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  • Thoughtful Progress

    Thoughtful Progress

    Image: PuiZera

    At the recent GTNF in Athens, stakeholders debated how to responsibly advance innovation.

    By Taco Tuinstra

    For a decade and a half now, the Global Tobacco and Nicotine Forum (GTNF) has nurtured engagement worldwide, fostering lively and constructive discussions among its participants. The GTNF’s most recent gathering, Sept. 24–26 in Athens, was no exception. For three days, the Divani Apollon Hotel served as a modern-day Greek agora, the ancient public space where people exchanged ideas and engaged in philosophical discussions with both friends and adversaries. Paying tribute to the host nation’s famous philosophers, the GTNF delegates asked probing questions, contemplated opposing viewpoints and displayed the courage to doubt themselves.

    But even as Athens upheld the tradition of spirited discourse, one of the conference’s most powerful moments was strikingly quiet. On day three of the forum, Carolyn Beaumont, a general practitioner and tobacco harm reduction educator from Australia, concluded her presentation with silence. She then chimed a bell every time a person would have succumbed to tobacco-related disease during that time span. Mindful of the conference’s full agenda, Beaumont played the recording for only a brief period. Had she let it run for the duration of the one-hour panel discussion she took part in, the bell would have tolled 900 times. That’s the equivalent of one death every four seconds, or 8 million deaths—nearly the population of Switzerland—every year.

    The staggering numbers underlined the urgency for the industry to help reduce the harm inflicted by smoking, and how to best achieve that goal was a major focus of this year’s GTNF. The task, of course, is formidable. Smoking is a notoriously difficult habit to kick, witness the fact that 60 years after the U.S. Surgeon General’s landmark report on smoking and health, and following decades of anti-smoking campaigns around the globe, more than 1 billion people continue to light up.

    Much of that is due to the properties of nicotine. The chemical’s uncanny ability to simultaneously stimulate and relax keeps many users coming back despite the widely known health risks of smoking. Illustrating the tenacity of nicotine addiction, another GTNF speaker, the cardio-endocrine physician Rohan Savio Sequeira, shared an anecdote of a patient who woke up from bypass surgery and immediately asked for a cigarette. “That’s the challenge we’re up against,” Sequeira said.

    Photo: Timothy S. Donahue

    But while addictive, nicotine is not the compound that causes the most serious smoking-related diseases. Nicotine may elevate blood pressure and heart rate, but the more significant risks presented by cigarettes, including cancer and chronic obstructive pulmonary disease, stem from combustion. Several GTNF speakers compared the rewards and risks presented by nicotine to those of caffeine. But unlike the most popular method for taking caffeine—drinking coffee—the most common nicotine consumption method—setting fire to dried tobacco leaves and inhaling the smoke—exposes its user to thousands of harmful chemicals.

    While the obvious solution would seem to be for smokers to consume only the nicotine, through patches, for example, the low success rate of nicotine-replacement therapies in cessation suggests there are additional factors that keep people reaching for cigarettes. As multiple speakers pointed out during the GTNF, smoking is about more than self-administering nicotine. Many aspects of the ritual are difficult to replicate. “Pouch and blow me a smoke ring,” Rae Maile, managing director of research at the U.K. investment bank Panmure Liberum, challenged his intellectual sparring partner, Erik Bloomquist, during a GTNF “fireside chat” about the financial side of the nicotine business.

    But innovation is changing the equation. Over the past decade or so, breakthroughs in battery and atomization technologies have allowed manufacturers to construct devices that not only deliver nicotine without the harmful products of combustion but also closely mimic aspects of smoking that many consumers find so appealing—the “throat hit,” the hand-to-mouth motion and, yes, even the ability to blow rings. BAT Group Head of Global Policy Flora Okereke likened the nicotine business’ rapid technological leap to the progress that had played out over a much longer timespan in the automobile business: from Ford’s Model-T to today’s self-driving cars. While not risk-free, these tools, which include e-cigarettes and devices that heat rather than burn tobacco, offer an opportunity to satisfy people’s cravings at a fraction of the risk presented by traditional cigarettes. In 2015, Public Health England memorably announced that vaping was 95 percent less risky than smoking.

    Yet despite their considerable potential, such next-generation nicotine products have not been universally welcomed, with many regulators and health groups, including the influential World Health Organization, more attuned to the risk of attracting new nicotine users than the promise of transitioning adult smokers from deadly cigarettes to less risky consumption tools. Electronic nicotine-delivery systems have also come under fire for generating e-waste and creating fire hazards.

    Much of the Athens GTNF revolved around this conundrum: How can society reap the benefits of cigarette alternatives without attracting consumers who shouldn’t be using those products and without creating other unintended side effects, such as environmental pollution? As suggested by the 2024 conference theme, at least part of the answer lies in “Advancing Responsible Innovation.”

    Acknowledging the fact that tackling the challenges will require the involvement of stakeholders from all parts of society, the conference hosted a whopping 79 speakers, including 30 women, from various professional walks of life. In addition to industry officials, regulators and analysts, the lineup featured health activists, politicians and consumer advocates. There were returning headliners such as the director of the U.S. Food and Drug Administration’s Center for Tobacco Products, Brian King, and numerous first-time contributors, such as Greek Health Minister Adonis Georgiadis, who in a video message encouraged delegates to educate governments so that they could provide their citizens with accurate information about the relative risks of nicotine products.

    Other participating politicians included Morgana Daniele, a member of Lithuania’s Parliament and chair of that nation’s Commission for Addiction Prevention, and Pietro Fiocchi, a member of the European Parliament and vice-chair of the Committee on the Environment, Public Health and Food Safety. The retail sector was represented by Henry Armour, president and CEO of NACS in the U.S., and Panos Panayiotopoulos, general manager and director of the Greek retail association, among other speakers.

    Perhaps the GTNF’s biggest “coup” this year was the participation of Kathy Crosby, president and CEO of The Truth Initiative, a U.S. anti-tobacco group established after the 1998 landmark Master Settlement Agreement between leading tobacco companies and American states seeking to recover the cost of treating sick smokers. The Truth Initiative has been highly skeptical of e-cigarettes, especially because of their uptake by underage consumers. But Crosby courageously elected to engage rather than demonize the industry—a decision that will surely have raised eyebrows among the more uncompromising members of the public health establishment.

    Yet Crosby did not dilute her message. Even as she acknowledged the need for less harmful solutions for smokers who are not ready to leave nicotine behind, she was adamant such products should leave behind their youth appeal. With unauthorized sales accounting for the overwhelming majority of U.S. e-cigarette sales, she urged retailers to remove illegal products from their store shelves immediately. Doing so, she said, would create goodwill and pave the way for constructive dialogue with the public health community. Industry representatives at the GTNF eagerly accepted the olive branch. “The ball is now in our court,” said Jose Luis Murillo, chief regulatory advisor to Juul Labs’ CEO.

