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Habanos Revenues Reach $545 Million
Credit: Timothy S. Donahue

Habanos S.A. has announced it generated $545 million in revenue in 2022. It’s nearly a 2 percent boost over its 2021 revenue, a representative of the manufacturing and distribution arm of the Cuban cigar industry told Tobacco Reporter during its coverage of the 23rd edition of the Habano Festival on Monday.

The company also stated that its largest markets for cigar sales are Spain, France, Germany, China and Switzerland, consecutively. These are the same five top countries as 2021, though China was listed second and France was listed fourth.

Globally, Europe, with a 53.7 percent market share, continues to hold the top spot for regional sales, however, its percentage was the only region to experience a decline in sales. Europe is followed by the Asia-Pacific region (19.3 percent), the Americas (15.3 percent), and Africa/Middle East (11.7 percent).

“These results reflect the perfect combination of the passion we all feel in this wonderful Habano business and the strength of our brands,” said Maritza Carrillo González and Luis Sánchez-Harguindey Pardo de Vera, co-presidents of Habanos S.A., in a press release. “They put the cherry on top of the unique tobacco that grows in this land and that offers unparalleled moments and experiences to aficionados from all over the world.”

Habanos says it grew its worldwide network of official sales outlets by 10 percent in 2022. It also announced the current count of its cigar retail experiences as follows:

17 Cohiba Atmosphere locations (20 in 2021)

157 La Casa del Habano stores (160 in 2021)

1,264 Habanos Specialists (1,217 in 2021)

2,744 Habanos Point designated stores (2,465 in 2021)

587 Habanos Lounge and Habanos Terrace locations (486 in 2021)

Last year, Habanos S.A. announced a new “global pricing standard,” which greatly increased the prices of Cuban cigars around the world. The company has already announced at least two additional price increases for 2023.

Habanos reported a turnover of $568 million in 2021, up 15 percent growth over the previous year.
March 1, 2023
A Never-Ending Fight

Photo: Yuri Arcurs/peopleimages.com

The illicit cigarette trade continues to plague the tobacco industry in the Balkans.

By Vladislav Vorotnikov

Over the past decades, the illegal cigarette business has been flourishing in Serbia, Montenegro and Bosnia and Herzegovina, causing pain not only to the Balkans but also to the European Union. In recent years, the battle against nonregistered tobacco plantations and underground cigarette factories has seemingly intensified, but complete victory remains beyond the horizon.
Serbia is the largest tobacco market in the Western Balkans. In 2022, legal sales stood close to $2.2 billion compared to roughly $900 million in Bosnia and Herzegovina and $95 million in Montenegro. It is estimated that smokers account for 40 percent of the population in Montenegro and 30 percent in Serbia as well as in Bosnia and Herzegovina.
The size of the illegal tobacco market in the Western Balkans is one of the hallmarks of the region. Its share varies significantly across the region. Illegal products account for 6.5 percent of tobacco consumption in Serbia, 20.3 percent in Bosnia and Herzegovina and 27.9 percent in Montenegro, a survey conducted by international nongovernmental organization the Global Initiative Against Transnational Organized Crime (GIATC) showed. Some other analysts put the size of the illegal sales in Serbia at 15 percent.
The picture is believed to be similar in Albania and Northern Macedonia, where no comprehensive studies aiming to calculate the share of illegal tobacco products in retail sales have been made in the past several years.

Satellites Against Criminals

Serbia is a pioneer in using satellite technologies in fighting against illegal tobacco plantations.

In 2022, law enforcement agencies seized 142 tons of illegal tobacco leaf and tobacco products in Serbia, the tobacco administration of the Serbian finance ministry said in its annual report. This is lower than in the previous years, which indicates that the battle against tobacco plantations has finally started paying off.
The positive developments are attributed mainly to new technologies that the state phytosanitary inspection employs with help from tobacco factories, said Goran Pekez, director of corporate affairs of Japan Tobacco International’s (JTI) Serbian office.
To battle against illegal plantations, the Serbian authorities took measures unprecedented for this part of the world. The government has launched a group of satellites to survey the terrain with the aim of identifying all plots where tobacco leaf is illegally grown, Pekez said. Serbia is a pioneer in using satellite technologies in fighting against illegal tobacco plantations.
Using space technologies is expensive, but the efforts already bear fruits. “The success of the satellite system can be seen in the results of the control measures, which are showing improvements every year. In the last five years, illegal tobacco plantations in Serbia have been almost eradicated,” Pekez said, estimating that during this period, roughly 800 tons of illegal tobacco were seized, preventing damage to the Serbian budget of around $453 million.
When discovered, all illegal plantations are destroyed in order to prevent illicit tobacco from ending up in the supply chain. Still, some officials, acknowledging the positive impact of the satellite imaging, argue that it is unlikely to completely take down the illegal tobacco business in the Balkan region. One of the problems is that satellites primarily search for large tobacco farms, frequently overlooking smaller plantations.
In 2022, Serbian tobacco producers donated four drones and accompanying equipment worth $1.2 million to the phytosanitary inspections to improve control of illegal tobacco plantations in the country, Pekez said.

The legal tobacco industry continues to invest in Serbia. In December 2022, JTI inaugurated a new production line at its Senta facility. (Photo: Goverment of Serbia)

Deep Routes, Strong Ties

Currently, the illegal tobacco trade negatively impacts the economies of each Balkan country, but it has not always been that way. In the 1990s, cigarette smuggling became a means of survival for Montenegro, which extremely needed money to fund armed forces during the Balkan War. The turmoil of those bloody years laid the ground for what some analysts describe as the largest illegal tobacco industry in Europe.
“Many of the high business and political elite today are still connected to cigarette smuggling,” the GIATC survey discovered, adding that a share of illegal cigarettes is destined for local markets, but large quantities are also smuggled to the European Union and some other countries.
For example, in 2021, law enforcement agencies discovered a channel through which at least 840 million counterfeit cigarettes, known in the Balkans under the common name cheap-white, had been smuggled from Montenegro on fishing boats and small cargo ships to the Mediterranean. The Montenegrin port of Bar is currently known as the key European hub for cigarette smuggling.
“The region’s proximity to lucrative markets in Western Europe, its links to North Africa and Turkiye and increased traffic from Latin America and Asia, combined with vulnerabilities linked to corruption, create ideal conditions for criminal networks to engage in such trafficking. The problem seems to be growing,” the GIATC said in another report focused on the Balkan region.
“Seizures are abundant, but regionally integrated port-oriented security responses remain scarce despite multiple police operations,” it added.
In addition, the illegal tobacco business in the Western Balkans keeps evolving. While the authorities have seemingly succeeded in fighting against nonregistered tobacco plantations, there are reports about the growing smuggling of raw tobacco, primarily from China. Tobacco smuggling in the Balkans is controlled by organized criminal groups also involved in drug traffic.

Many of the business and political elite today are still connected to cigarette smuggling.

