they are exposed to the very toxins they want to avoid.

    Henningfield pled for urgent product-performance standards and for cooperation among stakeholders to help tobacco harm reduction efforts succeed. “Together we can do this,” he said.

    In a passionate presentation, Patricia Kovacevic, general counsel and chief compliance officer at Nicopure Labs, in the U.S., urged the audience to avoid a future characterized by aggressive over-regulation, or even full-blown prohibition, and help bring about a scenario of sustainability and growth, while improving consumers’ quality of life and enjoyment.

    Kovacevic recalled how, growing up in communist Romania, she became fascinated with Umberto Eco, a novelist, philosopher and semiotician, perhaps best known for his book The Name of the Rose. (Eco is also president of the Bologna University Graduate School for the Study of Humanities.) “Some girls at 14 wanted to meet Michael Jackson; I wanted to meet Umberto Eco,” she said. So her mother brought her to Bologna twice—but each time it was summer so the university was not in session. Finally, in the early 1990s, she came to Bologna by herself and managed to listen to one of Eco’s lectures.

    Kovacevic said the episode taught her two things—that perseverance can get you anywhere and that 30 years pass in the blink of an eye.

    Using those insights, she speculated on what the tobacco and nicotine industries might look like in 2045. Regulation, said Kovacevic, is the single most important factor in harm reduction today, reminding her audience that, by the time of the next GTNF, e-cigarettes will be regulated in all European countries. Different regulatory outcomes in different jurisdictions could point the industries into opposing directions, however. This, according to Kovacevic, would not be a constructive approach.

    Despite the challenges, she expressed cautious optimism about the future. “We have the knowledge, the willpower, the motivation and the resources to act and steer the course toward constructive action, meaningful and sound harm reduction research, toward compelling and long-lasting results.”

    Riccardo Polosa, professor of internal medicine at the University of Catania, examined the characteristics of nicotine as the industry is developing methods of “cleaner” nicotine consumption—that is, nicotine without the combustion byproducts that are reckoned to be the major contributor to smoking-related disease. The ensuing public health panel discussion, led by Delon Human, president and CEO of Health Diplomats, touched on the challenges of getting industry research published, the importance of reliable and accurate information on the health effects of e-cigarettes, and the appropriate fiscal treatment of tobacco-related products along the continuum of risk, among other topics.

    Having opened the conference the previous day in his role as GTNF advisory board chairman, O’Reilly also delivered the GTNF closing speech, this time as BAT’s group scientific and R&D director.

    He called for a reframing of the “endgame” envisioned by some in public health. With the advent of reduced-risk tobacco and nicotine products, O’Reilly said, consumers, industry shareholders and the tobacco control community had arrived at a crossroads where their interests intersect. The tobacco industry had become part of the solution, rather than just the problem. Its formidable research and development capabilities, consumer understanding and financial resources—for the time being still funded mostly by the sale of combustible cigarettes—put it in a unique position to further reduce tobacco-related death and disease by bringing new products to market.

    Yet some in the public health community remain stuck in the past, according to O’Reilly. Driven by irrational hatred of the tobacco business and contempt for its consumers, they refuse to engage with the industry, calling even for its eradication. Illustrating his point, O’Reilly reminded his audience of the chilling words spoken by World Health Organization Director-General Margaret Chan during this year’s World Conference on Tobacco or Health: “We should not give up until we make sure the tobacco industry goes out of business.”

    O’Reilly was adamant that such reluctance should not be allowed to get in the way of progress. “The market has almost always been a better driver of change generally than government interference, and the potential health benefits to the individual consumer and the economic benefits to the industry present a potential win-win scenario,” he said.

    Ending the conference on a positive note, O’Reilly insisted the endgame should be not for the industry but for tobacco-related disease.

    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.

  • And the winners are…

    Tobacco Reporter announces the recipients of its 2015 Golden Leaf Awards.

    TR Staff Report

    Tobacco Reporter announced the winners of its 2015 Golden Leaf Awards during the Global Tobacco & Nicotine Forum gala dinner on Sept. 16 in Bologna, Italy. Recipients accepted trophies for their accomplishments in five different categories—Most impressive public service initiative, Most exciting newcomer to the industry, Most promising product introduction, BMJ Most committed to quality and Most outstanding service to the industry. The Golden Leaf Awards are sponsored exclusively by BMJ.

    Alliance One Tobacco Malawi

    Alliance One Tobacco Malawi (AOTM) received a Golden Leaf Award in the “Most impressive public service initiative” category for its reforestation program in Malawi.

    In Malawi, tobacco provides jobs for 430,000 people and contributes 60 percent of the country’s foreign exchange earnings.

    But while Malawi’s “green gold” provides substantial economic benefits, the production of tobacco also consumes natural resources. In 1990, more than 47 percent of the country was tree-covered, but, by 2010, 16.9 percent had been lost. According to Alliance One Tobacco Malawi, 7 percent of the wood consumed in Malawi is used in tobacco production, either as a construction material for building barns or for tobacco curing.

    Eager to address the environmental impact of tobacco growing, Alliance One International’s local affiliate, Alliance One Tobacco Malawi, has worked hard to improve the success rate of its forestry program. In partnership with customers, it is now growing trees on commercial plantations. Beginning with the 2013–2014 crop season, Alliance One Tobacco Malawi started delivering firewood to contracted farmers, reducing pressure on unsustainable and indigenous wood.

    Alliance One Tobacco Malawi’s holistic approach to wood resource management resulted in remarkable success in the 2014–2015 crop season. The company provided its customers with tobacco that is grown from 100 percent sustainable sources. It distributed 5,707,119 seedlings and planted almost 6 million trees across smallholder farms, commercial farms and government plantations.

    Alliance One Tobacco Malawi has also outlined a series of objectives to achieve by 2020, which include:

    • All wood for tobacco used for tobacco curing will be from a sustainably grown source.
    • Curing wood for both commercial and smallholder FCV growers will come from AOTM plantations. FCV growers should have their own woodlots.
    • By the end of the 2019–2020 crop season, all AOTM burley farmers will be curing their tobacco in live barns.

     

    SCM/TDC

    SCM/TDC received a Golden Leaf Award in the “Most promising product introduction” category for its Genesis e-cigarette machine.

    With the vast majority of e-cigarette hardware currently being produced manually in China, SCM/TDC recognized an opportunity to improve the quality of such products through automation. As regulation of the e-cigarette industry takes effect, quality and safety requirements will become much stricter, and many of the handmade products will fall short of the new standards.

    To meet this increased demand for safer products, SCM/TDC has developed a machine—the Genesis—to automate parts of the production process and bring production quality up to the high level that is common in the tobacco industry.

    The machine is built modularly to accommodate next-generation products and future product design changes, which are likely, given the fast development of e-cigarette technology.

    One of the most vital parts of the production process is testing the cartridge or disposable. The Genesis subjects every unit to a smoke test or resistance check, and quality control is carried out quickly and with great accuracy. This ensures that only products of the highest quality will end up in the hands of customers and that e-cigarette manufacturers will be able to comply with the strictest regulatory requirements.

    Headquartered in the Netherlands, SCM and TDC are members of the ITM Group, a global provider of machinery for the tobacco industry.

     

    Stand Point Vapor

    Stand Point Vapor (SPV) received a Golden Leaf Award in the “Most exciting newcomer to the industry” category.

    Headquartered in Shanghai, China, the company was established in 2014 to provide the most consistent and reliable e-liquids, e-cigarettes and accessories, as well as snus, with world-class customer care service.

    The company’s mission is to dramatically enhance customers’ experiences with new tobacco products.

    SPV is a fully owned subsidiary of Huabao International Holdings, a Hong Kong-based market leader in China’s tobacco and food flavors and fragrances industry. Backed by the expertise and resources of Huabao International Holdings, SPV has an unparalleled global supply chain, allowing it to secure the world’s best-quality raw materials, process them into finished goods and distribute them around the world.

    SPV is also the first massively promoted e-cigarette brand in China. The company is looking to expand internationally and is currently looking for strategic partners in the EU and the U.S.

     

    Universal Leaf Tobacco Co.

    Universal Leaf Tobacco Co. received a Golden Leaf Award in the “BMJ Most committed to quality” category for its commitment to quality and excellence throughout the tobacco supply chain, as demonstrated by a variety of projects and initiatives.

    Headquartered in Richmond, Virginia, USA, Universal is the world’s leading leaf tobacco supplier and has long been a vital link in the global tobacco supply chain. The company procures, finances, processes, packs, stores and ships leaf tobacco for sale to manufacturers of consumer tobacco products throughout the world.

