Category: Paper

  • Troubled Waters

    Troubled Waters

    A flat corporate hierarchy and short lines of communications helped Glatz Feinpapiere cope with the coronavirus pandemic disruptions. (Photo: Glatz Feinpapiere)

    The cigarette paper sector is coping with rising costs for raw materials, energy and transportation.

    By Stefanie Rossel

    Paper manufacturers have learned to cope with the pressure brought about by slumping global cigarette consumption and the simultaneous rise of paperless next-generation products. Since 2013, worldwide sales of combustible cigarettes have decreased every year, with consumption standing at 5.06 trillion cigarettes in 2020, down 3.7 percent from 2019, according Euromonitor. In 2019, the combustible cigarette category accounted for an estimated 95 percent of the global tobacco market, down from 94 percent one year previously.

    As if this hadn’t been enough, Covid-19 presented a range of further challenges for paper suppliers. “On top of [the shrinking global combustible cigarette market], the situation this year has been exacerbated by container shortages, resulting in higher raw material prices and delivery delays,” says Omar Rahmanadi, CEO of Indonesian cigarette paper maker BMJ. “Nonetheless, like Albert Einstein once said, ‘In the middle of difficulty lies opportunity.’ The global crisis has forced many buyers to revisit their sourcing strategy, which has subsequently opened new business opportunities.”

    Katrin Hanske

    “Security of supply is even higher on the agenda since the Covid-19 crisis,” says Katrin Hanske, vice president and general manager of SWM’s Tobacco and Alternative Solutions division. “The cigarette paper manufacturers have to ensure a high level of service and quality and must be even more agile in a rapidly changing environment. Having a global footprint and a strong global supply chain is a true advantage to serve our customers located all around the globe.”

    “Like the whole world, we were also not prepared to face the challenges of a worldwide pandemic,” says Nina Ritter-Reischl, CEO of Glatz Feinpapiere in Germany. “However, we were able to quickly adapt to the new situation, especially due to our flat hierarchy and short lines of communication. Particularly during the first months of the pandemic, we were faced with high demand for our papers, so we quickly increased our capacity by adapting flexible working hours or shift systems. In combination with the new sanitation and distance regulations, this was a challenge of its own.”

    Coping with Costs

    Rising prices for raw materials and energy, too, are impacting cigarette paper producers. “The global cigarette paper market in 2021 is dominated by a rapid increase in the costs for pulp,” says Ritter-Reischl. “From January to August, the costs for short fibers have increased over 70 percent and the costs for long fibers over 50 percent. This rapid increase is joined by rising costs for transportation, energy, chemicals and additives in general. Worldwide logistics and workflows still suffer from lockdowns of the Covid-pandemic. Therefore, the cigarette paper industry, just as the paper industry worldwide, is struggling with unexpected high costs, transportation challenges and the consequences of Covid.”

    As a consequence of this development, SWM raised prices by up to 15 percent across its engineered papers portfolio on July 1, 2021. The increases, the company said in a press release, were a direct result of sharp rises in raw material prices, with market wood pulp costs up by 50 percent in the past six months. “Largely because of the Covid-19 pandemic, 2020 saw a lower than expected demand for wood pulp and higher inventory levels,” SWM commented. “Since Q4 2020, demand in Asia has recovered strongly, driving inflation and a fast decrease in global inventory levels. Supply levels have turned toward Asia, leading to one of the sharpest price increases in recent history. In addition, polymer prices and packaging material costs remain highly volatile. At the same time, shipping companies are capitalizing on high demand following periods of congestion to leverage their pricing power as well as providing limited visibility on freight rates and special surcharges.”

    Although heated-tobacco products represent less than 2 percent of global tobacco retail volumes, according to Euromonitor, they will likely have an impact on the paper business, predicts Rahmanadi. “Heat-not-burn [HnB] products have disrupted the conventional cigarette industry,” he says. “This will undoubtedly disrupt cigarette papers as well. This development requires us as a specialty paper manufacturer to intensify our innovation to support the growth of HnB products.”

    Trend Toward Sustainability

    Despite current challenges, cigarette paper manufacturers remain optimistic. New business opportunities, they agree, are about to arise from tobacco companies’ focus on sustainability. “This is a trend and customer need we can serve, as it is in our genes,” says Reischl. “As a family-owned company with more than 135 years of history, we are sustainable in more than one way. Not only do we live and work carefully with the resources that nature is giving us—from water quality, emission reduction to energy savings, we [also] yearly reduce our footprint. We are also a sustainable partner for all our business partners, suppliers as well as customers.”

    Rahmanadi sees big opportunities in developing a paper-based material that can replace single-use plastics, not necessarily exclusive to the cigarette industry. “The global pandemic has demonstrated that people have the capability to tolerate changes more than what they thought they could. This could mean that people might be willing to sacrifice convenience for environmental sustainability by using paper-based materials instead of plastics, among others,” he says.

    “With the EU’s 2019 single-use plastics directive, paper filters made from cellulose fibers represent a great sustainable alternative for the industry,” notes Hanske. “They provide many benefits being an efficient plastic-free solution made with 100 percent renewable raw material, leaving no trace thanks to its faster degradation. We also observe that the industry is looking to use more natural materials for their packaging.  It is again an opportunity for SWM to put decades of know-how at the service of the market.”

    According to Hanske, SWM is ready to serve its customers no matter where the market takes them. “Beyond cigarette papers, the priority at SWM today is to offer the technical solutions needed by our customers to adapt and grow their business, be it in the traditional cigarette market or in the developing spaces like heated-tobacco products, smokeless or cannabinoids.”

  • The Leading Edge

    The Leading Edge

    Photos: Republic Brands

    Building on a formidable heritage, Republic Brands is keen to capitalize on the latest market trends.

    By George Gay

    Here’s a challenge. Try to figure out what “category” was being referred to when, during an interview with Tobacco Reporter in August, a company executive said, “I think it is the most exciting time to be in the category in the U.S.”

