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  • Singapore: Smoking Prevalence Drops to 10 Percent

    Singapore: Smoking Prevalence Drops to 10 Percent

    Photo: Noppasinw

    The smoking prevalence in Singapore dropped to 10.1 percent in 2020 from 13.9 percent in 2010, reports The Straits Times, citing the city’s Ministry of Health (MOH).

    The MOH attributes the decline to its multi-year, multi-pronged approach to reduce and discourage the use of tobacco products among Singaporeans. The ministry says it works with multiple partners to deliver public education to increase awareness of the harms of tobacco use, smoking cessation programs, legislative measures, taxation and enforcement.

    Among other measures, the MOH raised the minimum legal age for smoking to 21, and banned emerging tobacco products, on the premise that these can be gateways to smoking.

    The MOH is also studying the examples of New Zealand, Malaysia and Denmark, which recently announced plans to implement tobacco-free generation policies. The department says it will examine how these countries develop and enforce the bans, to determine if this can be similarly applied in Singapore.

  • Global THR Proponents Unite Ahead of COP10

    Global THR Proponents Unite Ahead of COP10

    A global audience, via multiple platforms, tuned into watch sCOPe’s two-day broadcast during the recent World Vape Day (WVD) and World No Tobacco day (WNTD).

    “sCOPe22’s success was critical given delegates will be discussing and debating harm reduced products at next year’s COP10 [the 10th session of the Conference of the Parties to the World Health Organization’s Framework Convention on Tobacco Control]. sCOPe22 showed that consumer advocates worldwide are united and highly motivated to fight for millions of smokers’ lives,” said Nancy Loucas of the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA).

    Tobacco harm reduction (THR) consumer advocates livestreamed for eight hours on May 30 and May 31. The panel discussions and presentations included representatives from Asia Pacific, Africa, Europe, North America and Latin America.

    sCOPe’s return on #WVD22 and #WNTD22 followed its five-day livestream last year during COP9—the ninth Conference of Parties to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC).

    “Countries represented at COP10 need to fully understand that millions of lives depend on delegates’ substantive discussions and subsequent recommendations on safer nicotine products next year. The red light must turn green—It’s long overdue.

    “Last year the FCTC kicked the subject for touch, but next year it’s all on. All eyes will be on COP10 to see if delegates start following the evidence not the emotion. THR works. Vaping bans don’t, and THR advocates are keener than ever to expose and change WHO’s fraught position,” said Loucas.

    Countries represented at COP10 need to fully understand that millions of lives depend on delegates’ substantive discussions and subsequent recommendations on safer nicotine products next year.

    Nancy Loucas, CAPHRA

    sCOPe22 participants included the European Tobacco Harm Reduction Advocates, Vaping Saved My Life South Africa, Association of Vapers India and CAPHRA.

    The Americas were also well represented with Latin American-based ARDT Iberoamerica, Rights For Vapers Canada, the Tobacco Harm Reduction Association of Canada, and the U.S. Consumer Advocates for Smoke-free Alternatives Association.

    “sCOPe22 uncovered many powerful personal stories of ex-smokers whose lives have been saved by switching to 95 percent-less harmful vaping. Instead of demonizing safer nicotine products, WHO needs to embrace them. Outrageously, WHO’s misguided advice and bullying sees hundreds of millions of smokers still blocked from accessing these life-saving products,” said Loucas.

    According to Loucas, THR advocates are buoyed by the fact that every year more and more countries are ignoring WHO’s anti-vaping campaign. Instead, they’re legalizing and regulating safer nicotine products.

    “In the Asia Pacific region alone, The Philippines, Malaysia and Thailand are set to join nearly 70 countries worldwide which have wisely regulated vaping with dramatic declines in their overall smoking rates. If WHO wants to improve global health and save smokers’ lives, they’d promote a THR approach next year—at the latest,” she said.

  • Los Angeles Bans Sale of Flavored Tobacco

    Los Angeles Bans Sale of Flavored Tobacco

    Photo: imagecatalog | Adobe Stock

    The Los Angeles City Council voted unanimously to end the sale of nontobacco-flavored tobacco products—including flavored e-cigarettes, menthol cigarettes and flavored cigars.

    The council’s action will make Los Angeles the largest city in the country to end the sale of flavored tobacco products, according to the Campaign for Tobacco-Free Kids (CTFK). Los Angeles joins over 120 California communities that have taken similar action.

    The legislation will now move to Mayor Eric Garcetti, who is expected to sign it, according to Filter. If passed, the ban would go into effect in January 2023.

