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  • Moving Backward

    Moving Backward

    If enacted, Spain’s proposed regulations on vaping products will hamper tobacco harm reduction.

    By Stefanie Rossel

    In mid-May, a shockwave hit Spain’s vaping industry: The government presented a bill that would end the independent domestic vaping sector. The proposal calls for limiting vapor product sales to state-owned tobacconist shops within five years. Specialized vape shops can stay in business only if they transition into licensed tobacconists—a step that would oblige them to sell combustible products as well. The bill would also ban online sales of vape products.

    At a recent conference, Angeles Muntadas-Prim Lafita, chair of the Spanish Association Supporting Vapers (ANESVAP) explained that the proposed legislation means the government wants to monopolize the nicotine market. “A country that is a member state of the European common market wants to monopolize a free and independent market. That’s like going back to a time when Spain wasn’t even a democracy—or even to the Spanish Inquisition,” she said.

    Muntadas-Prim Lafita considered it unlikely that vape shop owners would sell combustibles. Established tobacconist shops, on the other hand, might or might not sell vaping products under the planned rules. “This would be harmful for consumers who would be forced to go to a tobacconist to get their vape products—or as many as they could find because it would be up to the tobacconist to decide what he is going to sell,” she said. “In addition, smokers who use vaping to quit more hazardous products might be tempted to purchase combustibles again. It’s like forcing an Alcoholics Anonymous meeting to be held in a liquor store.”

    If the bill, which is now in the stage of public consultation, passes, it would also mean the loss of 1,200 direct and 3,000 indirect jobs in times of emerging economic crisis, according to Muntadas-Prim Lafita. Vape shops would have only six months to notify the commission for the tobacco market that they wanted to transition to become tobacconists. “The result of this legislation would be black markets, disobedience and lots of people going back to smoking,” she predicted. “Tobacco control in Spain is one of the fiercest and most stalled in the European Union.”

    A Worrying Precedent

    Criticism also came from the Independent European Vape Alliance (IEVA), the trade representative of independent producers and retailers of vaping products in the EU.

    In a statement, the organization pointed out that the proposed legislation went against the main principles of EU competition law. “Considering the consequences of the proposed measures, the [draft bill] will set a worrying precedent in which legally established business can be unilaterally closed in an EU member state and handed over to a state-owned network of tobacco shops,” the IEVA wrote.

    The planned legislation also violates the freedom of movement of goods in the EU and would generate severe adverse economic impacts in Spain and the EU, according to the group. It would drastically cut the European distribution value chain and negatively impact the exports to Spain from other EU member states, as the sales of vaping products in tobacco shops are expected to be extremely limited compared to the ones in specialized shops. Tobacco shops, after all, aim to maximize sales of combustible cigarettes and will be disinclined to devote time to explaining electronic devices to smokers looking to switch to less harmful alternatives.

    An online sales ban for vape products would also drastically reduce the movement of goods in the EU as retailers in other countries would no longer be allowed to sell their products in Spain. Lastly, the IEVA said, the proposed law fails to distinguish between combustible tobacco products and noncombustible products as established in the EU’s 2014 Tobacco Products Directive (TPD).

    The association called on the Spanish government, medical authorities and other stakeholders that will provide comments on the draft bill to critically reconsider the measure and insisted authorities review the proposed legislation for competition issues.

    A Small Market

    Compared with markets such as the U.K., vaping in Spain is relatively rare. After pharmaceutical companies lobbied the government for tougher legislation on vape products, the number of vape shops dropped by 90 percent in 2014. Today, there are around 535,000 vapers, which represents an adult vaping prevalence of 1.33 percent, according to the Global State of Tobacco Harm Reduction. This compares to a smoking rate of 27.9 percent, or 11.1 million people.

    Vaping devices, like heated-tobacco products, are legal in Spain and can be sold to those aged 18 or older. E-liquids are currently untaxed. Statista estimates that the Spanish revenue service will collect the equivalent of $183.4 million in e-cigarette taxes in 2022. The market is expected to grow annually by 2.89 percent.

    The bill is part of a wider effort by the Spanish government to bring its regulatory framework for tobacco products in line with World Health Organization and TPD standards.

    The manufacture, advertising and sale of vape products in Spain is regulated under the Royal Decree 579/2017, implemented five years ago, which basically translates the TPD into Spanish national law. The rules ban smoking and vaping in all indoor state-owned public places, on public transport and in some outdoor places, such as parks. Advertising of vape products on TV is allowed, though there are regulations about the type of program and the times of day in which advertisements may be broadcast. Cross-border sales of e-cigarettes are prohibited.

    A Tough Stance

    In December 2021, the government published the draft of its “Comprehensive Plan for Smoking Prevention and Control 2021–25,” which aims to extend anti-smoking legislation from 2006 to include vaping products. During the consultation period, several Spanish medical societies took a hard stance on vaping, saying e-cigarettes are an ineffective tool for smoking cessation and asking the government to regulate them like combustible tobacco products.

    Among other things, the plan aims to make more places—including private vehicles—smoke-free and vape-free, ban all e-liquid flavors except tobacco and introduce plain packaging for combustible cigarettes, vape devices and e-liquids.

