Category: Print Edition

  • Real-World Quitting

    Real-World Quitting

    Photo: Pressmaster

    What we know, and don’t, about how people stop smoking

    By Cheryl K. Olson

    Skip Murray was a failure at quitting. After trying countless times over the years to stop smoking, she was through. When she chose to try e-cigarettes, she says, “I had no intention of making a quit attempt. The purpose of my vape was to use it only when I could not smoke, as a temporary substitute.” Four months later, Murray realized that she could not remember the last time she’d lit up. She had accidentally quit smoking.

    Randomized controlled trials are the widely acknowledged gold standard in research. They are great for establishing whether a particular approach can create a meaningful effect. Thus, trials of smoking cessation methods typically recruit people who intend to quit, and assign them to use specific products in particular ways. The downside? This approach fails to capture the messy quitting experiences of millions. This includes Murray, a Minnesota-based tobacco harm reduction advocate and writer.

    Reviews by the Cochrane Collaboration that incorporate randomized trials and other planned intervention studies assure us that e-cigarettes have the potential to help people quit smoking. The Centers for Disease Control and Prevention’s National Health Interview Survey says 7.5 million adult Americans stopped smoking completely from 2020 to 2022. But how did they do it? Are people in the real world using reduced-harm alternatives to kick the habit?

    Raymond Niaura, professor of epidemiology at the New York University School of Global Public Health, has been looking into this. “Over the years, there have periodically been reports that have come out talking about methods people use to quit smoking or try to quit,” he says. “But most information is out of date.”

    For example, the 2014–2016 National Health Interview Survey (NHIS) listed 10 possible quit methods. The two most popular were giving up cigarettes all at once (a.k.a., “cold turkey”) and gradually cutting back. Although those unaided methods are popular, they aren’t considered to be evidence-based and often result in relapse down the line. E-cigarettes were a distant third in popularity but ahead of nicotine patches or gum. Most people indicated trying multiple quit methods.

    How We Quit Now

    Niaura and statistician Floe Foxon were already doing some analyses of NHIS data. They decided to detour and look at the latest publicly accessible figures on quitting methods, from 2022. Study participants who had stopped smoking completely in the previous two years were asked whether they had used any of a list of methods. They were also asked whether they had tried “to quit by switching to electronic or e-cigarettes.”

    “We found that use of e-cigarettes was pretty high. In fact, it was the No. 1 method used to quit smoking,” says Niaura. “That caught me a little by surprise.” These results hint at a quiet revolution. E-cigarettes may be playing a larger role than popularly assumed, in both attempted and successful quitting.

    Niaura and Foxon presented a poster of their findings at the March 2024 annual meeting of the Society for Research on Nicotine and Tobacco. Updated and expanded results will be published shortly. (Foxon consults for Juul through Pinney Associates. The poster and paper received no funding.)

    Survey Letdowns

    The NHIS is unusual in that it directly asks people how they stopped smoking. Most studies simply don’t ask. Nationally representative data on this question is surprisingly scarce. The alphabet soup of U.S. government studies such as NHANES, BRFSS and NSDUH inquire only about whether someone smokes now or used to smoke.

    Even the NHIS doesn’t ask annually about quitting. Because the survey covers a massive range of health issues, questions are often dropped or altered. The 2024 version asks whether in the past 12 months “a doctor, dentist or other health professional advised you about ways to stop smoking or prescribed medication to help you quit.” This is a worthy variation, but the approach thwarts year-to-year comparisons of change.

    Researchers are left to puzzle over what little information they can get. For example, the U.S. Food and Drug Administration’s Population Assessment of Tobacco and Health (PATH) survey asks about past-30-day use of cigarettes and electronic nicotine-delivery systems (ENDS). Because participants complete a series of PATH surveys over time, we can see that the link between quitting smoking and using ENDS has gotten stronger over time.

    Another problem with surveys? Varying or missing options for answers. In the 2022 NHIS, says Niaura, “We don’t know how many people quit cold turkey with no assistance. They didn’t ask that.” Instead, the response options included a variety of nicotine-containing medications and several behavioral help options, such as telephone quit lines and counseling. NHIS asked about ENDS but didn’t inquire about quitting smoking via other nonmedicinal reduced-risk products, such as pouches, snus or heated tobacco.

    Shifting response options do give glimpses into how assumptions change over time. “Back in the 1950s and 1960s, people were interested in things like, did you switch to a pipe or cigar to help you quit smoking,” notes Niaura. Oddly, the 2014–2016 NHIS questionnaire included the discredited cessation option of “switched to ‘mild’ cigarettes.”

    A third problem with nationally representative surveys is that they can’t tell us how people go about quitting. “We don’t really understand the whole process,” says Niaura. “The high numbers in the [NHIS] survey mean this is a frequent occurrence, that smokers are using e-cigarettes and quitting. How come there’s not a ton of research being conducted on those kinds of questions?

    Harking back to Murray’s experience, Niaura notes that many smokers “didn’t set a quit date, make a plan and go out and buy some e-cigarettes. And it still worked.”

    “So, what’s happening there?” he wonders. “What’s their experience along the way? What difficulties do they run into? Where are they getting advice?”

    Finally, Niaura ponders how e-cigarettes might be made even more effective, perhaps with some form of counseling and support, such as vape shops have provided to customers. With vape shops closing due to regulatory restrictions, this question deserves urgent attention.

    Regardless of what the government says or doesn’t say, in many ways, we are in a golden era of quit methods.

    Raymond Niaura, professor of epidemiology, New York University School of Global Public Health

    Success Factors

    A few studies have looked at factors linked to successful quitting with e-cigarettes. In a 2021 online survey, vaping more often throughout the day was linked to good outcomes. So was an abrupt switch from smoking to vaping rather than a gradual one. Using a newer device type (e.g., rechargeable pods) rather than older cig-a-like products also helped. Researchers also noted that “most people reported trying more than one e-cigarette flavor and more than one device type when trying to quit smoking.”

    A qualitative study used online individual interviews with people who had quit smoking with e-cigarettes, looking for factors that separated long-term success from short-term attempts. Those who gave up had trouble finding a vape they could stick with that met their needs and prevented cravings.

    I asked Murray for a reality check. To her, it makes sense that newer vaping devices could more effectively help people quit smoking. “I tried a cig-a-like. I didn’t like anything about it—how it felt, what the hit was like or how it tasted,” she says. “It was more satisfying to smoke!”

    She noted that, as with all new technologies, vaping devices have improved along the way. “There were issues with earlier products that leaked or weren’t reliable.”

    Based on her experience as a former vape shop owner, Murray found that for people who smoked heavily, the newer pod systems that use nicotine salts can be a game changer. “Those products provide enough nicotine to replace what they got from combustible tobacco,” she states.

    “A Golden Era”

    Niaura finds it frustrating that the FDA does not do more to promote the visibility of studies like these, including ones that use the FDA’s own PATH survey data. “Regardless of what the government says or doesn’t say, in many ways, we are in a golden era of quit methods,” he points out. “The good news is there are more ways to stop smoking than ever before: e-cigarettes and other reduced-risk products as well as tried-and-true conventional methods.”

    “Go and try something,” he urges. “And if it doesn’t work, try something else.”

    “The one valuable lesson that society should have learned is that there is no one-size-fits-all solution to the smoking epidemic. So no one product is perfect for all consumers,” concludes Murray.

    “Someone who smoked six cigarettes a day for a couple of years has drastically different needs than someone who has smoked two packs a day for 30 years,” she adds. “What part of smoking was most important to them, why they smoked and when or where they smoked are all parts of the equation when it comes to finding what will work best to help them stop.”

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

    The Path Less Traveled

    Originally launched as a limited edition, Gizeh’s Pink collection proved so popular that the company kept producing additional volumes and developed products with filters and matching merchandise. | Photo: Gizeh Raucherbedarf

    German rolling papers manufacturer Gizeh is finding new ways to appeal to consumers.

    By Stefanie Rossel

    The growth of the rolling papers category is often attributed to smokers’ changing behavior in challenging economic periods. In times of lower disposable income, consumers may shift from expensive factory-made cigarettes to more affordable roll-your-own or make-your-own products.

    There are, however, considerations that go beyond financial ones. “It’s certainly the case that consumers spend less money on smoking if they roll their cigarettes themselves,” says Lisa Esser, head of corporate affairs and development at German rolling papers manufacturer Gizeh Raucherbedarf. But for many RYO lovers, she notes, that’s not the main criterion. “Most of the time, the enjoyment of seeing, feeling and smelling the tobacco, and then turning it into a cigarette is centerstage,” she says. “A smoking experience with all senses creates an individual moment of enjoyment.”

    It’s perhaps this aspect that contributes to a phenomenon seldom witnessed in other areas of the nicotine market: RYO smokers often feel a strong bond with their rolling paper brand. Gizeh has responded to this attachment by launching a series of unusual special editions, such as the “All Pink” collection, which was first introduced in 2022 and comes as a king-size slims and tips set with all-pink papers, filter tips and even a pink magnetic lock. At last year’s InterTabac trade fair, the company debuted a version with reusable active filters, catering to the growing popularity of active charcoal filters. A matching metal tray as well as a lighter and a grinder complement the offer.

    “The pink collection was meant as a limited edition to try out something new,” says Esser. “But demand didn’t cease, so we kept producing new volumes and developed a range of products with filters and matching merchandise. With the blockbuster movie Barbie, the pink edition experienced a real boost. Maybe we were ahead of the trend with our marketing instinct?”

    Illicit Cigarettes on the Rise

    Fandom aside, economic adversity remains a major driver for RYO sales. Gizeh, which was founded in 1920 and is part of the Mignot and De Block group, is best known for its Gizeh, Mascotte and Marie brands. The company is present in more than 80 markets, with Europe being its main areas of operation. Here, Gizeh also sees the greatest opportunities for its business. The Covid-19 pandemic and the war in Ukraine have driven up prices and taken a toll on disposable incomes in many markets, prompting smokers to be more judicious in their expenditures.

    Another beneficiary, unfortunately, has been the informal market. “Illicit cigarette trade in Germany has significantly increased since the end of the Covid pandemic and the reopening of borders,” says Esser. “A fifth of the cigarettes smoked in Germany are nonduty paid. Tobacco taxes account for about half of the retail price of cigarettes in Germany, hence the import of nonduty-paid tobacco products becomes interesting for smart spenders. According to estimates by market research company Ipsos, the share of nonduty-paid cigarettes in Eastern Germany, which borders on some of the European Union eastern member states, is almost 40 percent. In the western part of Germany, it is approximately 13 percent. In 2021, German customs seized about 117 million nonduty-paid cigarettes. Only recently, a ‘garage factory’ making illicit whites was uncovered in the Ruhr area. Financial constraints, it appears, rather drive illicit trade than RYO sales.”

    Cannabis as a Driver

    The global rolling papers market was worth $714.1 million in 2023, up from $678.8 million in the previous year, according to Future Markets Insights. By 2033, the market is expected to reach $1.19 million. Surging demand for hemp-based rolling paper is expected to steer the growth of the market at a compound annual growth rate of 5.2 percent during that period, the business intelligence firm predicts.

    Meanwhile, the spreading legalization of recreational cannabis is presenting rolling paper manufacturers with new opportunities. The most recent country to partially legalize the recreational use of cannabis was Germany, a move that made it the first EU member state and the second G7 country after Canada to permit adult use for fun.

