Blog - Tobacco Reporter

Shock Absorber

With an appropriate tax regime, fine-cut tobacco can provide a useful buffer between high-priced cigarettes and illicit products.

By Stefanie Rossel

Across Europe, three countries offer showcase examples of unintended consequences created by ill-designed tax policies. The fiscal frameworks in France, the United Kingdom and the Netherlands prevent fine-cut tobacco (FCT) from fulfilling its buffer function in the nicotine ecosystem, leading to high levels of illicit trade. When taxed at comparatively low rates, FCT products can serve as a “shock absorber” between higher taxed factory-made cigarettes and illicit smokes. If the tax rates and retail prices of combustible cigarettes and FCT become too similar, fine roll-your-own (RYO) and make-your-own (MYO) products may lose their appeal to smokers with lower disposable incomes.

In the European Union, home to some of the world’s leading RYO and MYO markets, France presents a prime example. “The market is riddled with illicit trade, as the taxation levels prevent FCT to fulfill its buffer function,” says Peter van der Mark, secretary general of the European Smoking Tobacco Association (ESTA). “Since 2020, volumes of FCT have consistently declined, by 8 percent in 2021, 13.7 percent in 2022 and 10.2 percent in 2023.” This decline is slightly more pronounced than that in other tobacco segments.

On the bright side, according to van der Mark, French authorities appear to have belatedly recognized the negative impacts of their policies. Last month, the responsible minister acknowledged that beyond a certain point, raising taxes becomes counterproductive and boosts contraband, which benefits neither public health nor public finances. “We can only regret that it took one-third of the market to be illegal to come to that conclusion,” laments van der Mark.

The U.K. faces a similar situation. According to van der Mark, that country’s government has nearly aligned the tax rates on FCT with those on cigarettes—and without consulting the industry. As a result, legal volumes have been declining substantially, benefiting smugglers and illicit traders. According to van der Mark, this is not only impacting manufacturers, distributors and retailers but also the finance ministry (and therefore U.K. citizens), which last year saw its tobacco tax receipts drop by nearly 15 percent compared to 2022—a loss of approximately £1.5 billion ($1.91 billion).

Germany, the largest EU market for hand-rolling products, also hiked FCT taxes but managed to avoid the negative effects experienced by Britain and France, thanks to its incremental approach. “The ad valorem component on FCT increased progressively and moderately whilst step increases of the specific or minimum were always kept below 10 percent,” explains van der Mark.

“In general, we consider the German tax model to be well crafted as it allows for predictability and ensures the market functions smoothly whilst allowing the government to pursue its treasury and health objectives,” says van der Mark.

“Volume-wise, of course we note a decline in comparison with 2020 [consumption], which was exceptionally high due to the Covid-19 outbreak. In 2023, volume declined by 5 percent compared to 2022, confirming a declining trend in general.”

This year, however, Germany’s market has benefitted from rising FCT taxes in the Netherlands. According to van der Mark, a 50 gram pouch now costs approximately €25 ($27.02) there, encouraging Dutch smokers to source their tobacco elsewhere, including in neighboring Germany.

Across Europe, the general trend is toward less tobacco consumption, and FCT is no exception. “Inflation had a massive impact on consumer ability to buy tobacco products in 2022–2023,” says van der Mark. “Consumers down-traded or moved to FCT or illicit cigarettes. Although inflation has decreased, it remains very unequal from one country to another. Where inflation remains high, we expect sales of FCT to slightly increase, demonstrating once again the buffer function this product category can fulfill, provided it is taxed approximately.”

“We consider the German tax model to be well crafted as it allows for predictability whilst allowing the government to pursue its treasury and health objectives.”

STG Buys Mac Baren

As the market contracts, the fine-cut industry has been consolidating. In June, Scandinavian Tobacco Group acquired family-owned Mac Baren Tobacco from Halberg for DKK535 million ($76.87 million). Founded in 1826, Mac Baren’s portfolio includes pipe tobacco brands such as Mac Baren, Amphora and Holger Danske as well as fine-cut tobacco brands such as Amsterdamer, Choice and Opal. The company also produces and sells nicotine pouches with the brands Ace and Gritt.

Mac Baren sells its products in 74 countries and generates most of its net sales in the U.S., Denmark and Germany. Other key markets include the U.K., France, Spain and Italy. Headquartered in Svendborg, Denmark, the company has production facilities in Denmark and the United States (in Richmond, Virginia), and employs approximately 200 people full time.

Both Mac Baren and STG are members of ESTA. “The reduction of family-owned companies in our sector is always regrettable, but at the same time, we are pleased to see that its traditional know-how will remain in the very capable hands of STG, a company that is committed to high-quality traditional smoking tobaccos,” says van der Mark.