    If I didn’t know the answer to this puzzle, I think I would have guessed at something like nicotine pouches. I certainly wouldn’t have gone for a combustible product. But the executive was talking about the roll-your-own category in general, and, in particular, about Republic Brands, which in July changed its name from Republic Tobacco. “It’s rare that you are able to become part of a company like Republic with such great ownership, such iconic global brands and an amazing supply chain in a category that is becoming more and more meaningful in the U.S.,” said Paul Marobella, the former chairman and CEO of Havas Creative in North America who joined Republic as president and chief marketing officer on July 1, having previously acted as a consultant. “And I know that everybody here is really excited about our future. You’re going to see some great new products from us—some innovation. I think people will come to know the Republic Brand name more than they knew Republic Tobacco in the past: We are going to focus more on that. And we’re building a great place to work and a place that really creates iconic brands. That is the spirit here at the moment.”

    Marobella was speaking mainly about the U.S. market, though some of his underlying ideas have wider resonance, which is appropriate given the global reach of Republic. The company, owned by Donald Levin, claims to be the largest RYO company in the world. It has subsidiaries in Canada, continental Europe and the U.K. operating under the name Republic Technologies, seven manufacturing facilities across North America and Europe, and a sales presence in 120 countries.

    But for the moment, the focus is on the U.S. where Marobella has taken on the responsibility for aligning Republic’s brands and brand marketing with specific consumer segments across the U.S. He exudes enthusiasm for this challenge, and it is easy to get swept along by such an experienced brand marketer talking of consumers choosing new pathways through changing cultural environments with products that combine brand heritage with sustainable materials.

    Paul Marobella

    A Growing Market

    But he has a point. If you step back and take a moment to reflect, there is clearly something going on here—in the U.S.—and now. The first thing that should be kept in the background is the size of the U.S. market. This was brought home to me when Marobella mentioned E-Z Wider, one of the most recent brand additions to the Republic portfolio of rolling papers, acquired along with the Joker brand by Levin about three years ago. One of the areas where E-Z Wider has a strong presence comprises the Eastern Seaboard of the U.S., which, the internet tells me, has a population of about 118 million people, slotting it into about 12th position on a list of the most populous nations of the world. The plan is to take E-Z Wider national, as one of the company’s growth and emerging brands.

    Importantly, too, there are signs that within the huge U.S. market—the total population is about 328 million—the RYO sector is growing. Hard data on the sector is more difficult to come by than is that on factory-made cigarettes, for instance, but Marobella said Republic was seeing growth both in the incidence of people rolling their own and making their own with papers, cones and tubes. The cone sector, which Republic entered about three years ago, was particularly vibrant, he said, before adding that bamboo cones and bamboo papers were “flying off the shelves.” At the same time, indirect evidence for such growth is being provided, too, by an increase in new competitors and new brands entering the market and by what Marobella described as the excitement currently evident in the segment at trade shows.

    Another important point to keep in mind is that, whereas the market for factory-made cigarettes, which are locked in with tobacco, has nowhere else to go, the market for RYO and make-your-own accessories, such as rolling papers, cones and tubes, while heavily underpinned by tobacco consumption, is expanding beyond tobacco. Marobella is careful to emphasize that Republic wants its products to be used only with legal materials, naming tobacco, hemp, CBD and herbal products generally. But there is no getting away from the fact that smoking marijuana is becoming legal in parts of the U.S. and is already so north of the border, across Canada. And Marobella conceded that, in respect of marijuana, U.S. federal legalization would be great for “the RYO category in which Republic’s brands play such an important part.”

    What I wrote above about factory-made cigarettes having nowhere else to go might be taken to suggest that the manufacturers of factory-made cigarettes also have nowhere they can go beyond tobacco. But such a suggestion would be misleading. Leading manufacturers in this field are making huge efforts to move away from combustible tobacco toward all manner of new-generation products, and, given their initial success is maintained, it is conceivable their departure will leave behind a considerable vacuum, part of which could be filled by RYO products—initially tobacco based, but later, perhaps, underpinned by other smoking materials.

    And on top of these marketing opportunities for RYO brands, you can add emerging retail possibilities, such as ecommerce. Marobella told me that new highly innovative delivery services were coming on line in the U.S.: services such as GoPuff, which will deliver to your house in 25 minutes or less. Despite its name, GoPuff delivers a huge array of products that happens to include a wide range of tobacco and nicotine goods from charcoal heaters for hookahs to rolling papers to e-liquids. “You have consumption lounges being legalized in certain cities,” added Marobella. “Las Vegas is one where you will be able to consume herbal products on-premise. You have subscription delivery boxes in which papers and cones are sometimes included.”

    Bamboo papers and cones have been flying off the shelves, according to Republic Brands.

    A diverse consumer base

    Marobella added, however, that while more and more routes were being opened to the consumer and while it was important for Republic to keep abreast of these new opportunities, the company’s core business was with, and would remain with, distributors, wholesalers, convenience stores, c-gas stations and smoke shops.

    I guess that, to a certain extent at least, the route to the consumer needs to be allied with the type of consumer you are aiming at. So who are these consumers? Well, the traditional RYO consumer is still a male manual worker who likes to roll tobacco and smoke without having to take out a loan, and that is unlikely to change greatly soon. But, partly because of new opportunities provided by herbal materials, more women are entering the RYO category, and, in fact, some estimates have women accounting for nearly 40 percent of the RYO market attributed to herbal material use. In part, too, the RYO category has opened itself up to new entrants with products such as cones that don’t require people to be skilled in the art of rolling. And then there is the question of cultural changes. “I think that in the U.S., people are seeking to find moments to themselves, they are seeking to relax, seeking to enjoy the little things in life more and more because of what is happening in our world,” said Marobella. “And through our research, we have seen that people use our products to help them relax.”

    The JOB brand is said to be about creativity.

    Of course, to satisfy the needs of a diverse consumer base, you need a wide-ranging portfolio of products, and Republic seems to have just that. The company was started in 1969 by Levin, who at that time owned one of the most famous smoke and head shops in the U.S., Adams Apple in Chicago, and a smoking accessories business operating under the same name. He no longer owns the shop but still owns the brand name, which is used for the company’s ecommerce business selling on Amazon, and which appeared as recently as August in a TMA trademark report relating to RYO-related and MYO-related products. Since those early days, Levin has been acquiring and building a formidable brand portfolio, which includes OCB, said to be one of the largest global brands and one that is the company’s all-natural brand, carrying the tag line “One with Nature.” OCB, like many rolling-paper brands, comes in a dizzying number of versions, but Marobella says it is probably the company’s most expansive. “We have a whole line of different sizes, fibers, some that are made of flax, some that are made of wood pulp,” he said. “OCB has organic hemp, bamboo; we have a virgin unbleached paper and cones as well.”