    Universal’s leading position is based on its operating presence in all of the major tobacco sourcing areas; its ability to meet customer style, volume and quality requirements; its expertise in dealing with large numbers of farmers; its long-standing relationships with customers; its development of processing equipment and technologies; and its financial position.

    For tobacco production to thrive, the company believes that the supply chain must be preserved and improved through sound production and processing techniques and by conducting business according to ethical standards that protect and serve growers, employees, communities, the environment, customers and shareholders.

    Those at the beginning of the chain—the tobacco growers—must be able to sustainably produce and profit fairly from their crops. At the other end of the supply chain, tobacco product manufacturers are increasingly demanding not only quality leaf but quality, compliant leaf.

    Universal manages to simultaneously satisfy, in a competitive manner, these vastly different yet interdependent stakeholders through its investments in cutting-edge Extension services, good agricultural practices, research, training and social responsibility initiatives.

    The company employs more than 27,000 workers and conducts its business in more than 30 countries on five continents.

     

    U.S. Tobacco Cooperative

    U.S. Tobacco Cooperative (USTC) received a Golden Leaf Award in the “Most outstanding service to the industry” category for its contributions to the sustainability of U.S. flue-cured tobacco production.

    Based in Raleigh, North Carolina, USA, and comprising more than 850 member growers throughout North Carolina, South Carolina, Virginia, Georgia and Florida, USTC is the largest grower-owned marketing cooperative in the U.S. The cooperative also has a compliant and efficient processing facility located in Timberlake, North Carolina.

    Whereas the major leaf suppliers will return a dividend to their shareholders and investors, USTC reinvests most of its profits in its contracted tobacco growers. In the past five years, the company has declared patronage dividends of $37.9 million to its member growers, including $19.8 million in cash. USTC’s patronage dividend gives its growers the opportunity to invest in efficiencies, which improves the U.S. flue-cured production model in terms of the environment, people and the planet.

    Volume and pricing predictability are essential for growers’ viability and the sustainability of their flue-cured crop. As global and domestic demand fluctuates according to sales of manufacturers’ smoking products, USTC’s patronage dividend helps growers offset the impact of supply/demand cuts in contract volumes and is paramount in their ability to invest in growing high-quality, compliant flue-cured tobacco.

    The patronage dividend is not a premium, bonus or subsidy, and it does not increase the cost of the tobacco to the end user—it is purely the distribution of profits made by USTC from its sales of leaf and related products back to its grower members.

    The company has also passed $14 million in tax deductions to its growers through the Section 199 Domestic Production Activities Deduction, which offsets most of the taxes owed on the dividend.

     

  • Golden Leaf Awards

    Golden Leaf Awards

    Who will take home the coveted trophies this year?

    With all the negative publicity surrounding tobacco, it’s easy to lose sight of our industry’s positive aspects. Although we trade in a traditional commodity, many of our business practices and technologies are cutting-edge.

    Think of a cigarette packing machine, for example. The ability to produce 1,000 cigarette packs every minute without shredding the cartons and pulverizing the tobacco rods (or injuring the operator, for that matter) should count as a small miracle.

    Think also of our corporate responsibility initiatives. Most tobacco companies carefully look after the communities that provide their raw materials, investing in schools, hospitals and poverty-alleviation programs.

    It’s important to recognize tobacco’s accomplishments. To create a positive buzz in a challenging environment, we have created an annual tobacco industry awards program, the Golden Leaf Awards, presented by Tobacco Reporter and sponsored exclusively by BMJ.

    The first presentation of the Golden Leaf Awards took place in 2006, in Bali, Indonesia. The most recent one took place in September 2015, during the Global Tobacco Networking Forum at the Palazzo Re Enzo in Bologna, Italy.

    Awards are granted on an annual basis to companies that have achieved outstanding performance in five categories—most impressive public service initiative; most promising new product introduction; most exciting newcomer to the industry; most outstanding service to the industry; and the BMJ most committed to quality award.

    We challenge you to challenge our judges by nominating your company or another company deserving of recognition. And, of course, we would also like to thank BMJ. Without its generous support, this program would not have been possible.

    2015 Golden Leaf Award winners, recognized in Bologna, Italy

    Alliance One International                  Most impressive public service

    US Tobacco Cooperative                        Most outstanding service to the industry

    SPV                                                              Most exciting newcomer to the industry

    Universal Leaf                                          BMJ Most committed to quality

    TDC/SCM                                                  Most promising new product introduction

     2014 Golden Leaf Award winners, recognized in White Sulphur Springs, West Virginia, USA

    The Tobacco Board of India                  Most impressive public service initiative

    Tomra Sorting                                          Most promising new product introduction

    Shishapresso                                             Most exciting newcomer to the industry

    Alliance One International                    Most outstanding service to the industry

    White Cloud Electronic Cigarettes      BMJ Most committed to quality

     

    2013 Golden Leaf Award winners, recognized in Cape Town, South Africa

    Alliance One Kenya                                      Most impressive public service initiative

    British American Tobacco (BAT)              Most promising new product introduction (Tie)

    and

    R.J. Reynolds Vapor Co. (RJR)                   Most promising new product introduction (Tie)

    White Cloud Electronic Cigarettes           Most exciting newcomer to the industry

    Andromeda Forwarding and Logistics    Most outstanding service to the industry

    SEKE                                                                  BMJ Most committed to quality

    2012 Golden Leaf Award winners, recognized in Antwerp, Belgium

    Alliance One International                        Most impressive public service initiative

    Heinen Koehl                                                  Most promising new product introduction

    Perten Instruments AB                                Most exciting newcomer to the industry

    Mane                                                                  Most outstanding service to the industry

    Mane                                                                  BMJ Most committed to quality

     

    Previous winners include

    2011 Golden Leaf Award winners, recognized in Prague, Czech Republic

    Alliance One International                          Most impressive public service initiative

    Reconex                                                              Most promising new product introduction

    ECO2                                                                   Most exciting newcomer to the industry

    NDC Infrared Engineering                            Most outstanding service to the industry

    Vrijdag Premuim Printing                           BMJ Most committed to quality

     

    2010 Golden Leaf Award winners, recognized in Balgalore, India

    Universal Leaf Africa                                      Most impressive public service initiative

    Iggesund Paperboard                                       Most promising new product introduction

    Manifattura Italiana Tabacco                       Most exciting newcomer to the industry

    Godioli e Bellanti                                               Most outstanding service to the industry

    EDAPS Consortium                                           BMJ Most committed to quality

     

    2009 Golden Leaf Award winners, recognized in Bangkok, Thailand

    Sopariwala Exports                                          Most impressive public service initiative

    Filligent Ltd.                                                      Most promising new product introduction

    Arabian Nights                                                 Most exciting newcomer to the industry

    U.S. Flue-Cured Tobacco Growers               Most outstanding service to the industry

    Bimo Italia SpA                                                 BMJ Most committed to quality

     

    2008 Golden Leaf Award winners, recognized in Rio de Janiero, Brazil

    Universal Leaf Tobacco Co.                          Most impressive public service initiative

    U.S. Flue-Cured Tobacco Growers              Most promising new product introduction

    Tobaccotoday.info                                          Most exciting newcomer to the industry

    Universal Leaf Tobacco Co.                          Most outstanding service to the industry

    ITC Printing & Packaging                             BMJ Most committed to quality

     

    2007 Golden Leaf Award winners, recognized in Paris, France

    ILTD (ITC)                                                            Most impressive public service initiative

    GCH                                                                       Most promising new product introduction

    Uncommitted Tobacco Auction                     Most exciting newcomer to the industry

    Colin Mear Engineering                                   Most outstanding service to the industry

    ILTD (ITC)                                                            BMJ Most committed to quality

     

    2006 Golden Leaf Award winners, recognized in Bali, Indonesia

    Lakson Tobacco Company                            Most impressive public service initiative

    Titan Adhesives                                              Most promising new product introduction

    TobaccoPeople                                                  Most exciting newcomer to the industry

    Celenese Acetate                                             Most outstanding service to the industry

    WinterBell                                                         BMJ Most committed to quality

  • Civil discourse

    Civil discourse

    Photo: AIGen

    The GTNF reached new heights at The Greenbrier in 2014.