The FCT sector has consolidated at regular intervals, with the last wave being triggered by the EU Tobacco Products Directive (TPD) in 2014. At this time, van der Mark sees no indications of a new consolidation wave, however.

New Regulations on the Horizon

Whether the pending TPD revision will change that situation is up for discussion. The European Commission’s evaluation report, expected toward the end of 2024, should provide some insights into the future regulatory environment. According to van der Mark, a 2021 report on the TPD application identified topics likely to be discussed further in the future.

“This includes the field of ingredient regulation, where we have seen several member states taking cavalier initiatives and establishing outright bans of certain ingredients,” he says. “In general, we fear that the notion of ‘flavors’ has been largely misunderstood and will be subject to debates that will most likely be based on assumptions more than on actual scientific underpinning. Labeling and packaging, where the commission is no longer hiding its preference for plain packaging, will also be an issue, and, of course, the regulation of novel tobacco products.”

With a new commission poised to take office in November, van der Mark expects more emphasis on novel nicotine products and less impact on the FCT segment. “For fine-cut tobacco, the whole legislation has already been there since TPD2,” he says.

“We are more concerned about the ingredients regulation. We believe that the ingredients which are in tobacco products, representing between 1 percent and 3 percent of the total weight, are nonconsequential, but the commission is continuously looking at the ingredients as if they would make the product even more problematic from a health perspective. We think that the commission simply has the wrong end of the stick.”

Whether the EU’s approach toward tobacco products will change with the new crop of lawmakers remains to be seen. “At this stage, it is not sure whether the ‘shift to the right’ will affect the functioning of the EU Parliament and its ‘great coalition’ made of the Socialists and Democrats, Renew and center-right European People’s Party groups,” says van der Mark.

“An interesting statistic, however, is that about 60 percent of the elected members of the European Parliament are coming from parties that are not governing in their national jurisdictions. This means that we could see a European Parliament ‘free’ from the guidance of the national government, at least to a certain extent.”

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

August 1, 2024

Something to Smile About

The CoEHAR is studying the impact of reduced-risk products on oral health.

By Stefanie Rossel

Polosa and his team anticipate observing better gingival/gum conditions, improved tooth color and reduced dental plaque accumulation in smokers who stop smoking after switching to alternative tar-free nicotine products. | Photo: Chris Frenzi

In the context of smoking-related issues, oral health has long been neglected. According to Riccardo Polosa, founder of the Center of Excellence for the acceleration of Harm Reduction (CoEHAR) in Italy, this can be explained by several factors. “Smoking is primarily linked to fatal systemic conditions such as cancer, heart disease and respiratory problems, which tend to overshadow its effects on oral health,” he says.

In addition, until recently, dentists were less aware of the detrimental impact of smoking on oral health, particularly in managing gum disease, tooth loss and dental implant procedures. What’s more, because oral health is influenced by multiple factors, including diet, oral hygiene practices and genetic predispositions, it is difficult to isolate smoking as a culprit.

“Dentists have historically been hesitant to invest their professional efforts in helping clients quit smoking,” Polosa says. “However, there is now an increasing recognition among dental professionals of the significant benefits of smoking cessation in improving treatment outcomes, and more and more dentists are increasingly promoting smoking cessation strategies and advocating for the use of tar-free nicotine products.”

To investigate changes in oral health parameters and dental aesthetics in smokers who switch to tar-free nicotine products, the CoEHAR earlier this year launched the SMILE study with funding from the Foundation for a Smoke-Free World (FSFW), which recently rebranded as Global Action to End Smoking. Polosa says the study is the first and only of its kind, as it aims to measure risk reduction, harm reversal and smoking cessation combined, which sets it apart from other trials that focus solely on cessation.

Geographically Diverse Approach

The international, randomized controlled trial involves 474 participants in four countries—153 in Catania (Italy), 45 in Warsaw (Poland), 168 in Chisinau (Moldova) and 108 in Bandung (Indonesia). The decision to focus on these countries was based on strategic and practical considerations, Polosa explains. “Mandated by the FSFW’s mission, the selection of low[-income] and middle-income countries was crucial to facilitate the dissemination of high-quality tobacco harm reduction [THR] science through collaborative partnerships and knowledge exchange,” he says. “Additionally, factors such as low operational costs and strong interest in participating in the study were significant in their inclusion. Italy was specifically chosen to take a leadership role in training and coordination within the study.”

All four countries have high smoking rates, providing a substantial pool of participants for studying smoking cessation and switching behaviors. “The selection of these countries enables the SMILE study to capture a broad spectrum of socioeconomic, healthcare and cultural factors that influence smoking behavior and the adoption of THR,” says Polosa. Each country represents a distinct healthcare system, ranging from well-established systems in Italy and Poland to less developed systems in Moldova and Indonesia. This diversity enhances the study’s relevance and generalizability on a global scale.”