    While OCB is about being one with nature, the JOB brand, which has been in existence since 1838, is said to be about creativity—you’ve almost certainly seen the fine print posters—and cultural relevance while E-Z Wider, apparently named after the film, Easy Rider, is Republic’s outlaw or rebel brand.

    It is not possible to list all the brands and, especially, all the product styles within each brand, but I should point out that, despite such a large existing portfolio, as is mentioned at the start of this piece, there is more to come. Marobella wasn’t going to be drawn on specifics, but he did say that, across Republic’s portfolio, there would be more products made of organic hemp, which, by the way, is sourced from Champagne, France, from the same soils that produce fine champagnes. “You’ll start to see some unique sizes of products, such as cones; you’ll start to see some brands that are targeted at very specific demographics and consumer segments in the U.S.,” he said. “You might see some different colors of papers, some different patterns of papers that would appeal to a different 21+ demographic in the U.S., maybe a female demographic. There is a lot of innovation that is happening. We want to be on the leading edge of that.”

  • A Golden Age

    A Golden Age

    Photos: Curved Papers and Republic Technologies

    The Covid-19 pandemic notwithstanding, rolling papers, blunt wraps and cones are flying off the shelves in some markets.

    By George Gay

    Michael O’Malley

    If you speak about the roll-your-own (RYO) sector with Michael O’Malley of Curved Papers, much of what he says revolves around marijuana, so it is easy to come away with the idea that RYO’s future lies in this direction. But he dismisses this idea, pointing to the huge disparity in volume sales between those of tobacco and those of marijuana, which, of course, favors the former. However, he concedes that, right now, marijuana is making the news and the running, partly by providing what he describes as a “vortex of innovation.”

    I guess this is only to be expected. Tobacco has been on sale legally for a long time while marijuana is only now gaining the stamp of legislative approval in a limited number of jurisdictions. This is the time for marijuana-use research and fast-moving, follow-up innovation, something that has attracted the attention of a wide range of companies, including major corporations involved with tobacco, beverages and consumer packaged goods: companies that are investing directly or indirectly in marijuana and associated intellectual property.

    Overall, the RYO market was steady globally, said O’Malley, but, at the same, it was generating a significant expansion in brands and products because of the entry of marijuana, primarily in North America. In 2017, Canada and Mexico both passed federal legislation on marijuana and, recently, Mexico followed through with full adult use (previously more usually termed “recreational use” to distinguish it from medicinal use), leaving the U.S., by far the largest market, the laggard on federal legislation. However, 17 U.S. states, including some populous ones, had now opted for full legalization while almost every state had a legal medical marijuana program.

    That last point is significant because the dynamics of U.S. state legalization has tended to see medicinal marijuana leading the way before being followed by adult use. In some states that allowed only medicinal use, programs were based on “no flower consumption”—that is, no smoking. However, under pressure from people making use of these programs, and with the support of medical professionals, new regulations and/or legislative amendments have been introduced to allow for smoking to be part of these programs.

    O’Malley, who is based in the U.S., believes the legalization of marijuana will sweep from state to state and will eventually lead the U.S. to align nationally on this issue and broadly with its North American neighbors, despite the existence of considerable resistance in some states and powerful opposition at the federal level.

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    Flying off the shelves

    Even with the situation as it is, O’Malley was moved to say that now was something of a “golden age” for the RYO market, encompassing both tobacco and marijuana. Rolling papers, blunt wraps and cones were all flying off the shelves like never before, he said, notwithstanding the Covid-19 pandemic. In part, this was because, in the U.S., outlets selling RYO products, including convenience stores, gas stations and dispensaries, were largely deemed essential at the outset of the pandemic while smoke shops and head shops had also been open for some time.

    At the time of writing in mid-April, Curved Papers had suffered no supply chain interruptions because of the pandemic and, as a consequence, had been able to absorb an uptick in demand for its products. O’Malley said the legalization of marijuana was attracting new smokers and that many of these were drawn to Curved Papers’ products because their curved edge made it easier to roll a cigarette with inexperienced fingers. At the same time, he added, expert rollers continued to enjoy the “elegant convenience of the easy-to-roll curved edge.” And he is confident about the future, saying that economics and consumer preferences would remain favorable for hand-rolling.

    This confidence is steadfast even in the light of the emergence of machines capable of producing cylindrical joints resembling tobacco cigarettes. In fact, O’Malley sees the products of these new machines, some of which are expected to be launched this year, as providing competition more for the products of the knockbox machines used for filling cones than for hand-rolled cigarettes. “These new machines will not eliminate rolling joints,” he said. “We see them as complementary to and supportive of our markets.” Smoking the flower had survived the onslaught of speculative product introductions in the past, he added, including that of vaping devices.

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    Ancillary products

    While recent developments have seen the introduction of a lot of new products and product categories, O’Malley points out that rolling papers still comprise the biggest of the ancillary products in both tobacco and marijuana. But this should not be interpreted as meaning that O’Malley is anti-new developments or anti-technology. He describes Curved Papers as being an innovative company with a soon-to-be-announced development that will have an impact on how rolling papers are made in the future.

    For the time being, however, the company is content to remain a supplier of an ancillary product that doesn’t become involved directly with marijuana plants and therefore doesn’t become tied up with the accompanying regulations.

    However, it has consulted with companies that are so involved, including those researching CBD rolling papers and marijuana wraps. And, O’Malley said, because sustainability was a core value for Curved Papers, it had collaborated in the field of so-called hemp plastic, from which it would like to see produced a truly recyclable “doob tube,” which, for the uninitiated such as me, is a container in which to keep pre-rolled joints.

    Finally, O’Malley mentioned that while it was difficult to predict how U.S. relations with China would develop, there were likely to be implications for the RYO sector. China-made rolling papers had fueled a previously unseen white label market that had undercut European suppliers on price and that was continuing to narrow the gap on quality. But that surge might be slowed if East-West relations chilled during the next decade, and it was possible that the positions taken by the U.S. and the EU on China might differ, leaving the U.S. more isolated. In that case, he said, it would be interesting to see if product manufacturing returned to the U.S., even in the case of ancillary products such as tobacco rolling papers. “We see a possible window opening, again aided by developments around marijuana,” he said.