    By Taco Tuinstra

    The Greenbrier was a good choice for the 2014 Global Tobacco Networking Forum (GTNF)—not just because staying at a posh resort is more conducive to highbrow debates than “roughing it” at lesser venues, but also because the history of the famous West Virginia property mirrors that of the tobacco industry and its detractors.

    In the late 1950s, at the height of the Cold War, the U.S. government secretly built a massive nuclear- fallout shelter underneath the complex. Fearing a Soviet attack, it wanted to create a place from which lawmakers could safely manage whatever remained of their country in the aftermath of such an event. Protected by almost seven meters of topsoil, 60-centimeter reinforced concrete walls and a blast door weighing 25 metric tons, The Greenbrier bunker contained enough supplies to sustain government business for years.

    Fortunately, the Cold War did not turn hot, and the bunker was never used as intended (although it was put on high alert during the Cuban missile crisis). After The Washington Post revealed its existence in 1992, the facility was decommissioned and opened to the public. The shelter now attracts hundreds of visitors each year, including tobacco people. During the GTNF welcome reception, the host of the evening, Alliance One International, encouraged its guests to join guided tours of the underground structure.

    Industry Analogy

    The evolution from secrecy to openness, along with the shift from keeping people out to inviting people in, are familiar themes to those working in the tobacco industry. During the infamous tobacco wars of the previous century, the industry and its adversaries “dug in,” as convinced as each party was of its position. Only relatively recently have representatives of both sides started speaking with one another, having realized there is more to be gained from dialogue than from confrontation.

    The bunker mentality is slowly giving way to one of cautious engagement, and Tobacco Reporter’s GTNF has played a role in that process. After its debut in Rio de Janeiro, subsequent GTNFs in Bangalore (2010), Antwerp (2012) and Cape Town (2013) each attracted more visitors than the previous event, with an ever-greater diversity of participants and discussion topics. By bringing together people from all sides, the GTNF has helped nurture a discussion among industry representatives, health advocates and other stakeholders, such as regulators.

    The Greenbrier GTNF, which took place Oct. 1–4, 2014, went a step further in its pursuit of transparency. During the plenary session on opening day, the organizers suspended the Chatham House Rule, which governs the way information obtained at the GTNF can be shared outside of the event, and invited members of the mainstream press. Articles subsequently appeared in prominent media outlets such as USA Today, Bloomberg and Businessweek.

    In his opening address, David O’Reilly, British American Tobacco’s group scientific director and chairman of the GNTF advisory board, described GTNF as a conduit for reengagement with society. “As a respectable business, it is incumbent upon us to be upfront,” he said. Acknowledging that the industry had not always lived up to that standard, O’Reilly said the sector should admit past failings while advocating its legitimate role going forward.

    Like previous GTNFs, the Greenbrier event was hosted by Patrick Basham of the Democracy Institute, a think tank with offices in London and Washington, D.C. Making light of his attempts to dodge the role in West Virginia, Basham related a dream in which Tobacco Reporter’s famously-persistent global sales and events director, Elise Rasmussen, managed to recruit him for the GTNF even after he had died. As Basham was about to enter heaven, in his dream, St. Peter handed him his cellphone, with the dreaded words, “It’s Elise.” Basham went on to dismiss the mindset he suspected to be behind some of the more extreme anti-tobacco measures—“The nightmare that someone, somewhere might be happy.”

    Top Guns

    Since the event’s Rio de Janeiro premiere, each successive GTNF has attracted a higher caliber of speakers. Whereas the early events were dominated by consultants and marketing managers, GTNF today is able to recruit from the industry’s highest echelons, thanks in part to the assistance of the advisory board. The Greenbrier conference featured the CEOs of two prominent tobacco companies—Reynolds American’s Susan Cameron and Lorillard’s Murray Kessler—and the director of the U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP), Mitch Zeller.

    Cameron had recently returned from retirement, drawn by “the unfinished business of transforming tobacco.” Reynolds has been expanding its portfolio to include tobacco products with different risk profiles, including smokeless tobacco, dissolvable products and snus. According to Cameron, it is the only tobacco company offering quit-smoking aids. In 2013, the firm entered the vapor segment with its own e-cigarette, Vuse.

    Cameron said the success of such harm-reduction initiatives would depend on collective action by the industry and regulators. She pleaded for the equal treatment of all companies, and for an even distribution of the financial burdens, so that user fees and taxes would be collected not only from the larger, easier-to-find businesses.

    More controversially, Cameron argued for the strict regulation of open-system vapor products, which in her view present a unique risk. Open systems, she said, are subject to tampering, and with thousands of permutations on the market, it is difficult to know what consumers are getting. Cameron suggested such concerns threaten the industry’s long-term viability. And while insisting Reynolds didn’t want to put vape shops out of business, she called on the FDA to keep close tabs on all such establishments.

    In a testament to GTNF’s mission of promoting engagement, Cameron’s comments sparked a lively debate, both at The Greenbrier and in the U.S. vapor community. In one of the GTNF breakout sessions, a vape shop owner remarked that his company would not have survived without open-system products. The closed-system cigalikes, he pointed out,simply don’t provide the satisfaction his customers are looking for.

    Lorillard CEO Murray Kessler lauded the timeliness of The Greenbrier GTNF, noting that the industry was at a critical junction. After 50 years of polarization, he said, there was an opportunity to break down the ideological walls. Speaking underneath an image of the infamous 1994 Waxman hearings, during which the CEOs of America’s leading tobacco companies testified to Congress that nicotine is not addictive, Kessler predicted that the future would be based on science, not rhetoric.

    There is new leadership at the FDA and in the industry, he observed—and both parties are committed to tobacco harm reduction. But Kessler insisted the harm-reduction strategy should include abstinence and risk modification, given the fact that tobacco will continue to be legal (Congress has explicitly ruled out prohibition). “We need an alternative to the quit-or-die message,” he said.

    CTP director Zeller—a representative of the new leadership referred to by Kessler—provided insight into the center’s strategy and priorities. The CTP was created in the wake of the 2009 Family Smoking Prevention and Tobacco Control Act, which gave the FDA the authority to regulate tobacco.

    Zeller reminded his audience of tobacco’s toll on public health, which includes hundreds of millions of premature deaths in the 20th century. Fifty years after the surgeon general first warned people against the risks of tobacco use, some 42 million Americans still smoke, he said, with 3,200 teens lighting up their first cigarette every day.

    “Product regulation is an opportunity to reduce the death and disease associated with tobacco use,” he said.

    The CTP’s mission, Zeller explained, is to reduce harm at both the individual level and at the population level. Like the industry, the agency recognizes a continuum of risk, with combustible cigarettes—the most harmful product type—on one end of the spectrum and nicotine-replacement therapies on the other. Regulation, he said, could help shift people down the risk continuum, although the best outcome would still be consumers discontinuing tobacco use altogether.

    Reduced harm products present the CTP with a challenge, however. While they may reduce the risk to an individual user, their availability could also prevent consumers from choosing the healthiest option—tobacco cessation—or entice new users to the category, thus increasing risk at the population level. Some are also concerned about consumers “upgrading” to more dangerous tobacco products.

    Because it is difficult to determine the population impact of a product before it hits the market, Zeller said that any approvals for modified-risk tobacco product claims would be time-limited, and applicants would be required to renew their applications at regular intervals.

    Zeller also commented on the agency’s backlog in processing substantial-equivalent and modified-risk product applications, which has been a source of industry frustration. He attributed the problems to limited resources and the poor quality of some applications. Howver, considerable progress had been made,  he suggested, while admitting that more could be done.

    An entirely different presentation came from John Cameron, creator of Emperor Brands and brother of the famous filmmaker James Cameron (Avatar). Cameron started by declaring his love of smoking—“If I could, I’d smoke in my sleep”—and then went on to predict the demise of the traditional tobacco sector.

    Drawing analogies with the fates suffered by the music and print-publishing industries in the wake of new technologies, he insisted tobacco’s end was nearer than even the gloomiest analysts anticipated. “It’s over,” he said, flipping through graphics to illustrate his point.

    In tobacco’s place will arise a vibrant high-tech business, according to Cameron. E-cigarettes, after all, are not tobacco but technology. And the required hardware and software could become “the largest business on the planet.”

    “All major brand owners—Harley Davidson, Starbucks—will have their own line of e-cigarettes,” said Cameron. Enthralled by the possibilities, he described technologies to monitor lung function, nicotine uptake and puff counts. “In the future, when you see an e-cigarette, you will think health, not harm,” he marveled.