    Since April 1, adults aged 18 and over may carry up to 25 grams of cannabis for their own consumption and store up to 50 grams at home. They are also permitted to keep three plants for home cultivation. The new law allows for public consumption, provided that is not within sight of children or near sports facilities or takes place in pedestrian zones between 7 a.m. and 8 p.m. The original goal of making cannabis available in licensed shops has not yet been implemented, however. Instead, special cannabis clubs that can have up to 500 members will be allowed to grow and purchase the drug on a limited basis from July 1, 2024.

    Gizeh caters to this market with various dedicated products. “Since April 1, papers and filters can be purchased by adult consumers to fulfill the purpose for which they have already been used for a long time—namely, for the consumption of cannabis,” says Esser. “Following the motto ‘For pleasure only,’ we want to contribute to destigmatize cannabis products and to get the consumer out of illegality. As one of the leading manufacturers for papers and other accessories worldwide, we want to become No. 1 in the recreational products segment, by which we mean the segment focused on conscious and enjoyable cannabis consumption by adults.”

    Roll With It

    In September 2023, Gizeh expanded its recreational portfolio with Gizeh Cones, a product line comprising three cone types, including conical filter tips, which are targeted at users who don’t want to make joints themselves, prefer evenly shaped joints or don’t have much practice in rolling them.

    “The highlight of the range is the patented cone-shaped Active Filter, which has a diameter of 6 mm to 7 mm and was especially developed for king-size papers,” says Esser. “The conical design prevents the filter from dropping out of the cone when rolling. The purified active charcoal in the core of the filter is based on coconut shells, a renewable raw material. Ceramic caps on both ends with seven holes each allow for an optimal airflow. Our cone-shaped filters are made in Germany and can be used multiple times, making them sustainable.”

    According to Esser, marijuana consumption was already commonplace in Germany before legalization. “The new law only removes existing truths from the gray area,” she observes. Esser expects the German market to follow the same path as Canada, where recreational cannabis for adult use became legal in October 2018. “Perhaps demand will increase at first, but then I expect it to even out at the level where it already stands.”

    Partnerships and network extensions are another part of Gizeh’s growth strategy in recreational cannabis. To inspire brand loyalty, the company last year launched a limited edition sneaker with shoe company Kangaroos. “Cultural influences are an important driver for the Gizeh brand and will be an essential part of communication in the future,” says Esser. “What exactly [that will be] will be a surprise.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Smart and Smooth

    Smart and Smooth

    Koehl operates out of Wecker, town in Luxembourg near the German border | Photos: Koehl Machinenbau

    Stefan Hahn, managing director of Koehl, discusses the latest trends in cigarette manufacturing.

    By Stefanie Rossel

    Stefan Hahn

    Production efficiency continues to be a priority for tobacco companies. On the road to “Industry 4.0,” the world’s four leading cigarette manufacturers are focusing heavily on automation, ranging from information technology to operation technology, according to Stefan Hahn, managing director of Koehl Maschinenbau, a Luxembourg-based supplier of primary processing and logistics solutions.

    Intralogistics, which involve all flows of goods and materials on a company’s site, are increasingly important. Optimizing the coordination of processes is a key challenge in today’s intralogistics system implementation.

    Greenfield factories exemplify the seamless integration of internal logistics: Their highly automated shop floors consist, for instance, of a series of halls that are arranged on both sides of a long corridor aptly called “the spine.” Here, mobile robots that transport materials from the pallet to the machine have the right of way on dedicated lanes much wider than the footpaths. The spacious halls, which among others accommodate the Primary department, the filter-making division and the secondary, feature wide spaces between production lines, allowing the robots to maneuver. Below the ceiling, a filter segment supply buffer system completes the flow of materials.

    “When planning a factory from scratch, it’s easy to accommodate comprehensive intralogistics solutions,” says Hahn. “Tobacco manufacturers, however, currently seek to automate their existing plants, and this often proves to be a challenge. Today, several meters between production lines is standard, but when some of the older plants were built, machinery was placed much closer to each other. Or take the factory of one of our customers: Here, production is spread over three floors, which means that AGVs [automated guided vehicles] have to take the elevator to reach all production lines.”

    Koehl is well positioned for such challenges. While tobacco solutions still account for 50 percent to 60 percent of the company’s turnover, the company has two additional, fast-growing business units that specialize in intralogistics and robotics, respectively, and a department that focuses on automation and IT, where programmers enable production lines to communicate with the customer’s enterprise resource planning and business intelligence systems. “Automation is our daily business,” Hahn says. The company currently has more programmers than design engineers. This reflects a strategic focus on software development within the organization, highlighting the critical role of programming in its operations and product offerings. The balance between technical disciplines is essential to drive innovation and maintain competitive advantage in the market.

    The company currently has more programmers than design engineers.

    The latest version of Koehl’s Flavour Application System optimizes the application process and features state-of-the-art software.

    Wanted: Flexible and Robust Machinery

    Koehl is also active in enabling the implementation of the Open Platform Communications Unified Architecture Tobacco Machinery Communication (TMC) standard, which Philip Morris International, BAT, Japan Tobacco International and Imperial Brands jointly developed to describe general requirements for manufacturers of primary and secondary machinery that apply to both machine-to-machine and machine-to-business communication (see “Smart Connection,” Tobacco Reporter, September 2022). Koehl has already realized the first projects to integrate the standard.

    The company’s machinery complies with the TMC standard. In addition, Koehl has developed a solution for shop floors with equipment from different suppliers that was developed before the standard was introduced. Koehl also provides an interface service that facilitates integration for suppliers aiming to enter or expand within the tobacco industry. Its machine-to-cloud solution, the IIoT Server, enables vertical data transmission to a business intelligence system without, in the best case, changing the components’ programming. This way, all data accumulated on the shop floor can be semantically processed in the same way to collect and analyze it centrally.

    In the future, Hahn expects the number of employees in a cigarette factory to remain the same but that their tasks will change. “The transportation of physical items like paper, cigarettes and shrink film may become obsolete through the automation possibilities,” he says. “The focus will shift toward enhancing the efficiency of production processes. This evolution will prioritize innovation and optimization over traditional logistics.”

    Regarding tobacco machinery in general, Hahn sees two main trends, one being maximum flexibility.

    “In the future, the trend will shift away from highly specialized machinery capable of producing massive quantities of a single product,” he says. “The focus will instead be on versatile equipment that can swiftly adapt to various formats, catering to a market that values diversity over volume. This approach aims to minimize the setup time and enhance efficiency in manufacturing processes. For this reason, we have revised, for example, our track-and-trace portfolio to quickly adapt to changes in packaging formats and cover a wide range of product variations.”

    The other important theme is “robustification,” which means minimizing the risk of errors and protecting against hacking.

    Koehl has also developed equipment for non-cigarette tobacco product formats, such as pouches.

    Solution for Complex Tasks

    Koehl operates out of Wecker, near the German border, where it has 120 employees, including engineers, programmers and visualizers. The company develops it innovations in close cooperation with its customers. Its location in Trier, Germany, is a manufacturing facility, where 60 people build all tobacco machinery, intralogistics and robotics solutions and clients can carry out preliminary acceptance tests.

    The medium-sized company manages multiple projects simultaneously, each with significant financial stakes, which requires a high level of coordination and expertise. Koehl aims to expand its annual turnover of €40 million ($42.63 million). The plan depends in part on the company’s ability to fill 25 to 30 additional positions, as Germany presently experiences a shortage of specialists.

    In the tobacco industry, Koehl occupies a lucrative niche with its specialized machinery in the primary and secondary areas, such as its patented Flavour Application System (FAS 4 Evolution), an enhanced flavor application system offering numerous benefits to customers. The latest version optimizes the flavor application process in tobacco, filter and next-generation product manufacturing and features state-of-the-art software. An optimized feedforward controller effectively eliminates startup waste while an integrated radio frequency identification system ensures complete traceability from filling to application. An additional benefit of the FAS 4 Evolution is its compatibility with all current makers. Its design allows quick flavor changes, enhancing efficiency and flexibility in production processes.

    The company also caters to track-and-trace requirements for other tobacco products (OTP), which will take effect in the EU on May 20, 2024. Koehl adapted its track-and-trace system for cigarettes, which can apply an individual code into a black field on the pack without damaging the foil, for OTP applications. “OTP machinery runs at a much slower speed than cigarette packaging equipment, but there is vast product and format variety, including pouches, cans, outers, tins, wooden boxes or buckets,” says Hahn. “It’s a challenge to handle all these different sorts of bundles, so we had to develop new machinery for OTP tracking and tracing.”

    While tobacco manufacturers in recent years focused their investments primarily on the secondary department—a development that was among other things driven by track-and-trace requirements—Hahn is convinced that companies will soon look more closely at their primaries again. “The primary sector’s machinery, some of which dates back 30 [years] to 40 years, incurs significant maintenance and energy expenses and poses potential safety hazards to workers,” he says. “It is anticipated that by 2030, there will be a substantial rise in investment to modernize this equipment.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Feeling the Squeeze

    Feeling the Squeeze

    Photo: Taco Tuinstra

    A crackdown on vapes has pushed some Chinese companies out of business and encouraged others to prioritize international sales.

    By Stefanie Rossel

    China is the world’s center of e-cigarette production, accounting for approximately 90 percent of vapor hardware. Between 2022 and 2023, China’s vape product exports increased 12 percent, according to ECigIntelligence. Domestically, however, the vape category seems condemned to disappear, although with over 350 million smokers and an estimated annual smoking-related death rate of more than a million, the country’s potential for reduced-risk products is huge. This year, the country’s vaping population stands at 3.5 million, ECigIntelligence estimates.

    The rise of China’s internal vape market was short-lived. Initially, there was little awareness of e-cigarettes in the country. In 2013, domestic vape sales surpassed $13.75 million, and the sector continued to grow rapidly until November 2021, when China’s State Tobacco Monopoly Administration (STMA), the administrative arm of China National Tobacco Corp., which with around 2.5 trillion cigarettes a year is the world’s largest producer, asserted its authority over the vape industry.

    In November 2022, the Electronic Cigarette Management Measures (ECMM) took effect, putting substantial restraints on manufacturers catering to the domestic market. The measures regulate the production, sale, marketing and import and export of all vape products, including cartridges, vape sets and products sold as a combination of cartridges and sets, but not heated-tobacco products, which will be regulated as traditional cigarettes.

    It is worth noting that the ECMM legalized an industry whose legal status was previously dubious. Whether the legal space it gives vape manufacturers is enough to keep their domestic business viable is questionable, however; none of the companies approached was prepared to comment on the record.

    Among other requirements, the new regulations prohibit the sale of e-cigarettes with flavors other than tobacco on the domestic market. The document also sets a wide range of technical standards, including permitted ingredients and additives, nicotine levels, testing and safety standards and accreditation. Manufacturers, wholesalers and retailers of vape products are required to obtain a license from the STMA and are obliged to process all transactions through an e-cigarette transaction platform overseen by the monopoly. Other measures include prohibition of vape product advertising and a ban on e-cigarette sales through vending machines or any other self-service mechanism.

    Shortly after the ECMM entered into force, e-cigarettes became subject to a consumption tax. The rate for the production and import of e-cigarettes is 36 percent while the rate for wholesale is 11 percent.