    Mitch O’Farrell, the councilmember who introduced the legislation, tweeted after the vote went through, “We just took a huge step forward against Big Tobacco’s deadly agenda in Los Angeles. This morning, I led the City Council’s unanimous approval of a prohibition on the sale of flavored tobacco to everyone 21 and younger in LA, making us the largest city in California and the nation to take this kind of action against these products.”

    The ban applies to people of any age, however, not just those 21 and younger.  

    The ordinance also applies to zero-nicotine vapor products, but it does not, however, apply to hookah. “Normally, proponents and supporters of flavor bans will object heavily to … exemptions for hookah tobacco and lounges,” said Stefan Didak, a California-based vape advocate. “More often than not, an attempt at passing a ban fails because they withdraw their support.”

    “However, several of the major groups—including Annie Tegen, the vice president of state advocacy for CTFK—praised the council ahead of their vote on the amendments and congratulated them on doing the right thing,” Didak said. “Not a single word of dismay about the exemption for hookah lounges. I thought that was very much out of character.”

    Hookah lounge owners and retailers protested the ban, stating that it would eliminate a cultural tradition. It’s also speculated that the CTFK may have overlooked the exception of hookah in order to gain what they see as a big win with the LA ban, especially after years of back and forth trying to pass said ban.

  • Singapore Cracks Down on Illegal Vape Products

    Singapore Cracks Down on Illegal Vape Products

    Photo: nuttawutnuy

    Singapore authorities destroyed an some 6,500 seized vape products with an estimated value of more than SGD1 million ($726,639) on May 31, reports Channel News Asia. Among the seized items incinerated on World No Tobacco Day were 6,500 e-vaporizers, 83,500 pods and 8,000 e-liquids. Together, they weighed more than a ton.

    In Singapore, it is an offence to sell, possess for sale, import or distribute e-vaporizers and related components. Violators risk fines of up to SGD10,000 and jail up to six months.   

    The penalty for possessing and using a vape is a fine of up to SGC2,000.

    Between 2017 and 2021, the Health Sciences Authority (HSA) caught 383 illegal e-vaporizer sellers. HSA, which works with the Immigration and Checkpoints Authority to enforce against vaping, noted that some illegal importers have started to change tactics to avoid detection, by concealing products in lighting fixtures, for example.

    The agency says it has stepped up vigilance and enforcement actions.

    Last year, authorities destroyed almost 12,300 e-vaporizers, about 4,500 e-liquids and nearly 175,000 pods and components, with an estimated street value of almost SGD2 million.

     

  • Dutch Mull ‘Australian’ Cigarette Prices

    Dutch Mull ‘Australian’ Cigarette Prices

    Photo: auremar

    The Dutch government is considering increasing the price of cigarettes to between €30 ($31.96) and €47 per pack in 2040, reports the NL Times.

    Inspired by the example of Australia, where a pack of cigarettes costs the equivalent of €24, Public Health Secretary Maarten van Ooijen hopes the high prices will deter people from smoking.

    Currently a pack of cigarettes currently cost about €8 in the Netherlands. The government’s coalition agreement calls for an increase to €10 per pack. 

    Scientific research reveals that financial disincentives to smokers work only when prices are raised substantially. A recent study by Maastricht University showed, for example, that half of smokers will quit only once a pack costs €60 or more. 

    The proposed price hike is one step in the government’s plan to achieve a “smoke-free generation” by 2040, as set down in the National Prevention Agreement of 2018. The government wants only 5 percent of Dutch residents to smoke by 2040. Currently about 20 percent are smokers.

  • Mexico Outlaws E-Cigarettes

    Mexico Outlaws E-Cigarettes

    Photo: niroworld

    Mexican President Andrés Manuel López Obrador signed a decree on May 31 outlawing the sale of e-cigarettes, reports AP.

    Assistant Health Secretary Hugo López Gatell lashed out at industry claims that vaping is safer than smoking, calling it “a big lie.”

    Mexico has aggressively legislated against vapor products. Imports of vaping devices have been prohibited since at least October. Before that, legislators used consumer protection and other laws to discourage sales.

    Despite the most recent decree, many Mexicans import or buy vaping cartridges or fluid illicitly.

    At least 5 million Mexicans have tried vaping at least once, according to government figures.

  • A New Sheriff in Town

    A New Sheriff in Town

    Photo: Taco Tuinstra

    China’s tobacco monopoly asserts its authority over vapor products.

    By George Gay

    It is wise to take seriously the warning that you should be careful what you wish for.