    Encouragingly, each link of the supply chain represented at GTNF appeared eager to address underage access. While preventing sales to minors is a legal requirement in many markets, NACS’ chief, Armour, stressed that his organization’s members are motivated not by fear of penalties but because they feel a responsibility toward the communities they serve.

    Of course, that doesn’t mean it’s easy. Sketching the size of challenge, Armour noted that half of the U.S. population—some 165 people—comes to a convenience store every day, with 40 percent of their inventory comprising age-restricted products such as tobacco, alcohol and lottery tickets. Fortunately, technology, such as digital age verification platforms, are increasingly alleviating the burden.

    While the desire to prevent youth access is widely shared among stakeholders, opinions differ on the best way to achieve that objective. Around the world, lawmakers are increasingly resorting to prohibition, banning vape flavors or single-use products, for example—or outlawing new nicotine products altogether.

    That is not the approach favored by most GTNF speakers. Counterfactual Director Clive Bates reminded his audience that people have been using nicotine for at least 12,000 years. “Demand will persist because nicotine provides psychoactive rewards,” he predicted. Banning it, Bates noted, will simply shift demand from legitimate suppliers to law-evading ones, as happened in the U.S., where an onerous product authorization system combined with halfhearted enforcement has handed nearly the entire vaping business to the black market. Dave Dobbins, former chief operating officer of the American Legacy Foundation and now a consultant to Altria Group, cited the example of Bhutan, which in 2004 declared a nationwide ban on sales of tobacco products but was later forced to abandon its experiment under pressure from the illicit market (see “Bhutan’s Tryst with Health Imperialism,” Tobacco Reporter, June 2024).

    Instead of betting on unworkable bans, many GTNF attendees were hopeful that the same innovation that had brought the world less harmful nicotine products would help tackle challenges such as underage consumption. Elaine Round, group head of life sciences at BAT, took the opportunity introduce the GTNF audience to her company’s recently launched Omni platform, an evidence-based, accessible and dynamic resource that shows how science and innovation can combine to achieve a smokeless world. The potential of such innovations was clearly demonstrated in three “big pitch” presentations, a new GTNF event during which companies outlined their solutions to some of the business’ most vexing problems, and answered questions from an expert panel.

    Rhodri James, chief sales officer at Yoti, a digital identity company, described a technology that verifies buyers’ ages by scanning customers’ faces and measuring their skin tone. As people age, James explained, the pigment of their skin changes. Wrinkles, for example, have a different tone than smoother parts of the skin. By determining the differences, Yoti’s technology is able to determine a potential buyer’s age with an almost uncanny accuracy. In tests, the platform performed much better than human store clerks. In addition to speeding up checkouts—and thus reducing “friction” in store transactions—the platform helps defuse what James described as “challenges to the challenge.” Confronted with a customer incensed about being denied a sale, the salesclerk can simply blame the computer. Asked about privacy, James noted that facial age estimation is not facial recognition. The platform, he said, cannot tell who you are—only how old you are.

    Greenbutts presented a filter that it claims is biodegradable without compromising performance and taste (see “A Future Without Plastics,” Tobacco Reporter, March 2023). The product addresses a colossal challenge indeed. With 11 billion cigarettes discarded daily, filters are the single most littered item on the planet. As indoor smoking bans have forced consumers outdoors, the problem has only become worse; butts that were previously deposited in ashtrays are now ending up in the environment. Made with cellulose acetate, current filters degrade into nanoplastics, which not only pollute but also end up in the food chain.

    Founded in 2010, Greenbutts has developed a plastic-free, plant based product that is 100 percent dissolvable in water. Importantly, the filter delivers the same sensorial experience as cellulose acetate products at a comparable cost, according to the company. In blind tests performed at trade exhibitions, many smokers chose Greenbutt’s filter, said Chief Strategy Officer Luis Sanches, who added that production could be scaled up easily.

    Greentank shared a solution that offers vapers a more consistent user experience while lowering the risk of creating undesirable compounds during the heating process. In many currently available vapes, the flavor tends to wane as the pod empties. In tests, the Quantum Vape technology delivered 1,000 puffs with virtually unchanged flavor intensity. According to President and Chief Operating Officer Corey Koffler, Greentank was able to achieve this through “cleanroom chip manufacturing technology combined with physics at nanoscale.” Instead of relying on wicks and coils or ceramics, Quantum Vape comprises thousands of microscopic heating tubes on a chip. The system allows Greentank to precisely control both the location and the duration of the heating, thus eliminating hot spots and avoiding the risk of negative chemical reactions.

    The 2024 GTNF highlighted many more examples of such remarkable innovations, which perhaps isn’t surprising considering the amount of money invested. In a discussion among prominent suppliers of vaping hardware, e-liquids and nicotine pouches, company representatives revealed how much their employers spend on research and development. For example, Smoore International Holdings, a leading e-cigarette manufacturer headquartered in China, directs a whopping 10 percent of its revenue to R&D, according to Executive Director Eve Wang.

    While celebrating innovation, GTNF speakers lamented the hurdles preventing society from reaping the full benefits of new technologies. Misguided regulation featured prominently among the delegates’ gripes. According to Health Diplomats President Delon Human, 34 countries ban tobacco harm reduction products outright, leaving the market to combustible cigarettes. In the rest of the world, manufacturers must contend with everything from no regulations to very strict frameworks. Many words were devoted to the burdensome product authorization process in the U.S., which has left law-abiding American consumers with only a handful of outdated products and a thriving black market. The European Union’s continuing ban of snus, too, elicited repeated groans, as did the rapid spread of bans on nicotine pouches.

    Speakers also despaired at increasing restrictions on vape flavors. Konstantinos Farsalinos, senior  researcher at the School of Public Health at the Universities of Patras and West Attica, said that in the name of protecting youth, regulators aimed to make tobacco harm reduction products unpleasant and difficult to access. “But harm reduction will not work if you substitute cigarettes with a product that the smoker does not enjoy,” he warned.

    Misinformation was also mentioned as a challenge by many GTNF delegates. The World Economic Forum lists it as the biggest threat to humanity after climate change, noted Tikki Pang, former director of research policy and cooperation at the WHO. In the nicotine business, misinformation is widespread not only among consumers, many of whom now mistakenly believe that vapes are more harmful than cigarettes, but also among people who should know better: doctors. What medical schools teach their students about nicotine is abysmal, noted Jasjit Ahluwalia, a professor of behavioral and social sciences and professor of medicine at the Brown University School of Public Health and Alpert School of Medicine. In a recent survey, 80 percent of U.S. physicians erroneously indicated that nicotine causes cancer. Speakers agreed that education would be key to help correct misperceptions, although they acknowledged that any such effort by nicotine-related companies would likely backfire due to the industry’s enduring reputational challenge.