    Sharp Decline

    Mercedes Gorgni

    The ECMM follows a tightening of other rules, such as the decision at the end of 2019 to ban the online sale and advertising of e-cigarettes in response to concerns about underage vaping. In April 2022, the STMA released a new set of trial policy measures, which sought to control the structure of the e-cigarette industry by regulating where production capacity is concentrated and dictating the distribution of vape product retail outlets.

    One-and-a-half years after their introduction, the rules have taken a toll on domestic vape sales. “The market uninterruptedly grew from 2017 up to 2020 when the online ban of e-cigarette sales dampened the growth. However, the increasing popularity of prefilled pods and the increase in prices still generated a 26 percent growth rate compared with 2019 despite the setback in accessibility,” says Mercedes Gorgni, China analyst at ECigIntelligence.

    “The peak of the market was reached in 2021 at an estimated RMB19.7 billion ($2.7 billion) with 7 million adult vape users. Regulations in 2022 resulted in a sharp decline in the domestic market. The market value is estimated to have shrunk to RMB9.3 billion in 2023 and 3.8 million users due to restricted flavors, tax-induced price increase and a declining number of retailers offering products.”

    The shift in regulations, Gorgni says, posed a challenge for smaller and medium-sized companies within the industry, as adapting became increasingly difficult. “On the other hand, leading firms such as RELX leveraged their superior capabilities and resources to meet these stringent government demands, securing approval by the first half of 2022. RELX was—and still is—the leading brand in China. During 2021–2022, net revenue of Fog Core Technology, RELX’s holding company, saw the impact of the new regulations, dropping from RMB8.5 billion to RMB5.3 billion, with a further decline in 2023 when revenues fell to RMB1.5 billion.”

    The new regulatory environment, which favors larger companies capable of meeting the complex technical requirements, has incentivized domestic brands toward seeking opportunities beyond national borders, Gorgni explains. “It’s only natural that leading domestic brands like RELX, Yooz and Moti are now also pivoting their focus toward international markets as a strategic move to diversify their product offerings and mitigate investment risks. At the same time, several Chinese manufacturers are relocating to Southeast Asian countries like Indonesia and Malaysia, making the most of the benefits of lower labor costs and more favorable trade tariffs, thereby enhancing their competitive edge in the global market.”

    More recently, RELX’s market share has declined as other, mostly compatible, pod brands are widely sold informally, mainly via online platforms such as WeChat, Douyin or Xiaohongshu, in flavors other than tobacco and flavored disposables. “The illegal or informal market has certainly expanded, especially due to the availability of flavored disposable vapes sold online at significantly lower prices than on vape or retail stores,” says Gorgni.

    China’s illicit vape market is significant yet challenging to accurately quantify. With the government intensifying its crackdown on e-cigarettes, physical sales have become increasingly difficult. “However, the online black market is flourishing, offering popular models such as the ‘bubble teacup’ or other designs featuring cartoons, typically coming in sweet flavors and large capacities,” says Gorgni. “Moreover, pods designed to be compatible with RELX devices, indistinguishable in design and available in over 20 flavors from various brands like VS, Yeeg and Zgar, can easily be purchased with just a conversation on WeChat. These vapes are then discreetly shipped to buyers through common mail, a practice that has become widespread with the rise of e-commerce platforms like Taobao. Some vape shops surveyed by ECigIntelligence have also started adapting to this situation, acknowledging that a portion of their customer base prefers to have their purchases mailed to them given the inconvenience of visiting physical stores.”

    Focus on Exports

    Offline enforcement of e-cigarette sales regulations is stringent, according to Gorgni. “Conversations with the Electronic Cigarette Chamber of Commerce, which represents over 650 manufacturers in Shenzhen, have revealed there will be an increase in government crackdowns over the next four months. This enhanced enforcement aims to limit the growing illegal market for vaping products in China,” she says.

    Many retailers have already gone out of business following implementation of the ECMM. Prior to the regulations, the market was flooded with a vast number of specialist and generic e-cigarette retail points, with approximately 190,000 retail stores and 47,500 specialist vape retailers operating across the country, according to Gorgni. “After the new regulations, which required retailers to get authorization to sell e-cigarettes, took effect, the number of specialist retail points plunged to under 15,000, signaling a significant shift in the industry landscape,” she says.

    “Retail stores can now apply either for a license to sell e-cigarettes or traditional tobacco, incentivizing retail chains and supermarkets to play safe and possibly to maintain combustible cigarette sales. In 2022, a survey carried by ECigIntelligence showed that more than 70 percent of legal e-cigarette retailers faced financial challenges, with less than 10 percent remaining profitable.”

    Online, enforcing the new rules proves more challenging. “Sellers skillfully navigate the digital landscape by continuously opening new accounts, using alternative terms in posts and comments to avoid direct references to e-cigarettes, and engaging with potential customers through comments on popular videos and posts,” says Gorgni. “This method of operating under the radar complicates efforts to monitor and control the online sale of e-cigarettes, underscoring the complexities involved in regulating the digital aspect of the vaping market.”

    The regulatory measures were introduced in accordance with the country’s “Healthy China 2030 Plan,” which was released in 2016 and calls for a comprehensive strengthening of tobacco control to reduce the smoking rate to 20 percent among adults over the age of 15 by 2030. So far, progress remains slow. According to Gorgni, more than 25 percent of Chinese aged 18 and over were smokers in 2022, with men making up more than half of the smoking population. “With the focus on regulating e-cigarettes more strictly and limiting the availability of flavored vapes, consumers who previously turned to vaping as an alternative to smoking may revert to traditional cigarettes. It is expected that smoking rates may stabilize or even increase slightly,” she says.

    With the increasing focus on exports and the growth of the global vape market, Chinese vape manufacturers will likely continue to prioritize overseas markets due to the challenges and restrictions in their own domestic market. “The export volume of disposable vapes has been rapidly increasing, proving a shift toward international markets,” says Gorgni. “Enforcement being done by governments, like the U.S., is vital to avoid their population accessing low-quality vapes and eventually suffering the consequences. The STMA is aware of this situation and has made its regulations accordingly. Western governments should make use of this and improve communication with its Chinese counterparts to curb contraband practices and protect their own population.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Driving Transformation

    Driving Transformation

    Photos: BAT

    BAT’S new U.K. Innovation Center demonstrates the company’s commitment to become a predominantly smokeless business.

    By George Gay

    Is BAT edging into the field of transhumanism, specifically democratic transhumanism? This thought struck me when, during an introductory presentation ahead of a tour of BAT’s new U.K. Innovation Center in Southampton, the company’s director of research and science, James Murphy, described the range of BAT products now on offer, a seven-category range that transcends nicotine to include well-being and stimulation products.

    Using science, technology and innovation to take human beings to the next level is, of course, a rough definition of transhumanism, and doing so with a product that can be afforded by most people would put this project into the realm of democratic transhumanism. Certainly, such speculation is not at odds with BAT’s stated aim of creating “A Better Tomorrow.”

    On a more practical level, what to me was most significant about the Innovation Center and the research and development site within which it sits was the ambition on display. Hundreds of specialists are working there on prototype smokeless tobacco and nicotine products, on scientific research to determine the relative risk of using such products compared to smoking cigarettes and on building capabilities beyond nicotine. This is tobacco harm reduction (THR) plus—writ large.

    Doing Good and Making Money

    Of course, a lot of people opposed to or unconvinced of the benefits of THR claim that the major tobacco companies are only in business to turn a handsome profit and don’t care about the harm they cause nor about reducing it. And it is true that these companies are hugely profitable. Murphy mentioned that BAT had reported revenues of just over £27 billion ($33.93 billion) and profits of about £12.5 billion in its latest full-year results. But what seems to get lost in this argument is that it is possible to do good while making a handsome profit: one only need look at pharmaceutical companies to realize this is true. Indeed, perhaps it is necessary to make such profits because the investments needed to reinvent an industry, which is what is happening in respect of the tobacco industry, are not inconsiderable.

    That BAT is reinventing its business can be seen from the fact that of the just-over £27 billion in revenue the company earned, £3.5 billion came from its new category business. Again, the cynics will point out that the new category business made up only a relatively small part of the overall business. And again, this is true, but that reading of the situation needs some grounding. BAT launched its first new category product only in 2013, so while it has been manufacturing traditional tobacco products and people have been consuming those products for more than 100 years, it has been offering new category products for just over 10 years. Additionally, while combustible tobacco products are on sale universally, because regulatory climates vary around the world, the sale of reduced-risk, noncombustible products is allowed only on about 55 percent to 60 percent of markets, something that Murphy chalked up as one of the challenges BAT faced. How, he wondered aloud, could more regulators be encouraged to embrace THR?

    Unfortunately, if the February Conference of the Parties (COP10) to the World Health Organization Framework Convention on Tobacco Control (FCTC) (see “Doubling Down on Failure,” page 12) is anything to go by, the answer to Murphy’s question must be, “with difficulty.” Apparently, the Global Alliance on Tobacco Control, previously known as the Framework Convention Alliance, used COP10 to hand its “Dirty Ashtray” award to the Philippines for having had the temerity to promote THR.

    And while the intellectual debate around THR bumps along the bottom in this way, there seems little hope of quickly expanding the number of markets where regulated THR products are made available. Not surprisingly, the WHO holds sway in many countries, especially those that find it difficult to fund independent health research.

    The investment in the Southampton facility follows the opening of BAT’s Innovation Centers in Italy and China.

    The Promise of New Products

    This is all very sad because those who call the FCTC shots refuse to engage with the tobacco industry even though the industry has much to say that is informed and interesting to anybody concerned with reducing the harm caused by cigarette smoking. And one industry voice worth listening to is that of Elaine Round, a geneticist who is head of the global life sciences team at Southampton, where she has been for two years on an international assignment for U.S.-based R.J. Reynolds, which BAT bought in 2017.

    Alongside Murphy, Round took part in the introductory presentation to a group of journalists, and it soon became clear that while she was involved in the THR quest in a scientific capacity, she also had skin in the game. Before describing some of the results of the emissions and toxicology tests that BAT carries out on its three main reduced-risk products, Round mentioned that she had joined Reynolds in 2008 when she saw a job description that indicated the company was making efforts around harm reduction. At that time, she said, people in her family smoked, and she wanted to make sure they had options to use reduced-risk products if they were unwilling to quit.

    That timeline, which suggests that the tobacco industry has been concerned with THR for longer than most people realize, probably needs some explanation. Reynolds was in the vanguard of the quest for reduced-risk products and, as far as I am aware, was the first company to produce a heated-tobacco product (HTP). That product, which was different from the HTPs available today and which, for various reasons, was commercially unsuccessful, nevertheless provided a spark that was later to be reignited.

    The three main reduced-risk products described by Round comprised the vaping device Vuse, the HTP Glo and the oral nicotine pouch Velo, for which BAT scientists have published respectively 81, 85 and 25 peer-reviewed studies. Vuse delivered toxicant levels 99 percent lower than those of a combustible cigarette, Round said, while Glo delivered toxicant levels 90 percent to 95 percent lower, and Velo delivered toxicant levels 99 percent lower compared with those of cigarette smoke.