    At the Global Tobacco and Nicotine Forum (GTNF) in London in September, which was held about six months after new vaping industry regulations had been publicly mooted in China, one speaker told those listening how vaping industry regulations were overdue, necessary and to be welcomed. At the time, I assumed this welcome was predicated on the belief that the regulations would be beneficial—that they would allow the industry to grow in a stable way and, in doing so, serve the interests of the businesses involved, smokers wanting to quit their habit, and society at large while, at the same time, helping to remove from the industry cowboy operators and substandard products.

    Things have moved on since then. The regulations, formulated by the State Tobacco Monopoly Administration, were foreshadowed at the end of 2021, published in March 2022, became effective from May and are due to come fully into force in October.

    The question is: Are the regulations beneficial? I would say they are far from ideal, but then ideal would probably have been an ambition too far. Looking on the bright side, they are better than a ban, as has been introduced in Hong Kong and elsewhere, and, furthermore, given the considerable investment in these regulations and the systems necessary to operate them, unless some unforeseen catastrophe occurs, they seem to rule out a ban being introduced, at least in the short term to medium term. But they will undoubtedly rein in the country’s vaping industry—severely in some areas.

    The rise of China’s vaping industry has been hugely impressive, and the future had held out the offer of phenomenal growth, but now, predictions must surely be revised downward, particularly in respect of the domestic market, probably much less so in respect of exports. But in taking stock of this situation, it is necessary to bear in mind the relative importance of the huge and so far largely untapped domestic market.

    Domestic Sales Versus Exports

    One of the provisions of the regulations that will likely have upset those businesses and consumers looking for beneficial outcomes, assuming consumers in China tend to prefer the sorts of vaping products most popular in other countries, is the ban on flavored products other than those with tobacco flavors. They are unlikely, too, to have been overjoyed by a ban on nicotine-free products.

    On the other hand, the industry can take heart from the fact that products with flavors other than tobacco and those that are nicotine-free may be manufactured for export where such products do not conflict with the laws of the country of destination. Basically, export products must comply with the laws, regulations and standards of the destination country, though, where the country of destination does not have vaping regulations in place, export products will have to comply with China’s regulations.

    This difference between the requirements for local and export products raises an interesting question. The ban on the sale of nontobacco flavored and nicotine-free vaping products in China seems to be based, at least in part, on the idea that products with these properties are the ones favored by young people, who should be discouraged or, where minors are concerned, banned from vaping. This seems to be an ethical stance, but it is difficult to see how, given such an ethical stance, exports of such products could be allowed, even to countries that do not ban them.

    The regulation’s authors say, in translation, the “Measures for the Administration of Electronic Cigarettes” are being put in place in order “to further strengthen the supervision of new tobacco products such as e-cigarettes, regulate the market order, ensure the health and safety of the people, and promote the legalization and standardization of industrial governance in accordance with the Tobacco Monopoly Law of the People’s Republic of China, the Law of the People’s Republic of China on the Protection of Minors [and] the Regulations on the Implementation of the Tobacco Monopoly Law of the People’s Republic of China.” The regulations are said to cover the production, sale, transport, import and export, supervision and management of vaping products.

    Market Order

    There seem to be some curiosities in the regulations. From my reading, the regulators have gone down the U.S. route in deeming electronic cigarettes to be tobacco products, at least for the purposes of incorporating them under expanded tobacco laws. And while they refer to “vaping products,” they tend to refer to the use of these products as involving “smoking” rather than “vaping.” Having said that, I should point out that these are issues picked up by Western eyes from a translation of the regulations, which, unsurprisingly, have gone through a number of revisions.

    One of the things that jumps out at a Westerner from the stated aims of the regulations is the idea of regulating “the order of the market.” China’s economic system is such that, in part, the regulations are concerned with supply-side matters whereas in much of the rest of the world, such considerations would not come into the picture. Elsewhere, the market is controlled, if that is the right word, by demand, so if it becomes oversupplied, prices fall and, eventually, companies go bust. Or that’s the basic theory. In reality, some companies are considered to be too “important” to fail and have to be bailed out by taxpayers.

    The regulations aim to balance supply with demand through such mechanisms as setting production and sales targets, overseeing imports, controlling the expansion of companies, concentrating production sites, restricting product transport and overseeing wholesale and retail trading.

    Some of these controls are to be exercised through the licensing and registration of existing and new manufacturers, wholesalers and retailers, and even the expansion of their operations, or other changes, including moves into the trading of imported products. One of the requirements for obtaining a license will be that the applicant has access to sufficient funds to carry out whatever enterprise it wants to engage in, which, along with certain other restraints, some observers believe will tend to favor the bigger companies and weed out smaller ones. Again, this weeding out of the smaller players seems to be following the U.S. route, though by using a registration requirement applied to the company rather than the product.