    The Athens GTNF also devoted much attention to a key but often overlooked stakeholder in the debate: the consumer. Nancy Loucas, executive coordinator of the Coalition of Asia Pacific Tobacco Harm Reduction Advocates, emphasized the need to humanize the consumers, who she said are too often treated as mere data points. “We are more than statistics,” said Loucas, after sharing her personal story of transitioning away from smoking with the help of e-cigarettes.

    Acknowledging the people that make up the market, tobacco companies appear to be increasingly receptive to that message, as became clear during a keynote by Imperial Brands’ Paola Pocci, whose very title—chief consumer officer—underscores the central role of nicotine users in the manufacturers’ operations. While consumers are similar in their desire for better health, Imperial Brands’ research also revealed that one size does not fit all; they need a variety of product categories to choose from, depending on local regulations and personal preferences, which may vary even depending on the time of day.

    To facilitate the transition to lower-risk products, devices must also be easy to use. As multiple panelists observed, innovation is useless if consumers don’t want the product. Bells and whistles that excite product designers also complicate operations, which in turn could deter users. The success of disposables is a case in point. Single-use vapes have become popular largely due to their ease of use; there are no buttons to push, batteries to charge or apps to pair. All the user has to do is puff—just like with a conventional cigarette.

    Despite the tremendous technological developments of recent years, GTNF panelists agreed that much work remains. Because no player has yet managed to develop a perfect cigarette substitute, the industry must continue to listen to consumers and address their pain points, said Pocci. The fact that cigarettes are still the most popular nicotine product suggests that the industry has not done enough to reduce the harms of smoking, echoed Marina Murphy, senior director of scientific affairs at the Haypp Group—although she also noted that it had done much better than the pharmaceutical sector, which failed to appreciate that people smoke not only to satisfy their nicotine cravings but also for the sensory aspects.

    Even as regulatory frameworks tighten and misinformation persists, the 2024 GTNF once again underlined the industry’s strong commitment to tobacco harm reduction and continued innovation. While the combination of regulatory and societal challenges will keep nicotine companies on their toes, it will also ensure another trove of compelling discussion topics when the GTNF reconvenes at a yet-to-be-announced location in 2025.

  • Habanos Presents 2024 Upmann Magnum Finite LE

    Habanos Presents 2024 Upmann Magnum Finite LE

    The launch of the H. Upmann Magnum Finite Limited Edition 2024 vitola took place in one of the most iconic locations in the Spanish capital—the arches and inner gates of the Las Ventas bullring, a space filled with charm, history and culture.

    Habanos S.A., the distribution arm of Cuban cigars, together with its partner and exclusive distributor for the Spanish market, Tabacalera S.L.U., presented the new vitola at the event organized by the Club Pasion Habanos under the name El ruedo de H. Upmann.

    “The H. Upmann Magnum Finite Limited Edition 2024 (53 ring gauge x 130 mm length) stands out not only for its elegance but also for its exclusivity. It is a vitola designed for aficionados seeking a unique and sophisticated experience, combining the heritage and brand’s tradition, its refined Habanos, with a light to medium strength, and the characteristic aging of at least two years for limited editions,” a Habanos release states. “H. Upmann Magnum Finite is the result of a meticulous crafting process, using wrapper, filler and binder leaves from the Vuelta Abajo plantations, where the world’s best tobacco is produced, in Pinar del Rio region, Cuba.”

    Magnum Finite comes in an exclusive box of 25 units. The flavor is creamy, woody, toasted and earthy with vegetal and mineral hints, ripe fruit, sweetness and light spices, leaving a finish of hay, smoked cedar, damp earth, moss, iodine hints, dried plum, vanilla, nutmeg and molasses.

    Its aroma is tobacco, woody, toasted, herbal, ripe fruit, spicy and sweet, smoked cedar, leather, raisin, coffee, cocoa, clove, vanilla and molasses.

  • Skin Tone May Impact Effectiveness of Patches

    Skin Tone May Impact Effectiveness of Patches

    Photo: Andrey Popov

    Nicotine patches may be less effective in people with darker skin tones, reports Bloomberg, citing research from the University of California, Riverside.

    Writing in the journal Human Genomics, the scientists noted that eumelanin, a substance associated with darker skin tones, naturally binds to nicotine. This means that nicotine could accumulate at much higher levels in Black people’s skin.

    This has implications for understanding nicotine addiction as well as smoking cessation efforts, particularly those relying on nicotine patches. The patches, which people typically stick to their arms or chest, are supposed to supply a steady flow of nicotine throughout the day to help reduce cravings. But if eumelanin’s affinity for nicotine impacts that flow, it could mean people with darker skin will have a harder time quitting.

    In 2022, about 30 percent of people who wanted to quit with a cessation aid used patches, according to the National Institutes of Health. Only 5 percent of Black smokers in the U.S. successfully quit cigarettes each year compared with 7.6 percent for the overall population.

  • U.K. County Installs Vape Waste Bins for Recycling

    U.K. County Installs Vape Waste Bins for Recycling

    In North Yorkshire County in the United Kingdom, vape recycling bins have been installed at all 20 household waste recycling centers to prevent vapes from ending up in curbside bins.

    Materials used in single-use vapes can harm the environment and must be disposed of separately.

    Once collected at the recycling centers, they are transported to the recycling facility to be dismantled, and the lithium-ion battery is removed for processing while the metals and plastics are recycled.

    Lithium-ion batteries can cause fires if discarded in curbside recycling or waste bins. These batteries cause most fires in the waste collection and recycling industry.

    “This exciting new initiative has the aim of ensuring that people who use vape devices know how to dispose of them in the right way,” said the county’s executive member for waste services, Cllr Greg White. “Vapes are not safe to be recycled or disposed of in curbside bins or boxes at home. One incorrectly discarded vape could cause huge damage or serious injury.

    “In August, we also introduced coffee pod bins at our recycling centers as we aim to continue expanding what we accept at our recycling centers. These initiatives demonstrate our commitment to responsible recycling and reducing our carbon footprint.”

    Research released this year from Material Focus found that, in the U.K., the public is buying 7.7 million single-use vapes per week, which has doubled compared to 2022.

    People are also throwing away 5 million single-use vapes per week, or eight per second, which has quadrupled compared to 2022.

  • French Vape Organization SOVAPE to Shutter Doors

    French Vape Organization SOVAPE to Shutter Doors

    French consumer vaping organization SOVAPE announced this week it will dissolve. The group has been active since 2016.

    Best known for organizing three Vape Summits in France between 2016 and 2019, SOVAPE also co-founded the European Tobacco Harm Reduction Advocates (ETHRA) umbrella organization. Since 2019, the group has commissioned annual surveys of French public opinion on vaping and nicotine conducted by major market research firm BVA.

    However, this year BVA notified SOVAPE that it could no longer participate due to a health industry client’s contract prohibiting BVA from also working with nicotine-associated organizations, according to media reports.  

    The abrupt cancellation of the survey followed other recent blows, including news articles accusing SOVAPE and other consumer groups of connections to the tobacco industry, and attacks on scientists and health professionals who supported SOVAPE’s mission.