    Part 2

    The second GTNF day had the same format as the first, with a plenary session in the morning followed by breakout discussions on more narrowly defined topics in the afternoon. Chris Koddermann, Philip Morris International’s (PMI) director of government affairs, reflected on two years of generic tobacco packaging in Australia during the plenary session.

    While Australia’s discount cigarette segment and illicit trade have grown since the measure’s introduction in December 2012, overall cigarette consumption has not declined in excess of the long-term trend, according to independent research commissioned by PMI. Koddermann also dismissed “evidence” for plain packaging in the form of increased calls to quit-smoking lines after the law came into effect. He said such spikes were to be expected in January, when people make their New Year’s resolutions. Overall, the limited impact of plain packaging had not justified the destruction of the industry’s valuable intellectual property, according to Koddermann. (For an entirely different view on the topic, see “Pleased as punch,” on page xx.)

    Mark Kehaya, chairman of AOI, said the tobacco industry has a unique opportunity and responsibility to contribute to global food security. As populations increase and diets change, he noted, agriculture is increasingly under pressure. In order to meet the growing demand, subsistence farmers must become net food sellers. The tobacco industry, which contracts with tens of thousands of small growers and often has sophisticated grower-management systems, can help bring this change about. Kehaya said AOI’s efforts had resulted in a threefold increase in food production in some of its growing areas. He stressed the importance of tracking progress in promoting responsible agricultural practices and solving food needs, which would help build credibility. The industry needs to be part of the solution, according to Kehaya. “If not, we will be blamed.”

    Tobacco’s public-image problem was the subject of two presentations. Communications and issues management expert Paul Richmond explained how technology and social media have changed the field of reputation management beyond recognition. People today expect to know everything, he said. “You cannot engage too much.” Noting that tobacco’s voice had been lost in the debate, he suggested the industry do more to demonstrate the diversity of opinion. In particular, it should tackle the widespread misgivings about its involvement in the vapor business.

    Speaking on the same topic, another expert encouraged the audience to study examples of instances in which public opinion had shifted considerably, such as alcohol. In response to concerns about alcohol-related traffic accidents, the U.S. alcohol industry created the campaign “Friends don’t let friends drive drunk.” As a result, the public debate is now focused onresponsible drinking, rather than not drinking.

    Of course, the concept of responsible smoking is more tenuous, but that may change with the rise of vapor products. Other examples of U.S. public opinion shifts relate to gay marriage, marijuana use and nuclear energy, all of which enjoy considerably higher levels of acceptance today than they did in the past. To improve its public image, the industry should develop strong networks with its suppliers, especially farmers, and develop customer communities, according to the GTNF experts.

    That suggestion was right up the alley of the next speaker, Forest’s Simon Clark, who argued that, throughout the debate, one group had been consistently underrepresented: consumers. Established to defend the interest of both smokers and tolerant nonsmokers, Forest celebrated its 35th anniversary in 2014. Clark took the opportunity to look back on some of the organization’s initiatives and to contemplate the future in a rapidly changing business environment.

    Throughout the years, Forest campaigns have had varying levels of success, according to Clark. The organization’s “Save our Pubs & Clubs” campaign could not prevent a comprehensive public-smoking ban in the U.K. Its “Hands off our Packs” initiative, against the implementation of plain packaging, has been more successful. Three years after the start of the discussion, the U.K. government has yet to decide on the issue. The difference, according to Clark, is funding. Whereas the “Save our Pubs & Clubs” initiative was carried out on a shoestring budget, the “Hands off our Packs” campaigners had more money to work with.

    Clark promised Forest would continue stressing consumer choice and attacking excessive regulation in its defense of smokers. But he cautioned that, in their enthusiasm about e-cigarettes, tobacco executives should not forget their traditional customer, the smoker, who still accounts for the vast majority of the business.

    The last speaker of the GTNF preliminary session was special—not because of his skin color, as Kgosi Letlape jokingly suggested, but because of his professional background. As the president of the Africa Medical Association, Letlape’s decision to attend a tobacco forum elicited strong criticism from fellow health advocates.

    As a pragmatist, however, he believes the goal of public health is better served by engagement than confrontation. Cigarettes, says Letlape, will remain part of the landscape because of various forms of addiction—smokers’ addictions to nicotine, companies’ addictions to profits and governments’ addictions to tobacco tax revenues. In order for harm-reduction efforts to succeed, new products would need to satisfy all these addictions, according to Letlape. “We need to find a way to live with addiction, as opposed to dying from it,” he said.

    One of the biggest challenges to progress, Letlape suggested, is ignorance. “The average South African doctor is unfamiliar with e-cigarettes,” he said. The best chance for better health lies with an informed public, said Letlape: “Not just with consumers, but with the collective public—all 7 billion of us.”

    Letlape sees a role for all stakeholders, including health activists, regulators and industry. “You don’t have to love or even trust each other,” he said. “Just respect each other and be civil.”

    Whether intended or not, Letlape’s remarks succinctly captured the spirit of the 2014 GTNF. The audience acknowleged his speech with a standing ovation.

    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.
  • Old School, Modern Market

    Old School, Modern Market

    Photo: Medwakh

    A traditional Arabic tobacco that has been cultivated and smoked in the Middle East for more than half a century, dokha is making a global comeback.

    By Timothy S. Donahue

    Its origins are as mysterious as the Middle East itself. Some claim coastal Arabs invented both the small pipe, called a medwakh, as well as the traditional dokha tobacco smoked in it. The Iranians, who occupy modern-day Persia, believe they were the first to use the pipes and the original herbal (nontobacco) smoking mix. The truth is, it’s hard to say where dokha got its start, as dokha has never really been sold commercially until the past two centuries.

    “People used to grow dokha for their own consumption and smoke it through the bones of small animals,” says Behzod Jamolov, business development executive for the Bin Khumery Group (BKG) in the United Arab Emirates (UAE). “However, dokha only began to be considered a trade item about 200 years ago in the territory of the country that is now called Oman.”

    By most accounts, dokha originated in the Gilaki area of northern Iran in the 1400s or earlier. The medwakh was ideal for sailors to use while at sea, and the pipe gradually made its way up and down the Caspian Sea. As tobacco was introduced into the Middle East in the 1500s, the Iranian nontobacco smoking mixture was fortified and eventually replaced with various blends of dokha tobacco.

    During the next few hundred years, the Ottoman Empire attempted to outlaw tobacco smoking, which ironically increased the popularity of dokha tobacco and the use of the medwakh among Arabs. The small, inexpensive pipe and potent, easily cured dokha tobacco became the ideal covert smoking method. Strong spices conceal the smell of the tobacco. Such a small amount is smoked at a time that very little secondhand smoke is produced, allowing users to avoid unwanted attention. In an emergency, the inexpensive pipe and small amount of tobacco could simply be dropped and walked away from without incurring much loss.

    As the prevailing views on tobacco gradually relaxed, hookah smoking became the preferred method for consumption in the Middle East. The popularity of dokha waned, except with the sailors who found it impractical to smoke a hookah at sea. The medwakh and dokha also remained popular in the coastal areas where the sailors traded and eventually settled. This is why these days dokha is found almost exclusively in the UAE, home to the Middle Eastern sea trade and Arab sailors for the past 1,500 years or more.

    Today’s dokha is 100 percent tobacco, with no chemical additives, preservatives, pesticides or herbicides, according to Bassem Chahine, owner of the U.S.-based Medwakh.com, the first company to bring the ancient smoke to the Americas.

    Dokha is a Nicotiana rustica strain found only in the Middle East Gulf region (Photo: BKG)

    A unique blend

    Dokha is a Nicotiana rustica strain found only in the Middle East Gulf region. It is extremely high in nicotine. Dokha is not harvested and cured like Virginia tobaccos, but is instead cut, transported, set to dry in the sun and processed into various blends—all in a span of mere days, or, at most, weeks, according to Chahine. “This expedited process is possible, of course, because dokha is cured and processed in areas where the daily temperature can easily reach over 135 degrees Fahrenheit with a humidity of less than 7 percent,” he says. “This proprietary drying process arrests any fermentation, freezes ammonia levels and is what imparts the unique dokha flavor and the major laf raas [literally: head spin] to dokha tobacco.”

    Unlike hookah tobacco, dokha is not cured with molasses or honey. Behzod says cultivation is a time- and effort-consuming process. “Dokha seeds are planted into the high-quality field that is irrigated with only fresh water,” he says. “It’s an annual crop, which is usually harvested by hand.”