Mold, Waste and Animal Excrement

In the fight against illegal cigarettes, consumers also play an important role. In Serbia, a large share of customers buys counterfeit cigarettes from resellers, Pekez said, attributing this to a considerable price difference with legally manufactured tobacco products.
Consumers remain loyal to illegal cigarettes even though the possible danger to their health from counterfeit products manufactured in underground factories and workshops, which has been widely covered in recent years by local media.
“We emphasize that these products, which are not subjected to [sanitary] control and do not meet the standards common for tobacco products, can be dangerous to health—they can often contain numerous harmful ingredients—mold, waste and even animal excrement,” Pekez said.
The widening gap between counterfeit and legal cigarettes largely determines consumer preferences. A rise in excise rate has doubled the size of the illegal cigarettes market in Bosnia and Herzegovina during the past five years, the GIATC quoted from a source in the local government. Currently, prices also rise in Serbia, which is targeting to put its legislation in line with European regulations.
From Jan. 1, the price of all types of cigarettes in Serbia will increase by roughly $0.09 per pack due to a rise in excise rate to 33 percent. Under the excise duty schedule adopted in 2020, it will continue to increase gradually until 2025.

Tobacco Giants Scale Up in Serbia

Despite the wide presence of counterfeit products on the market, Serbia is the only country in the region where three major global tobacco companies have factories. In Serbia, tobacco has been grown for centuries. Currently, the largest legal tobacco plantations are located in South Pomoravlje and Vojvodina. Several cigarette factories are running in the country, including Philip Morris International; Nis, formerly known as Tobacco Industry Nis; BAT Vranje, previously named Tobacco Industry Vranje; as well as JTI Senta and Monus Cigarettes.
In December 2022, JTI inaugurated a new production line worth $16 million at its Senta factory and announced a new five-year investment cycle in Serbia worth $51 million.
“When a Japanese investor comes to a country to invest in it, other investors from around the world also feel comfortable about investing in that country,” Serbian Prime Minister Ana Brnabic said during the opening ceremony. “That is why Japanese investments are so important in these difficult and challenging times.”
JTI is the only foreign company that is purchasing locally grown tobacco. The new production line will double the capacity of the Senta factory and boost its export potential.
Other market players also invested in their local operations. In 2020, BAT Vranje started the production of cigarettes under the Dunhill brand.
The production of Dunhill in Vranje was called to increase BAT’s market share in Serbia and was in line with the company’s strategy to expand its presence in Southeastern Europe, the company said at that time. In addition, new investments were expected to bolster cigarette export from Serbia. The company estimated that it exported a third of its production in Serbia in 2020 compared to only 10 percent in 2016.
Since emerging in the country in 2003, PMI has invested over $800 million in the Serbian affiliate, remaining one of the country’s largest investors. The Nis factory is one of the most advanced operations in PMI’s global network of factories.
PMI saw its export from Serbia grow by a factor of 20 times between 2010 and 2020. Aleksandar Jakovljevic, managing director of PMI for Southeast Europe, said that the Nis factory had grown from a facility meant for the market of Serbia into a large regional and global production center, from which products were exported to more than 50 countries of the world.
In other countries of the region, however, things are not so bright. In 2022, Fabrika Duhana Sarajevo in Bosnia and Herzegovina, one of the oldest tobacco factories, suspended operation due to financial difficulties. The supervisory board of Badeco Adria, owner of the factory, decided to close it down as losses in the previous three years totaled €3.8 million. In 2021, Novi Duvanski Kombinat Podgorica, a tobacco factory in Montenegro, also stopped operation, citing excessive administrative pressure as the main reason for this step.
Despite the challenges associated with the illegal tobacco business, Serbia is expected to keep expanding cigarette production and export in the coming years, taking advantage of low production costs and its advantageous geographical position. A decisive victory against counterfeit cigarettes could fuel that growth, though it is unlikely to happen in the foreseeable future.

March 1, 2023
A Taxing Issue

The uncertainty surrounding the EU unmanufactured tobacco tax is making it increasingly difficult for logistics companies to operate with a sense of security. Photo: Taco Tuinstra

Freight forwarders struggle with uncertainty as the EU debates whether to tax unmanufactured tobacco.

By George Gay

Erik Van Neuten
Shortly after Erik Van Nueten, a director of Andromeda Tobacco Forwarding and Logistics, joined the Andromeda group in 2006, Tobacco Reporter ran a story on the company’s tobacco division headlined “Outsourcing the hassle.” The heading, which sprang from a comment by Van Nueten, referenced the fact that the company’s tobacco-trader clients could concentrate on what they were good at, buying and selling tobacco, while leaving the rest—the hassle—to Andromeda, the rest being worldwide services such as handling, storage, pest control, transportation, repacking, relabeling, sampling, sample dispatch and the not-inconsiderable associated paperwork.
Unfortunately for Andromeda, and other companies working in tobacco logistics, while the hassle factor in 2006 was challenging enough, it has increased hugely during the past three years, particularly in the EU, where it might be raised to yet another level in the future.
It would be crass to describe the Covid pandemic as having been a hassle, because it was and is a tragedy that has taken the lives of millions of people worldwide, that is still taking lives and that has caused major economic damage that, for most people, has meant many and greater hardships. Nevertheless, looked at purely from the point of view of tobacco logistics, Covid has been a hassle, though one that is fading. During a telephone interview toward the end of January, Van Nueten told me, for instance, that the availability of ships and containers was improving and that shipping rates, while still relatively expensive compared with those being charged two years to three years ago, were coming down slowly to acceptable levels, albeit from the ridiculously high levels ushered in by Covid.
That seems to be the good news. The bad news is that, for various reasons, those shipping rates are unlikely to return to close to where they were.

Taxing Unmanufactured Tobacco

In the EU, in parallel with the Covid pandemic but not connected with it, another issue has been brewing during the past three years and more. Van Nueten told me the European Commission was discussing whether unmanufactured tobacco (UT), which is the main tobacco commodity Andromeda deals with and the only tobacco commodity it deals with in the EU, should be subject to excise tax. No proposal has yet been put forward, nor is it known when this might happen. The commission has been reviewing the EU Tobacco Excise Directive (2011/64/EU) and was scheduled to publish proposals in December. But I was told that publication is unlikely during the first half of this year and that, given any decision would require unanimity among member states, discussions could stretch the time frame for any implementation.
As I understand things, in part at least, the commission wants to include UT within the scope of the excise directive so as to be able to include it also within the scope of its Excise Movement and Control System, which is the computerized system it uses to monitor the movement of excise goods within the EU. I am told that, to achieve such inclusion, the commission needs to create a new fiscal category for UT with a dedicated tax rate. Apparently, the commission could propose a zero percent tax rate for UT, but, even if it did, because the directive provides for only a harmonized minimum level of tobacco taxes throughout member states, individual states could choose to apply higher tax rates.
And it is at this point that these deliberations seem to collide with business reality. The sorts of uncertainties inherent in the current situation, which have already taken root in the EU, mean it is becoming increasingly difficult for Andromeda and other companies working in the field of logistics to operate with a sense of security. Although Van Nueten would prefer to see the traditional system retained with excise applied to tobacco products, he said the logistics industry could, given time, adapt to a new system. What was difficult was the present situation, which was unclear and made transporting tobacco through the EU frustrating and risky.

Although Brussels is still discussing whether to subject unmanufactured tobacco to excise tax, some states have already acted as if such a provision exists.