    In an Oct. 6 website post, SOVAPE explained it can no longer carry out its mission due to the current climate of “censorship, threats, lies, denigration and slander, to which can be added the dissemination of fake news and the denial of scientific data.”

    “Dialogue in this context is impossible,” SOVAPE wrote, “and clearly, it is now even ‘forbidden’ to provide information, such as a banal survey, on reducing the risks of smoking in France.”

    SOVAPE will donate the balance of its funds equally to the Pasteur Institute and fellow vaping groups AIDUCE and La Vape du Cœur. SOVAPE has paid to keep its website available for 10 years, and maintains videos of Vape Summit proceedings on its Youtube channel.

    “We regret that we are no longer able to cultivate a dialogue to promote the risk reduction approach against the main cause of preventable diseases and premature deaths in France,” SOVAPE said in its post. “We do not regret having tried, but must acknowledge that it is no longer possible for us to lead this fight that is dear to us, and which has nevertheless contributed to saving lives!”

  • The Long Road to Zero

    The Long Road to Zero

    Photo: monticellllo

    Efficiency will be the key to decarbonizing the EU transportation sector by 2050.

    By Stefanie Rossel

    To achieve its Green Deal goal and make the European Union climate-neutral by 2050, the European Commission aims to decarbonize transportation in the common market by that same date. It’s a mammoth task because the transportation sector is the EU’s biggest source of greenhouse gas (GHG), currently accounting for more than 1 billion tons of carbon dioxide (CO2) emissions annually, which is equivalent to the total emissions of Germany and the Netherlands combined.

    Not only is transportation responsible for more than a quarter of the EU’s total GHG emissions, but it is also the only major economic sector in Europe where GHGs have increased since the 1990s. Demand for transportation continues to grow steadily in the EU. According to the Alliance for Logistics Innovation through Collaboration in Europe (ALICE), demand for transportation in Europe increased by more than 20 percent between 2000 and 2019, with freight transportation growing 22 percent. Although the Covid-19 pandemic disrupted this trend, leading to a drop in GHG emissions from transportation of 13.5 percent between 2019 and 2020, according to the European Environment Agency, emissions quickly resumed their upward trend, growing by 2.7 percent in 2022. International transportation emissions, such as those from ships and airplanes, are also projected to continue increasing.

    Complicating matters, a recent analysis by Transportation and Environment (T&E), a European advocacy group for clean transportation and energy, shows that transportation has been decarbonizing more than three times slower than the rest of the EU economy since peaking in 2007. Under current climate policies, the group says, its share could reach 44 percent of all GHG emissions in the common market by 2030, up from 29 percent today.

    According to the evaluation, the EU’s current climate regulations will reduce transportation emissions by just 25 percent compared to 1990 levels in 2040 and by 62 percent in 2050 as the new CO2 standards fall short on several measures, according to the organization. For starters, T&E argues, the rules lack a 100 percent zero-emission target. Furthermore, they leave 13 percent of heavy-duty vehicle sales unregulated and define trucks running partially on diesel as “zero-emission.” Cars, vans and trucks with combustion engines bought between now and the mid-2030s, the group argues, will still be driving on European roads while shipping operators have little incentive to increase their operational efficiency. Meanwhile, demand for air travel, spurred by increasing airport capacity, will offset any gains from green fuel this decade.

    More Measures Needed

    T&E therefore calls for additional efforts complementing Green Deal policies to fully decarbonize transportation. Next to halting new airport and motorways capacity expansion and introducing binding electric vehicle sales targets for companies owning large fleets, the organization stresses the importance of direct electrification of road transportation, which, the group says, is two times more efficient than hydrogen power and four times more efficient than using e-fuels. Trucks are responsible for 25 percent of climate emissions from road transportation in Europe while accounting for less than 2 percent of the vehicles on the road, the group says.

    A study T&E commissioned in 2022 concluded that it was possible to transition all new freight trucks to zero emission cost-effectively and in time to meet Europe’s climate targets. Long-haul trucks, the study suggested, would initially have a slower increase in uptake potential but grow quickly to 80 percent by 2026 and to 99.5 percent by 2030. Held against the reality of zero-emission truck sales in the EU, this might be wishful thinking: Of the 11,000 new zero-emission heavy-duty vehicles sold in the EU-27 in 2023, only 0.9 percent were heavy trucks and 5 percent light and medium trucks, according to the International Council on Clean Transportation. In the fourth quarter of 2023, the sales share of zero-emission vehicles (ZEVs) in the heavy truck segment exceeded 1 percent for the first time.

    Reducing CO2 emissions by 50 percent will require a minimum of 465,000 ZEVs, the European Automobile Manufacturers’ Association estimates. These vehicles will need to be supported by 53,000 and 65,000 charging points as well as around 2,900 H2 fueling stations.

    Increasing Logistics Efficiency

    Logistics account for 11 percent to 12 percent of Europe’s total CO2 emissions, according to ALICE vice chair Sergio Barbarino. “The problem is that while most industry sectors since the 1980s or 1990s have managed to decrease their carbon footprint, transportation has been completely unbound,” he says. “Transportation has a huge struggle to decarbonize.”

    While thorough electrification of vehicles or use of sustainable aviation fuels are important factors in the journey toward zero emission, ALICE prefers a more holistic approach, leveraging opportunities for increased logistics efficiency.

    ALICE was set up to develop an industry-led strategy for research, innovation and market deployment of logistics and supply chain management, and to provide an overarching view on logistics and supply chain planning and control.

    The not-for-profit association has more than 180 members and represents all logistics key stakeholders as well as retail companies, information and communication technology providers and research and technology centers. ALICE supports, assists and advises the European Commission in the implementation of the EU Programs for research, Horizon 2020 and Horizon Europe.

    The alliance’s defining rationale is the Physical Internet (PI), an open-method approach that maximizes the use of existing data in infrastructure. The PI involves sharing resources with business partners, for instance, transportation means or storing space, which reduces costs, increases efficiency and contributes directly to reducing traffic and therefore emissions. The PI aims to seamlessly connect organizations by means of an overarching network system to external sources and capabilities so that they can collaborate and share transportation routes as well as logistics nodes, such as distribution centers, inland terminals or airports and ports.

    For the future, ALICE has identified several pillars. The first deals with how freight demand growth is managed, focusing on the question of how much stuff really needs to be moved and whether it would be more efficient to manufacture closer to the point of consumption.

    The second pillar stresses that all modes of transportation should be used as efficiently as possible. “Our problem today is that traditionally shaped supply chains are highly individual and diverse,” Barbarino said. “This lack of standardization makes the supply chain inefficient.” Choosing the most efficient energy mix between diesel-powered trucks with 100 g GHG per ton-kilometer, ZEVs (which still emit around 80 g GHG per ton-kilometer), trains (25 g GHG per ton-kilometer) or ships (10 g GHG per ton-kilometer) can make a huge difference.