    According to Behzod, dokha was previously made of one type of tobacco that was separated into cold and hot categories. Now, however, BKG is using more than five types of tobaccos from its plantations in Oman, Iran and the UAE. “All these tobaccos were grown under different sunlight conditions that make the flavor of the particular blend unique. Also, when tobacco is grown, there are top leaves that gain more sunlight and middle and bottom leaves that gain less sunlight, each of them are separated and used for a particular flavor,” he says. “As result, we are gaining more than 50 blends of dokha.”

    Dokha comes in two types, the traditional nonflavored and the modern flavored blends. The flavored blends fall into two general categories, savory and sweet/fruit. The traditional flavored dokha blends are mostly savory, though they are flavored lightly with a wide variety of spices, herbs and dried flowers—all used to enhance the very distinct flavors and notes of the different dokha tobaccos. The more modern, flavored dokha blends are patterned after hookah tobacco and are heavily flavored with fruit, mint or clove to cloak the actual tobacco taste and soften the harshness.

    Dokha comes in hundreds of strengths, flavors and brand names. The most commonly available strengths are barid, daffi and har—cold, warm and hot, respectively. Many vendors also offer moderating strengths in these three ranges, such as “over-cold” or “extra-hot.” These designations refer to the harshness of the tobacco, not necessarily the level of buzz a blend may impart.

    The buzz is what makes dokha special. The tobacco gives users a stimulating and comforting laf raas when smoked. The high is impacted by the blend of the tobacco, says Chahine. Generally speaking, the harsher (warmer) a blend, the more buzz it may impart, but there are many warm and over-warm blends that are specifically developed to give the user a maximum effect. “One puff of dokha is more than enough to satisfy a consumer, unlike other types of tobacco where a gram or more of tobacco is needed,” he says.

    The bowl of a medwakh is much smaller than that of a traditional Western tobacco pipe. Consumers usually fill it by dipping the pipe into the container of dokha and slowly spinning it until loaded. The pipes are made of various materials such as wood, bone, base metal, marble, steel, gold, silver, plastic or glass. A medwakh holds about a fingernail’s worth of tobacco—all that’s needed for each session. “Most people smoke less than 10 grams of dokha [the equivalent of four tobacco cigarettes] per week,” says Chahine. “The average Western cigarette smoker consumes about 15 cigarettes per day.”

    Photo: Medwakh

    Traveling abroad

    Smoking dokha outside the Middle East was a rarity until the 21st century. BKG was established in 1987 by a small farmer with a strong desire to provide the highest-quality dokha. At the time, it was a small shop with only few blends of dokha and some wooden pipes. The company now has almost 200 employees. In 2003, BKG began selling dokha on the international market. Following a surge in dokha demand within the UAE, the company expanded by setting up divisions in Oman, Qatar, Saudi Arabia, Europe and the U.S.

    “We used to sell our dokha to a few companies who packed them under their brand with the writing Bin Khumery dokha,” says Behzod. “After a certain period of time, we noticed that some of those companies were selling product that was not the one we were sending them; they were mixing some very low-quality dokha and selling it with our name, thereby damaging our reputation. As a result, we came up with idea of Turbo, the best-quality dokha on the market and always consistently the same. The Turbo brand consists of 19 blends of dokha, four types of medwakh, five types of filters and two types of pipe cleaner.”

    In 2006, after Chahine’s father brought his family to the U.S. from the UAE, he soon realized there was no reliable source of dokha in his adopted home country. While operating a hookah lounge, Chahine began to notice how Arab students would share and smoke any dokha they somehow had managed to bring from their homeland. Alert to opportunity, Chahine traded an old Playstation game console with a friend in the UAE for three 1.5-liter bottles of dokha.

    In November of 2009, Medwakh.com went online, becoming the first company to establish a legitimate online presence for dokha sales. “Within three minutes of going live, we made our first sale,” says Chahine. “We were floored.” The success of Medwakh.com has snowballed from there.

    The company started with three types of unflavored dokha and today imports and manufactures more than 200 types and flavors under three different brand names: Medwakh.com, Nirvana Dokha and Something Girlie Dokha. “Having seen how popular dokha was when anyone had any to share in our hookah lounge and how interested our American customers were in it, I was absolutely sure there was a market for it here,” says Chahine. “My family has been involved, one way or another, in the tobacco business in the Middle East for at least five generations.”

    Having that family history, and growing up in the UAE, eventually allowed Chahine to secure a reliable supplier. The company now buys its dokha directly from farms in the UAE and Oman through annual contracts.

    Behzod says the demand for dokha in the international market is gradually growing, but BKG is focused mainly on the Middle East and some European countries at the moment. “However, we are ready to supply countries that are interested in our products. It is vital for us to grow organically to sustain the unique quality of the product,” he says.

    Over the last few years, dokha has exploded onto the U.S. market, says Chahine. When the company started, its employees kept track of geographical sales by pinning pins onto a map. They quickly ran out of space though; within 18 months, the company had sold to all 50 U.S. states, 70 countries and six of the seven continents. To date, the company has sent dokha to more than 125 countries. Medwakh.com sold a little more than $300,000 worth of product in 2010. In 2014, the company expects to easily exceed $3 million in gross sales.

    “We’ve been concentrating on building a wholesale/distribution network for the last year or so, and I’ve been advised that we will double our 2014 sales in 2015,” says Chahine. “In 2010, I worked out of half of an office in my house and literally did everything myself. Today, we have 28 extremely dedicated employees, a 3,500-square-foot warehouse, a shipping and manufacturing facility, a corporate office with a phone-sales staff, a half dozen proprietary retail outlets, 45,000 unique online retail customers and over 500 wholesale/distribution customers. We will import between 2,500 and 3,000 kilos of raw dokha this year.”

    In contrast, Behzod said that BKG could not disclose its financials, although he assured Tobacco Reporter that BKG is the largest dokha producer in the UAE, as well as in the world. “We are a family that is built of competent and dedicated employees with the skills to maintain the quality of the products, dynamic growth and corporate culture of the company,” said Behzod. “Our Turbo dokha is a combination of traditional farming skills and unique blending technologies that allows us to produce a superior product for the UAE and the international market.”

    Medwakh.com says it is now the world’s largest online supplier of dokha, and by the end of 2015, Chahine says the company will be the world’s largest dokha supplier overall. “All it takes is for someone to whip out their medwakh at a public event and light a bowl of dokha, and a crowd of people will soon gather and ask, ‘What’s that?’ and the all-important, ‘Where do you get it?’” says Chahine. “By the end of the summer, we’ll have distributors in the U.K., Germany, Russia, Argentina, Norway, Ukraine, Turkey, and who knows who’ll be calling tomorrow.”

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

    The way forward

    Photos: Taco Tuinstra

    The Brazilian leaf tobacco industry cannot afford complacency in the wake of last year’s record earnings.

    By Taco Tuinstra

    There were lots of smiling faces in southern Brazil last year. At 706 million kg, the 2012–2013 tobacco crop volume may not have broken records, but its export earnings—the variable that counts—were unprecedented. According to Sinditabaco, an industry organization, leaf exports generated a whopping $3.27 billion last year. Can Brazil continue flying high? While generally confident about the future, industry leaders say several issues, including labor cost, must be addressed if Brazil is to sustain its strong position in the global leaf market.

    Brazil’s reputation as a reliable supplier of flavor tobaccos is based on several factors, including the size of its growing area (large), its farmer profile (small) and the integrated tobacco production system (ITPS), which enables the industry to coordinate production with no fewer than 160,000 farmers in the states of Rio Grande do Sul, Santa Catarina and Paraná. Like elsewhere, tobacco growing in Brazil is subject to the whims of Mother Nature. But the spread of production over such a large area, with varying climate conditions and growing calendars, means that risk, too, is spread widely.

    Planting takes place over six months, from May to November—a much longer timeframe than in the United States. And whereas some 75 percent of U.S. tobacco production is concentrated in the so-called Old Belt, the Brazilian equivalent—the area around Santa Cruz do Sul and Venâncio Aires—accounts for only a quarter of that country’s cigarette tobacco production. If one region suffers from adverse weather, conditions are likely to be better in other growing areas, and the overall impact will be mitigated.