    Velo nicotine pouches must comprise one of the most interesting reduced-risk products to emerge in recent years because they produce toxicant levels down even on those of snus, an oral product that has been credited with helping to reduce the smoking rate in Sweden to around 5 percent and having thereby sent lung cancer rates in that country crashing. Indeed, nicotine pouches sit comfortably alongside nicotine-replacement therapy products on the continuum of risk and are perhaps the most environmentally friendly of all the reduced-risk products being used to assist smokers to move away from cigarettes. It is not surprising, therefore, that BAT has demonstrated its confidence in this product by including in its Innovation Center a nicotine pouch pilot plant that allows researchers to go from concept to trial product in an hour.

    At BAT’s Southampton Innovation Center, specialists are working on prototype smokeless tobacco and nicotine products, on scientific research to determine the relative risk of such products compared to smoking cigarettes and on building capabilities beyond nicotine.

    Supporting the Mission

    Officially opened on March 7 in the presence of BAT’s entire management board, the Innovation Center is housed within BAT’s Southampton research and development facility, which has been in operation since 1956 on a site occupied by the company for more than 100 years. In a press note, BAT said the £30 million investment in the Innovation Center would support its mission to become a predominantly smokeless business in which 50 percent of its revenue was derived from noncombustibles by 2035.

    The group of journalists, of which I was one, was given, on March 8, a tour of the Innovation Center, entering by way of a vast atrium that put me in mind of going to school in a finger-concealing blazer with the words of my mother ringing in my ears, “you’ll soon grow into it.” Clearly, bigger and better things will be happening there in the years to come. Some of the Innovation Center was off limits because of commercial sensitivities, and we passed various spaces that were yet to be occupied. But we were taken into a large flavors laboratory, which is likely to be at the forefront of the battle to keep reduced-risk products appealing to adult consumers while complying with the seemingly inevitable restrictions imposed by regulators fearful of these products being used by those underaged. Overlooking the working, clean-space, nicotine-pouch pilot plant from a room above and adjacent to it was a highlight of the tour, but I was amazed, too, at the large number of specialists working at computers on new product design, until it was pointed out to me that products must be customized to a certain extent to meet the regulatory requirements and consumer preferences of many different markets.

    The Innovation Center provides nine specially designed technical spaces to aid the development of BAT’s portfolio of new category products. “These spaces are dedicated to research for modern oral nicotine pouches, for liquids and flavor for vapor products, for heated products and for well-being and stimulation beyond nicotine,” the press note said. “The investment will also support work on packaging, engineering, innovation development and system integration ….

    “The new facilities will bring together cross-functional and key R&D teams—with 400 highly specialized scientists and engineers, drawn from a range of fields, including biotechnology and clinical trials. These teams will accelerate the development of the next generation of BAT’s new category products and provide the robust evidence necessary to encourage adult smokers to switch to less risky alternatives, backed by science.”

    The inclusion of a nicotine pouch pilot plant at the Innovation Center demonstrates BAT’s confidence in the product category.

    A Positive Path

    Meanwhile, BAT said it had more than 1,600 specialists spread across the U.K., the U.S., Brazil, Indonesia, Malaysia and China. “The £30 million investment in the Southampton facility follows the opening of BAT’s Innovation Centers in Trieste, Italy, in 2021 and in Shenzhen, China, in 2022, and an investment of £300 million a year in R&D to develop new category products and establish substantiation of their reduced-risk potential,” the company said.

    This summary of the totality of BAT’s investment in R&D is significant because it gives an indication of the capability uplift the company has had to bring about within its ranks during a relatively short time and therefore its commitment to THR and, more latterly, well-being products. In 1956, and for a long time afterward, the R&D carried out at Southampton would have involved mostly scientists working with tobacco while in recent years, it has had to venture into fields formerly far beyond its comfort zone, so it has had to recruit, for instance, software engineers, formulation chemists and flavorists.

    I started this piece by speculating about whether BAT was venturing into transhumanism. That was a bit of a stretch, but it is worth noting that the company, at Southampton and its other Innovation Centers, is carrying on in a specialist field the humanist project that stretches back to the Enlightenment and the use of scientific methods to better understand the world and the place of humans within it. The cynics will point out that the Enlightenment journey has not always wound up in good places, and, again, this is true, but I cannot see how anybody could argue that the general direction of travel has not been hugely positive. Science-led THR, properly applied, follows in that direction.

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • Doubling Down on Failure

    Doubling Down on Failure

    Photo: v-a-butenkov

    The FCTC COPs comprise a counterproductive, environment-busting waste of time and money.

    By George Gay

    If COP10 proved one thing, it is that there should be no COP11.

    The continuing existence of the Conference of the Parties (COP) to the World Health Organization Framework Convention on Tobacco Control (FCTC), which is seemingly controlled by a coterie of authoritarian, publicity-shy, self-appointed morality overseers and to which supposedly sovereign governments humbly send their delegates to worship at the altar of the FCTC Secretariat, is an affront to the environment and to the taxpayers who part fund these COP affairs and whose taxes could be better spent feeding and otherwise providing for people currently in desperate need.

    From the information that seeps out, everything that gets done at these secretive affairs could be done through emails and the odd telephone call. It seems unconscionable, verging on suicidal, that, with 2023 having marked the first time that every day within a year, the temperature exceeded 1 degree Celsius above the 1850–1900 preindustrial level, with close to 50 percent of days 1.5 degrees above and two days in November, for the first time, more than 2 degrees above,* more than 1,000 COP delegates should kick off 2024 by flying to Panama supposedly as part of a health initiative. This was insanity on stilts.

    I asked the organizers what the carbon footprint of the event was, but answer came there none, so one must assume that while the secretariat likes to interest itself in the environmental impact of tobacco, it is unconcerned about keeping its own house in order. In other words, it is safe to assume that COP10 was a totally avoidable environmental disaster waved through so a few people could carry forward a vanity project aimed at their trying to interfere with the lifestyle choices of smokers.

    Why should the diktats dreamed up by a tiny clique of would-be tobacco prohibitionists and lifestyle controllers be allowed to affect the choices of 1 billion adult smokers?

    Limiting Choices and Threatening Livelihoods

    Why should the diktats dreamed up by a tiny clique of would-be tobacco prohibitionists and lifestyle controllers be allowed to affect the choices of 1 billion adult smokers? Why should they be allowed to threaten the livelihoods of millions of tobacco growers, their families and those who work for tobacco companies and allied businesses?

    The futility of COP10 was nicely, though unintentionally, summed up by one of the European Union delegates when, in his three-minute introductory slot, he said that the EU had been at the forefront of tobacco control and a driving force in negotiating the FCTC and its protocols, now an important component of the 2030 agenda for Sustainable Development (SD). Then, without offering any reason or apportioning any blame, he said that at the midway point of the 2030 SD agenda, 85 percent of the SD goals were off track and that nearly a third of the targets were in regression. Turning to the home front, he said that despite the introduction of tobacco control legislation and policies, smoking rates in the EU remained high, again without questioning why this might be the case.

    Meanwhile, seemingly oblivious to the failures he had described, the delegate started to sum up by talking of the need to redouble joint efforts by saying that the EU remained fully committed to the FCTC and adding that by working together during the conference, delegates could take a step forward in their global tobacco control agenda. At first, I thought the delegate had taken as advice Walt Kelly’s put-down, “having lost sight of our objectives, we redoubled our efforts.” But then I realized this was not true because whereas I had assumed the main objective was to encourage people to quit tobacco smoking, the EU delegate’s objective was seemingly to implement WHO measures whether they worked or not.

    He finished by saying, “Together, we can deliver sustainable progress and pave the way for a tobacco-free world where people can enjoy healthy lives with no one left behind.” Here we were into Candide territory where everything is for the best in the best of all possible worlds. Fortunately, the Ukraine delegate was there to remind delegates that this was not the best of all possible worlds and that tobacco consumption goes up when people are under stress, especially when they are constantly under the threat of death because their territory has been invaded by the forces of another country.

    Whereas I had assumed the main objective was to encourage people to quit tobacco smoking, the EU delegate’s objective was seemingly to implement WHO measures whether they worked or not.

    No Progress Without Change

    Do the WHO and the delegates at these affairs really believe that by trying to force people to give up tobacco smoking, they will ensure everybody leads a healthy life, with no one left behind? What about the many people around the world daily facing rape, torture and violent death by invading forces or simply at the hands of their own less than benevolent governments? Will the multitudes afflicted by under-reported starvation, with their dying words, thank the delegates for saving them from the ills of tobacco? Will those vulnerable people deeply afraid of the arrival, on the WHO’s watch, of the next pandemic, offer thanks for being protected from a lifestyle choice they can protect themselves from? And do these delegates think that when we are all standing knee-deep in water following environmental breakdown, we shall thank them for removing the temptation of smoking, if for no other reason than because the matches would be too damp to light our tobacco? If they do, they need to get out more.

    And they need to mend their bullying ways. One of the main reasons why there should be no COP11 is down to the disrespectful way the COP10 affair treated the Philippines. Apparently, the Global Alliance on Tobacco Control (GATC), previously known as the Framework Convention Alliance, in a puerile intervention in what should have been an adult debate, handed the country the GATC’s pathetic “Dirty Ashtray” award for having the temerity to promote tobacco harm reduction (THR). The Philippines is a sovereign democracy that decided after robust debate that the health of its people could be aided by allowing smokers access to safer alternatives to combustible cigarettes. It should continue along that path unless it, and it alone, decides otherwise. Its decisions should not be brought into question by a gaggle of anti-tobacco organizations whose existence is dependent on the continuing health of the tobacco industry but that is threatened by the rise of THR.

    Indeed, the FCTC Secretariat and the GATC should, in any properly run debate, recuse themselves when matters of THR are raised since they could be seen as having a vested interest in not wanting the tobacco industry, especially the cigarette industry, to be fatally undermined—rather than suffering the flesh wounds the FCTC is able to inflict. That this is the case is supported by the existence of the COP byproduct, the Meeting of the Parties (MOP3, as it was in Panama) to the Protocol to Eliminate Illicit Trade in Tobacco Products, whose love affair with “track-and-trace” systems is aimed at ensuring tobacco manufacturing businesses retain their customers.

    The best reaction to the GATC’s intervention would be for all nations that are committed to THR to withdraw from the FCTC, which is not going to change its ideology. And without change, there can be no progress.

    But for all COP10’s faults, I cannot help wondering whether hypocrisy isn’t the very worst. I would suggest that a significant proportion of the more than 1,000 delegates and officials who attended the Panama affair drink alcohol. And I would further suggest that a good proportion of those are addicted, or regular drinkers, some of whom might be “problem drinkers.” How, I wonder, do these drinkers manage to take the moral high ground and condemn smokers? Do they have to stand on their empties? Isn’t that a little unstable? Or perhaps they are used to such balancing acts. Perhaps they are used to using just one eye to examine the damage done to individuals by their smoking while shutting the one that might focus on the even greater damage done to populations and societies at large by drinking. Sadly, I doubt that many have the level of self-awareness that would encourage them to engage with such issues. They exist in a closed world of self-righteous indignation.

    Although that is not the way the secretariat sees things. COP10 headlined a post-conference press note with possibly the longest heading ever written: “COP10 adopted historic decisions to protect the environment from the harms of tobacco and to address cross-border tobacco advertising, promotion and sponsorship and the depiction of tobacco in entertainment media.”