A Matter of Definition

Although Brussels is still discussing whether to propose the inclusion of UT within the scope of the EU excise directive and thereby allow member states that wished to do so to tax UT, some states have already acted as if such a provision existed. I was told by somebody who didn’t want to be named that, during the past 18 months or so, two trucks containing UT were stolen in separate incidents while in transit within the EU and that the companies that had issued the original customs documents for the tobacco were held liable for import duties, excise and VAT, an amount thought to be in the region of €4.6 million ($4.95 million) per truck. I later learned that these were not altogether isolated cases.
These incidents, which seem quite alarming within a region that is supposed to boast a harmonized tobacco tax regime within a single market, probably have their roots in a 2017 EU Court of Justice case involving Eko-Tabak and Generalni reditelstvi cel (General Directorate of Customs, Czech Republic) in which the court was asked to consider the confiscation of goods belonging to the former, which the latter had ruled to be manufactured tobacco subject to excise duty. The case basically involved the definition of “smoking tobacco” within the EU directive, which the court ruled had to be broad and to take into account whether the tobacco could be smoked after simple processing by means of crushing or hand-cutting.
As a result of this ruling, and despite the fact that the directive applies only to manufactured products, some member states started considering some UT to come within the court’s definition and therefore be subject to excise tax. And clearly, for as long as some states continue to consider UT to be taxable and others don’t, those responsible for transporting tobacco within the EU are going to suffer. Under current arrangements, taxable goods intended for transit need to have special documentation raised by authorized entities in the country of shipment that is then cleared in the country of destination upon arrival. This seems to indicate that if UT were sent from country A, where excise was applied to such a product, to country B, where no such excise was applied, the arrival could not be cleared. And if the tobacco were to be sent in the other direction, no documents could be raised in country B though they would be required in country A.
Probably, I guess, there would be administrative tricks that could get around these problems in the short term, and hopefully they will disappear with the proposals put forward by the commission in revising the excise directive, which will hopefully include those aimed at reinvigorating the concept of a harmonized market, in part by tightening up the definition of UT.

What to Do?

Nevertheless, two major questions seem to arise. What are logistics companies expected to do in the meantime? There have to be some interim arrangements that mean they can operate efficiently, secure in the knowledge that what they are doing is within the rules.
The other question has to address why a system that seems to have been working well should be changed. Well, the answer in some people’s eyes seems to be that the court ruling provided a necessity for change—change that would ensure that member states got their cut, though they don’t put it quite like that. Such change would address the problem caused when UT is stolen during transit through the EU, taken to an illicit factory and ends up as a product in the illegal trade, without taxes having been paid on either the unmanufactured or manufactured tobacco.
In turn, such a way of looking at things raises at least a couple of interesting issues. Firstly, it seems to cast doubt on the idea that the EU, through such initiatives, is pursuing illegal traders at least partly because of health concerns for those who might smoke illicit cigarettes. At its base, the idea is about taxing the tobacco whether or not it gets into the hands of the illegal market; it is about revenue. The other issue is that applying excise to UT could be seen as partly legitimizing the activities of illicit manufacturers. If such a manufacturer steals a truck of UT on which taxes have been paid or are due and turns it into products, those products, I guess, enter the market as excise paid. Even the theft might be disputed by a smart lawyer willing to claim the tobacco fell off the back of a truck.
It seems to me that we are again being driven toward ridiculously complex reactions because of an unwillingness to trace a problem back to its cause—unfair levels of taxes being applied to combustible cigarettes. If the aim is to reduce the illegal trade in cigarettes, significantly reduce the taxes on them and remove laws requiring licit cigarettes to be unappealing while heavily promoting alternative, low-risk products.

*While acknowledging that all opinions and errors in this piece are his, the writer would like to thank the following for their help in explaining some of the background and intricacies associated with the commission’s discussions on tobacco excise: William Meyer, senior EU affairs manager, and Peter van der Mark, secretary general at the European Smoking Tobacco Association.

A Rational Approach: Controlled Atmosphere Systems are Gaining Traction in the Fight Against Tobacco Pests
In the main article accompanying this sidebar, I finish with my usual rant on what I see as the absurd complexities smuggled into efforts to reduce the illegal trade in tobacco products. So, as a way of introducing some balance, in this piece I would like to contrast such efforts with those being used to combat another problem in which rogue players cause economic damage along the tobacco supply chain. It seems to me that the tobacco industry has in recent years approached the issue of tobacco losses to insects in a rational, proportionate and evolving manner.
That’s not to say everything has been fixed. It hasn’t, and new problems could arise in the future, as those who have read the companion piece might suspect. If, as seems possible, excise taxes are applied to unmanufactured tobacco in the EU, there will be an even greater incentive for protecting tobacco. Otherwise, tobacco beetles and moths will not only be eating their way through tobacco but also through the excise paid on that tobacco. And while bureaucrats seem keen on complexity, I think they will draw the line at issuing excise rebates on receipt of evidence provided in the form of well-fed beetles.
Ten years ago, it was said that tobacco worth about $800 million was being lost annually to insects, and so, in an email exchange at the end of January, I asked Rene Luyten, a director of b-Cat, whether the situation had improved or deteriorated since then. He replied that he had no idea about the value of losses but added that he knew that tobacco owners did not sit back and allow problems to overwhelm them. They were always looking to improve the way they protected their tobacco from insects, and that was irrespective of the costs of producing tobacco at any particular time.
One of the improvements that was made saw, in 2011, controlled atmosphere (CA) systems, which had been used in respect of other commodities and various products for 15 years or more, starting to gain traction with tobacco people—those involved in warehousing, shipping, trading and manufacturing tobacco. Further impetus was provided in 2012 when Coresta issued a guideline for the treatment of tobacco beetles with CA, a guideline that was revised to include the tobacco moths the following year. Used properly, CA offers enormous benefits because it kills all tobacco beetles and moths in all their life cycle stages; it can be used for all types and varieties of leaf tobacco without affecting taste and color, and it can be used for tobacco products.
Luyten told me that demand for new CA chambers was currently good around the world, as was demand for extensions of installations made previously by some of the early adopters of this technology. And demand is coming from both large and small companies because installations can be geared to the size of the business. On the modest end of the scale, b-Cat, which has been involved in the CA business for more than 50 years, has installed a system with the dimensions of a single 40-foot container while at the other end of the scale it has built a system with a capacity of 63 40-foot containers spread through nine chambers.
Of course, many leaf tobacco export countries still use chemical insect treatments, mainly because of the high volumes they need to handle and the resulting costs. But because of issues to do with insect resistance to phosphine gas treatments, which became such a huge problem before the adoption of CA systems, manufacturers tend to use CA as the final treatment adjacent to their manufacturing sites. They also tend to favor CA treatments because of issues concerned with the environment and sustainability, issues that drive the part of the continuing R&D effort at b-Cat that is aimed at automating processes so as to minimize energy usage. —G.G.

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

March 1, 2023
Elfbar to Rebrand as EB Design

Photo: Olivier Le Moal

Shenzhen Weiboli Technology Co. plans to relaunch its Elfbar e-cigarettes under the name EB Design in the United States after losing a trademark dispute in court, reports 2Firsts.
On Feb. 23, a federal judge ordered Weiboli to stop marketing its Elfbar e-cigarettes in the U.S., finding that VPR Brands, which makes and sells Elf brand vapes, is likely to succeed on its claims that the Elfbar vapes infringe its trademark.
In an interview with 2Firsts, Elfbar’s North American public relations manager said that while Elfbar would launch its new name in March, the brand would retain its original logo. The letters E and B in “EB Design” are believed to represent the initials of Elfbar.
Elfbar’s American PR manager said the company would continue to focus on the United States. The brand’s U.S. suppliers and distributors market are aware of the name change and prepared for it, he noted.