    Big Versus Small

    Whether you view such provisions as good or bad will probably depend on whether you are a small vaping industry operator in China likely to be driven out of business or a big one that will benefit from fewer competitors. Of course, if China is successful in using such a system to stabilize the market and ensure underfunded companies don’t go bust with all the social fallout such failures can cause, it will probably be seen to have done a good job. But there are clearly dangers in disadvantaging smaller businesses working within an industry that, because of its youth, is dependent on innovation for its success, commercially and socially.

    In addition, the market will be closely controlled by “a unified national e-cigarette transaction management platform” through which manufacturers, wholesalers and retailers will have to process and record all their trading and transactions. Wholesalers wishing to trade in imported vaping products will have to obtain permission to do so, and the imported goods will have to comply with all local technical requirements and regulations and be sold, appropriately labeled, through the transaction management platform.

    There are provisions in the regulations for dealing with counterfeit and inferior products and the infringement of intellectual property rights, including through the encouragement by rewards of people reporting cases of the illegal production and sale of vaping products.

    The regulations will govern registered trademarks along with warnings and other messages applied to tobacco packaging, and they hold that e-cigarette advertising will be in line with tobacco advertising, which is consistent with their being regarded as tobacco products. E-cigarette exhibitions aimed at promoting such products are banned.

    Sales of vaping products through “information networks” other than the transaction management platform are banned, as are sales through vending machines and sales to minors, with the onus being on retailers to check identity documents where the age of the would-be purchaser is in doubt.

    The regulations will see the introduction of a product traceability system, and they will control the sites of retail outlets, including in respect of banning such outlets “around” schools. And they will provide for quality control through the inspection, testing, monitoring and evaluation of products under institutions set up to conduct technical reviews based on the submission of application materials, such as inspection and testing reports. Those engaged in production will be required to establish product quality assurance systems and be responsible for the quality of their products.

    Meanwhile, in April, the State Administration for Market Regulation, the standards committee, published the national standards for electronic cigarettes (GB 41700-2022), which provides, among other things, details about the technical requirements for vaping products and relevant test methods, safety standards, permitted ingredients and nicotine levels and concentrations.

    Encouragingly, some reports indicate that the newly regulated industry players will be encouraged to carry out vaping industry R&D in respect of raw materials, finished products and risk assessments, and that they will be encouraged to promote the application of green technology and other environmentally friendly practices.

    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.
  • The Takeaways

    The Takeaways

    Photo: Jhvephotos | Dreamstime.com

    What lessons should regulators learn from the United States?

    By Clive Bates

    The U.S. Food and Drug Administration has had jurisdiction over tobacco products since Congress passed the Tobacco Control Act and it entered into force in 2009. Through its Center for Tobacco Products (CTP), the FDA regulates tobacco products, which include nicotine products such as e-cigarettes and e-liquids in the United States. With the recent retirement of Mitchell Zeller, the CTP’s director since 2013, it is an excellent time to take stock. Here we look at six lessons from the experience that might help guide regulation in other jurisdictions.

    First lesson: Understand how well-intentioned but poorly designed regulation can harm public health. The regulation of newer, safer products should reflect the political reality that the most hazardous products, cigarettes, will remain pervasively available. In the United States, variants of just under 3,000 cigarette products have been on the market since 2009, largely untouched by onerous regulation. The Royal College of Physicians signaled the risks that flow from excessive regulation of safer alternatives in its 2016 report Nicotine without smoke: “… if [a risk-averse and precautionary] approach also makes e-cigarettes less easily accessible, less palatable or acceptable, more expensive, less consumer-friendly or pharmacologically less effective, or inhibits innovation and development of new and improved products, then it causes harm by perpetuating smoking.”

    Regulatory regimes that are tougher on the alternatives to cigarettes function as anti-competitive barriers to entry. Sound regulatory practice requires efficiency, transparency and predictability with burdens proportionate to risk. Unfortunately, the premarket tobacco product application process by which safer products must enter the market to compete with cigarettes is astonishingly expensive and opaque and fails any test of proportionate regulation. It functions to protect the cigarette trade and concentrate the vape market into a monoculture of uninspiring products. This is partly the law itself, but much is down to how the FDA has interpreted its responsibilities under the law.

    Second lesson: Use standards and a notification regime rather than a product-by-product regime. The problem with an authorization regime is that it requires a public health agency to say “yes” to allowing a nicotine product onto the market. For institutional cultural reasons, many will find this challenging to do. Asymmetries in risk aversion mean regulators tend to be far more reluctant to accept the risk of saying “yes” and something bad happening than saying “no” and something good not happening. Both outcomes are harmful, but the former is what energizes regulators while the latter is hidden. A further issue with authorization systems is that they are easily politicized, providing a focus for campaign organizations to press for the decisions they want from regulatory agencies. For example, the FDA has been pushed hard by well-funded campaigns to ban flavored e-cigarette products. In contrast, the European Union has used a notification system with standards codified into the EU’s Tobacco Products Directive and, as a result, has a diverse and competitive market without a huge problem of youth uptake and far less political tension.