    How any of the above warrants the epithet “historic” is beyond me. The idea that what went on in Panama Feb. 5–10 should be regarded as famous or important in history is simply laughable. From what has emerged, COP10 was just another case of the same people using a lot of words to say the same things as they have said in the past. The only way that COP10 could write itself into the history books would be to do the decent thing and write FCTC COPs out of history.

    Shrouded in Secrecy

    How do I know that the same people said the same things? I don’t; I’m guessing; I have to guess. WHO COPs are conducted along the lines of secret society meetings by people supposedly so frightened that anybody should learn of the lack of intellectual rigor guiding their processes that delegates are required to go through a type of omerta ceremony, though, bizarrely, they seem to refer to it as the application of Chatham House Rules. Journalists and anybody with an independent mindset are not allowed to enter the hallowed halls of the conference.

    Or are they? According to the press note with the longest heading, “COP10 was open to the media ….” But this does not chime with report after report by journalists and other interested parties who have complained about not being granted accreditation at any of the FCTC COPs due to a standard FCTC cop-out. One of the best brief reports on COP10 that I read was by Nick Powell for EU Reporter, who wrote, “Like many journalists, I was refused accreditation, but that made little difference as the conference voted to exclude the press.”

    It is difficult to square these two takes on the situation. I did ask the organizers of the event about this, but answer came there none. All I can go on is that the overwhelming evidence points to the fact that Powell is correct. And this is probably admitted in the full sentence in the press note with the longest heading: “COP10 was open to the media, which had the opportunity to observe all public and open sessions, enabling reporters to witness more than 1,000 delegates from around the world unite over six days to consider and take action on important issues related to implementation of the convention.” It seems that this was obfuscation because there were few “public” or “open” sessions. I must admit that they had me fooled there for a minute, but then I thought that press notes, even those with the longest headings, were supposed to inform, not mislead.

    Silly me. Health Policy Watch (HPW), obviously having read another post-event press note, quoted the WHO as saying: “Globally, some 200,000 hectares of land are cleared every year for tobacco cultivation, accounting for up to 20 percent of the annual increase in greenhouse gasses (GHGs).” But, as HPW pointed out, the WHO “failed to explain the source for the GHG estimate.”

    And it could do with explaining something else. This is from the thoughtful COP10 conclusions of the International Tobacco Growers’ Association (ITGA): “ITGA, as the global tobacco growers’ representatives, observes with concern the impunity applied to using arguments against tobacco farming without providing reliable data. A fresh example is the WHO FCTC claim that 200,000 hectares of land are being cleared every year to grow tobacco when in fact, the harvested area of tobacco has consistently declined in the last decade.”

    COP10 was just another case of the same people using a lot of words to say the same things as they have said in the past.

    Avoiding Harm Reduction

    But let me go back to Powell’s piece because it contained something else most interesting. He immediately followed the sentence quoted above with one saying: “That was shortly after the organizers cut off the microphone of a delegate who had the temerity to suggest that the priority should be harm reduction.” Of course, this incident makes a mockery of the statement in the press note with the longest heading that is quoted above as saying 1,000 delegates from around the world were united over six days. Clearly, they were not united. Questions around THR and less risky alternatives to combustible cigarettes had to be kicked down the road.

    Powell did not say which delegate was cut off so rudely, and I can imagine there might be any number who would have wanted to make the point about THR, including those from the Philippines, of course, but I do know the U.K. delegation was supposed to make such an intervention. A meeting in the U.K.’s Houses of Parliament on Jan. 18 was told by Dame Andrea Leadsom, the parliamentary undersecretary of state for health and social care, that the U.K. delegation to COP10 would put forward its position that vapes comprised an important tool for helping adults quit tobacco smoking.

    Leadsom was speaking during a backbench debate organized by Member of Parliament Andrew Lewer and aimed at uncovering what stance the government would take at COP10. Lewer, and others who spoke during the debate, were concerned that COP10 might resolve to establish equivalence in the regulation of combustible cigarettes and reduced-risk products, thus undermining the U.K.’s successful strategy of using vapes to help smokers quit their habit. Concern was expressed during the debate also about the fact that though the U.K. was a major contributor to the FCTC, it seemed diffident in its approach to tobacco COPs.

    If backbenchers were hoping for a robust stance by the U.K. this time around, they must have been disappointed, at least in respect of the three-minute introductory presentation by the U.K. delegate, who did not mention THR and whose reference to vapes was confined to saying how the U.K. was concentrating on reducing the appeal of these products to children. I could not see whether she tugged her forelock when she declared commitment to the FCTC.

    What a contrast to the New Zealand delegate’s brilliantly measured presentation where she spoke of the country’s pride in reaching tobacco control milestones and coming close to its goal of reducing the incidence of smoking below 5 percent. This had been achieved, she added, through a mix of FCTC-endorsed measures and the considered implementation of evidence-based harm reduction measures, including making available to smokers a range of nicotine-replacement products.

    The question is, why should these pointless events continue. Most governments run by sentient creatures must know that FCTC COPs comprise a counterproductive, environment-busting waste of time and money. Safer alternative products can replace combustible cigarettes within a reasonable time. All that is needed is for those governments to apply and enforce consistent, light-touch but effective regulation to these products, ensure that messaging about them aimed at consumers is accurate, clear and consistent, and then sit back and let the private sector do the rest.

    The FCTC has already ruled itself out of being a part of such a process.

    *Figures from the European Commission’s Copernicus project
    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • Taking Stock

    Taking Stock

    Image: blacksalmon

    Where are we with ESG?

    By Cheryl K. Olson

    It was once novel, even radical, to talk about making good environmental, social and governance (ESG) practices central to business and investment decisions. Today, ESG is literally front and center on the websites of major tobacco companies.

    Under the heading “Winning with ESG,” Turning Point Brands states, “We recognize that incorporating ESG into our business strategy will support our operating principles of winning with accountability, integrity and responsibility.” Altria has set up a Responsibility Progress Dashboard to track and manage ESG issues.

    Sustainability is now the trending term. Witness Philip Morris International’s Sustainability page, which begins, “For PMI, sustainability is more than just a means to minimize negative externalities and mitigate risks while maximizing operational efficiency and resource optimization.” At Universal Leaf, the first-listed “core belief” is “We believe in our responsibility to make a sustainable impact on our planet.”

    Whether ESG or sustainability, is something meaningful going on here for the nicotine product industry? What are the biggest concerns on the “E” side of things? Below are several perspectives.

    Investor Viewpoints

    Pieter Vorster, managing director at Idwala Research, focuses on tobacco harm reduction and industry transformation. When it comes to tobacco companies, says Vorster, investors may look at ESG from several angles. One is the Tobacco-Free Portfolios perspective, which assumes that there are no good tobacco companies, and all should be excluded from portfolios. Another approach, he says, is “to encourage companies to change, as with the oil industry, and invest in the least bad ones.”

    A third viewpoint looks more at process than product. Tobacco companies can end up in ESG portfolios via “good credentials on other measures like carbon footprint and water,” says Vorster. “BAT, for example, has been in the Dow Jones Sustainability Index for over 20 years.”

    Why the shift from ESG to sustainability? “From an investor perspective, the whole ESG movement is probably slowing,” Vorster says, because it’s no longer a differentiating factor. Rather, environmental and social consciousness is something that’s assumed by both investors and consumers.

    This is why he feels that measures of movement toward reduced-risk nicotine products, such as the Tobacco Transformation Index, can benefit industry. They can help companies stand out on another dimension of ESG. (More on this later.)

    “I think the sustainability label is a bit broader than ESG,” says Vorster. “For me, from an investor perspective, sustainable would be, how long can this business exist? How long can it grow?”

    “Ultimately, most investors care about performance,” Vorster says. “If a company’s environmental credentials are going to impede their share price performance, then they will care.”

    He adds, “That’s also why they care about tobacco companies transforming, because they want a more sustainable business long term. You know, it’s not good business if your products kill half your customers.”

    Investors care about tobacco companies transforming because they want a more sustainable business long term. You know, it’s not good business if your products kill half your customers.

    Pieter Vorster, managing director Idwala Research

    The Litter Issue

    When I was a child, environmental awareness meant “Keep America Beautiful” (KAB) campaigns, telling us “every litter bit hurts.” This included cigarette ends tossed from car windows. To my surprise, KAB is still going. Its website says that “cigarette butts account for 88 percent of litter four inches or smaller.”

    Concerns about cigarette litter have shifted from aesthetics to preventing chemical and plastic pollution. Cigarette filter waste was on the agenda this year at the 10th session of the Conference of the Parties (COP10) to the World Health Organization Framework Convention on Tobacco Control (FCTC). Citing a 2010 study, a COP10 news release says, “An estimated 4.5 trillion cigarette butts are thrown away annually worldwide, representing 1.69 billion pounds of toxic trash containing plastics.”

    Cigarette filters are also the focus of most research literature on tobacco and sustainability. A 2022 editorial in the journal Addiction on the environmental impact of tobacco products advocates banning the sale of filtered cigarettes, or having industry pay for cleanup. As an example of the latter, the writers point to a San Francisco “cigarette litter abatement fee,” which is currently $1.50 per pack, paid quarterly by local cigarette retailers.

    The European Union’s Single Use Plastics Directive has helped spur efforts to develop biodegradable filters. Experiments in recycling are underway, such as a project in Slovakia that plans to mix recycled cigarette filters into asphalt for surfacing roads.

    Sidelining of cigarettes by noncombustible alternatives should gradually reduce filter waste. What about litter issues with newer nicotine alternatives?

    “Next-generation, or reduced-risk, products were generally not a major source of concern on the environmental side until the rise in popularity of disposable vapes,” says Vorster. Waste from disposables is particularly difficult to address because so many are sold illicitly.

    The website of the U.K. Vaping Industry Association (UKVIA) criticizes the lack of interest in and resources for vape recycling from local councils. The UKVIA will host a webinar on April 15 to address the future of vape waste management.

    Concerns about e-cigarette waste have yet to catch fire (pardon the pun) in America. Sustainability is not listed among the “top issues” on the website of the Truth Initiative. Their brief 2023 report on “tobacco and the environment” mentions disposable e-cigarette waste and battery risks but zooms in on pollution and litter from cigarettes.

    David Sweanor, who chairs the advisory board of the Centre for Health Law, Policy and Ethics at the University of Ottawa, views this issue skeptically. “People look for something new to beat up nicotine companies on,” he says. “But your real concern isn’t about disposable e-cigarettes; it’s about batteries. Something less than 5 percent of household batteries sold in the U.S. are properly disposed of. So don’t throw it at the nicotine business or consumers.”

    During a visit to Finland, Sweanor happened upon a creative art installation that turned out to be a battery recycling station. “Because batteries are all different colors, as the container filled up, it’s a beautiful sculpture,” he recalls. “Whoever puts these in hockey arenas and shopping malls—why aren’t we doing things like that?”

    Waste from disposables is difficult to address because so many are sold illicitly. (Photo: Bennphoto)

    Concern About Carbon/Water Footprint

    Nowadays, we care less about “litterbugs” and more about carbon footprints. In her 2024 closing address to COP10, Adriana Blanco Marquizo, head of the FCTC Secretariat, emphasized environmental protection. She cited the “historic decision” to “take account of the environmental impacts arising from the cultivation, manufacture [and] consumption of tobacco products as well as the waste they create.”