    Environmental considerations

    Santiago Sanchez
    Santiago Sanchez

    For the time being in Europe, one of the main concerns of the RYO sector is the EU’s Single-use Plastics (SUP) directive, which Santiago Sanchez of Republic Technologies International (RTI) described as almost surreal. He said he agreed that the use of plastics should be restricted because the damage being done to wildlife was immense and the situation had to be reversed. And Republic was committed to playing its part in protecting the environment, he added, as was evidenced by the company’s rolling-papers booklet factory, which, since the beginning of last year, had been running only on “green electricity.”

    Nevertheless, Sanchez is concerned that the SUP regulations are not realistic in that the period given for their implementation is unreasonable. Under the regulations, suppliers of filters marketed for use in combination with tobacco products are required to have printed on their packaging “plastic in filter,” a legend that must be rendered in the language or languages of each EU member state on which these products are sold. Of itself, this might not have posed a problem, but the text was published officially only in March, and products must include this message if they are “placed on the market” after July 3. Additionally, it is not clear what is meant by “placed on the market,” and the EU, at the time of writing, was yet to clarify the term.

    Sanchez said that major industries could not work with such short timeframes, which eventually could lead to a situation whereby manufacturers might have to destroy products that fell foul of such timeframes. In this event, it was possible that the regulation would, bizarrely, lead to a waste of energy and raw materials, not to mention the financial loss.

    One area where Republic had been concerned about the possibility of cost-induced losses has not come to fruition, however. The uncertainty over Brexit meant the company had had to play safe by placing additional stock on the U.K. market so as to avoid the possibility of product shortages in the shops. But whereas successive delays in the implementation of the Brexit accords forced the company to keep such additional stocks for quite some time, in the end, procedures worked quite smoothly, and Republic was not negatively affected by Brexit apart from some additional costs engendered by the necessity of producing extra paperwork. Currently, the company is bringing down its U.K. stock levels to normal levels.    

    Meanwhile, the Covid-19 pandemic seems to have caused a significant increase in sales in all of Republic’s product categories. Whether consumers smoked more due to the stress, whether they switched to cheaper products or whether both phenomena were in play, the result has been an increase in demand for the company’s products. A big factor here, of course, was that these products were distributed by major chains and tobacco shops, which were declared essential almost everywhere, which meant the public had access to smoking items.  

    In most of Europe, meanwhile, people don’t have easy access to marijuana as many do in North America, and most of those who do cannot smoke it legally. But Sanchez recognizes there is a boom in progress in North America and notes that this development could spread. Even in the U.K., where even medicinal marijuana is generally frowned upon, the mayor of London is launching a consultation; though, already, the central government has declared this is not a matter for London alone.

    In general, Sanchez said, demand for marijuana-related products was increasing and, in his opinion, would continue to do so. Companies, he added, should adapt to the new situation by taking advantage of the opportunities. “And in this sense, RTI is glad to confirm that it will launch shortly in selected markets a new range of rolling papers with CBD-infused natural gum,” he said. “It will be the first of its kind, and we are extremely proud of this development with a patented system that will bring a plus to marijuana consumers.”

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    In fits and spurts: Is the predicted growth in RYO sales sustainable?

    I’m told that the value of the global roll-your-own (RYO) tobacco product market is roughly about one percent of that of the all-embracing, global tobacco product market, but according to a February press note promoting analysis by Grand View Research, while the total product market is expected to expand at a compound annual growth rate (CAGR) of 1.8 percent from 2021 to 2028, the RYO market is expected to expand during the same period by a CAGR of 4.2 percent.

    This is positive news if you’re in the RYO business, especially if you are exclusively in that business. But before you start to cheer, it might be worthwhile spending a minute or two examining the reasons given for the predicted, relatively fast rise in RYO product business.

    “The rising consumption of [RYO] products among females and students is fueling market growth over the world,” the press note said. “The adoption rate of the product is increasing among the youth in major economies, including the U.S. Moreover, the financial stress caused by the Covid-19 pandemic has encouraged numerous smokers to shift from factory-made cigarettes to hand-rolled cigarettes due to the cost advantage of roll-your-own … tobacco products.”

    Although the Covid-19 pandemic might be seen as something exceptional, the reaction of smokers to the financial stresses that it has caused is anything but exceptional. It has been well documented in the past that, outside the core of RYO product consumers, there are smokers who move from factory-made cigarettes to RYO products and back again on a schedule that conforms roughly with the relative prices of RYO and factory-made cigarettes and with the health or otherwise of their finances, which might change according to their personal circumstances or local, national or global events, such as the economic hit caused by Covid-19. So the boost to the value of the RYO market that can be laid at the door of the pandemic is likely to evaporate if or when the virus is beaten, tamed or becomes part of the family, as with influenza; though, admittedly, with the current lack of attention to prevention, it’s always the case that another pandemic-inducing virus could be just around the corner.

    The other “problem” with the stated reasons for the predicted growth in the value of the RYO market is that they include rising consumption of such products among women and students around the world. Those opposed to tobacco consumption, especially the peculiar group that comprises people who seem to want tobacco manufacturer profits to be maintained as high as possible, will jump on this information as being indicative of the wicked nature of the RYO industry. In addition, the idea that RYO products should be sold around the world when, in the past, they have been confined largely to some specific geographical locations will not go down well. At the same time, even most of those championing sex equality will rail against any shift toward women of what has traditionally been a male-dominated habit. And, well, better we all fall down dead than a student or youth should be seen puffing on a rollie.

    What we have here is ammunition for those wanting to raise taxes on RYO products to the point where the cost of RYO smoking becomes as ridiculously high as that of factory-made cigarette smoking—all in the cause of helping the RYO smoker of course.

    It won’t help that the press note says the market for RYO filters will outperform that for other RYO products, with a 4.7 percent CAGR between 2021 to 2028, in part at least because of the introduction of biodegradable or environmentally friendly filters. Many people question whether cigarette filters perform any useful purpose beyond keeping tobacco out of the mouths of smokers, and they worry that filters tend to encourage smokers to keep smoking by giving them, in the view of those opposed to filters, a false sense of harm mitigation.