Indonesia presents a unique case due to its widespread use of clove cigarettes, which account for nearly 90 percent of the Indonesian cigarette market. “Studying THR in a context where very popular traditional tobacco products dominate can offer valuable insights into cultural attitudes toward smoking cessation and alternative nicotine-delivery systems,” says Polosa. “Smoke from clove cigarettes contains high particulate matter and toxicants, making them as harmful as conventional tobacco cigarettes. Therefore, THR is strongly needed in Indonesia, with advocacy and education being key to successful implementation.”

State-of-the-Art Technologies

For their study, the SMILE researchers recruited cigarette smokers interested in switching to alternative products. The participants were randomly allocated to receive either standard care, including cessation counseling (i.e., “very brief advice”), or the nicotine product of their choice plus very brief advice. The trial also includes a reference group of individuals who had never smoked. The researchers then recorded participants’ cigarette consumption and tar-free nicotine product at every visit. Additionally, participants were asked to return all empty, partly used and unused consumables. Throughout the study, the researchers monitored smoking and tar-free nicotine product use via a tracker app.

“The SMILE tracker app is an integral component of the SMILE study, designed to monitor participants’ behaviors and lifestyle choices. Through daily prompts, the app assists in tracking cigarette consumption, the use of nicotine products, and regular oral hygiene practices such as brushing, flossing and mouthwash use. Although personal oral hygiene practices were carefully tracked, there was no emphasis on oral hygiene education or management of dietary patterns,” says Polosa.

“A standardized approach was implemented to mitigate the effect of these potential confounders on both primary and secondary study endpoints,” he continues. “Participants were explicitly advised to continue their established oral hygiene practices for the entire duration of the study. Furthermore, adherence to specific restriction criteria before each scheduled study visit was emphasized to prevent any confounding of the collected data.”

To prevent confounding factors, oral hygienists removed plaque, calculus and stain from the study participants’ teeth 14 days prior to baseline measurements. “This critical element is absent in most clinical trials,” says Polosa.

Chronic periodontal disease is common in smokers that is unlikely to improve with cessation alone, according to Polosa. “Therefore, participants with periodontitis have been excluded, and only participants with mild to moderate gingivitis have been recruited, as they are more likely to maximize the impact of the intervention.”

The researchers use state-of-the-art technologies, such as spectrophotometers and quantitative light-induced fluorescence scanners, to quantify tooth discoloration and the amount of dental plaque.

“These study endpoints measure important patient factors that may drive behavior change,” says Polosa. “This is particularly persuasive for young adults, for whom a cardiovascular-cancer-respiratory risk-based narrative is either ineffective or counterproductive and for whom concern about bad breath and poor dental aesthetics due to enamel discoloration and ‘tar’ stains may be a much more significant reason to stop smoking.”

The Importance of Aesthetics

The SMILE study allows volunteers to choose their own type of tar-free nicotine product, says Polosa. “This personalized choice is likely to enhance adherence, retention, and optimize compliance, thus maximizing cessation of tobacco cigarettes,” he explains. “This unique approach also generates results that are not product-specific and therefore more generalizable and realistic for implementing such a strategy in the real world.”

According to Polosa, the researchers enroll only those who would not otherwise commit to a smoking cessation counseling program but are prepared to choose from smoking alternatives such as e-cigarettes and tobacco-heating products. The study has been designed to allow participants to tailor their own “nicotine experience” by selecting the tar-free nicotine product that aligns most with their preferences, thereby maximizing the transition away from tobacco smoking and reducing the likelihood of relapse.

The study is not designed to coerce participants to avoid tobacco smoking completely, he says. Dual use is not prevented; therefore, the sample size has been oversampled to ensure that enough exclusive users of tar-free nicotine products by the end of the study are included.

“The SMILE study also provides a unique opportunity to evaluate the impact on oral health and dental aesthetics among individuals who simultaneously smoke conventional cigarettes and use tar-free nicotine products,” says Polosa. “Different dual-use patterns exist—e.g., strong switchers versus light switchers—and are likely to have varying impacts on overall oral health. We expect to observe progressive changes with different patterns of dual use.”

Perhaps the most interesting aspect of the SMILE study is its inclusion of aesthetics. Polosa says that stained teeth and tobacco odors are a growing concern, especially among young smokers, who demand not only healthy mouths but good-looking smiles.

“Everyone wants to have a perfect dentition, as it helps in interpersonal contacts and raises value in the job market,” he says. “In our social media-driven age, vanity plays a significant role in influencing behavior. The desire for an attractive appearance, including a bright smile, is often a powerful motivator, especially among younger demographics who are highly engaged with social media platforms.”

Evidence from literature demonstrates that using images of damaged and tar-riddled lungs does not act as an effective deterrent to smoking, he says. “This is partly because people do not respond well to negative messaging and because they do not identify such images with their own bodies. The focus on aesthetics—rather than vanity—is important because we are conveying a positive outcome message for smoking cessation, leveraging the explosion in social media posts of happy, healthy people with bright smiles.”