    Six years ago, a groundbreaking report from Imperial College London turned attention from smoking’s health harms to the environmental harms from producing 6 trillion cigarettes per year. Researcher Maria Zafeiridou and colleagues looked at “resource needs, waste and emissions of the full cradle-to-grave life cycle of cigarettes” across the globe. As Imperial College’s news release noted, those 6 trillion cigarettes required 22,200 megatons of water, 5.3 million hectares of land, 62.2 petajoules of energy and 27.2 megatons of material resources.

    Synthetic nicotine maker Zanoprima Life Sciences recently released a report comparing the environmental impact (from the raw materials to the factory gate) of their laboratory-made nicotine and nicotine from plants. The report’s author, Eric Johnson of Atlantic Consulting of Zurich, routinely does life cycle assessments of products and services.

    “In some of the work I do, I know what the answer will be before I start,” says Johnson. “But I hadn’t looked at this issue closely.”

    Drawing on data used in the Imperial College study, Johnson found that tobacco-based nicotine (especially when fuel cured) had a substantially larger carbon footprint. Also, synthetic nicotine production doesn’t use up water.

    Johnson was struck by the size of the difference. “When it’s ‘this product has a 15 percent lower footprint than the other guy’s product,’ it’s hard to know,” he says. “But tobacco nicotine’s footprint is multiple times larger. Even with normal error and uncertainty, the result is solid.”

    Clearly, from an ESG standpoint, the big issue has to be that cigarettes are killing 8 million people a year. Not the carbon costs.

    David Sweanor, chair, advisory board of the Centre for Health Law, Policy and Ethics at the University of Ottawa

    What We Can’t Say

    As someone who makes his living as an investor, Sweanor views all of the above as relative trivialities. “Clearly, from an ESG standpoint, the big issue has to be that cigarettes are killing 8 million people a year,” he says. “Not the carbon costs.”

    A “good ESG” cigarette company would move aggressively into reduced-risk nicotine products. But that’s just the first step, says Sweanor. Such companies also have an ethical and legal responsibility to warn their customers.

    “If you’re selling products that are two or three orders of magnitude more hazardous than viable alternatives, you need to tell them. That’s basic ESG standards,” he says. “However, the laws in many countries, including the U.S. and Canada, make it illegal to do that.”

    Educating about and promoting reduced-risk products could create shareholder value and make it easier to hire good employees. “You’d also want to differentially price and have other incentives to nudge consumers toward the less hazardous nicotine products,” he adds. “But companies are precluded from doing all that.” Sweanor calls this “insane.”

    Recent surveys show that ever-fewer people, including those who smoke, think that noncombustible nicotine products are less hazardous than cigarettes. Sweanor imagined what health authorities would do if similar proportions of adults disbelieved that driving drunk increased car crashes. “They’d be totally freaking out and running a major campaign,” he says. “And probably force any companies involved to be part of that effort.”

    He stresses that this is out of industry’s hands. “The responsibility I would lay on the companies,” he concludes, “is that they are not making a big deal out of this.”

    ESG From the Inside

    I asked an industry insider, who’s had senior roles at several major companies, for their unvarnished anonymous view. “There is a lot of snark around the value of things like ESG,” they admitted. “I’ve heard it called ‘window dressing.’”

    They personally disagree with that view, noting that “unsexy” things like constant efforts to reduce manufacturing waste and water use get little publicity.

    “I’ve even heard THR (tobacco harm reduction) called window dressing. But I don’t think that’s true where I work,” they said. “We’d like to stay around for a long time, and we’ve got to do something very different to make that happen. And there is a real sense of pride about this transformation.”

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

    Citations

    Zafeiridou M et al. (2018). Cigarette smoking: An assessment of tobacco’s global environmental footprint across its entire supply chain. Environmental Science & Technology. https://pubs.acs.org/doi/10.1021/acs.est.8b01533

    Zanoprima Lifesciences Ltd. (2024). Carbon and water footprints of tobacco-based vs. synthetic nicotine. https://www.zanoprima.com/updates

    Truth Initiative (2024). Tobacco and the environment. https://truthinitiative.org/research-resources/harmful-effects-tobacco/tobacco-and-environment

    Morphett K et al. (2022). The environmental impact of tobacco products: Time to increase awareness and action. Addiction. https://onlinelibrary.wiley.com/doi/10.1111/add.16046

  • A Legacy of Leadership

    A Legacy of Leadership

    Image: HTGanzo

    Tobacco Reporterturns 150.

    By Mike Macdonald

    Impressionism was born in April 1874 when Monet, Renoir, Degas, Morisot, Pissaro, Sisley and Cezanne broke the rules and held their own art exhibition in Paris. Other notable events from the year included the establishment of the Universal Postal Union to coordinate international mail, the invention of the cylindrical QWERTY typewriter/keyboard, a patent for blue jeans with copper rivets by Levi Strauss (that sold for $13.50 per dozen) and the debut in Bombay of the first commercial horse-drawn carriage. Notable births that year included American philanthropist John D. Rockefeller, magician Harry Houdini, Italian inventor Guglielmo Marconi and British Prime Minister Winston Churchill.

    That year also marked the birth of Tobacco Reporter magazine, the leading source of industry information for, now officially, a century and a half. Technically, Tobacco Reporter began as the Western Tobacco Journal, a small, weekly newspaper published in Cincinnati, Ohio, for farmers growing burley tobacco along the Ohio River, but even then, it was the go-to source for industry information. Over time, manufacturers, processors, importers, exporters and most anybody interested in tobacco joined the growers in reading it. Before long, it was a full-fledged, monthly magazine shipped to more than 100 countries around the world, officially changing its name to Tobacco Reporter in 1966.

    How it started

    From the beginning, the award-winning magazine rode the waves of technology in publishing and was a stalwart of the tobacco industry, priding itself on obtaining the most pertinent information possible in person, firsthand. At TR’s birth, linotype (a typesetting machine that uses a keyboard instead of people doing it manually), zinc printing plates and web presses that used rolls of paper instead of individual sheets, were all brand-new inventions that made the printing process much quicker and more affordable. Progress over the decades came in the way of the mimeograph, film, monotype machines and eventually computers, and TR took advantage with each step. Today, TR remains dedicated to the printed page but also takes advantage of the technology offered by communicating information with digital editions, e-newsletters and a website that is voraciously fed each day. Whatever medium the reader preferred, TR always delivered.

    Issues in the early years offered practical advice and news written by growers for growers, but soon, professional journalists who were experts in the field (no pun intended) joined to set the standards that still top the industry to this day. A trip through TR’s archives is like reading a meticulously detailed history of the modern tobacco world, featuring companies, innovations, trends, growing reports and governmental news as well as the people who made it all happen.

    Riding the waves of technology, even then. (Photo: simonekesh)

    In 1980, Tobacco Reporter was sold from the Western Printing Co. to Specialized Agricultural Publications, and its headquarters was moved closer to the heart of the American tobacco scene, Raleigh, North Carolina. In his December 1980 editorial, associate publisher Peter Sangenito predicted, “With this merger, Tobacco Reporter will solidify its position, despite misleading and inaccurate statements made to the contrary by a competitive magazine, as the No. 1 international tobacco industry publication in the United States. We intend to hold—and expand—this position.”

    Forty-four years later, mission accomplished! Tobacco Reporter became the flagship of the company’s tobacco and nicotine division, surrounded by other titles such as Flue-Cured Tobacco Farmer, Burley Tobacco Farmer, Tobacco Farm Quarterly, Tobacconist, Pipes and Tobaccos, Cigars and Leasure and, most recently, Vapor Voice.

    Elise Rasmussen

    The first person hired after the move to North Carolina was a spirited young salesperson straight out of college by the name of Elise Ward (Rasmussen). The rest, as they say, is history. Elise not only remains with the company these many years later heading up global sales, but she is also the publisher of TR and one of the most recognizable characters in the industry, with too many accomplishments to count. She is only the second woman to serve as the master of the Worshipful Company of Tobacco Pipe Makers and Tobacco Blenders and is a serial founder, having launched or co-founded two other magazines, including TR’s sister publication, Vapor Voice, as well as Women in Tobacco, an organization with more than 500 members that has given voice and appreciation to the women within an industry once solely dominated by men.

    Elise’s biggest contribution to the industry’s intellectual discourse, however, has been the creation of the Global Tobacco and Nicotine Forum (GTNF). Since its inaugural gathering in Rio de Janeiro in 2008, the GTNF has evolved into the nicotine business’ single most important discussion forum, bringing together not only industry executives but also senior regulators, policymakers and public health advocates to reflect on the sector’s challenges and opportunities.

    Same talent but greater ambition

    In 1996, Taco Tuinstra joined TR, and, with true Dutch wit—that being, it doesn’t come along often, but when it does, it is gold—he quips that he’s not sure if serving as a magazine’s editor-in-chief for nearly three decades should be a source of pride or an indictment on his lack of ambition. Jokes aside, Taco is one of the most respected journalists in the industry and a true believer in getting the story firsthand. He has visited more than 80 countries, including destinations that even the most adventurous tourist would be awestricken by.

    Taco has been to not only North Korea and Latin America’s tri-border region but also, in 2003, to the lawless area straddling Pakistan and Afghanistan, the place where at the end of the 19th century, a nearly equally talented but considerably more ambitious correspondent honed his craft, reporting on—and at times participating in—Britain’s bloody campaign against Pashtun tribesmen. Unlike Winston Churchill (who was featured with his signature cigar on TR’s February 1965 cover), Taco did not lay siege to his hosts, electing to talk tobacco with them instead. In fact, his sources welcomed him by noting that he was the first Western visitor to arrive in the region unarmed since the Sept. 11 attacks on the United States.

    Rounding out the award-winning editorial team are George Gay, who, with his keen sense of observation and sharp wit, has become one of the most authoritative tobacco commentators since he started reporting on the business in 1982; Stefanie Rossel, who is widely respected for her deep industry knowledge; and assistant editor Timothy Donahue, who in his 11 years has become a recognized expert on the vapor business, scoring, among many other scoops, an exclusive interview with the inventor of the e-cigarette, Herbert Gilbert. 

    These roving reporters, who you will likely have met in your fields, factories and at trade exhibitions over the years, are supported by a committed team of professionals in our Raleigh office: Marissa Dean has been instrumental in the exponential growth of TR’s website and digital offerings while graphic designer Dan Kurtz, eagle-eyed copyeditor Kailyn Warpole and all-everything Karen Pace are instrumental behind the scenes. Our most recent hire, Will Rasmussen, has been a stalwart at GTNF events for years and now gives his mother much-needed assistance.

    In print, online – and in person; industry events such as TABEXPO became an important part of Tobacco Reporter’s portfolio. (Photo: Taco Tuinstra)

    Our current lineup fits into a long tradition of hiring top talent. What industry veteran will not remember Ann Jeffries, Colleen Williams, Noel Morris, Kay O’Neill, Chris Glass, Brandy Brinson and Ann Crumpler, to name just a few of the stars whose names have graced TR business cards over the years?