March 1, 2023
A Future Without Plastics

Photo courtesy of Greenbutts

With its new environmentally friendly technology, Greenbutts wants to tackle the challenge of filter litter.

By Stefanie Rossel

Of the more than 5 trillion cigarettes produced globally each year, the majority ends up in the environment after consumption. Cigarette butts are the most littered plastic item on earth as many smokers don’t consider them to be litter. According to the Truth Initiative, butts have consistently made up 30 percent to 40 percent of all items collected in annual international coastal and urban cleanups since the 1980s.
While most of a cigarette’s components quickly disintegrate when smoked or disposed of, the filter will stick around for some time. Around 98 percent of cigarette filters comprise cellulose acetate (CA), a polymer that is slow to degrade in the environment. It can take up to 14 years for a CA filter to degrade, depending on the conditions of the environment where it has been discarded.
Tadas Lisauskas
“Our estimation is that more than 4 trillion plastic butts are littered every year, and marine life researchers warn that there could be more plastic than fish in the ocean by 2050,” says Tadas Lisauskas, founder and CEO of California-based Greenbutts. “Urgent action is needed.”
A material-science and impact-driven business, Greenbutts has made it its mission to eliminate CA cigarette litter. The company was founded in 2010 by Lisauskas and Xavier Van Osten, who were newcomers to the cigarette filter business at that time but were acutely aware of the need for a green alternative to the plastics-containing filters polluting the environment.
They soon learned that creating a viable substitute was a science in itself. In addition to degrading quickly when discarded in the environment, a biodegradable filter or filter substrate must meet many requirements, such as adequate smoke chemistry and acceptable sensory performance. The filter must also be suitable for processing on high-speed filter assembly equipment and cigarette making machinery.
To help tackle these challenges, Greenbutts hired a former executive of specialty filter manufacturer Filtrona as technical advisor and teamed up with experts from the U.K. Nonwovens Innovation and Research Institute to evaluate fibers with sufficient porosity and thickness.
Greenbutts spent almost a decade designing and developing filters that provide comparable taste and filtration properties as current CA filters but will disperse in water within several minutes with agitation and begin to degrade in compost within several days.
After years of R&D and testing with tobacco companies, the company came up with a patented substrate and filters made of all-natural, food-grade fibers, such as abaca fiber, cotton flock and industrial hemp as well as a starch-based binder, which were introduced to the market in the summer of 2019. The product is sold in bulk or as ready-made rods of filters and filter tips. The blend of materials allows for the same filter manufacturing rates as acetate filters, according to Greenbutts.

Greenbutts’ patented substrate and filters are made with all-natural, food-grade fibers.

Better Alternative

Greenbutts is now ready to take its innovation to the next level. In November, the company introduced Greenbossing, a trademarked process developed with Boegli-Gravures. According to the companies, the innovation will revolutionize Greenbutts’ filter rod manufacturing. “We want to offer to the tobacco industry not just an alternative but the state-of-the-art solution,” explains Lisauskas. “We believe we are creating the next generation of biodegradable filters by introducing our patented Greenbossing technology. Boegli and Greenbutts are actively innovating together and leading a sustainability pathway and building the future today. The Greenbossing technology arrives at the perfect time to accelerate the transitioning from cellulose acetate, which is a single-use plastic (SUP), to Greenbutts’ fully biodegradable and water dispersible substrate. The innovation will enhance the existing filtration capabilities and sensorial experience and much more, setting the Greenbutts substrate far ahead of all competitors and establishing a new ‘gold standard’ for cigarette filters.”
CA filters are still considered the gold standard in cigarette filtration. While it is still early days, Lisauskas believes they may very well lose that position to his Greenbossing products. “The initial analytical lab tests have shown promising results, and we will be able to share them in due time,” he says.

Regulatory Pressure

In recent years, awareness of the cigarette litter problem has increased. Several countries are considering legislation to reduce cigarette butt waste. In July 2021, the European Union enacted its Single-Use Plastics Directive (SUPD). While the SUPD does not oblige tobacco manufacturers to use plastics-free cigarette filters, it requires producers to fund consumer awareness campaigns, extended producer responsibility schemes and tobacco filter collection initiatives from December 2023.
Luis Sanchez
“The question is not if the CA plastic filters will be banned; the question is when they will be banned,” says Luis Sanches, chief strategy officer at Greenbutts. “The CA butts are the No. 1 most littered single-used plastic item in the world, and there is no logical reason to stop them from being banned. Many other SUPs have already been banned, such as plastic straws, cutlery, plastic bags, plastic cups. And the banning of the CA plastic filters is simply a matter of time. The tobacco business is aware of this, and there is clear indication that they are fully committed to drive the change. We at Greenbutts believe that through awareness and education, the industry will eventually drive the change, the regulators will enforce the change, consumers will deliver the change. We at Greenbutts are facilitating this change to occur.”
Despite the significant problem of cigarette litter, CA filters continue to dominate the market. Not only because CA has been a tried-and-tested, cost-effective material but also because there were no external incentives, such as stricter regulations, encouraging a rethink. In the U.S., the expensive regulatory approval process for new products actually presented a barrier to more environmentally friendly filters. In the first years since the launch, Greenbutts therefore marketed its product to hemp cigarette manufacturers and the marijuana industry.

With agitation, Greenbutts’ filter will disperse in water within several minutes. In the environment, it will start degrading into compost within several days.

Into the Future

The Greenbossing technology may help Greenbutts overcome the regulatory hurdle. “The FDA authorization is a lengthy and meticulous process,” says Lisauskas. “It requires a lot of data, patience and solid science. We have already started the process with the collaboration of world-class scientists and our legal team to embark on this challenging journey.”
As rules for environmental protection tighten around the world, cigarette filter manufacturers and other industry players have stepped up their efforts to provide alternatives to CA-based filters. Most of these solutions, however, are made from paper, a substrate that presents challenges. For example, paper behaves differently than cellulose acetate so that it requires adjustments in the design of the filter and cigarette, and it often comes with a characteristic taste and smell.
“The sensory performance, I would say, is the most challenging factor to overcome,” says Lisauskas. “The chemically and physically modified filaments of cellulose acetate associated with the plasticizer, triacetin, make the plastic filter a very well-designed filtration tool for several chemical compounds present in tobacco smoke.”
The Greenbutts filter with the Greenbossing technology, by contrast, utilizes natural fibers, specifically selected for their sensorial neutrality, filtration capability and mechanical strength. This combination minimizes natural variability, enables airflow control and reduces paper filters’ cellulosic sensorial notes, according to Lisauskas.
The company has recently experienced a clear and growing interest from EU-based tobacco companies in its product. “We can attest that other organizations, outside the EU, want to take the lead on the sustainability agenda by giving consumers what they are looking for: authentic products, no plastic, no chemicals, no additives, and all-natural alternatives,” says Lisauskas.
Sanches hopes that because of the further benefits delivered by the Greenbossing process, the tobacco industry will adopt Greenbossing eventually as its new standard for both combustible and heated-tobacco products. “And it will open up further opportunities for other combustible products beyond tobacco,” he says.
The company already has some experience with heated products. In August 2021, Greenbutts entered into an agreement with Poda Lifestyle and Wellness, which uses the biodegradable filters in its Beyond Burn Poda Pods.
Greenbutts is currently evaluating heated-tobacco products, Lisauskas relates. “There is nothing that should impede the successful application to this sector,” he says. “The Greenbossing process should deliver the perfect match.”