    That has certainly been the case this growing season. “At the end of September and the start of October, there were rains in the Old Belt, which delayed the tobacco’s development,” says Guilherme Steffen, regional administrative director, South America, at Alliance One International (AOI). “When the heat hit between Christmas and New Year’s, the plants were unprepared.” Other areas experienced more favorable growing conditions. “The Old Belt suffered a yield reduction of about 15 percent, but there was a slight increase in yields elsewhere,” says Aldemir Paulo Faqui, leaf production director of Universal Leaf Tabacos. “Taken together, the yield is down slightly over last year, but this is compensated for by the increase in area planted.”

    The Brazilian Tobacco Growers Association Afubra predicts about 700 million kg in southern Brazil, including flue-cured Virginia (FCV), burley and Galpão Comum, a native variety.

    Faqui expects quality to be decent, especially for burley. “The weather in the north of Rio Grande do Sul and the west of Santa Catarina—the primary burley-growing areas—was favorable for curing,” he says. “Humidity was high and there was no low temperature. We’re looking at nice, naturally brown colors for burley.” FCV quality is projected to be average this season.

    Whether prices will be as firm as last year, however, remains to be seen. Farmers tend to respond to good crops by growing more tobacco—which depresses prices the next season—and this year was no exception. The area planted for the 2013–2014 crop was 3–4 percent larger than that for 2012–2013 (332,000 ha). Also, some traders believe the industry overpaid last year. This season, it will likely practice more restraint. On the bright side, the exchange rate is more favorable than it was in 2012–2013. “The less expensive real will make Brazilian tobacco more affordable for buyers,” says Gary Russell, sales director of Marasca.

    Brazilian leaf companies expect to process some 700 million kg of tobacco this year. (Photo: ULT)

    Farmer profile

    The ITPS has been a major contributor to Brazil’s success in the tobacco industry. Unlike its U.S. counterpart, the Brazilian leaf tobacco industry is dominated by small-scale production. The typical tobacco farmer in southern Brazil has 16.1 ha of land of which only 2.5 ha is reserved for tobacco, according to Afubra. Greater shares of his property are covered by crops such as corn (22 percent), soy (7.6 percent) and native forest (17 percent). But while accounting for a relatively small area of the farm, tobacco generates a majority (56 percent) of the average grower’s income.

    Tobacco remains the No. 1 cash crop in southern Brazil, and contrary to the image projected by some anti-tobacco activists, Brazilian tobacco farmers are not impoverished or perpetually indebted. “Over the years, tobacco income has allowed farmers to buy consumption goods of a standard similar to that common in urban areas,” says Flavio Goulart, Japan Tobacco International’s (JTI) corporate affairs and communications director for South America.

    But small growers generally don’t have access to funding from conventional financial institutions; they cannot fund their own operations like many U.S. farmers do—and that’s where the ITPS comes in. In the ITPS, tobacco buyers and producers work together to produce a consistent crop. At the start of the growing season, merchants provide their contracted farmers with finance and agricultural inputs, the cost of which are subtracted from the selling price after the crop has been grown. The dealer commits to buying the entire harvest, offering the grower a degree of security that he doesn’t get from other crops. Leaf technicians help the farmer follow proper agricultural practices, ensuring the buyer gets the tobacco styles he requires.

    Traditionally, small-scale farmers have relied on manual labor, provided mostly by family members and neighbors. “These farmers can respond instantly to developments in the fields,” says Robert Jones, president of Tabacum. “They can reap and top at exactly the right time, which in turn promotes quality.” But small-scale production is ill-suited for mechanization—something that could become a problem as labor gets scarcer.

    A worker at JTI’s reserch farm near Santa Cruz do Sul tends to seedlings for refostation.

    Booming Brazil

    Migration to the cities has been an issue for decades in rural areas worldwide. In Brazil, the challenge has been exacerbated by the country’s recent economic boom and upcoming events such as the 2014 football World Cup and the 2016 Olympics, which have created strong demand for workers in construction and services. In December, Brazil’s jobless rate fell to a record low of 4.3 percent, according to the Brazilian Institute of Geography and Statistics—a figure that many economists equate with full employment. Adding to the problem, whisper some, are generous social programs, promoted by Brazil’s ruling Workers’ Party, which have reduced the incentive for people to accept relatively low-paying positions.

    Meanwhile, a government push to formalize agricultural labor has made farmers even more reluctant to hire workers. Growers are now expected to prepare proper contracts, collect taxes, etc. “For the average tobacco farmer, the paperwork required can be intimidating,” says Mario Bender, production superintendent at Premium Tabacos do Brasil. Instead of hiring help, farmers may choose to reduce their tobacco plantings to an area that they can manage with their family. The situation has also created a bit of a competitive disadvantage for Brazil versus that other flavor market dominated by small-scale producers. “You can be sure President [Robert] Mugabe isn’t enforcing all the labor protections in Zimbabwe,” says Jones. Farmers’ representatives and Brazilian legislators are discussing amendments to the legislation that would allow tobacco growers to contract temporarily labor under less onerous regulations.

    In a way, the pressures are also a result of the tobacco industry’s success in eradicating child labor. The tobacco industry in southern Brazil was started in the first half of the 20th century, largely by German immigrants who brought with them a strong work ethic. As was common in those times, parents expected their children to help out on their farms. In today’s world, of course, child labor is frowned upon, and the tobacco sector has worked hard to discourage the custom. For example, in order to obtain a growing contract, a tobacco farmer must now provide proof of his children’s school enrollment. It’s not just a token formality: At the end of the school year, leaf buyers will demand to see the children’s attendance records. In addition, Sinditabaco and individual tobacco firms run campaigns to discourage child labor and promote education.

    Brazil’s 2010 census found that the incidence of child labor in the tobacco fields had declined by 50 percent over the previous 10 years, compared with reductions of only 20 percent in other sectors. Individual companies report even more impressive accomplishments. Carlos Palma, corporate affairs manager at market leader Souza Cruz, says all of the farmers his company contracts with send their children to school now.

    But the success of such initiatives also means that tobacco growing has become a less obvious choice for farmers’ children when they grow up. Exposed to a greater variety of opportunities than their parents, rural youngsters are increasingly opting for careers elsewhere, reducing the influx of new blood into the profession. Since 2009, the number of farmers has declined by 20,000, and the remaining ones are having difficulties finding labor.

    The Brazilian tobacco industry’s response to the trend has been twofold. On the one hand, it is educating would-be farmers on the potential of the business, demonstrating that, for adults, cultivating tobacco is a valid—and, often, lucrative—choice. On the other, it is trying to reduce farmers’ dependence on labor through mechanization, alternative curing technologies and good agricultural practices. Such measures have the added benefit of increasing quality and, thus, income.

    Because harvesting is the most labor-intensive part of the tobacco-production cycle, most efforts are focused there. Leaf dealers have been experimenting with harvesting machines, but they’ve found it challenging. Manufactured in high-cost Europe and attracting steep Brazilian import duties, the equipment is too expensive for the average tobacco grower. Efforts to convince local manufacturers to produce harvesting machines have been unsuccessful because of the still-limited market. Some suggest that, in order for mechanical harvesting to work, farmers may have to purchase them collectively. Another option would be to create a system in which specialist harvesting service providers rent out their equipment and operators.

    Scale is not the only challenge. Bender points out that mechanical harvesting would require changes to agricultural practices. For example, because machines are less discriminating than humans, farmers would need to start growing tobacco varieties with leaves at greater distances from one another. “Manual laborers can pick and choose exactly the right leaves,” he says. “A machine, by contrast, simply harvests everything at a certain height.”

    With labor accounting for 54 percent of tobacco production cost, mechanization offers the greatest potential for savings. But there are other opportunities to reduce expenses as well. Over the years, tobacco companies have introduced numerous technologies, such as the float system and the loose-leaf barn, to help growers become more efficient—and thus more profitable. “We can’t control world leaf prices, but we can control our expenses,” says Valmor Thesing, administrative director of Universal Leaf Tabacos. The larger companies operate dedicated research farms where they experiment with new seed varieties and cultivation techniques. Universal says it has had considerable success with no-till tobacco cultivation. As a result of such initiatives, farm yields have improved significantly over the years.

    Sometimes, innovation is simply a matter of questioning existing practices. For example, Philip Morris Brazil (PMB), which entered the leaf market in 2010, no longer requires farmers to bundle tobacco, which is a time-consuming process. In the past, when there was plenty of labor, the cost of bundling was immaterial, but times have changed. “The agronomy team asked our processing guys, ‘Do you really need leaf in bundles?’” says Eduardo Muller, manager regional agricultural programs for Philip Morris International (PMI). With some adjustments, it turned out they didn’t. Non-bundling has quickly gained acceptance among Philip Morris-contracted burley growers, and the firm plans to extend the experiment to FCV farmers this year.