    But if there is one thing that is likely to raise the blood pressure of people opposed to smoking more than filters, it is flavors, and the report apparently describes how flavors are helping to propel the increase in the market for RYO products. And it gets worse. Flavors, different sized products and attractive packaging are said to be combining to propel a global demand for premium RYO products, an idea that will surely make it increasingly difficult to sell the idea that RYO is aimed largely at financially impoverished smokers.

    None of this is to say that the report’s authors should have shied away from describing what they see as the likely drivers of the market for RYO products; it’s just an interesting parallel to the phenomenon encountered by quantum physicists—that it is not possible to measure stuff without disturbing it. —G.G.

     

  • Lessebo Paper Certified “Cradle to Cradle”

    Lessebo Paper Certified “Cradle to Cradle”

    Image: Lessebo Papers

    Lessebo Paper has achieved a Cradle to Cradle Certified Gold award for its white ranges of uncoated, premium graphical papers, Lessebo Design and Scandia 2000. End users can thus not only support their own sustainability strategy but also give consumers who are looking for a sustainable solution a decision-making aid. Lessebo Paper has been producing paper since 1693, making it one of the oldest paper manufacturers in Sweden.

    The company focuses on innovative graphic papers in the premium segment.

    Cradle to Cradle Certified is a globally recognized measure of safe, sustainable products made for the circular economy. To receive certification, the products are assessed for environmental and social performance across five critical sustainability categories: material health, material reutilization, renewable energy, water stewardship and social fairness.

    To be awarded with the gold award, gold standards must be met in all categories.

    “Our products have once again been proved to be a leader in sustainability,” says Eric Sigurdsson, CEO at Lessebo Paper, in a statement. “Being the first paper producer worldwide to receive Cradle to Cradle Certified at Gold level for our uncoated paper products is a big achievement and has been made possible by our focus on sustainability. This is clearly showing that our paper is one of the most climate-friendly paper qualities in the world.”

    The paper is produced from totally chlorine-free pulp and has a minimal carbon footprint. It is especially suitable for printing materials where quality and sustainability are of importance, two factors that are key values of the Lessebo brand.

    The manufacturer has a long history in Sweden and a track record when it comes to sustainability. Starting in 1662 as an iron mill, the company soon began to focus especially on paper production. And though Lessebo Paper has significantly grown over the years, its tradition and core value—to develop high-performance and environmentally responsible papers and boards—has persisted.

    The continuing improvement on every level of production as well as the use of certified management systems has made Lessebo Paper one of the world’s most environmentally friendly paper mills, with emissions at 22 kg per metric ton of finished product—more than 96 percent lower than an average producer of graphical paper.

    This commitment has over the years also been acknowledged by the industry: Lessebo Paper is qualified with many sustainability certificates, like the EU Ecolabel for its Lessebo Recycled paper range, the Forest Stewardship Council for several of its paper and board ranges and now also with the Cradle to Cradle Certificate.

    In addition, Lessebo Paper had its white ranges of uncoated paper, Lessebo Design and Scandia 2000, assessed in the category of material health and was awarded a platinum level material health certificate by the Cradle to Cradle Products Innovation Institute. This means that all ingredients and process chemicals have been evaluated and accepted by the organization.

  • Going Natural

    Going Natural

    Photos: Zig-Zag

    As consumer interest in untreated products increases, Zig-Zag has expanded its unbleached and hemp papers segment.

    By Stefanie Rossel

    Although a niche of the tobacco market, hand-rolled cigarettes have always had their fan base. Compared to factory-made cigarettes, they represent a less expensive way of smoking, especially in tax-heavy environments. As the Covid-19 pandemic continues to depress the disposable incomes of many people, the popularity of roll-your-own and make-your-own tobacco products is likely to increase. Affordability aside, hand-rolled cigarettes have another advantage: They allow their users to create a custom-made smoke. The right paper is key to the smoking experience.

    In recent years, unbleached and “natural” papers have become more popular. “Over the long history of rolling papers, there have been numerous evolutions of preference for consumers,” explains Curtis Berry, brand director of Zig-Zag, a leading brand of rolling papers that originated in France 140 years ago. “At one point in this evolution, smokers wanted a consistent and cleaner looking paper, hence our whitening process that eliminates imperfections and provides a consistent look and performance, which is still preferred by many today.

    “Recently, there has been a growing consumer interest in products with natural attributes, including rolling papers, so we introduced the Zig-Zag Organic Hemp and Zig-Zag Unbleached products to satisfy that need. In addition, there is also interest in the pre-rolled cone form factor, which provides convenience with a perfect smoke every time. With the addition of our new products, we feel we are providing the widest range of premium papers that meet the diverse preferences within the marketplace.”

    The company’s first unbleached paper was the Organic Hemp Paper, which it introduced in the U.S. at the start of 2018. Zig-Zag unbleached paper, made from a different blend of fibers, was created and first released in Canada in late 2018 followed by the U.S. launch in early 2019. The products are available in an extra thin and ultra thin quality as thinner papers tamper less with the flavor profile of tobacco.

    “Out of the gate, we’ve had very positive feedback,” says Berry. “Consumers love the natural hue, ease of rolling and smoking characteristics. We feel like we really created a great product that adds to our well-rounded portfolio of Zig-Zag paper. From that feedback, we decided to add an unbleached version of our Classic Ultra-Thin Cones.”

    Zig-Zag’s unbleached offerings cater to growing consumer interest in products with natural attributes.

    What’s left out

    The manufacturing process of unbleached rolling paper is basically the same as that for regular rolling paper and has a centuries-long artisan tradition. “Paper is essentially a mixture of fibers from various sources,” says Berry. “The creation of every Zig-Zag rolling paper begins with the sourcing and selection of the finest 100 percent natural plant fibers. The manufacturing process has two key phases, pulping and sheeting.”