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.

March 1, 2023
High-Tech Quitting

Photos: Qnovia

Qnovia wants to increase smoking cessation rates with a disruptive inhaler technology.
By Stefanie Rossel
For smokers eager to quit, there’s a plethora of nicotine-replacement therapy (NRT) products on the market. However, whether they come in the form of lozenges, patches, gums, nasal sprays or prescription inhalers, the effectiveness of these cessation aids is disappointingly low. A study conducted by the Swiss Institute of Social and Preventive Medicine in 2006 found that the chance of a smoker quitting cigarettes long-term with the help of NRTs was a mere 7 percent. There’s no sign that this rate has improved in recent years. The poor performance is due in part to the fact that NRTs fail to provide instant relief of the physical sensations that contribute to cravings.
Qnovia, a Richmond, Virginia, USA-based medical technology and pharmaceutical company established in 2018, has set out to address this shortcoming with a new drug delivery technology. The firm has developed RespiRx, a handheld, pocket-size device capable of producing a medically safe aerosol without heat. The device consists of a vibrating mesh nebulizer, which is a combination of a vibrating piezoelectric actuator and a piece of mesh that diffuses a drop of liquid into a fine mist on contact.
Piezoelectric materials can produce electric energy upon application of mechanical stress. A commonly known piezoelectric is quartz. The technology, which usually involves clunky equipment and requires regular cleaning, has been used for many years for applications unrelated to smoking cessation.
Qnovia has made it more user-friendly, according to Qnovia CEO Brian Quigley, who spent 16 years with Altria Group, including seven as president and chief executive of the company’s smokeless and innovative products/vapor businesses.
“Vibrating mesh nebulization is a proven and safe method for delivering inhaled therapies; however, our proprietary device is designed to be orientation-agnostic and requires no cleaning or maintenance,“ he says. “Not only are there proprietary elements to achieve this, but the entire nebulizing engine is also miniaturized and part of the drug product containing carriage that continuously feeds the drug to the mesh, maintaining a controlled flow rate and thereby delivering a precise dose when activated with the user’s breath.”
The device works with a 12-week step-down dosage regimen consistent with other Qnovia NRTs. Every three seconds of inhalation registers as an individual dose, with a running count displayed on a panel of the battery unit. Working with a general practitioner or tobacco treatment specialist, patients are given a tapering dosage schedule according to their own consumption level. The concentration of pharmaceutical-grade nicotine in the cartridges remains constant over the duration of the program, with the device limiting the dispensation of doses in a single day and adjusting the limit per the regimen.
RespiRx has a higher pharmacokinetic curve than existing NRTs but a lower one than combustible cigarettes so that patients require progressively fewer doses as cravings subside. According to Quigley, one of the largest problems with existing buccal and transdermal solutions is that they don’t deliver the nicotine to the bloodstream quickly enough to alleviate withdrawal symptoms.

Vibrating mesh nebulization is a proven and safe method for delivering inhaled therapies; however, our proprietary device is designed to be orientation-agnostic and requires no cleaning or maintenance.

Brian Quigley, CEO, Qnovia

Unique Features
While RespiRx, with its high-tech design and elaborate features, may resemble an electronic cigarette, it is in fact a very different product, according to Quigley. “At its core, our device is a medical technology designed to achieve the FDA’s [U.S. Food and Drug Administration] Center for Drug Evaluation and Research’s [CDER] standards for safety,” he says. “So our device has multiple design features that make it wholly different than an e-cigarette. First, we use no heat to create the aerosol, which ensures there is no risk of exposing the user to thermal byproducts or degradants. Second, our drug product is also designed only using excipients that are safe for inhalation in a drug context, and third, the design of the device is meant to achieve CDER safety standards for airpath and safety, which are not requirements achieved by e-cigarettes.”
RespiRx’s technology also differs from Kind Consumer’s Voke, a breath-activated device that worked like an asthma inhaler. The product was designed to deliver rapid nicotine craving relief without heat, combustion or vapor. It looked like a cigarette, and its consumption ritual mimicked smoking.
The U.K. Medicine and Healthcare products Regulatory Agency granted Voke a medical license in 2015, and Public Health England endorsed the product as a safer alternative to smoking. However, after raising £140 million ($171.42 million) and attracting investments from major companies, including BAT, the venture ended in late 2020.
According to Quigley, Voke delivered the user a cold shot of compressed polybutylene—in essence, a pressurized nicotine liquid, which appears to have impacted the user experience.
By contrast, Qnovia’s device delivers a laminar, nonturbulent aerosol. “Not only does our aerosol appear to look vapor-like, but it’s also designed to be inhaled easily under normal inspiratory conditions, unlike the Voke,” says Quigley.
Quigley is confident that RespiRx won’t suffer the same fate as Voke. “Firstly, the RespiRx’s on-device LCD screen prompts and future mobile app connectivity will play important roles in advancing patient adherence and compliance rates,” he says. “These tech-enabled features simply didn’t exist with Voke’s low-tech, data-absent approach. Secondly, from a broader drug-delivery platform perspective, the RespiRx is actually able to deliver complex, pressure-sensitive molecules like biologics. Voke was tied to one indication area, where the underlying technology for broader API adoption would have been a challenge. The RespiRx, on the other hand, is already engaging in activities to expand Qnovia’s active pharmaceutical ingredient portfolio beyond nicotine.”
According to the company, the RespiRx technology could be used to deliver a variety of drugs for various future indications, including asthma, chronic obstructive pulmonary disease or chronic pain.

Into the Clinical Trial Phase
In the NRT category, RespiRx will compete with FDA-approved nicotine inhalers such as Nicorette, which is available without a prescription. Quigley believes RespiRx will prove to be a more effective solution.
“The Nicorette inhaler delivers large droplets containing nicotine into the patient’s mouth,” he says. “This results in buccal absorption, so it’s not an inhaled delivery mechanism despite its name, which limits the ability of the drug to rapidly and effectively alleviate withdrawal symptoms, where our device delivers an aerosol with particle dynamics that deliver the drug to the lung, which will result in more immediate drug delivery and improved ability to alleviate withdrawals. Also, the inhaler has a very harsh and bitter taste, which limits adoption, whereas our formulation does not have these unpleasant effects.”
Making smoking cessation medication—or novel nicotine-delivery products for that matter—permanently acceptable for smokers continues to be a challenge. Quigley says RespiRx’s formulation has no flavor. Since the product’s target audience is looking to ultimately stop consuming tobacco products altogether, they want an experience that is different from that offered by existing alternatives and one that helps them move away from smoking over the 12-week user regimen.
In October 2022, Qnovia raised $17 million to help RespiRx through the FDA’s Investigational New Drug Application process. “Once we submit our IND, we will execute phase I, II and III studies with FDA guidance; however, the study design, powering and endpoints are all already very clearly defined,” says Quigley.
The company plans to submit its final new drug application to the FDA in 2025. Approval is likely to come faster than for new tobacco products going through the FDA’s premarket tobacco product application process. “At the appropriate time, we expect to also request breakthrough and accelerated review status, which are established programs to facilitate the submission, review and final decisions for drugs,” says Quigley. “Largely, I believe CDER does a very good job hitting its timing performance requirements, and the burden of proof we have to demonstrate is clear and well defined. For all these reasons, I believe we have a significant advantage engaging with CDER despite the cost and time we invest in generating strong data for the agency.”
Instead of marketing RespiRx as an over-the-counter product, Qnovia has chosen to pursue prescription-only status. “We believe that it is important to ensure that this therapy is only used as intended, and we want to be sure to not have abuse liability concerns. Given the design of the pharmacokinetic profile and the delivery of nicotine via inhalation, we strongly believe that a prescription path is important to ensure appropriate use under the care of a physician.”