    PMI now buys part of its leaf requirements directly in Brazil.

    Vertical integration

    Another significant development in Brazil has been the “verticalization” of cigarette manufacturers’ operations. Souza Cruz has sourced its leaf tobacco requirements directly for many years, but recently other manufacturers have gotten involved as well. Following several years of market volatility, JTI purchased the leaf operations of KBH&C and Kannenberg in 2009. The next year, Philip Morris International (PMI) acquired 17,000 farmer contracts from Universal and AOI, and created PMB’s tobacco operation.

    “Our goals are to secure supply, be closer to farmers and take responsibility for the areas that we operate in,” says Goulart. “Vertical integration offers us an opportunity to apply the JTI way of doing things; we want to contribute to the standards.”

    For the time being, both companies will continue working with leaf merchants. Without its own stemmery, PMB is still processing tobaccos at third parties. PMI also aims to buy part of its leaf requirements from other leaf merchants. JTI, too, wants a mix of third-party supply and direct sourcing. “We strive for balance,” says Goulart.

    Not everybody is convinced of the wisdom of verticalization, however. Jones, an industry veteran who retired as CEO of Universal Leaf Tabacos in 2009, says many cigarette manufacturers were vertically integrated in Brazil during the 1980s, but then decided to divest their leaf operations to specialists. “Leaf sourcing is a high-cost, low-profit business,” he says. “It would not surprise me if, within 10 years, the manufacturers spin off those businesses again.”

    For Universal and AOI, vertical integration has meant a shift in the emphasis of their activities toward processing, which generally carries lower margins than full-sales service. AOI has offset some of the lost PMI business by establishing a joint venture with the China National Tobacco Corp., called China Brasil Tabacos (CBT). Operating since January 2012, the JV has 6,000 integrated farmers spread over 41 municipalities of Rio Grande do Sul. CTB’s main customer is the Chinese monopoly, but the company will be selling to other customers grades that the Chinese are uninterested in.

    While some have expressed concern about the large manufacturers “hoarding” tobacco, others see opportunity. Newcomer Tabacos Novo Horizonte (TNH), for example, has done well catering specifically to the needs of niche customers: companies specializing in roll-your-own or pipe tobaccos, for example. Created only three years ago, the firm has seen its volumes grow from 13 million kg in its first year of operations to an expected 23 million kg this season.

    The market entry of firms such as TNH proves that, despite the adversity facing the tobacco industry, Brazilian tobacco leaf continues to generate considerable interest among businesspeople. Sinditabaco says it has added four companies to its membership since 2006—a remarkable gain in an otherwise mature industry. The challenges are real enough, however, and the sector will have to stay on top of its game to prevent last year’s smiles from turning into grimaces.

    Using technology to optimize production

    Universal’s Mobileaf application allows the firm to keep up with crop data in real time. (Photo: ULT)

    The size of Brazil’s tobacco industry never ceases to amaze. Leaf exporters coordinate their business with a whopping 160,000 farmers, growing a little more than 2 ha each and spread over an area larger than France. Just contemplating the logistics of supplying inputs, providing agronomic assistance and keeping track of crop development is enough to make the mind boggle. The task is further complicated by the fact that tobacco companies take on all sorts of social responsibilities, such as ensuring that farmers send their children to school.

    Fortunately, technology is lightening the workload. Universal Leaf Tabacos has developed an application, Mobileaf, that allows the company to keep up with all relevant information in real time. Using tablet computers, the firm’s leaf technicians collect data from the fields about the area planted, soil types, reforestation and fertilizer requirements, among other variables. The gathered information is synchronized over wireless networks with a central database, allowing Universal to better plan its operations, respond faster to field developments and, ultimately, produce tobacco more cost-effectively.

    Valmor Thesing, Universal Leaf Tabacos’ administrative director, says Mobileaf has greatly improved the quality of information. In the past, administrating relationships with the company’s 30,000 contract growers in Brazil involved lots of paper—with the associated risk of copying mistakes. Today, the risk of such errors has been virtually eliminated. Data flows faster, too. Whereas in the old days it could take up to four weeks for information to make its way back to the head office, updates are now almost instant. Brazil’s 3G mobile phone network is well developed, and even if a technician has trouble connecting from the field, he can still do so from home.

    Conceived only three years ago, Mobileaf has caught on quickly. Universal is now preparing to implement the system in Africa, Italy and the United States. —T.T.

  • Coming together

    Coming together

    Photo: Deyan

    Celebrating its fifth anniversary in Cape Town, the Global Tobacco Networking Forum has firmly established itself as the venue for industry interaction.

    By Taco Tuinstra

    Tobacco Reporter’s Global Tobacco Networking Forum (GTNF) has grown relentlessly since its debut in 2008. After a cautious start in Rio de Janeiro, subsequent gatherings in Bangalore (2010) and Antwerp (2012) each attracted more visitors than the previous event, with an ever-greater diversity of participants and discussion topics. But the most recent GTNF, held in Cape Town, Nov. 6–8, topped them all, boasting record attendance and an unrivaled program.

    The 2013 conference took place under the motto simunye, which means “we are one” in Zulu and is used to remind people that no one can operate in isolation. The concept fit seamlessly with the GTNF philosophy of bringing together people—even those who don’t always see eye to eye—to share ideas and solutions that will benefit business, customers and society at large.

    Like previous GTNFs, the Cape Town event attracted senior leading tobacco executives, financial analysts and prominent health advocates, among other stakeholders, but the caliber of participants was higher than ever. The speaker list even included a two-time Nobel Peace Prize nominee (Leon Louw, executive director of the Free Market foundation, who contributed to the creation of South Africa’s post-apartheid constitution). Attendees praised the quality of the discussions, which focused on topics such as regulation, tobacco harm reduction and the never-ending fight against illicit cigarette trade.

    Each morning of the event opened with a plenary session, comprising speeches and panel discussions. After lunch, delegates broke into smaller groups to discuss various topics more in-depth. In between the official sessions, participants had a chance to network in less formal settings. The idea was that this would allow them to discover shared interests and identify new opportunities—and there was evidence of that happening, with people who otherwise may not have met realizing they could help each other or do business together.

    Over the past five years, the forum has clearly come into its own. Whereas in the run-up to the first GTNF, event-fatigued industry representatives required some persuading to come to Rio, tickets to the Cape Town gathering sold out a month in advance. Further validating the GTNF’s claim to be the industry’s premier discussion forum, the 2013 conference was supported—both financially and with speaker participation—by all leading cigarette manufacturers.

    The decision to stage the 2013 GTNF in Africa proved well-timed, too. As Michael Lalor, lead partner at Ernst & Young’s Africa Business Center, pointed out during his keynote address, Africa has lately become the place to be for investors. The continent is home to six of the world’s 10 fastest-growing economies and is expected to continue growing in a diverse range of sectors. Contrary to popular perception, the growth has been driven not by commodities, but by domestic demand. “This is a structural transformation,” said Lalor, adding that the benefits have been trickling down to ordinary people, who enjoy higher standards of health care, education and general welfare than before. According to the World Bank, half of Africa’s countries now qualify as middle income—up from a handful in the 1990s. Governance is improving as well; more than 35 African countries now qualify as democracies—a far cry from the days when the continent was ruled almost exclusively by generals and presidents-for-live.

    Of course, it wasn’t always so. In 2000, The Economist magazine famously portrayed Africa as “the hopeless continent,” lamenting its intractable civil wars, high levels of corruption and decaying infrastructure. But even as that issue hit newsstands, a turnaround was already underway. Lalor said the foundation for Africa’s takeoff was laid at the end of the Cold War, when the world’s superpowers stopped using the continent as a proxy battlefield.

    Despite the gains, investors in Africa still face plenty of challenges. For starters, it is easy to underestimate the continent’s size and diversity. Africa is larger than China, the United States and Europe (excluding Russia) combined. It is home to 54 countries and an even greater number of cultures and languages. Distribution is a tremendous hurdle for anyone, including tobacco companies, hoping to do business here. (The challenges facing tobacco companies and their suppliers in Africa are vividly described in “The distribution trail,” TR August 2004” and “Out of Africa,” TR August 2008.) Those who get it right, however, like British American Tobacco South Africa, stand to reap tremendous gains.