    Third lesson: The regulator should accept the same disciplines it imposes on the regulated entities. The Tobacco Control Act, which is the FDA’s regulatory foundation, repeatedly refers to “appropriate for the protection of public health” as a guiding principle. For example, this test is applied to new nicotine products as part of the premarket review process. But does the FDA ensure that its own approach is appropriate for the protection of public health? By setting the burden of proof so high, the FDA has implemented a de facto ban on flavors other than tobacco and (possibly) menthol in vaping products. This is probably a response to intense and well-funded activism. But it will have the effect (if not the intent) of closing all the vape shops and radically collapsing the diversity of products on the U.S. market. Imagine if the FDA had to prove that its approach to flavors is “appropriate for the protection of public health.” That is precisely what it would have to do if it introduced a product standard to ban flavored products. The agency would not be able to do it, and it should not be doing it by default.

    Fourth lesson: Risk perceptions matter, and regulators can help. One of the important purposes of public health regulation is to promote consumer behaviors that improve health. That should include, for example, making it easier and more desirable to vape than to smoke. But that cannot work if consumers do not understand which options are safer. In the United States, despite federal communications budgets of hundreds of millions of dollars, the public risk perceptions about nicotine are in a terrible state and, in many cases, deteriorating. In 2020, less than 3 percent of adults held the correct belief that e-cigarettes are much less harmful than cigarettes, but 62 percent wrongly believed that e-cigarettes are as harmful or more harmful than cigarettes—a view for which there is no evidence. Seventy-two percent wrongly believe that smokeless tobacco is no less harmful than cigarettes. A majority (56 percent) wrongly believe that nicotine is the primary cause of smoking-related cancer. The statements and communications campaigns of regulators and public health agencies like the Centers for Disease Control and Prevention  in the United States can improve these perceptions or make them worse. Either through risk aversion or by design, the leading federal agencies have contributed to the landscape of poor risk perceptions and have hence undermined their own effectiveness. This has especially been the case through agency efforts to deter youth use. These have strayed into the exaggeration of the harms of nicotine vaping and inappropriately capitalized on the scare over the outbreak of lung injuries in 2019 that was widely but falsely attributed to nicotine vaping.

    Fifth lesson: Apply some skepticism and science to the claims of activists. A regulator should be objective and cautious about activists’ claims and draw on the best possible science to guide its actions. Between 2017 and 2019, the rate of vaping among U.S. high school students shot up from 11.7 percent to 27.5 percent, an alarming rise by any standard. This generated a climate of moral panic in the public, media and politics—with flavored vapes and the marketing practices of e-cigarette companies blamed for the rise. Cooler heads advised caution and to look more carefully at the underlying patterns. That was good advice. It turned out that most teen vaping was infrequent, most frequent use was concentrated in young people who might otherwise be smoking, and very few tobacco-naive users showed any sign of dependence. We know that the causes of youth vaping are similar to the causes of youth smoking: characteristics of the individual and their circumstances rather than the products being the primary driver. For many young people, their frequent vaping may have been a beneficial displacement from smoking or diversion from cigarette uptake. From 2019 to 2021, teenage vaping fell sharply, especially among the infrequent users, suggesting that the dramatic rise had been a frothy and transient fad. Yet, by basing a response on the headline numbers rather than the underlying usage patterns, the FDA may have done more harm than good to both adolescents and adult smokers by overreacting to a moral panic based on a false premise. The science and data were there to navigate this crisis with a steady hand, but the FDA chose the path of least resistance and accepted activists’ claims at face value and acted accordingly.

    Sixth lesson: Adopt a realistic economic and behavioral model. How can a regulator use its powers wisely and make proper determinations if it has a poor grasp of the products and behaviors it is regulating? One way of looking at vaping products is that they are a form of smoking cessation device, a kind of pimped-up nicotine-replacement therapy. In that case, a regulator might demand clinical trials to show efficacy in smoking cessation and intervene to reduce “abuse liability”—the risk that the product will attract users for reasons other than its therapeutic indication. The other way of looking at vaping products is that they are competitive alternatives to cigarettes for people who wish to use nicotine for whatever reason. They work by presenting a rival value proposition to smokers. To do this successfully, they must be appealing and pleasurable and meet the needs of people who do not even want to quit smoking (those most at risk from smoking-related harm). Few medical or public health regulators have the conceptual tools to deal with ideas like pleasure or appeal without seeing them as an abuse liability. In reality, vaping and heated-tobacco products are best understood as part of a major technology transition from combustible to noncombustible technologies in the consumer nicotine market. The regulatory regime for such products needs to encourage and not suppress innovation, allowing innovators to do the heavy lifting in securing the eventual obsolescence of cigarettes. That is a far more ambitious aim than placing smoking cessation products on the market. Alas, few regulators, including the FDA, appear equipped for the challenge.

    Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).
  • African Ambition

    African Ambition

    Adam Molai (Photo: Pacific Cigarette Co.)

    The Pacific Cigarette Co. continues to gain momentum.

    By Daisy Jeremani

    The Pacific Cigarette Co. of Zimbabwe has made significant progress toward becoming one of Africa’s No. 2 cigarette makers as it now produces more than 3 billion sticks per year, according to company founder and chairman Adam Molai.

    In a recent interview with Tobacco Reporter, Molai said Pacific was on track to becoming the largest indigenous African cigarette manufacturer by 2020 and the second-largest cigarette manufacturer on the continent, but its growth was disrupted by the Covid-19 outbreak.

    “Significant gains have been made toward this objective, growing from inception to over 3 billion sticks per annum. However, the Covid-19 pandemic merely delayed—it did not destroy or disrupt—our ultimate goal. Our vision for global success through value addition and tobacco beneficiation remains undeterred, and we continue to strive to create value for the African economy and enhance the lives of Africans,” he said.

    Born into an entrepreneurial family, Molai attended some of southern Africa’s most prestigious schools, including Peterhouse Boys, northeast of Harare. He worked at Ernst and Young in Zimbabwe and proceeded to the University of Buckingham in the U.K. where he graduated with a business degree in August 1992. Four years later, he left Lakehead University in Canada with a first-class commerce degree.

    Molai returned home and ran some small businesses, but his biggest break came at 31 years old when he, together with Nick Havercroft, founded Savanna Tobacco, later renamed Pacific Cigarette Co. They launched it in 2002 as a threshing enterprise in Africa’s No. 1 tobacco growing country. This entailed buying tobacco stems from farmers, processing them and exporting them. They did not immediately have the resources to import a cigarette manufacturing plant, but investing in threshing and starting to export were the first serious steps that propelled Pacific to be the brand it is now.

    Molai and Havercroft recognized the opportunity that lay in processing tobacco into cigarettes, and through innovative financing structures to raise foreign currency in a market plagued by foreign currency shortages, they were able to import the required equipment and became the first indigenously owned cigarette maker in Zimbabwe. In addition to the challenge presented by the foreign currency shortage, they also had to overcome the difficulties presented by the then poor relations between Zimbabwe and Germany, which is home to some of the world’s leading tobacco equipment manufacturers. At that time, Europe and the U.S. were sanctioning Harare over the land acquisition program and human rights issues. Despite this, Molai was still able to pay for the company’s first cigarette maker and packer to start producing Pacific Blue cigarettes for export in 2004

    While this represented a big break at a personal level, breaking into a market that had been dominated by established brands for decades presented a considerable challenge, according to Molai. Competitors tried to derail and sabotage the newcomer in a variety of ways, at times using underhanded methods, he says.

    Nonetheless, Molai persisted. “Although it was challenging competing with established global multinationals with infinite resources, we used this as a learning experience,” he said.

    “Our competition provided us with the best education on business. They triggered the tenacity, resilience and boldness which has facilitated our growth and expansion into the region.”

    A few years later, Molai turned the company’s focus to tobacco contract farming. He won government approval to establish contract farming in a country still dominated by auction sales. Critics labeled him an economic saboteur who wanted to use contracting to help white farmers, most of whom just had been evicted from their farms under the land acquisition program, externalize funds. But he was not deterred, having realized that the new, resettled farmers lacked the technical know-how, inputs and financing to seriously grow tobacco.

    After two years of lobbying and hard work, the company was finally licensed to contract but with extremely stringent conditions that gave it no recourse against any defaulting farmers. This first contract scheme was called Zimbabwe Tobacco Growing Co., later rebranded to Northern Tobacco.

    “I believe our foremost contribution to the tobacco industry is not cigarette manufacturing,” says Molai. “The most important contribution we made was fighting for permission to introduce contract farming of tobacco in Zimbabwe.”

    Other companies launched their contract schemes later, and today, more than 100,000 farmers produce some 95 percent of the local crop under contracts.