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.

March 1, 2023
Hong Kong: Record Cigarette Seizures

Photo: Panksvatouny

Hong Kong customs seized 730 million illicit cigarettes in 2022, 76 percent more than in 2021 and the highest annual figure in more than two decades, reports The Standard.
Officers processed 7,148 cases last year, including 3,436 involving cigarette smuggling and 931 involving drug trafficking.
The illicit cigarettes confiscated in 2022 had a market value of HKD2.01 billion ($256.07 million) and a taxable value of around HKD1.4 billion, according to Customs and Excise Commissioner Louise Ho Pui-shan.
Customs officials attributed the spike in illicit cigarettes to the rising tobacco price under inflation.
The increased seizures follow a relaxation of immigration measures in multiple countries after the Covid-19 pandemic, Ho added, noting Customs would recruit 90 inspectors and 170 officers to strengthen the city’s enforcement capability.

March 1, 2023
$Doing the Math$

Doing the Math

Photo: Fran_kie

The numbers presented on illicit trade (and many other topics) should not always be taken at face value.

By George Gay

Shortly before I was asked to write this story on the illegal trade in cigarettes, the U.K.’s prime minister, Rishi Sunak, came up with a plan aimed, I assume, at helping to ameliorate the damage done to the country by his and previous conservative governments since 2010. His idea was that all pupils should be made to study mathematics until the age of 18, an aim that included some obvious pitfalls. For instance, given the plan was put in place, increasing numbers of people would come into contact with imaginary numbers, and even numbers that are difficult to imagine, such as 0.0005, which is about the percentage of the population who voted for Sunak to become prime minister.
Even if, like me, you’re not a mathematician, it’s worth keeping your eye on figures that are presented to you. And in this regard, I was intrigued by a press note announcing the publication of a paper by Researchers at the International Tobacco Control Policy Evaluation Project, the University of Waterloo, Canada, who were said to have “evaluated the impact of federal and provincial menthol cigarette bans in Canada by surveying smokers of menthol and nonmenthol cigarettes before and after Canada’s menthol ban.” The research study was said to have found that “banning menthol cigarettes does not lead more smokers to purchase menthols from illicit sources, contradicting claims made by the tobacco industry that the proposed ban of menthol cigarettes in the U.S. by the Food and Drug Administration will lead to a significant increase in illicit cigarettes.”
However, even a person with a limited understanding of mathematics would have to wonder whether the study’s findings support this statement, even leaving aside the seemingly important issue that Canada isn’t the U.S. It seems to me that it is a bit of a leap to make the above claim when the number of menthol cigarette smokers who took part in the study seems to have been only 138 (the study included, too, 1,098 smokers of nonmenthol cigarettes, who were used, at least in part, as a “control group”).
As I read things,* menthol cigarette smokers were surveyed in 2016, before the nationwide ban** was brought in, and again in 2018, after the ban was introduced. Of the 138 menthol cigarette smokers who were surveyed in 2018, only 36 reported smoking menthol cigarettes after the ban while brand checks indicated that only 17 were actually smoking menthol cigarettes at that time and that the most recent cigarette purchases of only 13 of those 17 had comprised menthol cigarettes. Again, as I read things, only nine of the 17 bought their menthol cigarettes from outlets on First Nations reserves, but, despite these tiny figures, the researchers present their results to the first decimal place and are happy to conclude that “After Canada’s menthol ban, there was no increase in illicit purchasing of menthol or nonmenthol cigarettes from First Nations reserves.”
The press note seems to push that conclusion further. Its heading, “Study refutes industry claims that ban on menthol cigarettes leads to increased use of illegal smokes,” is not confined to First Nations reserves outlets but presumably encompasses the other outlets covered: convenience stores, the internet, supermarkets and bars/pubs.
This is important, I think. You can imagine somebody in the future quoting the report by saying that 51.2 percent of sales of illicit menthol cigarettes in Canada post the menthol cigarette ban were made on First Nation reserves. That sounds impressive, of course, unless you know that the 51.2 percent figure is based on little more than a handful of purchases.

What is the justification for trying to “save” menthol cigarette smokers, but not other smokers, from the consequences of their own actions?

An Alternative Destination

Having said that, my main gripe with the study was that it was superfluous, and yet the authors called in at least two places for further research into this matter. Why is money spent on such studies when the world is in desperate need of funding for basic science?
I was never sold on the idea that a ban on menthol cigarettes would necessarily and greatly increase the sale of illicit products in the place where the ban was imposed. And I certainly wasn’t sold on the idea that you need to carry out studies to get to the bottom of this question, though I understand that they are needed to keep going the huge economic benefits to be enjoyed by the increasingly large, multi-faceted industry dedicated to making the lives of smokers more miserable.
So the following is my contribution—an open-access, no-cost method of getting to the bottom of the menthol cigarette question. Wait until you are alone, sit down in a not-too-comfortable chair, switch off all electronic distractions, refrain from drinking alcohol and allow yourself the luxury of thinking; and, after a time, it will probably become clear that, assuming those selling menthol cigarettes post a ban will set their prices competitively, three major factors will interact to determine the level of sales of illicit menthol cigarettes in the place where such products are banned. Those are: the appeal of the products in the place where the ban is imposed, the efficiency of the authorities charged with preventing the manufacture and distribution of illicit products in that place and the ease with which the borders of the place can be sealed against the products.
It is not difficult to figure out which countries would find it relatively easy to enforce bans on menthol cigarettes successfully and which would find it more challenging. And, as to the appeal of the products, it only needs to be remembered that the prohibition is not on cigarettes but on menthol. Importantly, the prohibition is not on nicotine, the thing that we are told keeps people coming back for cigarettes, but on a flavor that is preferred by a minority of smokers; so, without moving from my chair, I came to the belief that normally law-abiding, former menthol cigarette smokers were more likely to switch to nonmenthol brands than to go looking for illicit menthol cigarettes. And, in one sense, the research backs this up when it reports that of the 36 people who claimed to be smoking menthol cigarettes after the ban, 19 of them were mistaken. Of course, since the advent of the motor car and the tendency to speed has made most adults fairly flexible when it comes to obeying certain laws, and since it is possible that illicit menthol cigarettes might be offered to them in venues where alcoholic drink is being consumed and, therefore, decision-making flawed, a certain level of illegal trade has to be expected.
But the fear of increasing the illegal trade is probably the least of any number of issues that are raised by bans on menthol cigarettes. One ethical consideration concerns discrimination. What is the justification for discriminating against menthol cigarette smokers? Or, looked at another way, what is the justification for discriminating against the smokers of nonmenthol cigarettes? What is the justification for trying to “save” menthol cigarette smokers, but not other smokers, from the consequences of their own actions?