Appealing to individuals’ desire to present themselves well and feel confident not only acknowledges the importance of aesthetics but also offers practical solutions for oral healthcare practitioners, such as aesthetic-enhancing alternative nicotine products for those who may struggle to quit smoking, according to Polosa. “The goal here is to harness today’s emphasis on appearance to encourage healthier behavior,” he says. “I predict that the argument for better aesthetics and oral health will become a more prominent and effective tool in smoking cessation efforts.”

The study’s results are expected in 2025. Polosa and his team anticipate observing better gingival/gum conditions, improved tooth color and reduced dental plaque accumulation in smokers who stop smoking after switching to alternative tar-free nicotine products.

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

August 1, 2024

The Case for Nicotine

Many policymakers see nicotine as part of the problem; THR proponents see it as part of the solution. Understanding why such deeply opposing views are held also provides a view of the way ahead.

By Barnaby Page

Advocates of tobacco harm reduction (THR) and the industry making THR products are accustomed to fighting battles on multiple fronts—simultaneously contending with the threat of flavor bans, new taxes and misrepresentations of science, for example. But perhaps the most essential battle of all is the one against the demonization of nicotine; it’s possible to imagine vaping continuing to exist without nontobacco flavors, for example (even if it might be a less appealing kind of vaping), and it’s possible to imagine consumers continuing to buy THR products even if taxes hike their price, but it’s not really possible to imagine THR without nicotine.

This means that, while its opponents are not wrong to say that that nicotine is to an extent an initiator and certainly a perpetuator of smoking, it’s also a “friend” as much as an “enemy” in the quest to reduce smoking rates and smoking-related harm. Persuading others, including lawmakers, the medical profession and the public health establishment, to see it this way is a key and decidedly nontrivial task for the THR movement, one that could have profound effects on future policy and regulation concerning THR products and therefore their uptake.

Smoking and Addiction

Opposition to nicotine probably derives, at heart, from two somewhat different but related factors: cigarettes and addiction. First, it’s easy to forget—but essential to remember—that until around a decade ago, nicotine effectively meant cigarettes for most people in most countries. Sure, there were other delivery mechanisms (e-cigarettes were already starting to make their presence known; oral products of different kinds had traction in some places; a few people even smoked cigars or pipes), but the cigarette was dominant … and so for the average person, who in a specialist field like this also includes the average policymaker, nicotine was inextricably tied to smoking, which in turn was inextricably tied to combustible cigarettes.

As a result, it’s not surprising that many people find it difficult to separate the effects of nicotine from the effects of cigarette smoking in their head. (Even some people who ought to know better seem to find it tough.) Meanwhile, public health messaging had for decades reinforced the same point—Superman’s foe, the evil Nick O’Teen, is a classic example.

Plus, and this brings us to the second point, nicotine was not only that generally sinister thing, a “chemical,” but it was one you could become addicted to. Again, it’s understandable that people who weren’t specialists in addiction science wouldn’t realize that the concept itself was a much-debated thing, and people who had grown up in a War on Drugs era when “drug addicts” were seen as an undifferentiated group of miserable, ruined junkies naturally saw addiction itself—regardless of the addictive substance concerned—as a terrible condition.

Again, of course, there are those who ought to know better who use the concept to spread distrust; it amused me a few years ago when the then U.S. surgeon general, Jerome Adams, said that nicotine was “as addictive as heroin.” Leaving aside the whole issue of how you assess comparative addictiveness, the logical corollary here was that heroin is no more addictive than nicotine, but I doubt he would have wanted to spread that as a public health message.

THR advocates need to recognize that the perception is just as potent as the reality.

The Power of Perception

In any case, some definitions of addiction or dependency now stipulate that it must be harmful, and it’s highly questionable whether nicotine—once separated from cigarette smoking—falls into that category. So there’s even a case to be made that nicotine addiction doesn’t exist as a problem in the first place. But the bottom line is that it is widely perceived to be harmful and addictive.

And that is a huge obstacle for THR to overcome. Nicotine is absolutely central to the THR proposition. Indeed, it is founded on the distinction between nicotine and smoking, as famously expressed by Michael Russell when he observed that people smoke for the nicotine but die from the byproducts of smoking. It is the ability to make this distinction that leads to the concept of the continuum of risk—the idea that though different product categories (cigarettes, oral, vapor, heated tobacco, nicotine-replacement therapy [NRT] and so on) may all deliver nicotine, they do so with different risks, with some categories (for example, NRT, pouch and vape) at the bottom of the range while others (all of them involving combustion) are at the maximum.