    In the pulping phase, the raw vegetal matter is broken down into small fibers. These ground fibers are further refined using a high temperature and pressure-washing process. For its classic white papers, Zig-Zag uses a proprietary “whitening” process, which is skipped for the production of unbleached papers thus allowing the finished paper to reflect the natural hue of the fibers. “Some uninformed people have claimed that ‘unbleached’ means that white papers are made with household bleach or something like it,” Berry points out. “That is simply ridiculous. The bleaching step for white papers utilizes an oxygenation process, with no residue of any kind on the paper. There is no ‘bleach’ or chlorine used in the whitening process. ‘Unbleached’ merely refers to the absence of the oxygenation process in making the paper, which means the paper has that natural hue of the fibers versus a classic white look.”

    The washed fibers are then suspended in a solution of pure water. This solution only contains a few ounces of fibers per gallon and is around 99.5 percent water. This fibrous solution is sprayed onto a large canvas “forming table” where the fibers naturally interweave, and water is drained away. The material goes through a series of presses and heated cylinders to compress and finish drying the sheet. These sheets are then rolled up and cut into reels of paper to be ready for a complex watermarking operation, natural gum application and packaged in interleaved booklets originally invented by the founders of Zig-Zag as Berry points out. All Zig-Zag papers are vegan, genetically unmodified, bleach-free, dye-free and cruelty-free.

    Since all papers the company manufactures are made in the same process, little conversion was required to produce unbleached and hemp papers. “The investment came in developing the right blend of fibers and then skipping the ‘whitening’ process of the pulping stage to allow the natural characteristics of the fibers to be present in the final paper.”

    Here to stay

    While a large variety of materials, including more unusual inputs such as rice or esparto (a harsh needle grass), can be used to manufacture rolling papers, Zig-Zag uses only four types of fibers within its blend: hemp, flax, soft wood and hard wood. “Each of our papers uses a unique blend of fibers from various plants that are sustainably harvested,” says Berry. “The fiber blend of a paper will change how the final dried sheet comes out. Different combinations of long and short fibers from these various plants will change the paper’s strength, feel, thickness, porosity and burn rate. Unbleached paper has its own unique blend of these fibers.” Consumer preferences are varied, he adds. “Some consumers prefer the classic white look. Others prefer a natural hue. Still others prefer all hemp fibers over any other blend. Either way, we have them covered.”

    Berry says he sees nothing but upside for the unbleached paper and cone segment: “We are excited to continue to explore other opportunities within this category. We believe the unbleached category is here to stay and will continue to grow.”

    The company has witnessed increasing demand for its accessories. “We’ve had rollers for many years, and our trays were launched around the same time as our organic hemp papers. Just like with our paper portfolio, we want to be able to cater to the wide range of smokers, and we know this involves providing the right tools and accessories that assist in the different rolling rituals each one of us has.”

     

  • Sales up at Schweitzer-Mauduit

    Sales up at Schweitzer-Mauduit

    Photo: SWM

    Schweitzer-Mauduit International (SWM) reported sales of $279.3 million in the third quarter of 2020, up 9 percent over those in the 2019 third quarter. GAAP operating profit was $37 million, up 7 percent, and adjusted operating profit was $52.7 million, up 26 percent.

    SWM’s engineered papers segment sales were $140.4 million, up 8 percent, driven by a 2 percent volume increase and favorable price/mix performance of 6 percent. Higher volumes benefited from strong growth across cigarette paper products as customers increased inventory levels to de-risk their supply chains in the event of future disruptions from Covid-19.

    These volume gains were partially offset by the continued de-emphasizing of lower margin nontobacco paper products. Price/mix improved due to the strong sales of higher value cigarette papers, including low-ignition propensity papers coupled with the favorable mix impact of lower nontobacco volumes.

    “We are pleased to report a strong quarter with sales and adjusted profit growth in both segments,” said SWM CEO Jeff Kramerin a statement. “While the pandemic continued to impact some of our end markets, the global SWM team continues to perform well under challenging circumstances. All of our sites were fully operational throughout the entire quarter, a testament to our people’s commitment to the safety protocols implemented across the company.”

  • Living With Uncertainty

    Living With Uncertainty

    Photo: Delfort

    Stagnating tobacco consumption and a persisting pandemic are challenging the cigarette paper business.

    By George Gay

    It is obvious that the effects of Covid-19 have not been evenly spread across businesses and industries. Since lockdowns and restrictions became the norm, that part of your business that manufactures personal protective equipment will have done a lot better than the division that sells overseas holidays, and, generally, the tobacco sector sits somewhere between these extremes on the continuum of business opportunities and risks created by the disease and its underlying virus, SARS-CoV-2.

    And if you zoom in a little closer, you will probably notice that there are pockets of activity within the tobacco sector that have fared better than others have. I would guess, for instance, that sales of tobacco products whose consumption does not require inhalation would have stood up better than those of others. But within other pockets of activity, Covid-19 has delivered only yet another injection of instability into businesses already faced with considerable changes and uncertainties brought about by those changes.

    For a long time, the tobacco papers sector had been operating on a reasonably stable market, albeit one that was the subject of much consolidation among its business consumers and, therefore, among its suppliers. Of course, many sectors have found themselves affected by such consolidation, but, for the tobacco sector, no sooner had consolidation reached a point where little more was reasonably possible than those suppliers that had navigated these consolidations were hit by a major technological disruption.

    Up to a point, that disruption, led by liquid-nicotine vapor devices, meant a partial reversal of the consolidation, so tobacco suppliers that could turn their activities toward the supply of liquid nicotine, and the suppliers of flavors, for instance, saw fresh opportunities open up.

    But if you were in the paper business, this disruption offered no new opportunities only the threat of a further reduction in the demand for cigarettes and, by extension, a reduction in demand for plug wrap and cigarette and tipping papers. Even now, with the arrival on the market of heat-not-burn devices, the picture has not improved to any great extent for the paper sector. After all, if a pack of heat-not-burn cigarettes replaces a pack of traditional cigarettes, the amount of paper required goes down, though admittedly not to zero as is the case when traditional cigarettes are replaced by vapor devices.

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    Additional challenges

    It goes without saying that the papers sector is being hit by the decline in cigarette smoking, a decline that is going to continue, but against that background, additional challenges have been and, to some extent, are being played out. And together, these challenges can be summed up in one word: uncertainty, which is perhaps one of the most despised words in the business lexicon. After all, even though the word “tax” has by no means a welcome ring about it, at least the inevitability of taxes raises them above the level of uncertainty.