    Pillar No. 3 calls for managing fleets and assets as efficiently as possible. In Europe, a truck is on average used with 50 percent of capacity. “As long as you only ship single-type products, you can never fill a truck efficiently. To achieve this, you will need combined products of different companies.”

    If enhanced efficiency is achieved in pillars one through three, Barbarino emphasized, this would lead to a 50 percent to 60 percent reduction in emissions. In addition, ALICE expects a $100 million to $300 million cost relief for the European industry.

    Removing Regulatory Barriers

    Several EU directives currently in preparation are expected to significantly facilitate the realization of more sustainable transportation solutions, according to Barbarino. The revised Weights and Dimension Directive will remove barriers for the uptake of ZEVs and energy-saving technologies and harmonize the rules on maximum weight and dimension of heavy-duty vehicles in cross-border operations. Among other things, it will allow for the extra weight of the batteries for ZEVs, enable a European modular system between member states with trucks heavier than 40 tons and will streamline procedures and requirements for indivisible loads.

    The new Combined Transportation Directive will support the shift from road freight to lower emission transportation modes such as inland waterways, maritime transportation and rail. It will entail the obligation on terminals to publish information about available services and facilities.

    Apart from policies, automation could be a revolution for freight transportation, Barbarino pointed out, and also for sustainability. He reported about an experiment in which companies had tried out “silent delivery,” i.e., delivery before six a.m. and thus outside the usual morning rush hour. This way, the companies could save 30 percent of fuel.

    “To decarbonize transportation, it is important to push the boundaries of technology and regulation,” Barbarino concluded. “Often, the most complex part of a project is not the technology or the innovation but the permitting.”

  • Testing the Waters

    Testing the Waters

    Photo: Adobe Stock

    Tobacco companies are slowly gaining their footing in the cannabis business.

    By Stefanie Rossel

    Eight years after the first tobacco company invested in a cannabis firm, hardly a month passes without news on the progress of cigarette makers’ ventures into this field. On Sept. 5, Organigram Holdings, BAT’s first major investment in the cannabis sector, announced that it had closed the second of three tranches of a CAD124.56 million ($92.2 million) follow-on equity investment by BAT’s BT DE Investments subsidiary.

    As part of the transaction, Organigram in 2023 created a strategic investment pool, Jupiter, to be funded with CAD83.1 million. According to a press release, Jupiter is targeting investments in emerging cannabis opportunities that enable Organigram to apply industry-leading capabilities to new markets, thus expanding its global footprint.

    Organigram’s first Jupiter investment, in March, was in Open Book Extracts, a Roxboro, North Carolina, USA-based manufacturer of legal cannabinoid ingredient production, formulation and finished goods. The $2 million investment was Organigram’s second into the U.S. market. In June, the company invested €17 million ($18.8 million) in Sanity Group, a leading German cannabis company.

    Meanwhile, on Aug. 1, Aurora Cannabis announced a commercial collaboration with Cogent International manufacturing, a subsidiary of inhalation and oral delivery systems provider Vectura Fertin Pharma, which is associated with Philip Morris International. Through the arrangement, Cogent will launch its Luo CBD lozenge on Aurora’s Canadian medical cannabis patient platform, giving it access to patient feedback that will be used for building data for future analysis.

    There is, however, also less upbeat news from the sector. Altria’s Cronos Group, which has been struggling to find its footing in the Canadian recreational market, ended last year with a $168.7 million loss; in mid-2023, Cronos was even reviewing sales options.

    In June this year, Imperial Brands’ Oxford Cannabinoid Technologies (OCT) delisted from the London Stock Exchange, where it had been one of the first cannabis companies to start trading in 2021. Since its listing, the company’s share price had fallen by 97 percent, with its market capitalization plunging to £1.5 million ($1.96 million). OCT stressed that it had no immediate cash flow concerns but said that, as an unlisted company, it expected to have access to a larger pool of capital.

    Room for Experimenting

    Deepak Anand

    Deepak Anand, principal of Vancouver-based ASDA Consultancy Services, describes the challenges tobacco companies are encountering in the cannabis sector as part of the natural progression for businesses entering a new industry. “For most tobacco companies, these early-stage investments are not particularly significant from a financial standpoint; this is certainly true for Altria,” he says. “Their involvement in cannabis is more about gathering intelligence. By holding stakes in cannabis companies, tobacco firms gain insights into the market, including product trends and production methods, in case they decide to scale up their operations in the future.”

    According to Anand, Organigram is a prime example of this approach. “What’s notable about Organigram is their product development collaboration—a center of excellence focused on next-generation cannabis products,” he says. “As a result, we see many personnel from BAT actively involved at Organigram’s Moncton, New Brunswick facility. They are conducting extensive R&D on cannabinoid products, immersing themselves in different sectors of the cannabis industry, leveraging the federally legal market to experiment and innovate.”

    In August 2024, Organigram announced preliminary results from its clinical pharmacokinetic study on nano-emulsion technology. Branded as FAST (fast-acting soluble technology), this patent-pending innovation aims to offer faster onset, improved bioavailability and a more predictable duration of cannabis effects. Organigram expects to launch FAST in the fall, starting with gummies.

    Anand explains why many tobacco companies are zeroing in on CBD, pharmaceutical or medical cannabis segments. “Tobacco firms have realized they must prioritize consumer safety and navigate complex legal frameworks. For instance, the U.K.’s Proceeds of Crime Act presents a unique challenge. Since nonmedical cannabis remains illegal in the U.K., investing in cannabis companies—even in jurisdictions where it is legal—can be legally complicated.”

    Potential New Market

    Cannabis continues to be legalized for medical and recreational use in more jurisdictions, albeit at a slower pace than in recent years. On April 1, Germany became the third country in the European Union after Malta and Luxemburg to authorize recreational cannabis, although under EU pressure it stopped short of the originally envisioned full legalization. The first phase allows consumers to cultivate cannabis for personal consumption in social clubs; in a second step, Germany will test legalization in selected regions.

    Six months into partial legalization, recreational cannabis is hardly flourishing: The social clubs are just getting going while Bavaria continues to fight cannabis consumption with new local laws. Nevertheless, Anand sees opportunity in Germany. The country’s 2017 legalization of medical cannabis coincided with the introduction of telemedicine. Telemedicine providers specialized in prescriptions for cannabis have mushroomed since. “Cannabis is now regarded as any other medical product,” says Anand. “That shift alone has created very strong market forces. Most people who want cannabis can get a prescription and obtain it.”

    He expects the cannabis landscape to experience another shift once the pilot projects under the second pillar of Germany’s cannabis law become operational. “Once consumers are able to access cannabis products in pharmacies or licensed stores, we’ll see a new phase in the market,” says Anand. In April, lawmakers released draft legislation to implement the second pillar of Germany’s cannabis law.