This concept is hardly news to anyone involved in THR or indeed anyone in the tobacco industry. But it’s worth repeating that it may not only be an unfamiliar idea but an apparently contradictory one to people outside those worlds if they believe that risk is inherent to nicotine use. Before any progress can be made on improving policy and regulation, this is a misconception that needs to be corrected, and for the reasons that I’ve discussed, it can be quite a deep-seated one. Of course it’s illogical—it’s like concluding that because it is very dangerous to drive on icy roads at high speed, it must be equally dangerous to drive on any road at any speed—but being illogical doesn’t mean it’s not thoroughly believed in by many people.

The continuum of risk also means that where public health is concerned, logical regulation would focus on the delivery mechanisms (the icy road and the 90 mph) rather than the nicotine (the existence of cars). Except insofar as it may encourage use of more-risky delivery mechanisms, it doesn’t make sense for nicotine itself to be a prime concern. The on-off debate about very low-nicotine cigarettes (VLNCs) is a vivid illustration of this; there are surely questions to be asked about a policy that retains the dangerous thing (combustion) and concentrates on eliminating the far less dangerous thing (nicotine). To be fair, the research on how consumers might use VLNCs in real life is not yet conclusive, and it is possible they would have a deterrent effect beneficial to public health. But it’s difficult to escape the impression that the image of the evil Nick O’Teen is lurking in the background here as well.

What Regulation Might Look Like

Of course, we can’t realistically expect that lawmakers are going to leave nicotine entirely alone. So if we were going to regulate nicotine the substance—as opposed to characteristics of the delivery mechanisms, and nonproduct issues such as minimum purchase age, advertising and public usage—what areas could be looked at?

We could regulate nicotine content, which we could measure in two ways: either absolutely—the total amount in a cigarette stick or a vape pod, for example—or comparatively, by measuring concentration. The latter makes more sense for product categories where there is notable variation in product size (for example, e-liquid bottles).

We could also look at regulating the nicotine yield, which is the amount of nicotine actually emitted from the product and thus available for consumption by the user; although clearly dependent on the nicotine content level to some extent, this is a more meaningful number in terms of effects. (A hypothetical product with very high content yet very low yield would contain an awful lot of nicotine that might just as well not have existed—it would be irrelevant in any calculation of risk or health impact.)

We could also look at nicotine flux, the rate of nicotine emission—a crucial difference between combustible cigarettes and vapes, for example, and one that strongly affects the actual experience of use. And finally, just to be complete, of course we would want to regulate safety where nicotine is sold in very high concentrations such that accidental consumption of a relatively small amount could have seriously deleterious effects. The perception of risk here is, again, quite possibly exaggerated, but measures like childproofing do nothing to undermine the value of THR, they may prevent some accidents, and many countries have implemented them. This aspect, at least, is a no-brainer ….

But (apart from the childproof caps) does regulating nicotine itself actually solve any problems that aren’t addressed by, for instance, regulating underage purchase—especially if we don’t consider dependency in itself, among adults, to be a problem?

The THR movement will have to work relentlessly to keep the focus on risk profiles of delivery mechanisms, not on nicotine.

The Gateway Effect

The biggest contender for “problem to be solved” could, of course, be the so-called “gateway effect”—the idea that even when less risky forms of nicotine consumption are available, enjoyment of and/or dependency on them (take your pick) could lead the user toward more-risky forms.

A logical riposte would be that though doubtless there are individual cases of such a gateway being passed through (as there are individual cases of almost anything you care to imagine), there is no convincing evidence of it happening on a large scale—and in any case, other measures could deter it. If we want to prevent people progressing from vapes to combustibles, the THR argument would go, surely it’s sensible to make vapes more attractive and combustibles less (whether that’s through differential taxation, marketing restrictions, flavor restrictions or other measures). Going in the other direction—for example, reducing nicotine levels in THR products (which are often less effective than combustibles at delivering nicotine to the body anyway)—would likely just have the effect of making THR less attractive to existing smokers and discourage them from switching.

Nevertheless, the gateway effect is a widespread concern that ties in at an emotional level with the idea of nicotine as an irresistibly addictive substance leading users further and further into its grip. And once again, THR advocates need to recognize that, as is so often in this field, the perception is just as potent as the reality—often more so. Addressing that will be a long and tough task, but the agenda for THR should be clear.

The THR movement will have to work relentlessly to keep the focus on risk profiles of delivery mechanisms, not on nicotine itself. It will have to encourage policy based on proven risk, not on nicotine-specific characteristics such as concentration that in themselves don’t obviously connect to risk. It will have to put forward convincingly the idea that THR products need to be at least as attractive to the consumer as combustible products if their public health potential is to be realized—this means, in effect, undertaking the very difficult task of persuading policymakers that we should encourage nicotine consumption via THR.