    Having said that, uncertainty, at some level, is ubiquitous in the business world, and, indeed, it can be the life blood of industries. Certainty does not breed disruption, and disruption seems to be what is currently being sought after in all but the most conservative industries. But there is a point where uncertainty tips over into negative territory, even chaos, and, as is described above, those operating in the tobacco sector have had to learn to live with high levels of uncertainty, especially in recent years. For instance, while it has been known for some time that smoking is in decline, trying to guess what level of decline is going to be experienced in the future is probably more difficult now than it has ever been, partly because we are living in a time of coronavirus.

    And not only are markets for cigarettes declining, they are fragmenting with the appearance of a larger variety of products, some of them niche, a situation that translates into more but smaller orders for suppliers to tobacco manufacturers, such as those providing paper—in other words, a situation in which it is difficult if not impossible to maintain previous levels of efficiency. At the same time, the need to find solutions for the growing focus on cigarette litter is creating new demands in respect of filter-related papers.

    There is no getting away from these challenges. Demand for combustible cigarettes will continue to decline while the demand for the special and niche papers needed to meet the requirements for new and reformulated products will continue to increase. The decline in demand for combustible cigarettes is likely to be driven by a number of factors but certainly in part by increases in demand for vapor devices and heat-not-burn products, especially now that the U.S. Food and Drug Administration (FDA) has authorized the marketing in the U.S. of IQOS as a modified-risk tobacco product.

    But there is more to uncertainty than consumer-led demand. While laws and regulations on tobacco products differ from country to country and region to region, even within those countries and regions, regulations are subject to change as is clearly illustrated in the EU where the Tobacco Products Directive has the issue of change built into it. And while product preferences vary from country to country, such preferences are themselves the subject of change over time.

    And these are just some of the challenges thrown up by uncertainties specific to the papers sector. Paper suppliers, of course, have also faced all the hurdles thrown up by the general restrictions introduced by governments in response to Covid-19.

    Understandably enough, given that little was known about the SARS-CoV-2 virus when it first started to spread around the world, not all of these government responses have been consistent or coordinated, so, for instance, borders have been closed at short notice and some countries have reduced the number of border crossing points, causing long delays for commercial shipments.

    Such closures and delays would have been difficult to deal with at any time, but they have been especially trying in the present circumstances when businesses along the tobacco products supply chain have been increasing orders from paper suppliers in an attempt to keep those chains well stocked as a buffer against other disruptions, such as the enforced short-term or long-term shutdown of factories. And to make matters worse, the challenge presented by trying to keep supply chains stocked can easily go into reverse. Once the increased orders have been filled and the supply chains well stocked, demand flattens until those stocks have worked through the system or until a new wave of factory closures and border restrictions set the whole disruptive process back into being.

    The issues raised by Covid-19 have been considerable, and while some of them have been short-term, others are continuing. It is easy to forget that paper suppliers have had to respond to different customer ordering patterns and deal with new regulations and restrictions that differ from country to country and that can change from day to day, all while having to restructure their internal systems to deal with such things as working at home, video meetings and travel bans and restrictions.

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    Diversification

    Given all of the above, it would be easy to become downbeat about the future for the tobacco paper industry and, therefore, those supplying it. After all, while it might be the case that paper suppliers are free to offset reductions in demand for tobacco product papers by seeking new markets beyond tobacco, such a strategy can come up against technological and commercial challenges. On one hand, it has to be asked whether a supplier’s machinery is capable of producing the grades of papers required by other industries, and, if not, if it is worth investing in the necessary machinery when there is no guarantee about success on the markets of these so-far-untapped industries.

    And on the other hand, many paper suppliers are already diversified, offering papers across a number of industries, so, presumably, if making further inroads into these other markets was a simple matter, the suppliers would have done so already. In fact, such a strategy will be made more difficult by the fact that all of the paper suppliers currently engaged with tobacco will doubtless be looking into diversifying further into the same industries. As Albert Einstein is often quoted as having said: football is made more difficult by the existence of the other team.

    But perhaps there is another avenue of “hope” opening up. I place “hope” in inverted commas here because it is based on something that not many people would hope for or welcome—the possibility that increasing numbers of vapers will be “encouraged” to return to smoking traditional cigarettes and increasing numbers of smokers will be discouraged from trying to move to vaping.

    As I write this, the liquid-nicotine vapor industry in the U.S. is facing something approaching wipeout as the Sept. 9 deadline looms for applying to the FDA for premarket tobacco product authorization for vapor products—million-dollar authorization applications that are way beyond the means of small-sized and medium-sized companies.

    At the same time, the U.K. government has decided to abolish Public Health England (PHE) next year. PHE, an executive agency of the department of health and social care, is the body that has been supportive of the vapor industry’s efforts to help in the effort to reduce cigarette consumption and is famously known for having declared vaping to be 95 percent less risky than smoking. Although another body will take over some of PHE’s responsibilities, no decision had been made at the time of writing about what would become of PHE’s anti-smoking efforts.

    The trouble is, as Queen Elizabeth I reputedly said, “Hope is a good breakfast, but it is a bad supper.”

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  • The Natural Experience

    The Natural Experience

    Photo: Republic Technologies International

    Republic Technologies burnishes its environmental credentials.

    By George Gay

    When Santiago Sanchez of Republic Technologies International (RTI) responded to my request for information about the current state of the RYO/MYO sector, he suggested that I might like to watch a video about how his company had taken part in a program aimed at helping to regenerate areas of Kenya where, for various, often multiple reasons, the environment had become degraded. He warned me that it was “a bit long” but assured me that it was worth watching.

    I must admit that normally my heart sinks when I’m asked to watch company videos, but I didn’t find this one overly long, and I thought it was well worth watching. It concerned something that I had known almost nothing about, and it helped me to understand RTI’s approach to its business and its products. The company’s website (www.natural-experience.com/en/natural-world) says that it is dedicated to respecting the environment by reducing waste wherever possible and otherwise reusing or recycling products. “We are committed to quality, human relationships and the environment,” the website says.

    Okay, these could be empty words, but watch the video (https://bit.ly/2woh50K) and I think you will find evidence that, at least in respect of the fine line of gum that runs along one edge of each RYO rolling paper produced by RTI, the issues of quality, human relationships and the environment are all to the fore and addressed in ways that might surprise. The idea of an RYO/MYO accessories (and e-liquids) company being indirectly involved in planting trees from the air is, I think, something that would raise questions in the mind of even the most uninquisitive person.