    Japan is another market worth watching. In 2023, the country passed a bill to amend its Cannabis Control Law for the first time in 75 years. The proposed revisions, expected to take effect as soon as this year, will bring much-needed clarity to CBD regulations and may accelerate legal use in areas like medicine, health, beauty, beverages and edibles. Citing Euromonitor International, The Japan Times noted that sales of CBD products in Japan have grown sixfold over the past four years, reaching ¥24 billion ($154 million) in 2023.

    “I believe this amendment will open up the CBD category, although the restrictions on THC content are strict compared to other markets,” says Anand. “That poses a challenge, but it’s significant that the Japanese government is moving away from its previous stance, where CBD was only allowed if derived from the seed and stalk of the cannabis plant, rather than the flowers, where the most active cannabinoids are found.”

    As for Japan Tobacco, the only major international tobacco company without a stake in the cannabis sector, Anand expects them to enter the space “sooner rather than later.” “The amendment of Japan’s Cannabis Control Law, along with increased activity from JT’s global peers, will likely prompt the company to explore opportunities in this field more aggressively,” he says. However, since JT is partially owned by government, any major business decision would require the approval of Japan’s minister of finance.

    Shifting Sector

    Statista expects the global cannabis market to generate $64.73 billion in 2024 and then grow at a compound annual growth rate of 3.01 percent until it reaches a value of $75.09 billion by 2029. With an anticipated revenue of $42.98 billion in 2024, the United States will continue to be the world’s largest market for cannabis, although the substance remains illegal on the federal level.

    Currently, medical cannabis is legal in 38 states and various U.S. territories while recreational use is permitted in 24 states and Washington, D.C. In April, the Drug Enforcement Administration (DEA) announced that it would reclassify the drug from the strictest Schedule I, which refers to drugs with no accepted medical use and a high potential for abuse, to the less stringent Schedule III.

    By rescheduling cannabis, the drug would be studied and researched to identify concrete medical benefits, opening the door for pharmaceutical companies to get involved with the sale and distribution of medical cannabis in states where it is legal. Reclassifying cannabis would also represent a first step toward narrowing the policy chasm between state and federal cannabis laws.

    On Aug. 27, however, the DEA postponed its cannabis reclassification hearing to Dec. 2, after the U.S. presidential election. The announcement sent cannabis stocks plunging. Asked to take a position on a ballot measure seeking to legalize recreational cannabis in Florida, Republican presidential contender Donald Trump on Sept. 9 said that if he wins in November, his administration would “focus on research to unlock the medical uses of marijuana.”

    The Democratic presidential candidate, Kamala Harris, too appears receptive. “Both sides supporting the cause is certainly good news for the cannabis industry,” says Anand. “But at this point, it is still uncertain what U.S. legalization might look like. What we have seen so far is the DEA comment on rescheduling, which will still involve cannabis to be considered like a pharmaceutical product. But then what happens on a state-by-state basis—will there be a Department of Justice memo forcing the government to leave the states alone because of the states’ rights?”

    The cannabis sector is undergoing a significant transition, according to Anand. “In North America, there was a surge of early interest and substantial investment in the sector, but much of that capital was misallocated or even wasted. Some early-stage founders mismanaged their companies, leading to inefficiencies. The challenge with cannabis legislation is that it often moves more slowly than anticipated, which leads to disappointment when milestones aren’t met, such as the DEA delaying hearings or Germany adopting a phased approach to legalization.”

  • Smokeless Coup

    Smokeless Coup

    Marlboro remains the world’s most valuable tobacco brand, but cigarette alternatives are gaining ground.

    Contributed

    The total value of the world’s top 10 most valuable tobacco brands has decreased by 6 percent, with eight out of 10 brands experiencing a decline in brand value this year, according to the latest ranking by Brand Finance, a leading brand valuation consultancy. The ranking reveals a significant shift in the industry toward smokeless alternatives, driven by changing consumer preferences and increasing regulatory pressures. Despite these changes, traditional combustible tobacco brands remain the most valuable, supported by loyal customer bases and effective pricing strategies.

    IQOS (brand value up 8 percent to $3.5 billion) is the fastest-growing tobacco brand, driven by rising revenue from smoke-free products. Philip Morris International reported smoke-free products reached nearly 40 percent of total net revenues in the fourth quarter of 2023. This was driven by the continued growth of IQOS, which has now surpassed Marlboro in net revenues, solidifying its position as the leading premium nicotine brand less than 10 years after its launch.

    Despite a 6 percent drop in brand value to $32.6 billion, Marlboro retains its position as the world’s most valuable tobacco brand for the 10th consecutive year. It leads the sector by a significant margin, with a brand value more than five times that of L&M, which holds the second spot.

    Altria Group, which owns Marlboro in the United States, and PMI, which owns the brand elsewhere, have both faced declining revenue from combustible products. Altria has struggled with lower shipment volumes and increased promotional investments, including a recent $0.17 per pack price increase on Marlboro and other brands in the U.S. Similarly, PMI has reported a drop in revenue from combustible tobacco. Nevertheless, Marlboro retains its top position due to its loyal customer base and strong promotional strategies.

    L&M (brand value $6.2 billion) has climbed to second in the ranking, despite recording a 2 percent decline in brand value. It has overtaken Pall Mall, which now sits in third following a 9 percent loss in brand value to $5.9 billion. L&M’s brand value has taken a hit as shipment volumes have declined. L&M is the sector’s strongest brand with a Brand Strength Index score of 77 out of 100.

    “While Marlboro continues to lead as the most valuable tobacco brand for the 10th consecutive year, the industry is undergoing significant transformation,” said Richard Haigh, global managing director at Brand Finance.

    “The rise of smokeless alternatives like IQOS highlights shifting consumer preferences and changing market dynamics. Earlier this year, BAT’s announcement of a $31.5 billion impairment on the value of some of its U.S. cigarette brands marked the first significant write-down in a major market.

    “Acknowledging the reality that the market for traditional cigarettes is shrinking and taking action should be seen both as a bold and an important step in addressing an existential problem for the company. With eight out of the top 10 brands experiencing declines in value, tobacco giants must be brave in admitting market shifts and strategically planning their next moves to sustain global dominance and relevance.”

    Chesterfield (brand value $3.1 billion) has maintained its brand value year-on-year and advanced one position to seventh place. The brand has seen a rise in shipment volume, with an 8 percent increase in the fourth quarter of 2022 and a 14 percent increase for the full year, which has contributed to its stable brand value this year.

    The latest rankings highlight the dominance of U.S. tobacco brands, which make up a remarkable 92 percent of the total brand value in the ranking, totaling $61 billion. Only two brands in the ranking are from outside the U.S., the U.K.’s Rothmans (brand value down 8 percent to $2.9 billion) and Indonesia’s Sampoerna (brand value down 12 percent to $2.7 billion).