And, to achieve all this, it will have to educate not just policymakers but also health professionals, the media and the public. This includes actively countering misinformation, but simply saying people are wrong is clearly not going to be persuasive in itself, and it’s those THR advocates who engage directly and deeply with the “nicotine skeptics” who will end up making the biggest difference.

For not only can nicotine be part of the solution rather than part of the problem, ignoring this is also a risk in itself. We shouldn’t lose the focus on reducing smoking by becoming distracted into reducing nicotine consumption.

Barnaby Page is the editorial director of Tamarind Intelligence, the publisher of ECigIntelligence, TobaccoIntelligence and CannIntelligence. As a journalist, he has been covering the worldwide reduced-risk nicotine sector since 2014, with a particular focus on public health and regulatory issues.In his current role, he manages Tamarind’s editorial and reporting teams, producing a wide range of nicotine-related content. He previously spent 30 years as a reporter and editor for newspapers, magazines and online services, specializing in technology and business. He is based near London, England.

August 1, 2024

The Heart of HTMS

Celebrating the life and legacy of Ronald Woodthorpe

By Marissa Dean

Ronald Woodthorpe passed away on March 26, 2024, at age 86 after a three-year fight with dementia. He is missed by his surviving family and friends, but his legacy remains at the heart of Hampshire Tobacco Machinery Services (HTMS).

Born in London in 1938, Woodthorpe was always a hard worker, training as a toolmaker after finishing secondary school. He took a job with Robert Legg in 1964 as a toolmaker—the company manufactured tobacco machinery and domestic appliances at the time. The next year, Robert Legg was acquired by American Machine Foundry Co. and renamed AMF-Legg, specializing in machinery for preliminary leaf processing and the processing and manufacture of cigarette and pipe tobacco. During this time, Woodthorpe developed a love for the industry that would span decades.

In 1974, Woodthorpe was approached by John Payne, a director from AMF-Legg, with the idea to start a new business reengineering and upgrading machines for the tobacco industry. Thus, John Payne Engineering was born, and Woodthorpe was named technical director. The company quickly grew, supporting larger manufacturers like Imperial and BAT. Woodthorpe was involved with developing an upgraded, faster hinge-lid packer based on the Molins HLP 2 during his time at the company, and he inspired a technology transfer with Bulgartabac in the 1970s.

John Payne Engineering was eventually sold in 1986 to Evered Holdings and later became part of GBE International. This didn’t sit well with Woodthorpe, who decided to start his own business: HTMS.

HTMS began as a supply company in 1987, supplying spare parts for Molins and Sasib/AMF machinery from a small office and store in Southampton. Woodthorpe’s contacts in the industry supported him, and the business developed well. In 1988, Woodthorpe’s daughter, Gillian, was hired to assist with business administration. Two engineers were then hired to facilitate workshop activity.

Three years later, the company moved to a larger office with stores beneath and a separate workshop facility. There, they began rebuilding Sasib/AMF soft packing machinery lines. Within the next five years, Woodthorpe’s daughter-in-law, Sara Fielder, and his youngest son, Peter, joined the company. By 1998, HTMS moved again to a larger space across the road, which is where it currently resides.

Over the next couple years, HTMS bought the rights, technical drawings and casting patterns for the high-speed XL Hinge Lid Packer from John Payne Engineering and GBE making and packing, and Robert Brown, a Molins packing expert who worked with Woodthorpe at John Payne Engineering, was hired. The hinge-lid packer became HTMS’ flagship machine, and Brown’s addition to the team allowed Woodthorpe to further develop the high-speed hinge-lid packer and its associated downstream machinery.

Woodthorpe was determined, a hard worker, a hard taskmaster and a man who generally would not take no for an answer. The tough standards he placed on himself were reflected in his work ethic and care—he tried every day to do the best he could for his business and his family. Those who knew him felt he was a very fair man who would always get you where you wanted to be and would support you in a time of need.

“Ron always saw the best in people and encouraged those to find it in themselves,” said Brown. “In that way, he inspired others to achieve levels that they never thought possible, and I was certainly one of those. As long as you tried your best, you were never a failure in Ron’s eyes.”

HTMS continues Woodthorpe’s ethos of service—the ability to supply immediately and support in times of need. HTMS understands that off-the-shelf supply is paramount to the business and its customers, thanks to Woodthorpe’s dedication and care over the years. Today, the company’s main focus is cigarette and cigar packaging, but it still provides primary equipment in the form of tobacco-cutting machinery and cigarette/cigar making machinery and spares.

“People talk about a work-life balance—well, Ron was one of the only people I’ve ever known who loved to ‘live to work’ as much as he did ‘work to live,’ simply because he had an equal amount of love and passion for work as he did his family,” said Sara. “Ron worked longer and harder than most because he wanted to make sure his family were taken care of but also because he loved the job and everything that it encompassed.