    I won’t go into any details here because the video is far more descriptive than I can be, but I shall point out simply that RTI’s support of the nongovernmental organization Seedballs Kenya, through its OCB brand, is linked to RTI’s use on its cigarette booklet papers only of pure, organic, vegan-friendly gum arabic that is extracted from African acacia trees—support that, in turn, helps sustain the livelihoods of the people who harvest and carry out the initial processing of the gum arabic.

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    Beyond gum

    But RTI has been in the vanguard of addressing environmental issues that go far beyond gum arabic. For instance, the hemp that it uses to produce thin but strong rolling papers is grown organically without the use of insecticides or even irrigated water. And, importantly, the company provides information about its annual needs to the cooperative of French farmers who produce the hemp to ensure that the cooperative can manage its output in a sustainable way.

    At the same time, the company offers RYO filters that are made of pure cellulose fibers sourced from sustainably managed forests. They are unbleached and naturally biodegradable and, RTI says, provide a better filtration than is provided by other types of filters. And then there are the rolling paper packs that are produced from recycled paper and printed with vegetable inks that are low in odor and have low-migration properties.

    With such an emphasis on respecting the environment, it would be reasonable to expect that RTI and its OCB brand, despite their tobacco connection, would be welcomed as part of the family of responsible companies and products. But that is not necessarily the case. Sanchez told me that the Belgian government has decided that it is contrary to the provisions of the EU’s Tobacco Products Directive (TPD) to allow rolling paper packs to bear messages attesting to the positive credentials of the papers—messages such as “unbleached” or “organic.” I’m not sure, but I guess this will have come about because of the tortured logic that says that consumers, on seeing, for instance, that papers are organic, will be encouraged to smoke. It assumes that consumers’ thinking so lacks nuance that they cannot tell the difference between organic beetroot and organic rat poison.

    RTI has further burnished its environmental credentials with the launch, under its OCB brand name, of the Virgin Paper Roll Kit comprising 32 slim paper leaves, 32 unbleached cardboard filters and a foldable rolling tray and rubber band to store the kit. The virgin paper is sourced from Forest Stewardship Council-certified wood and involves no animal testing. It is unbleached, and no chalk or dyes are used in its production. The gum used on the paper is pure gum arabic, and the packaging is printed with vegetable-based inks.

    Worrying developments

    Fortunately, Belgium is the only EU member state to take this stance. But its doing so shows up one of the problems that a company such as RTI faces. Because the various states, when transposing EU regulations into national laws, can interpret those regulations differently, the TPD does not provide the consistent rulebook that it might appear to provide.

    And this is significant because though as an RYO/MYO accessories provider, RTI is not greatly affected by the TPD in a direct way, it of course suffers the cold winds of the TPD that blow through the manufacturers of RYO and MYO tobaccos. And those cold winds keep blowing. While the revision of TPD2 is still about a year away, Sanchez says, he is already hearing comments about how TPD3 will add further restrictions. And he is rightly concerned because, as he pointed out, the imagination of EU regulators is boundless in this area.

    Another issue that is likely to cause problems for the tobacco industry in general is the upcoming EU directive on single-use plastics that will probably embrace the “polluter pays” principle where the polluter is interpreted as the manufacturer—of acetate filters, for instance—rather than the consumer who carelessly discards the item.

    Meanwhile, things are also tough in the U.S. where, for instance, the process that manufacturers have to go through to obtain approval from the Food and Drug Administration to put a new or modified product on the market seems so complex as to be unreasonable. Sanchez said that it was hardly possible for small RYO/MYO players to comply with these requirements and that some companies had withdrawn from the market. RTI, he added, had to increase its workforce just to do the testing and create the thousands of documents that were needed for compliance.

    Standardized packaging is another issue making life difficult—and not only in an indirect way. Although it seems to beggar belief, two countries, Israel and Canada, have implemented standardized packaging requirements for rolling paper booklets while Belgium has done the same for booklets that carry the same brand name as a tobacco product.

    But one of the most worrying developments that will inevitably affect RTI indirectly is the tendency for some countries to close or reduce the tax differentials between those applied to cigarettes and those applied to RYO/MYO tobacco. Portugal and the Czech Republic have already closed the gap, and the U.K. in March moved to reduce the difference.

    And, of course, RTI is plagued by the availability of counterfeit rolling paper booklets and the reluctance of many countries to take effective action against such illegal trade. Sanchez estimates that just a small proportion of counterfeit products are being intercepted in the EU and the U.S. but is claiming some success for a unique QR code system that the company has introduced and that allows wholesalers, retailers and consumers to check whether they are buying genuine products.

    Looking on the bright side, Sanchez says that RYO/MYO companies are generally doing better than the manufacturers of factory-made cigarettes and that RTI is doing particularly well. But, as always, there’s a catch. He said that RTI had been developing its presence on a number of markets—before, that is, the coronavirus crisis had raised its head. The situation was now complex, he added, and it was just too difficult to predict what the future might hold.

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  • Job Virgin Unbleached Cone Packs

    Job Virgin Unbleached Cone Packs

    Job rolling papers are now available in virgin unbleached cone packs.

    Pre-rolled and equipped with a tip to offer an easier way to pack, fill and enjoy, Job Virgin Cones are made of unbleached, chlorine-free and dye-free fibers that are responsibly harvested.

    Vegan and GMO-free, Job Virgin Cones are ultrathin (12 grams per square meter) and lightly porous for a slow burn and truer taste with minimal ash. With their natural brown hue, natural acacia gum adhesive and distinctive Job watermark, the cones are part of the recently introduced Job Virgin product line, which is intended for the discerning and eco-conscious consumer who prioritizes quality, flavor and sustainability.

    Job Virgin Cone packs are available in two retail sizes: 1 1/4 size (six cones per pack) and king size (three cones per pack). They are packed 32 packs per display and 24 displays per case.

    The top-selling premium paper brand in the United States with a legacy that goes back to 1838, Job is family-owned and distributed by Republic Tobacco, the largest roll-your-own/make-your-own distributor in the United States.