    Four years ago, Pacific partnered with China Tobacco Shaanxi Industrial Corp. (CTSIC), in an effort to serve the Chinese market. In January 2022, Pacific invested $9.5 million to relaunch two of its brands, Pegasus and Branson, to ensure that they would be able to not only cater to the premium segment but also offer world-class quality cigarettes at an affordable price. The Branson brand family was expanded with Branson flame, toasted and mint varieties while Pegasus now comes in a toasted flavor and a Chinese blend named Hong Ma. 

    Molai recognizes that the Chinese blends are still in their infancy but says the company is working to ensure that it is able to grow that market given that China has the world’s largest population, which is getting increasingly affluent and traveling or settling in other countries.

    “As a disruptor and a trendsetter, Pacific will continue innovating to keep ahead of the competition,” he says. “The relaunch of some of our brands was not only driven by our Chinese partnership but also part of our DNA to ensure we satisfy our customers.”

    Pacific’s deal with CTSIC, he said, was the first of its kind, where Chinese brands got licensed to an African entity. The partnership, which is in line with Zimbabwe’s “Look East” investment policy, remains a key part of the strategy to build Pacific’s market share, considering that China has the world’s highest number of smokers and there are an estimated 10,000 Chinese living in Zimbabwe.

    It takes time to establish and grow a brand, says Molai, so Pacific is working tirelessly to gain the trust and loyalty of consumers.

    “Our aspiration was to get African cigarettes into the Chinese market,” he says. “Africa is the only continent without a quota to supply cigarettes into China, and with Zimbabwe being the largest tobacco player on the continent, it was therefore my responsibility, on behalf of our continent, to make this happen.”

    Pacific is also making inroads into neighboring South Africa, and they recently launched their Acacia brand and intend to continue expanding. As Covid-19 hit in March 2020, Pacific had to innovate and began a campaign centered on its mission that “People are the recipe for maximizing stakeholder value,” so they have been cementing and capitalizing on the relationships that they have on the market to ensure that they get the desired product placement and sales traction.

    Speaking on the prospects for the African economy, Molai said the economy can only grow when businesses identify opportunities for beneficiation and increase their levels of domestic value addition, creating employment and industrializing while enhancing and developing its people. Value addition is especially imperative for Zimbabwe, which exports 98 percent of its tobacco raw and processes just two percent of local production into cigarettes.

    “My personal objective was to democratize the tobacco industry from a highly racialized industry to one whose participation mirrors the continental demographics. This has been largely achieved with indigenous Zimbabweans now major players from growing to cigarette manufacturing.

    “It is our responsibility, and as Pacific, we remain committed to the well-being and long-term sustainability of Zimbabwe’s golden crop by manufacturing and distributing products of international quality,” he said.

    The businessman said his personal ambition has now expanded beyond tobacco and is now also focusing on the industrialization of Africa and beneficiation of other value chains so that the continent becomes an alternative supply chain to the world. Covid-19, he added, has exposed the risk concentration of current supply chains, thus Africa has a phenomenal opportunity to industrialize and create opportunities for it’s very young and unemployed youth.

    In November 2020, his self-titled foundation launched JUA Kickstarter, a $1 million initiative to support startups on the continent. With support from partners, the fund was doubled in January 2021. Announcing the development, Molai recalled the grueling journey he traveled to launch a successful brand and felt the need for him to assist startups.

    “With 65 percent of our population below 35 years of age, this population represents a significant threat or opportunity for our continent,” he told Tobacco Reporter.

  • Inching Closer

    Inching Closer

    Photo: New Africa

    The FDA has taken a major step toward banning menthol cigarettes in the U.S., but there’s still a long way to go.

    TR Staff Report

    It’s hard to overstate the significance of the U.S. Food and Drug Administration’s plan, announced on April 28, to ban menthol cigarettes in the United States. While authorities have banned menthol cigarettes in other jurisdictions, such as Brazil (2012), Canada (2017) and the European Union (2020), the impact of those measures was less severe because relatively small shares of smokers preferred menthol cigarettes in those markets. In the U.S., by contrast, menthol products accounted for a whopping 37 percent of all cigarette sales in 2020, according to Statista.

    Public health advocates dislike menthol because it reduces the irritation and harshness of smoking, which makes it easier for consumers to take up the habit. According to the FDA, menthol also interacts with nicotine in the brain to enhance nicotine’s addictive effects. “The combination of menthol’s flavor, sensory effects and interaction with nicotine in the brain increases the likelihood that youth who start using menthol cigarettes will progress to regular use,” the agency writes on its website. “Menthol also makes it more difficult for people to quit smoking.”