“Ron’s dedication to taking care of ‘all of us’ over the years gave us, the HTMS team, the drive to continue in succeeding where he left off after his retirement, even more so now to continue further to honor his memory,” she said.

Dedication is a clear theme of Woodthorpe’s life. He retired in 2020 at age 83 after a full life and career, leaving his company under the care of Peter, Sara and Jeff Perress. Even when he retired, it was less from a desire to retire and more from Covid-19 pandemic concerns, according to his son.

In 2021, Woodthorpe was diagnosed with vascular dementia. Despite the struggles that caring for a loved one with dementia brings, Peter remembers his dad’s lessons of “Never put off till tomorrow what you can achieve today” and “If it’s not fun, don’t do it.”

HTMS carries Woodthorpe’s core beliefs in quality, value and service at the heart of the business. And though he will be missed, his legacy will live on. “Ron’s enthusiasm, dedication and enjoyment for the job was passed on to all who worked for him,” said Howard Rich, a former colleague.

Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor. Since that time, she has taken on additional responsibilities, including feature writing. Her skills span the publishing industry from layout and design to copy editing to content creation.

August 1, 2024

Indonesia Bans Single Stick Sales

Indonesia has banned the sale of individual cigarettes and raised the minimum purchase age to 21 from 18, reports Reuters. Its new rules also mandate restrictions on tobacco and e-cigarette marketing; large, pictorial warning labels on tobacco products; and bans on the sale of tobacco and e-cigarettes near schools and playgrounds. In addition, it includes new restrictions on social media sales.

Single stick sales make cigarettes more accessible to vulnerable populations, according to health activists.

The rules are intended to reduce smoking prevalence and prevent young people from taking up the habit. With 70 million smokers in a population of 270 million, Indonesia has one of the world’s highest smoking rates. The country also struggles with a high level of underage smoking. A 2023 survey revealed that 7.4 percent of smokers are between the ages of 10 to 18, with 15-19 being the age group with the most smokers.

Health Minister Budi Gunadi Sadikin emphasized that the new rules represent a significant step forward in strengthening Indonesia’s health infrastructure.

“We welcome the issuance of this regulation, which will serve as a foundation for us to jointly reform and build the health system down to the farthest corners of the country,” he was quoted as saying by Xinhua.

The Campaign for Tobacco-Free Kids too welcomed the new rules. In a statement, the organization urged the Indonesian government to dramatically raising tobacco prices, simplify the tobacco tax system and ban smoking indoor public places.

Henry Najoan of the cigarette factory association was quoted by news web site Kumparan as saying that the rules would destroy the tobacco industry.

According to the Ministry of Industry, Indonesia’s cigarette industry employs 5.98 million people, including 4.28 million workers in the manufacturing and distribution sector, and 1.7 million in tobacco cultivation.

Indonesia is one of the only countries in the world that has not signed the World Health Organization’s Framework Convention on Tobacco Control.

July 31, 2024

Top Court Upholds FDA Authority in Philippines

The Supreme Court of the Philippines upheld its 2021 decision to grant the country’s Food and Drug Administration regulatory authority over the health aspects of tobacco products, reports the Inquirer.

“All products affecting health, including tobacco products, are covered by the FDA’s mandate to ensure the safety, efficacy, purity, and quality of health products,” the Supreme Court said.

“Thus, the inclusion of tobacco products in the implementing rules of the FDA Act is in accordance with the law,” it added.

The case stemmed from an attempt to stop the enforcement of the FDA implementing rules and regulations. In a case filed in 2011 before the Regional Trial Court of Las Pinas City, the Philippine Tobacco Institute (PTI) alleged that those rules improperly expanded Republic Act No. 9711 by classifying tobacco products as health products.

The PTI argued that under the Tobacco Regulation Act of 2003, the Inter-Agency Committee on Tobacco (IACT) had exclusive jurisdiction over tobacco products.

In 2012, the Las Pinas court ruled in favor of PTI and nullified the provisions of the FDA implementing rules and regulations relating to tobacco.

The Department of Health and the FDA then petitioned the Supreme Court for review, which overturned the Las Pinas court decision in 2021. The PTI then challenged the high tribunal’s ruling, but was rebuffed.

The denial of the motions for consideration means the IACT and the FDA will continue to share authority over tobacco, with each overseeing different aspects of the trade.

Under the Tobacco Regulation Act, the IACT is chaired by the trade secretary with the health secretary as vice chair and includes a representative of the tobacco industry as a member. The PTI previously held the position of representing the tobacco industry in the committee.

July 31, 2024

Altria Reports Results

Altria Group reported net revenues of $6.21 billion for the second quarter of 2024, down 4.6 percent from the comparable 2023 quarter. Revenue net of excise taxes declined 3 percent to $5.28 billion.

The company attributed the decreases to lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment.