    Of all the evolutions we’ve seen in the publishing industry over these 150 years, most of the biggest changes have been triggered by how readers wanted to consume their information. The internet revolution driving everything online was clearly the biggest, but another popular trend came with in-person events. Trade shows became an important part of the business world, and many magazines in all industries began hosting them as a new way to engage with their readers, and TR was no exception. Too often, companies attended such events more out of obligation than desire, though, and sensing stress within the tobacco industry because of numerous small shows, TR owner Dayton Matlick and his staff set out to create the ultimate industry show, painstakingly traveling around the world and interviewing the stakeholders to see what they actually wanted, with the mantra that we serve ourselves best by serving our customers first. In 1994, TabExpo was born under the TR umbrella, and to this day is the “must-attend” trade show for the industry.

    Tobacco Reporter’s most recent chapter began in 2020 when it was purchased by TMA, a match that has propelled both organizations to new heights. Founded in 1915 as an industry trade association, TMA is a member-driven, nonprofit source of information and analysis that empowers ideas as well as assembles stakeholders to discuss and debate tobacco and nicotine matters. Together, TR and TMA have strengthened one another to the benefit of the industry, offering daily news, financial projections, market research, business insights, company profiles, governmental coverage, virtual seminars, in-person forums and the in-depth, long-form articles that have made the magazine the unquestioned leader in the industry for the last century and a half. It’s hard to believe, but now, under the leadership of TMA, the publication that has such a rich and impressive past has an even brighter future.

    Here’s to the next 150 years!

  • Turning Up the Heat

    Turning Up the Heat

    Photo: KKF

    Heated-tobacco products continue to gain momentum, although consumption patterns are shifting.

    By Stefanie Rossel

    Heated-tobacco products (HTPs) continue to make inroads worldwide. According to Euromonitor International, the market reached $35.2 billion in 2023, up from $31.5 billion in 2022. The company expects sales to grow to $40.6 billion in 2024. Expansion continues apace. At its 2023 Investor Day in September, Philip Morris International announced that it would launch its IQOS Iluma in four yet-to-be-named U.S. cities this year.

    With almost 30 million adult smokers, the U.S. is believed to offer significant opportunities for HTPs. Euromonitor projects the U.S. consumables market to reach 15.3 billion sticks by 2027. In its September 2023 financial estimate, PMI said it was aiming to capture 10 percent, or 18 billion units, of the U.S. combustible cigarette market within five years after an IQOS Iluma launch.

    “In value terms, HTP will be one of the fastest-growing legal RRP [reduced-risk product] categories,” says Shane MacGuill, Euromonitor’s head of nicotine and cannabis research. He bases his prediction on the experience of other markets where HTPs have been successful. “These are markets with a higher disposable income, a still relatively robust smoking population and strong affordability within the cigarette category, as IQOS is a premium product,” says MacGuill. “Manufacturers can communicate around tobacco and nicotine products, thus managing expectations around the HTP. Many of those factors apply in the U.S., but obviously in particular if PMI got modified-risk approval from the Food and Drug Administration; this would give them advantages for their messaging about IQOS.”

    MacGuill also sees potential for HTPs in the U.S. cannabis space. “We do see heated cannabis consumables that effectively target the IQOS device just beginning to emerge, although this is still a tiny aspect of the cannabis landscape,” he says.

    There is, however, a lack of consensus in the nicotine industry about the immediate future of HTPs in the U.S., according to MacGuill. “A major vape manufacturer we talked to said the HTP category would be almost nothing in the next five years because of regulatory issues, such as how long it will take to get premarket tobacco product application (PMTA) approval,” he says. “If you speak to peers of PMI, there are concerns that PMI could grow the category very significantly in the U.S., leaving no space in terms of revenue and recognition for everyone else.”

    Photo: vfhnb12

    Waiting for FDA Approval

    The upcoming launch will be PMI’s second attempt to establish IQOS in the U.S. In April 2019, the company assigned the exclusive commercialization rights of the brand to Altria, which then launched IQOS in Atlanta and Richmond with more than 100 dedicated salespeople. Heat sticks were sold in 500 stores. One-and-a-half years later, IQOS was available in Georgia, Virginia, North Carolina and South Carolina.

    However, plans for further commercialization were interrupted when the International Trade Commission (ITC) upheld a claim by BAT that IQOS products infringed two of its patents. In September 2021, the ITC issued an order preventing Philip Morris and Altria from importing and selling the infringing products, IQOS models 2.4, 3 and 3 Duo and their respective heat sticks.

    In July 2020, the U.S. Food and Drug Administration authorized PMI to make modified-risk claims for its IQOS model 2.4; in March 2022, it allowed modified-risk claims for the IQOS model 3. In October of that year, PMI agreed to pay Altria $2.7 billion to reclaim the U.S. commercialization rights for IQOS as of April 30, 2024.

    The dispute with BAT was solved only in February 2024, when PMI and BAT reached a global settlement resolving all ongoing patent infringement litigation between the parties related to the companies’ HTP and vapor products. Besides dismissing all pending patent infringement cases, the nonmonetary settlement also prevents future claims against current products.

    While the agreement includes a provision to request the lifting of the IQOS sales and import ban, PMI’s focus for the launch of IQOS in the U.S. will remain on its Iluma model, for which it submitted PMTAs and modified-risk tobacco product applications to the FDA in October 2023.

    However, PMI has scaled back its original launch plans in the meantime: At the 2024 CAGNY Consumer Conference in February, the company revealed that only one city test was planned in the second quarter of 2024, with a larger scale introduction postponed to the second half of 2025 or later. The decision can be explained with the FDA’s slow reviewing process. Product authorization is the prerequisite for major geographic expansion and an increase in commercial investment, but the FDA is struggling with a substantial backlog in product reviews (see “System Overload,” Tobacco Reporter, March 2023). According to Tobacco Insider, it could take 18 months to 24 months for IQOS Iluma, which comes with a fundamentally different heating system than its predecessors and contains numerous technological improvements, to get authorization. “Thereby, IQOS will have a meaningful presence in the USA (i.e., reaching to at least half of the U.S. smoker base) only in 2027 or later […],” the platform writes on its website.

    Nonetheless, PMI will enjoy a significant head start over its competitors. According to MacGuill, it will be important for BAT to enter this category in the U.S. as soon as possible. Globally, PMI estimated the number of IQOS users at approximately 28.6 million at the end of 2023, up by 3.7 million versus December 2022. BAT thinks there are about 8.8 million users of its Glo HTP device worldwide.

    Italy Catches Up

    With an estimated market value of $11.13 billion in 2023, according to Euromonitor, Japan remains by far the leading market for HTPs. But the market appears to have plateaued; its value is expected to reach $11.23 billion in 2024. A similar trend can be detected in South Korea, where the market value of HTPs climbed from $2.19 billion in 2022 to $2.24 billion last year. For 2024, the market is anticipated to be worth $2.45 billion. According to Euromonitor, in 2022, South Korea ranked third behind Italy in the global HTP league. In 2024, it is expected to fall to fourth place, behind Germany. Russia, too, is a large HTP market, but data has become elusive since that country invaded Ukraine. The most recent figures, presented at last year’s InterTabac exhibition in Dortmund, valued Russia’s HTP market at $3.2 billion.

    As Japan’s and South Korea’s HTP markets reach maturity, price competition is increasing, according to MacGuill. “Consumers are experimenting with other brands, trying other devices, while manufacturers are subsidizing devices,” he says. “It’s the natural circle of the mature market to have rapid growth and then a plateau. However, the trend for HTP markets in general is that growth is likely to return with triggers such as price. There is no ceiling.”

    The dynamics in Italy are similar, according to MacGuill. Its HTP market value has grown from $4.07 billion in 2022 to an estimated $5.18 billion last year and is expected to reach $6.51 billion in 2024, boosted by an increasing offer of devices at lower price ranges that drive product adoption. As in Germany, where the retail value of HTPs has increased from $1.96 billion in 2022 to an estimated $2.47 billion in 2023 and is anticipated to reach $2.98 billion this year, MacGuill expects the Italian HTP market to continue to grow, albeit at a slower pace than in Japan when IQOS first hit the market 10 years ago. In Japan, HTPs benefited from higher consumer incomes and consumers’ general enthusiasm for new products, among other factors. “In the two European countries, we don’t have that combination in the same way,” says MacGuill. Italy, he says, was also increasing cigarette taxes at the time when HTPs were introduced.

    Globally, the HTP category is characterized by geographical diversification and an intensification of use. “Frequency of consumption plays an important role,” says McGuill. “In most markets, daily users represent the biggest proportion of consumers. In Italy, 73 percent of cigarette consumers smoke daily whereas 67 percent use HTPs, which is close and experiences volume progression. When there is a lot of experimentation, such as use on a weekly basis, then this will have a magnifying effect on volumes.”

    Most notably, geographical expansion is expected in Jordan, Lebanon, Egypt and Singapore. “The further down the average income table, the softer the potential for HTPs gets—also the further east you go,” says McGuill. “Here, technology development that gets the price down for HTPs is needed. In these regions of the world, affordability will be the main driver.”

    Opening Up New Possibilities

    Regarding regulation of HTPs, MacGuill expects an alignment with the cigarette category in many markets, particularly in terms of public consumption restrictions and excise tax. This, he says, will bring the price of heat sticks closer to that of cigarettes, dulling the incentive to switch.

    Herbal consumables will be an interesting segment. “It allows manufacturers to avoid the excise and regulatory hurdles,” says MacGuill. “However, regulators will move much more quickly and follow through with regulation and action. And herbal sticks could become a victim of their own success as there’s only so much rooibos tea in the world. So the security of supply might become questionable in some markets.”

    Herbal consumables democratize the category, according to MacGuill, because small manufacturers won’t have to compete with the established players for leaf tobacco. “We already see smaller brands in the space with apparent success,” he says. “The segment won’t go anywhere near a point where it’s as fragmented as the vape market, but it will be interesting to see whether the tobacco industry will push for some regulation because they want responsible players and not what we have seen in disposable vapes.”

    For tobacco companies, herbal heat sticks may pave the way for products in other areas, such as cannabis. “For BAT, for instance, which owns cannabis supplier Organigram, the next logical step could be to sell heated cannabinoid or CBD products,” says MacGuill.

    He is doubtful, however, that manufacturers would provide a combined nicotine-cannabis product. “From a regulatory perspective, manufacturers are quite keen to keep these two spaces apart,” he says.

    New heating technologies for devices, MacGuill stresses, will be successful only if they offer consumers a benefit. “This could be a meaningful difference to user experience, enhanced efficacy of the product or increased harm reduction at the higher end of the market, or a technology that drives down price at the lower end,” he says.

    The most pressing task for public health and manufacturers alike, he concludes, will be to make HTPs more accessible to consumers in low-income and middle-income countries. Home to the lion’s share of the world’s smokers, it is in these markets that lower risk nicotine products can make the greatest contribution to reducing the public health impacts of smoking.

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Mediocre Meeting

    Mediocre Meeting

    Image: Aleksandr Baiduk

    COP10 is unlikely to significantly accelerate progress toward the FCTC objectives.

    By Stefanie Rossel

    The scene could have been from a Monty Python movie. During the 10th session of the Conference of the Parties (COP10) to the World Health Organization Framework Convention on Tobacco Control (FCTC), authorities raided four hotels hosting tobacco harm reduction (THR) advocates, investigating reports of “T-shirts and pamphlets advertising harmful products,” according to Martin Cullip, International Fellow at the Taxpayers Protection Alliance’s (TPA) Consumer Center.