  • Get Packing

    Get Packing

    Once the EU Packaging and Packaging Waste Regulations come into force, tobacco companies will have around 18 months to ensure all their packaging in the market is compliant. | Photos: Parkside

    Preparing for Europe’s new waste regulations

    By George Gay

    In July, Parkside issued a press note describing some of the ways in which flexible packaging might be used to help manufacturers in responding to the EU’s nascent Packaging and Packaging Waste Regulations (PPWR), ideas that Tobacco Reporter followed up on in a conversation with the company’s sales account manager of tobacco, Laura Haggerty.

    Parkside’s Recoflex range includes plastic and paper-based materials that are suitable for recycling.

    Tobacco Reporter: Would you please explain to those not entirely familiar with the world of packaging how you define the term “flexible packaging?”

    Laura Haggerty: Flexible packaging refers to any item of packaging that is made from a nonrigid material. In the tobacco industry, it’s most commonly seen in the form of loose-tobacco pouches, the shrink-wrap film that we use to protect cigarette cartons, and cigarette carton liners.

    However, flexible packaging can be made of almost any material, including plastic, bioplastic, paper and aluminum foil. Each material has its own pros and cons, which is why they are often combined in the form of laminates. A tobacco packaging will often contain several laminate materials to help keep its contents fresh by protecting against moisture and oxygen.

    Your press note says a preliminary deal on the PPWR was reached in April. Do you know when the regulations will be finalized?

    The provisional text of the deal has been finalized and will come into force at the end of 2024, but some key details will not be decided for several years.

    The EU will investigate the viability of bio-based materials in 2027 while the design for recycling guidelines will not be set until 2028. This means PPWR will not take its final form until the end of the decade at the earliest.

    When will the regulations be enforced?

    While PPWR comes into force at the end of this year, businesses have 18 months to ensure they comply with the new rules. That means, in practice, they will be enforced from mid-2026.

    What will be the main differences between the packaging regulations under PPWR and those under the Packaging and Packaging Waste Directive (PPWD) already in force?

    The main difference is that PPWR is a regulation whereas PPWD is a directive. In EU law, directives set a goal that is legally binding, but member states have a degree of freedom in how they reach that goal. Regulations are entirely legally binding, setting out policies that member states must follow in full, even if that means rewriting that country’s laws. This will also harmonize regulations across the EU, which should help with implementation.

    This is important as it will see extended producer responsibility (EPR) rollout across the EU. EPR is a policy approach that makes packaging producers responsible for the cost of packaging waste management. These costs are meant to encourage producers to design out unnecessary packaging while also incorporating recyclable materials where possible.

    PPWR also introduces new, more ambitious targets for waste reduction that each country must meet. These targets are to reduce packaging waste per capita by 5 percent by 2030, 10 percent by 2035 and 15 percent by 2040 compared to 2018 levels. It includes mandatory reuse and refill targets for certain packaging types, more restrictions on single-use plastics and PFAS [perfluorinated and polyfluorinated alkyl substances] chemicals, and new labeling requirements, among many other things.

    What are the main ways in which the new regulations will affect the tobacco/nicotine industry?

    The introduction of EPR will have a major effect. Tobacco companies operating in the EU will have to cover the costs of waste disposal, so they will find margins squeezed unless they can redesign packaging to be easier to recycle—or use less packaging altogether. When the design for recycling guidelines is finalized, this may become mandatory.

    This will affect the use of materials like shrink-film, which is currently problematic to recycle in existing infrastructure, so tobacco companies may have to look at other barrier materials to protect their products through the supply chain.

    Part of PPWR also includes new labeling requirements, which tobacco companies will have to incorporate alongside their existing strict labeling obligations.

    At this stage, can and should tobacco/nicotine product businesses start considering their options and even taking steps to change at least some of their packaging?

    Tobacco companies should absolutely look at ways they can change their packaging. Once PPWR comes into force, they will have around 18 months to ensure all their packaging in the EU market is compliant. This does not leave much time to evaluate, redesign and produce new packaging. Remember that as tobacco packaging is already highly regulated in the EU, any changes must also comply with existing legislation.

    Looking at the wider tobacco industry, including its new-generation nicotine products, which of its packaging materials will be affected by the likely changes brought in by the PPWR?

    Flexible packaging like pouches will likely be affected as they rely heavily on soft plastics, which are difficult to recycle. As mentioned, this will also affect the shrink-wraps and the inner liners commonly used in flip-top cartons and other rigid packaging, so it will likely have wide-reaching consequences for all tobacco packaging.

    Should the industry try to eliminate all “plastic materials” from its packaging, however that term is defined, or should it aim to eliminate only those plastics that do not break down in an environmentally friendly manner and become “forever” particles?

    Plastic is often painted as a villain, but the truth is much more nuanced than that. Unnecessary plastic use is a problem, but solving it needs a holistic, considered approach. Simply eliminating all plastics would have a disastrous effect on the environment in the form of increased product waste.

    Compostable materials are a possible solution and an area where we are a market leader. We produce accredited compostable pouches that can break down in domestic compost heaps and industrial organic recycling facilities. These materials are commonly used for pouches, but they also have applications as wraps for cigars and liners for cartons.

    Which of the Parkside packaging innovations mentioned in your press note would be appropriate for tobacco industry application?

    We work closely with our customers in the tobacco sector, so many of our solutions are ideal for tobacco packaging applications. Our Recoflex range includes plastic and paper-based materials that are suitable for recycling and can be tailored with high barrier coatings, metallization and more. We produce pack wraps, individual wraps for cigars, inner liners, resealable lock-and-peel pouches, and compostable pouches, all of which are suited to many applications within tobacco packaging.

    Will the arrival of the PPWR regulations provide an opportunity for the tobacco/nicotine industry to make radical changes to its packaging, or do tobacco/nicotine industry-specific regulations make such moves impossible or unlikely?

    The strict industry-specific regulations do pose some challenges when it comes to labeling. Packaging will need to contain labeling that describes its material composition and recyclability, so incorporating these new labels in a way that complies with existing restrictions may require some redesigning.

    Restrictions on pack shape, such as restrictions on slimline cartons, mean it is difficult to radically rethink many tobacco packaging formats. However, it may be possible to reduce the weight of packs using lighter weight materials combined with water-based barrier coatings to ensure performance.

    Presumably, there will be a cost associated with tobacco industry players changing their packaging. How can they minimize such costs while remaining compliant?

    We recommend working closely with a trusted packaging partner. At Parkside, we have worked closely with many tobacco companies for many years. That means we have developed the expertise needed to tailor packaging solutions to ensure they meet the needs of our customers in terms of both pack performance and compliance. This ensures packs can be designed and produced efficiently, which is always the best way to minimize costs.

    Progressive businesses are generally not opposed to reasonable regulations provided they are evenly applied and competition remains on a level playing field. Do you have any insights, based on your experience with the PPWD, of how strictly and how evenly the new regulations are likely to be applied?