    Unlike in other markets, the debate about menthol cigarettes in the U.S. is also about racial disparities. According to the FDA, nearly 85 percent of African Americans smoke menthol cigarettes compared to 30 percent of white smokers who smoke menthols—a situation industry critics attribute to decades of “predatory marketing” of menthol cigarettes to Black communities.

    “By issuing proposed rules today to prohibit menthol cigarettes and all flavored cigars, the FDA is taking historic and long-overdue action to protect our nation’s kids, advance health equity and save lives, especially among Black Americans and other populations that have been targeted by the tobacco industry and suffered enormous harm from the predatory marketing of these products,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

    The FDA expects its menthol ban to reduce the appeal of cigarettes and reduce deaths and disease among current menthol smokers by decreasing cigarette consumption and increasing the likelihood of cessation. “Published modeling studies have estimated a 15 percent reduction in smoking within 40 years if menthol cigarettes were no longer available in the United States,” the agency writes. “These studies also estimate that 324,000 to 654,000 smoking attributable deaths overall (92,000 to 238,000 among African Americans) would be avoided over the course of 40 years.”

    Not everybody is convinced a menthol ban would achieve the desired health effects, however. “We strongly believe that there are more effective routes to deliver tobacco harm reduction than banning menthol in cigarettes,” said BAT Chief Marketing Officer Kingsley Wheaton in a statement. “Evidence from other markets, including Canada and the EU where similar bans have been imposed, demonstrates little impact on overall cigarette consumption.

    “The scientific evidence shows no difference in the health risks associated with menthol cigarettes compared to nonmenthol cigarettes, nor does it support that menthol cigarettes adversely affect initiation, dependence or cessation. As a result, we do not believe the published science supports regulating menthol cigarettes differently from nonmenthol cigarettes,” said Wheaton.

    Guy Bentley, director of consumer freedom at the Reason Foundation, says supporters of menthol prohibition have been disappointed by lackluster results in other jurisdictions that have banned the products. “The most common result of menthol prohibition has been for the majority of menthol smokers to switch to equally dangerous nonmenthol cigarettes, continue to buy illicit menthol or use devices to flavor nonmenthol cigarettes,” Bentley wrote on the Reason Foundation’s website.

    Morgan Stanley expects most American smokers to switch to nonmenthol cigarettes, obtain their mentholated cigarettes illicitly or switch to mentholated vapor products in the wake of a menthol ban. In addition, the investment bank predicts that consumers may “self-mentholate.” This practice would be legal, and menthol is readily available for purchase online on platforms such as Amazon.

    According to Morgan Stanley, menthol bans in Europe and Canada did not have a measurable impact on the cigarette market, though the category was significantly smaller. “The impact in Europe was moderate because it was less aggressive in enforcing menthol rules, had loophole clauses (e.g., menthol filters), a low menthol smoker population (about 5 percent), and [it] did not skew toward a certain demographic group like it does in the U.S.,” the bank wrote in a note to investors. “The most significant impact was in Poland (about 25 percent menthol [smokers]), which saw a rise in illicit trade from neighboring countries.”

    However, a study of Canada’s experience, published in Tobacco Control, noted that among daily smokers, menthol cigarette smokers were more likely than nonmenthol smokers to have quit smoking in the wake of that country’s menthol ban. If the United States’ experience mirrors that of Canada after it banned menthol cigarettes, 1.3 million people would quit smoking, and potentially hundreds of thousands of premature deaths could be averted, Geoffrey Fong, principal investigator of the International Tobacco Control Policy Evaluation Project, was quoted as saying by The New York Times.

    Regardless of its impact on public health, a U.S. menthol ban would considerably impact the operations of tobacco manufacturers operating in that country. According to Morgan Stanley, BAT is most exposed to the category, with menthol cigarettes representing 55 percent of U.S. volumes and 60 percent of U.S. profits (and about 30 percent of group profits). The investment bank estimates that menthol represents 19.5 percent of volumes and 15 percent of profits for Altria group.

    While the FDA’s April 28 announcement is significant, Goldman Sachs notes that there is still a long way to go for the plan to become reality. The agency must still take multiple steps before it can issue and implement a final rule, starting with a 60-day public comment period, which ends on July 5. After that, the Office of Management and Budget must review the proposed rule to ensure the FDA adequately addresses all public concerns, including unintended consequences, followed by a statutory delay of between one year and two years before implementation. Legal challenges could delay the ban even further. “Ultimately, it is a complex and lengthy process that, based on precedent, could likely take several years to be successfully implemented, if at all,” wrote Goldman Sachs in a note to investors.

    Expect tobacco companies to generously share their views during the comment period. “We are reviewing the details of the proposed regulations and will continue to actively participate in the rulemaking process by submitting science-based comments to FDA,” said Wheaton.