Rising Poverty

But that’s enough from Canada. Let’s alight briefly in France where, in January, there was a report of a raid on an illicit tobacco factory that resulted in the seizure of more than 100 tons of tobacco-related products said to be worth €17 million ($18.7 million).
Sitting in my chair, I wondered what I was supposed to make of this story. I guess it was meant to come across as a success in which the coordinated powers of national and international law and order foiled the activities of criminals. But I couldn’t help thinking that it described a failure since the main aim of law enforcement should be prevention rather than the clumsier activities associated with detection and prosecution. And there was a rather unpleasant aspect to the story, which described how the French police had arrested nine suspects, “most of them Moldovan nationals.” Unsurprisingly but unfortunately, we shall probably never know what brought these people to feel that their best hope was to live and work in a factory far from their home and constantly with the fear of detection.
Could it be that they were financially impoverished? In a report in The Guardian on Jan. 23, wealth correspondent Rupert Neate quoted Nobel Prize-winning economist Joseph Stiglitz as saying that, in the period defined by the Covid pandemic and its aftermath, many people found life very difficult. And he added that, during the same period, it was shocking how many people and rich corporations made off like bandits. Those bandits, of course, will not be brought to justice.
The question arises as to why it is seen as perfectly legitimate to create within the EU a fertile environment for the illegal trade in cigarettes by applying unfair levels of taxes while mandating that licit cigarettes should be as unpleasant as possible and then spend precious resources on hunting down those who try to get around such obstacles. With the advent of next-generation products (NGPs), the time is overdue for new thinking. Reduce taxes on cigarettes, remove the laws that require licit cigarettes to be unappealing, heavily promote alternative, low-risk tobacco and nicotine products, and the laws of competition will dissolve the problem of the illegal trade in cigarettes.
Of course, NGPs are not immune from being traded illegally, and I was intrigued by a recent press note from the U.K.’s Chartered Trading Standards Institute entitled “Illicit vapes top list of high street threats, say Trading Standards experts.” The note made some good points, but I was pulled up short by one comment. “It’s important we support retailers to ensure that products [vapes] are sold responsibly …. If we don’t, there’s a risk that products could be banned or overregulated, leaving smokers without the option of a product that carries a fraction of the risks of smoking and is an extremely effective aid to quitting.”
At this point, I had to retire to my chair. What was this person saying? That he believes the U.K. government is so muddled in its thinking that it might ban vapes, a product that, in his own words, carries “a fraction of the risks of smoking” and comprises “an extremely effective aid to quitting [smoking],” if those products are sold to children? At the same time, he seemed to be implying that the government would not ban combustible cigarettes, the consumption of which is hugely riskier than is the consumption of vapes, and which are also sold to children.
But perhaps he’s right to be concerned. You have to wonder whether the U.K. government isn’t a little hazy on questions of risk. Last year, while he was chancellor, Sunak was forced to pay a fine for breaking Covid-19 lockdown rules. And he started this year by having to pay a fine for traveling in a vehicle while not wearing a seatbelt.

*Not being a mathematician nor a scientist, I had some difficulty following the figures, in no small part because percentages did not correspond with reported sample sizes, possibly because of the tiny sample sizes involved.

**The report and the press note use, sometimes in the same sentence, both the words “ban” and “bans,” the latter to refer sometimes to provincial bans. I have used only “ban,” reflecting the fact that the menthol cigarette ban now applies nationwide, but I should point out that whereas the provinces introduced menthol cigarette bans between 2015 and 2018, the two surveys took place in 2016 and 2018.

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

March 1, 2023
Questioning the Numbers

Image: megaflopp | Adobe Stock

Changes in the U.S. Tobacco Tax and Trade Bureau’s reports have made its data less useful.

By Marissa Dean

Each month, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) publishes excise tax statistical reports for tobacco products. In November 2022, the TTB announced that it would be changing the way in which it releases and reports this data—changes that significantly affect the quality of the data for its previous users.
The reporting changes are attributed to the decrease in market players; the TTB stated that with so few remaining players, the data, as it had been published, made it easy to identify specific companies and their production and sales levels. This made for an unfair market, with some manufacturers privy to information that may affect product pricing and create unfair marketing practices.
While at face value, the changes may not seem relevant, especially to those not adept at interpreting tax data, they are actually quite substantial. The TTB’s changes have led to shifts in the categories listed (categories now consist of cigarettes and a smaller number of other tobacco products) and the aggregation of tax-exempt data from all product categories; additionally, some months are missing data points. Tobacco products that are greatly affected include large cigars, little cigars, chewing tobacco, pipe tobacco and roll-your-own tobacco. As vapor products are not subject to a federal excise tax, the TTB does not, and did not previously, release any data regarding electronic cigarettes, e-liquid or other novel tobacco products.
The trade association TMA uses the TTB’s tobacco tax data to create reports dissecting the information to discuss the U.S. tobacco product markets and trends. With the TTB’s changes, this information is now less useful than before. Overall, cigarette data hasn’t changed significantly outside of the lack of specific tax-exempt information; however, the other tobacco products are lacking much information that was previously available, making it impossible to get a complete picture of the market.
When the TTB implemented its changes, it implemented them retroactively, meaning all of its previous excise tax statistical reports were removed from its website. The TTB also does not plan on notating which figures have been changed in revised reports to accommodate the new aggregation system, according to a source familiar with the matter.
This poses a problem for TTB data users. Now, there are likely to be more discrepancies in data because one source may be using the “new” data while another may be using the previously published data. There are likely to be more gaps in information as well because many categories are missing information due to the aggregation—data comparisons are more difficult to obtain if missing data points become more common. Sources are less likely to be able to effectively discuss market outlooks and comparisons as well due to the gaps in data and the fact that categories have been combined. At best, they would be estimations and educated guesses based on historical data and trends.
The aggregated information now provided by the TTB is useful in small part to give a snapshot of the market, but with gaps in data and large category aggregation, there is no way to dissect the market and understand possible trends in any comprehensive manner. Unless more players enter the game, it is unlikely that the TTB will revert to the way in which it originally reported the statistical data, creating a roadblock for those trying to discern potential market changes.

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.

March 1, 2023
Where’s the Parade?

Photo: TRITOOTH

Record-low youth smoking rates get no respect.

By Cheryl K. Olson

Back in 2009, when planning its 10-year public health objectives, the U.S. Department of Health and Human Services (DHHS) set an ambitious goal for reducing youth smoking. At the time, said government data, one in five teens (19.5 percent) had lit up in the past month. The Healthy People 2020 target was 16 percent.
These targets aren’t meant to be slam-dunks. In 2020, a third of the 985 trackable Healthy People objectives were met; the rest improved some, stayed the same or got worse. So what happened with high school smoking?
It plummeted. After passing the goal in 2013 (15.7 percent), teen cigarette use kept on falling. At the ten-year mark, in 2019, it hit 6 percent.
The Healthy People 2030 youth smoking target is 3.4 percent. The newest national figures suggest we’ve already left that number in the dust. The 2022 National Youth Tobacco Survey (NYTS) pegged high school cigarette use at an astonishingly low 2.0 percent. That’s even just a puff in the past 30 days, not daily use.
Dave Dobbins
“We’re crushing it, right? It’s great news,” says Dave Dobbins, former chief operating officer at the Truth Initiative who is now a consultant for Altria. “For many years, I never thought we’d get youth smoking under 5 percent; I thought the job would be done around seven or eight. And we’re beating the heck out of that.”
Did I miss the champagne cork-pop celebration? Why aren’t we talking about this?
There’s a clue in the title of this 2016 DHHS press release: “Cigarette smoking among U.S. high school students at an all-time low, but e-cigarette use a concern.”
In the 2022 NYTS, past-month e-cigarette use was 14.1 percent. The answer may be that we’d have to give e-cigarettes some credit for choking off youth smoking. And we have decidedly mixed feelings about that.