    Part of the idea of PPWR is to harmonize regulations across the EU, so that would indicate the intention is to create a level playing field. However, it could still be subject to some variations as different member states have differing infrastructures. A country that already has robust recycling and waste management infrastructure in place will find it much easier to adapt.

    As a result, we anticipate PPWR will be applied more evenly than PPWD was—but there may still be some divergence in places.

    Finally, while the EU is hugely important to your business, does Parkside focus on other parts of the world?

    Certainly. We have invested heavily in our Malaysian site in recent years, meaning we now offer a comprehensive suite of services and solutions to tobacco companies across APAC [Asia-Pacific] countries as well as Europe. This gives us a greater level of agility and flexibility to operate on a global scale.

  • All-Rounder

    All-Rounder

    Due to its versatility, homogenized tobacco remains key to tobacco companies’ operations.

    By Stefanie Rossel

    For reconstituted tobacco leaf (RTL), the only way seems to be up. Valuates Reports estimated the global RTL market at $305.47 billion in 2023 and expects it to reach $370.85 billion by 2030, which corresponds to a compound annual growth rate (CAGR) of 2.7 percent between 2024 and 2030.

    Also known as homogenized tobacco or recon, RTL was developed by Schweitzer-Mauduit International (SWM) in the 1930s. Initially, RTL was designed to reduce waste. By recovering “leftovers” such as tobacco dust, scraps and stems, and reintegrating them into the production process, manufacturers can save valuable raw materials.

    Today, homogenized tobacco has a wide variety of applications. Apart from its use as a material to reduce tobacco product filling cost, it is an essential ingredient in cigarette blend design, offering cigarette manufacturers a convenient tool to lower the nicotine content of their products. The advent of heated-tobacco products (HTPs) has created new opportunities for the product. RTL allows tobacco companies to develop blends that deliver the desired taste and nicotine when heated to a comparatively low temperature.

    According to SWM, the recon market is driven by several trends. For starters, the cigarette market is expected to exhibit a CAGR of minus 3.5 percent between 2023 and 2028. The trend, the company points out, is obviously not the same in every country, with the U.S. and Japan leading the decline and Africa and the Middle East enjoying slight growth. At the same time, the HTP market is projected to witness a 15 percent CAGR between 2023 and 2028. SWM anticipates global sales of HTP consumables to reach over 300 billion sticks by 2027.

    The traditional cigarette market and the HTP market are influenced by the same factors. Cigarette or stick designs have an impact due to their recon inclusion rate per stick while there is also customer capacity to self-source the recon, as for example Philip Morris International does. In addition, the availability and price of leaf tobacco can also drive interest in RTL. SWM stresses that the drivers are not the same for recon used in conventional cigarettes and recon used in HTPs.

    A Product With Many Benefits

    Tapuwa Pswarayi

    In traditional RTL, SWM works closely with its customers to develop materials for innovative applications, says SWM’s product manager, Tapuwa Pswarayi. “In addition, our ancillary services allow us to perform in-depth analysis of materials to ensure that recipes meet all regulatory specifications. We firmly contribute toward reconstituted tobacco having been a key part of the tobacco blender’s toolkit for decades. In recent years, more major tobacco players have been innovating with SWM recon solutions in an increasing number of applications—from cigarette blends [to] roll-your-own to shisha. The many benefits of recon span across operational efficiency, regulatory compliance and cost stability.”

    With increasing volatility in tobacco markets globally, the relative price stability of recon presents a great opportunity to mitigate the impact of fluctuating costs. “The past growing season was challenging for many tobacco farmers, resulting in reduced quantities produced and sharp price increases in the majority of the tobacco-producing world,” he says. “Reconstituted tobacco is therefore a valuable tool for creative blenders—performing complementary roles in blend segments while offering a more competitive price.”

    The functional advantages of recon produced with SWM’s papermaking process are also an important factor, according to Pswarayi. “It’s made from tobacco by-products, such as stems, scraps, fines and dust, which are mixed with water before undergoing a two-step papermaking process to produce a uniform sheet, known as a ‘web.’ The web closely mimics the aesthetic and physical properties of tobacco leaf. This means it can be processed in the same way as tobacco leaf—whether it’s intended for cigarettes, cut rag or roll-your-own—with several additional benefits for the manufacturer.”

    Moreover, the product fits in well with current efforts to make production processes more sustainable. RTL allows for waste reduction through optimized utilization. “While the standard process typically generates waste during leaf-processing to packing and manufacturing, recon degrades less during production,” Pswarayi says. “This allows manufacturers to retain more material in the finished product, resulting in greater efficiency and reduced costs.”

    Almost any combination of tobacco by-products can be used to create high-quality recon, he says. SWM uses two main supply models—buying recon from its established portfolio of taste and performance characteristics, and developing unique recon blends. “To achieve this, we take the raw materials supplied by the customer and convert them into recon at our state-of-the-art facilities, with the customer owning exclusive rights to use the recipe that you create.”

    Beyond Tobacco

    Bruno Stefani

    SWM started to work on reduced-risk products in 2014. In 2017, it set up a dedicated reduced-risk products (RRPs) team, which today employs about 50 people, 20 of whom work in dedicated laboratories. “Our heat-not-burn recon solutions are designed to be easily used in existing cigarette-manufacturing assets,” explains Bruno Stefani, SWM’s HTP product manager of RRPs. “This allows our customers to go fast.

    “In that spirit, one of our pillars is to identify and select interesting tobacco grades for HTP application within tobacco material portfolio already sourced by customers for their cigarette production, which simplifies and secures the tobacco material sourcing. Every HTP is an inseparable combination of an aerosol-generating material—i.e., our recon, a consumable and a heating device. To create a unique consumer experience, we master the understanding of these three elements and their interactions.”

    The fact that SWM also manufactures cigarette paper allows the company to supply HTP wrapping papers and paper-filtering media to help customers reduce the plastic content of their products, according to Stefani. “We also invest a lot in securing freedom to operate to facilitate the access of this HTP market. Our role is also to identify potential reliable partners which can contribute to the final solution, covering all aspects of customers’ need and expectation.”

    SWM also benefits from its long-time experience in botanical fiber production. Botanical reconstituted with or without nicotine is another driver for growth in the HTP sector, says Stefani. “There is a strong interest for such tobacco-free products,” he says. “The big tobacco companies have really started to be active in this market since last year with the launch of Veo by BAT and then Levia by PMI and iSenzia by Imperial Brands. As we can process very different kinds of material shapes, leaves, nuts, roots, fruits, flowers and so on, reconstitution offers a very interesting solution to get an industrial product made with natural ingredients with well-mastered specifications and which is designed to smoothly run in an existing customer’s primary department. We also tightly master the addition of nicotine or other active ingredients to be added to the botanical on customers’ request.”

    Stefani says that SWM continuously scouts the market for new trends and needs, as well as the manufacturing technology offer, in order to be ready to develop and supply new materials and comply with its customers’ new developments. Judging from recent innovations in the HTP sphere, there’s certainly more to come.