    But while Africa offers significant opportunities as an end market, it remains best known in the tobacco industry as a supplier of leaf. Charles Graham, regional director for Universal Leaf Africa, said the continent offers both skilled farmers and ideal growing conditions. Accounting for 27 percent of the world’s arable land but only 13 percent of its people, Africa produces some 600,000 tons of leaf annually, with significant volumes originating in Zimbabwe, Malawi, Mozambique and Tanzania. Unlike other big African industries such as mining, tobacco farming benefits people in rural areas. There are some 1.1 million tobacco farmers in sub-Saharan Africa, each supporting multiple dependents. And despite attempts by some to promote alternative crops, tobacco’s returns to the farmer are unrivaled. Graham was quick to point out that the tobacco industry strongly opposes monocropping, however. “We encourage our farmers to become well-rounded agro-businessmen, producing a variety of crops, including food crops,” he said.

    Several speakers commented on how competitive the global market for leaf tobacco had become, with customers and governments insisting on full traceability and regulatory compliance. “The definition of quality is changing to one of total product integrity,” said Mark Kehaya, chairman of Alliance One International, who detailed his company’s initiatives to optimize its supply chain in Africa.

    In addition to competitive pressures, African tobacco farmers, like others in the industry, are increasingly targeted by public health activists. In a passionate speech, François van der Merwe, chairman and CEO of the Tobacco Institute of Southern Africa (TISA) and global president of the International Tobacco Growers Association, implored the industry to face its challenges with simunye. There was a lot of unnecessary distrust within the sector, he noted—even though the legal players had many shared interests. For example, the industry should cooperate to fight illicit trade and senseless regulation. While supporting the health agenda, TISA vehemently opposes the extreme rules inspired by the World Health Organization’s (WHO) Framework Convention for Tobacco Control. Van der Merwe also insisted on the right of the industry to be included in talks about tobacco regulation, from which it is increasingly banned. But with rights come responsibilities, he noted. The industry should get its own house in order, by working toward regulatory compliance, for example. He encouraged his audience to keep their heads high in spite of the almost unbearable pressure. “Don’t apologize,” he said. “Be proud of your business.”

    The theme of pride resurfaced during a breakout session on tobacco product regulation, when Louw—a self-described health puritan—questioned why the industry discourages consumers from using its products. “If you are not proud of your products, you cannot complain about what is thrown at you,” he commented. “You should encourage tobacco consumption as a perfectly legitimate choice to make.” Earlier, during the Nanny State panel discussion, Louw had argued for the “privatization of the mouth”—the freedom to decide what comes out (controversial opinions, for example) and what goes in (“tobacco smoke, fatty foods and certain other, unmentionable things”).

    Views favoring personal freedom and limited government were also aired by other members of the Nanny State panel, which had a strong libertarian flavor. Jeff Stier, senior fellow at the U.S. National Center for Public Policy, argued that public health is better promoted through private-sector innovation than through government interventions, as demonstrated by the success of e-cigarettes. Simon Clark, director of the smoker lobby group Forest, lamented the U.K. public smoking ban, which fails to provide for separate smoking rooms. “A blanket ban is not about the protection of nonsmokers but about forcing consumers to change their behavior,” he protested. Clark also cautioned against unintended consequences of smoking bans, such as loneliness among old people who are now staying at home rather than going to the pub. In this vein, Mark Littlewood, director general of the London Institute of Economic Affairs, urged the industry continue fighting yesterday’s battles. “Revisit all the bad laws and regulations,” he said.

    The tone was more conciliatory during the Public Policy panel discussion. Delon Human, a prominent health care consultant specializing in tobacco harm reduction, said South Africa’s bloodless transformation from apartheid to democracy held lessons for the tobacco industry and its detractors. “I believe a win-win-win is possible,” he said. Human invoked the image of two big ships—one representing the tobacco industry and the other the public health community—that had recently been joined by a smaller ship, symbolizing tobacco harm reduction and containing “a curious mix of pragmatists looking for a middle way.” But Human cautioned against reviving the tobacco wars. “Do not consider engaging in a war with public health unless you want to move back into the fruitless confrontations of the past,” he said.

    Another distinguished health advocate on the panel stressed that harm reduction was about striking a balance. “We may not like intravenous drugs, but we still allow needle exchanges,” he observed, adding that harm reduction initiatives relating to tobacco have had a harder time gaining acceptance among health advocates because the industry had not been truthful in the past. The suspicion in the public health community runs deep, he said—to the extent that Gro Brundlandt believed her phone to be tapped by the industry while she was director general of the WHO. “It’s a big step for us to be seen in the same room with the tobacco industry,” he said.

    During the question-and-answer session, Van der Merwe brought up a point that had been on many tobacco representatives’ minds. The industry has changed, he pointed out to the health advocates on the panel. “We want to engage—but in practice, the door is closed. What is the first step to opening the door?”

    Panel member Kgosi Letlape, president of the Africa Medical Association, replied that the tobacco industry has no right to play victim, given its past behavior. But he suggested the industry stake its demand to participate in the discussions on universal legal principals. “You are a legitimate stakeholder,” he said, acknowledging that the tobacco industry generates employment and raises tax revenues. “Tell the regulators, ‘you don’t have to like me, but you must talk with me.’”

    The conference also offered a good opportunity to reflect on the rise of e-cigarettes, which present both a challenge and an opportunity to the tobacco industry. Displaying a slide depicting a typewriter, one GTNF speaker urged his listeners to rethink their business. To most in the audience the picture was just that—a typewriter. When shown to a group of young people who had grown up in the Internet age, however, the machine apparently elicited an entirely different response: “Cool—a laptop with a built-in printer that doesn’t need to be plugged in!”

    Rather than simply manufacturing smoking products, one could argue that tobacco companies are in the business of mood modification. Seen from this perspective, cigarette manufacturers compete not only with other tobacco firms, but also with, say, producers of energy drinks. The industry also would do well to take notice of the changing attitudes toward ownership. Young people increasingly rent or subscribe, rather than own. Many features that previously required hardware are increasingly downloadable, a development that extends beyond smartphone applications.

    With the advent of e-cigarettes, competition will be increasingly about nicotine delivery rather than tobacco smoke. Nicotine remains a widely misunderstood drug, however, and David O’Reilly, British American Tobacco’s scientific director, took advantage of the GTNF to help set the record straight. O’Reilly called nicotine “an important cultural drug” because of its unique ability to relax and stimulate simultaneously. Throughout the day, there are many consumption moments. “It brings you up after lunch, and down post coitus,” he quipped. It also offers therapeutic properties such as improved cognition and weight control.

    While nicotine is not without risks, at the level normally used in humans it is considered to be safe. According to O’Reilly, the lethal dose of nicotine is 60 mg, but 1 mg-2 mg is enough to supply the “hit” that smokers crave. What’s more, the body tells the user when he needs to stop (by giving him a headache for example). Unlike “tar,” nicotine does not cause cancer or serious cardiovascular problems. But it does raise a person’s heart rate and blood pressure.

    While the idea of an e-cigarette has been around since the 1960s, it is only recently that the product has started catching on commercially—a classic case of the pioneers getting killed and the settlers taking the land, said O’Reilly.

    The trick, going forward, he said, will be reasonable regulation—regulation that will encourage good manufacturing and marketing practices without restricting innovation. Like Human, O’Reilly cautioned against belligerency. “We will not renormalize nicotine by going to war with the WHO. To be successful, the WHO needs to be part of this development,” he said.

    O’Reilly’s presentation concluded the official part of the GTNF, but the organizers still had a surprise in store for the delegates: a performer who embodied not only the agility, speed and determination that many in the industry aspire to, but also the fragility of a species under threat—a condition that many in the tobacco business can relate to. Under dead silence—the audience had been asked to refrain from clapping so as to not unsettle their intrinsically shy guest—volunteers from Cheetah Outreach escorted one of their big cats to the podium.

    Based near Cape Town, Cheetah Outreach’s goal is to raise awareness of the plight of the cheetah and to campaign for its survival. After explaining their work and fielding questions about their loudly purring companion the handlers invited the audience to the podium for group pictures.

    Photographers jostled for position, competing for the best angles. Flashes fired and light transformed into pixels. And when the cameramen checked their LCD displays, they saw tobacco executives, free-market advocates and public health officials standing side by side, flanked by a majestic African cat. If there were ever an image that captured the simunye spirit that prevailed during the Cape Town GTNF, this would be it.

     

    Editor’s note: This report was compiled in compliance with the Chatham House rules that governed the GTNF. All people mentioned provided permission to be quoted in Tobacco Reporter.

     

    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.