    “These turned out to be clothes worn by consumer advocates bearing their organization’s name and flyers politely addressing COP10 delegates and asking them to consider harm reduction,” he says. “It is shameful that Panama considers materials expressing the right to free speech and democratic engagement to be a criminal matter.”

    Concurrent with COP10, Cullip co-organized the TPA’s “Good COP” (“Conference of the People”) counter-conference at the Central Hotel Panama. The event was livestreamed and featured almost two dozen tobacco harm reduction experts representing 14 different countries. With their presentations, they said that they were holding the WHO accountable for denying “lifesaving access to tobacco harm reduction products” and denying the public and media access to the COP meetings.

    “We know that the WHO were aware of our event as it was mentioned in webinars by Corporate Accountability, the University of Bath and the Network for Accountability of Tobacco Transnationals,” says Cullip. “It is also included in a page on COP10 interference at Tobacco Tactics [a knowledge exchange platform monitoring the tobacco industry’s activities]. One purpose of the event was to get the WHO’s attention, so we are thrilled to have achieved that. There were no attempts to stop our event, but we were visited by an inquisitive group from Vital Strategies, and a couple of delegates ventured away from the conference to have a snoop around our hotel.”

    While the “Good COP” organizers did not interact with any COP10 delegates, consumer representatives who attempted to go to the Convention Center in the hope of having a discussion were stopped. “Journalists approached WHO front groups ‘protesting’ outside the building but were told that only FCTC-accredited media would be spoken to,” says Cullip.

    Another Private Function

    Stakeholders such as consumers and tobacco growers struggled to be heard in Panama. (Pamphlet courtesy of Martin Cullip)

    COP10 was business as usual in many ways. As in past events, the conference managed to maintain its secrecy. Media representatives were cherry-picked in an accreditation process that denied access to anyone who doesn’t share the WHO’s idea of tobacco control. But even the Chosen Ones were thrown out after the delegates voted on Day 1 to exclude the press. Nongovernmental organizations (NGOs) wishing to take part had to pass a similar test of faith while consumers who have successfully quit smoking with the help of reduced-risk products were banned from sharing their experiences.

    The absence of dissenting voices allowed delegates to spread misinformation uncontested, as in the estimate of the area of land cleared for tobacco cultivation every year. It also allowed them to shame states for THR-friendly policies. The Philippines, for example, received an “Ashtray Award” for its “brazen use of tobacco industry tactics of obstinate dispute and delay throughout the COP.” Without outside scrutiny, the delegates could also conveniently ignore scientific evidence from studies not commissioned by the WHO or its financial supporters led by Bloomberg Philanthropies.

    In such a climate, only a few delegations had the courage to use the short progress statements during the opening plenary to discuss their countries’ positive experience with novel nicotine products. New Zealand was the only party to point out how the implementation of a differentiated, evidence-based regulatory framework that includes reduced-risk products (RRPs) had contributed to significantly reduced daily smoking rates.

    Most other country statements were disappointing, according to Cullip. “Canada made no mention whatsoever of harm reduction, and the U.K. were too timid to even mention the ‘Swap to Stop’ campaign, which is a central plank of the U.K.’s efforts toward the country’s Smoke-Free 2030 goal and is always mentioned in parliamentary question answers on the subject,” he says. “One can only assume they were scared of upsetting the FCTC Secretariat, so they chose not to rock the boat. There is also a suspicion that the U.K. announced its ban on disposable vapes, plain packaging and restrictions on flavors just a week before deliberately so they would be looked on favorably by the WHO.”

    Armenia, El Salvador, Guatemala and the Philippines were among the few parties to mention THR at the conference. They called for a serious and evidence-based discourse on novel tobacco products, stressing the need to consider alternative methods of reducing the health impacts of smoking. The Philippines, whose regulatory framework has recognized the role of RRPs since 2022, cited FCTC Article 1(d), which stipulates that harm reduction is one of the pillars of tobacco control.

    “There were signs at COP10 that some countries are softening on harm reduction, and quite a few made country statements referring to THR or voicing the opinion that the WHO should recognize the potential,” says Cullip. “During the proceedings, some parties also questioned the quality of reports presented by the FCTC for COP10. I had the impression that some delegations realize that the genie is out of the bottle on reduced-risk nicotine products and [that] it’s best to recognize that and accommodate them in tobacco control policies instead of banning them, which is unrealistic and futile.”

    There were signs at COP10 that some countries are softening on harm reduction, and quite a few made country statements referring to THR or voicing the opinion that the WHO should recognize the potential.

    Martin Cullip, International Fellow at the Taxpayers Protection Alliance’s Consumer Center

    Debate Postponed

    In line with the agenda, COP10 delegates debated novel nicotine products but without making decisions. Discussion on FCTC Articles 9 and 10, which deal with the testing and measuring of tobacco products’ contents and emissions, and the disclosure of such information, went on for the full length of the conference without achieving consensus. Cullip views this as a positive development. “It is good for consumers and public health that the wild proposals contained in COP10 reports on Article 9 and [Article] 10 did not gain any traction at COP10,” he says.

    St. Kitts and Nevis urged the FCTC Secretariat to form a working group to discuss harm reduction and to define it under the terms of Article 1(d). “This is the first time that any meaningful discussion has taken place on that part of the treaty, so it is quite significant,” says Cullip. “A working group is open to all parties to the treaty to take part in whereas an expert group is populated by cherry-picked NGOs and ‘experts’ appointed by the FCTC Secretariat and Bureau.

    “The WHO wanted an expert group set up to discuss Articles 9 and 10 to replace the previous working group, which was suspended in 2018 at COP8. Parties had been surveyed in 2020 and 2021 about the fate of the working group, and a majority, both times, were in favor of reactivating it. However, their wish was ignored, and the WHO proposed setting up an expert group regardless. It tends to explain why parties could not come to a consensus, and the St. Kitts proposal just added to the disagreement.”

    THR proponents had asked for a working group in the run-up to COP10, but so far to no avail. “There is still no formal confirmation of the decision, let alone its scope of work, objectives, criteria or membership,” says Delon Human, president and CEO of Health Diplomats and co-author of a COP10 scorecard report that measures the progress in achieving the FCTC objectives. “However, WHO’s silence on this issue should not overshadow the importance of member states finally beginning to ask the right questions,” Human notes.

    Derek Yach, who as a WHO cabinet director and executive director was heavily involved in the creation of the FCTC two decades ago, hopes that the FCTC Secretariat will look back at the way it held broad consultations with industry scientists in the years leading to the adoption of the treaty. While a draft decision requires parties to review and update the evidence and science related to tobacco harm reduction by COP11, the text, according to Yach, suggests that the proposer has prejudged the outcome.

    “It highlights ‘the need to be informed about activities of the tobacco industry that have a negative impact on tobacco control,’” says Yach, who is also the lead author of the COP10 scorecard. “Never once does the decision hint at possible positive effects of THR on tobacco use and its ultimate effect on health. Further, the decision reverts to outdated science when discussing tobacco cessation. Use of the terms ‘concern,’ ‘caution’ and ‘challenges’ all portray THR in a negative light. If this decision is adopted, it may hamper a needed open scientific debate about benefits at a time when these become clearer and stronger with new major publications.”

    The world of tobacco control and THR has changed dramatically since [2003], which is unfortunately not reflected in the interpretation, development and implementation of FCTC guidelines.

    Delon Human, president and CEO, Health Diplomats

    No Significant Effect Anticipated

    The COP10 scorecard was shared with all COP10 delegates and a host of non-state THR stakeholders, according to Human. The responses received by non-state actors such as NGOs or public health advocates were mainly positive, he notes, while state actors only acknowledged receipt. The report assessed progress made by the parties to the FCTC in six sections. Trends in tobacco use and impact was rated an E-, commitments, resolutions and pledges received a B+ and implementation of resolutions a D-. In the three other sections, the FCTC got poor marks too.

    Measured against the findings of the scorecard, COP10 didn’t fare well, according to Human. “The most disappointing aspect of COP10 was the ongoing nonrecognition of THR as an integral part of tobacco control as stated in Article 1(d) of the FCTC,” he says. “Therefore, the ‘fail’ grade for not embracing THR was perpetuated. This is […] a failure to prevent unnecessary tobacco-related disease, disability and premature deaths.”

    Furthermore, the “fail” marks for neglecting THR research priorities and capacity-building in low-income and middle-income countries were validated not only by nonaction but accentuated by the ongoing exclusion of key stakeholders, Human points out. “We scored the lack of stakeholder engagement as a ‘fail’ beforehand, and unfortunately, the COP10 exclusionary behavior confirmed the ‘fail,’” he says. “FCTC’s Article 5.3 requires parties to protect the implementation of their public health policies against the commercial and vested interests of the tobacco industry. Yet this is impossible when many of the same countries are also striving to generate revenue from state-owned tobacco entities.”

    Globally, 18 governments own 10 percent or more of at least one tobacco company. This is likely to interfere with at least one of the decisions referenced in COP10’s Panama Declaration: the creation of a working group to deal with Article 19, which nations can use to hold the tobacco industry liable for people’s health and the environment. The article was repeatedly discussed in previous COP meetings, says Human.

    “The expert group which has been established will be made up of lawyers from various countries, with experience of holding tobacco companies accountable. At COP6, the expert group on Article 19 presented a comprehensive report on civil liability for the tobacco industry, and at COP7, it presented an online Civil Liability Toolkit. Whether this leads to a flurry of lawsuits after COP10 remains to be seen. The technical guidance needs to be backed up by political will in countries. Tobacco companies remain one of the most effective tax collectors for countries, so the most likely outcome will be prolonged discussions followed by minimal action,” says Human.

    Human feels encouraged by the COP10’s decision to set up another expert group to work on “forward-looking control measures” under Article 2.1, which encourages governments to implement measures beyond those required by the FCTC. “The world of tobacco control and THR has changed dramatically since [2003], which is unfortunately not reflected in the interpretation, development and implementation of FCTC guidelines,” he says.

    “Article 2.1 might offer hope in that it could guide the COP to better translate new information, science, products and consumer experience into actions. As a starting point, our hope is that the workgroup would review current peer-reviewed literature on the effectiveness of noncombustible nicotine alternatives such as ENDS [electronic nicotine-delivery systems] to facilitate and accelerate cessation. Then it could play a role in balancing the COP focus to consider supply side measures in equal weight to the current focus on reducing demand for tobacco products.”

    For Human, the recent COP’s decision to strengthen language around Article 18, which urges parties to take account of the environmental impacts arising from the cultivation, manufacture and consumption of tobacco products as well as the waste they create, is positive, as it will help integrate tobacco control policy with those protecting the environment. “For example, it will improve policy coherence between the FCTC and national and international treaties, like the Intergovernmental Negotiating Committee on Plastic Pollution, aimed at addressing hazard waste from tobacco products, including cigarette butts,” he says.

    “Another positive outcome could be an acceleration of identifying and promoting economically viable and sustainable agricultural alternatives to tobacco growing. All in all, it should strengthen implementation of the FCTC.”

    Human is less optimistic that the decisions taken at the event will contribute to accelerating the decline of global tobacco consumption. “Based on the mediocre decline in tobacco consumption facilitated by COP1 to COP10 and the inability of parties to fully embrace harm reduction strategies, science, products and methods, no significant declines are expected.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.