In the Rearview Mirror

The article in the New York Times Magazine was provocatively titled “If It’s Good for Philip Morris, Can It Also Be Good for Public Health?” It included an interview with Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.
“The challenge to me is not to eliminate smoking but the death and disease from smoking,” Myers said in 2006. “That should be the end goal. If you had a product that addicted 45 million people and killed none of them, I would take that deal. Then you’d have coffee! I have to believe that if the marketplace incentives were such that over time someone could devise a product that would give the same satisfaction as tobacco but didn’t kill them, people would flock to it.”
In that first decade of our century, the future of youth smoking looked gloomy. This 2010 DHHS press release title summed up the mood: “Little Progress Being Made in Reducing Smoking Among High School Students.” It noted that cigarettes’ rate of decline had slowed.
Kathleen Sebelius, then secretary of health and human services, wrote an introduction to the 2012 Surgeon General’s report Preventing Tobacco Use Among Youth and Young Adults. “Despite the well-known health risks, youth and adult smoking rates that had been dropping for many years have stalled,” she stated.
Michael Pesko
The surprise decline in teen smoking that followed isn’t fully explained by tobacco control policies or changing demographics, experts say. Michael Pesko, an associate professor of economics at Georgia State University, has published over 20 papers on e-cigarette policies and their effects.
“Something unexpected clearly happened between 2012 through 2019 that caused this exceeding of the smoking reduction goal by 400 percent,” he says.
“Tobacco 21 happened, and research suggests this had an impact in the later part of the decade. But the other big thing that happened was wider availability of e-cigarettes.”

The Pivot to E-Cigarettes

Rather than celebrating minuscule smoking rates, anti-tobacco organizations pivoted to e-cigarettes and nicotine addiction. Consider a recent Campaign for Tobacco-Free Kids press release on the 2022 Monitoring the Future survey findings. In his statement, Myers relegated smoking’s decline—“a remarkable public health success story that will save lives for generations to come”—to the third paragraph. He led with youth e-cigarette use and a call for the Food and Drug Administration to eliminate “the flavored products driving this youth addiction crisis.”
The Healthy People website today describes tobacco use in teens as “getting worse.” Reducing past-month tobacco use is a 2030 target. The new focus is on “cigarettes, e-cigarettes, cigars, smokeless tobacco, hookah, pipe tobacco and/or bidis.”
“I understand the reasoning of people who are skeptical of reduced-risk products,” says Dobbins. “There’s a fear that people who otherwise would not have used nicotine will use them and then be more likely to transition to cigarettes if they continue to exist in the market.”
“However, this has yet to be reflected in population data,” he continues. “Instead, the data suggest a transition to less harmful products. I think we have done a better job at educating people of all ages about the dangers of smoking than I gave credit.”

Is Vaping Displacing Smoking?

Pesko and colleagues have been analyzing the natural experiments created by variations in state policies regarding sales of e-cigarettes. He points out the remarkable consistency across a large body of research, none of it industry funded. In short, when governments regulate e-cigarettes—including taxes, minimum legal sales ages and advertising restrictions—it reduces e-cigarette sales to and use by both youth and adults.
“And it also increases combustible cigarette use, again across all populations,” Pesko says.
“The laws operate as intended in terms of reducing e-cigarette use but with the large unintended effect of increasing combustible use.”
Vaping appears to be displacing smoking. Set aside the moral panic over vaping and legitimate fears of this new unknown; what’s left looks like a public health success story.
“That’s what I believe is happening: a remarkable public health achievement,” says Pesko. He applauds advocates for passing Tobacco 21 but says nicotine companies also deserve credit. “Sometimes there is overlap between profit incentive and public health. The adoption of e-cigarettes may have been one of those things.”

Nicotine Gut Check

How should we feel about nicotine once it’s separated from combustible cigarettes? If, as Myers speculated about in 2006, we have appealing but addictive products with health risks similar to coffee … is that OK? This is a massive cultural adjustment that may take years to process.
Social scientists Kirsten Bell and Helen Keane described our confused emotions in an article critiquing the gateway theory. “The nicotine in NRT [nicotine-replacement therapy] products is ‘good’ because it weans smokers off the ‘bad’ nicotine in cigarettes and ideally nicotine itself,” they wrote. “The nicotine in e-cigarettes is ‘bad’ because it facilitates addiction to nicotine, which, in turn, drives the user to seek it in ‘harder’ or more dangerous forms.”
“My belief is that there will be an ongoing persistent demand for nicotine,” says Dobbins. “And if I’m right, it’s important that that demand be met with products that don’t subject the user to disease and death.”
Another new objective for Healthy People 2030 is “Eliminate cigarette smoking initiation in adolescents and youth adults.” In 2018, four percent of youth aged 12 to 25 first picked up a cigarette. The 2030 target: zero percent. Does this trajectory suggest that zero youth use of nicotine should be the next goal?
Pesko is not a fan of that approach. He uses the analogy of the Environmental Protection Agency’s regulation of water. They generally don’t use a zero standard for even nasty things like lead.
“It’s so expensive to go from that trace level to zero, and the benefit is so small,” he notes. “It’s a reasonable goal to try to get use very low and with as safe a nicotine product as possible. But to go to zero nicotine use by kids, I can’t imagine the types of aggressive regulation and extra policing we’d need to do that. And even then, we wouldn’t achieve the goal, as we’ve seen with the war on drugs.”

More Productive Policies

Given limited resources, where might policymakers and regulators most productively put their attention to reduce tobacco product risks to youth?
First, if we accept that the demand for nicotine exists, steer it toward reduced harm. “In terms of policy, having lower regulation of e-cigarettes than cigarettes makes a lot of sense,” says Pesko. “We want to incentivize people to use safer products. We should be taxing proportional to risk.”
He would also like to see lower regulatory hurdles for products like e-cigarettes and nicotine pouches and incorporation of studies like his into appropriate for the protection of public health calculations: “Natural experiments are a strong, consistent body of evidence that could be used to approve more PMTA [premarket tobacco product application] applications. I’d like the FDA to use this body of work more.”
Another suggestion is to turn up the heat on those nicotine companies known to sell to youth. Journalists have reported on the FDA failing to police vape products with candy flavors and toy-like packaging. Reynolds American even submitted a citizen petition a to the FDA requesting ramped-up enforcement of disposable e-cigarettes like Puff Bar and Elf Bar.
Dobbins understands the discomfort of many anti-tobacco advocates with this evolution in thinking.
“The reduced-harm products option allows companies that make money off selling cigarettes to continue doing business, albeit with much less harmful products,” he says. “But I think the most likely alternative of restrictive policies will be a move to a gray market that won’t be accountable to regulatory systems or the law, the way large companies must operate in the present.”
Recalling industry chiefs’ past staunch denials of tobacco harms, Dobbins adds, “We must acknowledge that we are nearly 30 years from 1994.”

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

March 1, 2023