“Altria’s momentum continues to build as we pursue our vision to responsibly lead the transition of adult smokers to a smoke-free future,” said Altria CEO Billy Gifford in a statement.

“In the second quarter, our companies’ innovative smoke-free products delivered strong share and volume performance, and we hit meaningful milestones that we believe set us up for future success. Njoy received the first and only marketing granted orders from the FDA for menthol e-vapor products, and we submitted PMTA applications to the FDA for next generation Njoy and On! products.

“Our traditional tobacco businesses also remained resilient, despite a challenging operating environment. Our highly cash generative businesses supported continued investments in our innovative product efforts, and we returned significant value to shareholders during the first half of the year, with more than $5.8 billion delivered to shareholders through share repurchases and dividends.”

July 31, 2024

New Zealand Reserves Funds for HTP Tax Cut

The government of New Zealand will set aside NZD216 million ($127.39 million) to pay for tax cuts on heated tobacco products (HTPs), reports Radio New Zealand.

Earlier this month, Associate Health Minister Casey Costello announced a 50 percent cut to HTP excise taxes, arguing that doing so would encourage cigarette smokers to migrate to less unhealthy nicotine products.

A paper released on the health ministry’s website shows the Cabinet agreed in May to set aside NZD216 million to cover the estimated lost revenue.

Philip Morris International, which owns the bestselling HTP product in New Zealand, has long argued that tax levels should reflect the relative risk levels of tobacco products.

However, the Cabinet paper noted it was unclear whether the tax break would be passed on to consumers due to the monopolistic nature of the market.

Costello said that she expected the industry to reduce the cost of its heating products. “I’m expecting the excise reduction to pass to consumers; this is what we were advised would happen by officials and it is something we will also be monitoring,” she was quoted as saying.

New Zealand tax authorities collected NZD3.62 million in 2022 and NZD5.97 million in 2023 from HTPs.

Earlier this year Costello scrapped laws that would have slashed the number of tobacco retailers, removed 95 percent of the nicotine from cigarettes and aimed to create a smoke-free generation by banning sales to those born after 2009.

Critics have expressed concern about links between the tobacco industry and Costello’s New Zealand First party. Two senior corporate communication positions at PMI are held by people who previously held senior roles in the New Zealand First.

July 30, 2024

Cigarette Prices up in Kenya

Tobacco companies in Kenya have increased cigarette prices even after the government withdrew a proposed excise tax increase, reports The Star.

Following price hikes of between 20 percent and 33 percent, the price of a single cigarette has increased by an average of KES5 ($0.03) at the retail market. Sportsman, one of the most common brands, now costs KES20 per stick with a packet retailing at an average KES400.

Originally, the government had planned to increase cigarette taxes to KES4,100 per 1,000 sticks from KES4,067.03 per 1,000 sticks. However, following countrywide protest (which also targeted other tax hikes), President William Ruto declined to sign the legislation into law.

The tobacco companies who since increased the prices earlier opposed the treasury’s proposals, arguing that the measure would stifle the formal industry and boost illicit trade.

BAT Kenya attributed the price hikes to rising production costs.

“Over the past year and into 2024, there has been a significant and sustained rise in our cost of production, occasioned by economic turbulence across both our domestic and export markets, arising from global and domestic geopolitical disruptions, currency fluctuations and rising interest rates, which has adversely impacted our trading environment,” the firm told The Star.

The price increase, it said, was necessary for the business to navigate an increasingly challenging operating environment and enable the company to continue to meet its business obligations, including supporting the livelihoods of over 80,000 Kenyans in its value chain.

BAT Kenya’s profits declined 19.2 percent to KES5.57 billion in 2023 due to higher operating cost and lower sales volumes.

July 30, 2024

PMI and KT&G to Partner on Submissions

Philip Morris International and KT&G will collaborate on regulatory submissions for KT&G heat-not-burn products in the United States. The companies have signed a memorandum of understanding.

On Jan. 30, 2023, PMI obtained exclusive rights to commercialize KT&G’s smoke-free products outside South Korea.

KT&G’s new platform products are expected to be launched first outside the U.S. Thereafter, the partners plan to work on a premarket tobacco product application submission for review by the U.S. Food and Drug Administration.

“We want every adult smoker who does not quit smoking to switch to a science-backed, better alternative for the benefit of their own and public health,” said PMI CEO Jacek Olczak in a statement.

“The heat-not-burn category, with different tiers of FDA-authorized products, has a pivotal role to play in making cigarettes obsolete in the U.S.”

KT&G “is currently pursuing global expansion and structural transformation centered on its three core businesses—next-generation products, overseas cigarettes, and health supplements,” said KT&G President Bang Kyung-man in a statement.

“We will do our utmost to achieve our future vision of becoming global top-tier by leveraging innovative NGP products and scientific R&D capabilities that will be introduced to overseas markets.”

July 30, 2024