    Following a June 2021 report by the National Committee for the Prevention of Smoking, the plan also called for the taxation of vapor products. The report proposed a general e-liquid tax at the EU average rate of €0.15 ($0.15) per milliliter and an additional tax of €0.006 per milligram of nicotine. This would amount to an average tax rate of 35.6 percent, enabling the Spanish government to collect €35 million in taxes per year, according to the National Committee. With all measures combined, the government aims to reduce the percentage of the population that smokes to 10 percent by 2040.

    Uncertain Outcome

    According to the World Vapers Alliance analysis, the draft plan is biased against vaping, selectively citing studies, many of which have already been refuted. However, it didn’t consider studies acknowledging the harm reduction potential of vape products, such as the findings of Public Health England that vaping is 95 percent less harmful than smoking and may serve as an important smoking cessation tool.

    “What this means is that the government wants to make it harder to vape than to smoke,” the organization stated. “Overall, the government draft shows the lack of knowledge politicians have on harm reduction tools, such as vaping, and the need for vapers to press them and tell their stories. Public health laws need to be based on evidence and not on stigma.”

    The ANESVAP has started collecting signatures for a petition urging Spain to keep vapor taxes low and e-cigarettes accessible for customers. It also calls on regulators to keep online sales legal, allow an appropriate range of flavors and differentiate between vapor products and combustible cigarettes in smoke-free places.

    The busy schedule of the Spanish government leading up to next year’s general election presently plays into the hands of the country’s vape community. Already more than a year behind schedule, the plan is now less likely to be brought before the Spanish Parliament soon, according to ECigIntelligence, which expects the bill to be discussed next year at the earliest.

  • Show of Support

    Show of Support

    Speakers at the InterTabac/InterSupply trade shows expect steady growth for next-generation products.

    By Timothy S. Donahue

    China is the capital of e-cigarette production. It only makes sense to look at the vaping environment in the country to gauge the future of the industry. Jason Tian, director of development of 2FIRSTS, a vaping industry vertical media firm, and diplomatic assistant for the E-Cigarette Professional Committee of the China Electronics Chamber of Commerce (ECCC), said during an InterTabac/InterSupply trade show, held in Dortmund, Germany, in September, that e-cigarette production in China is growing rapidly.

    A joint report from the ECCC and 2FIRSTS anticipates the global e-cigarette market to grow by 35 percent in 2022. The total market is expected to exceed $108 billion. In 2021, China’s total e-cigarette exports were $19.8 billion and were expected to reach $26.7 billion in 2022. Disposable e-cigarettes accounted for 65 percent of that growth; open systems accounted for 17 percent and pod products accounted for 8 percent in 2022. The main export destinations were the U.S., the EU, Russia, the Middle East and the U.K. Together, these markets accounted for 93 percent of China’s e-cigarette exports.

    It seems that no matter where you go in the vaping industry, everybody wants to discuss the growth of disposables—and indeed, they dominate the InterTabac/InterSupply show floors. And while disposables are the fastest-growing segment of the industry, the one-time use vapes are devastating for the environment, according to several speakers during the event. A member of the European Confederation of Tobacco Retailers (CEDT) quipped, for example, “These [disposables] are really not up to date because it’s not sustainable for a society to have throwaway products.”

    Tian said that new regulations in China are motivating companies to invest more heavily in R&D, including areas of sustainability, flavors and delivery. This is going to help boost the global vaping market, he predicted. “There’s going to be more investment,” said Tian. “And we predict that in the next one or two years, there’s going to be a new technological change in e-cigarettes. That’s a very optimistic look,” Tian explained. “And on the market side, though, with the strict regulation of China’s domestic market, more and more Chinese companies are going to be accelerating in their global development. They probably will put more investment in and … may do more partnerships around the globe.”

    Speaking to visitors of the world’s largest tobacco/nicotine industry tradeshow, Tian told business owners, investors and other industry players that companies importing products from China or considering investing in a company that imports products from China need to be sure their China-based suppliers have a license issued by China’s State Tobacco Monopoly Administration.

    “This is actually a guarantee for you and your consumers that the products that you are importing are safe, are quality guaranteed and are legal. Second, make sure your Chinese suppliers have sufficient production quotas. Every company with a license—they have a quota that limits how much they can produce yearly,” said Tian. “Once they’ve reached the quota, it seems to be a very simple path—simple paperwork, simple filing—but you have to make sure your demands [can be] met by the quota.”

    Companies working with Chinese suppliers need to be sure to have registered trademarks for their products, and those products must also meet any regulatory requirements of the country in which the products will be sold. If a country doesn’t have any e-cigarette regulations, China’s regulations would apply to that country.

    “We want to encourage everybody, the industry as a whole … to be compliant with the laws in the country that they are working with,” said Tian. “We want to healthily grow this e-cigarette environment, the e-cigarette industry,” he said. “To register [your] trademark is to protect your own back … protect yourself, protect your own brand.”

    While synthetic products are illegal in China, the country does allow for the export of nontobacco nicotine products. At least one company has been granted a production license for such products. Tian said that China issues separate licenses for imported and exported products. “There’s a difference in the quotas. But once you have a domestic use license, you’re for sure going to have an export license. But they’re not the same. The quotas are different,” he said. “But if you’re only export, only export[s] are still needing [a] license.”

    The EU is expected to introduce equivalent legislation for tobacco products, including nontobacco nicotine products, in the next few years, according to Pablo Cano Trilla, director of legal analysts for Tobacco Intelligence at ECigIntelligence. He also expects the heat-not-burn market to grow more rapidly than in previous years.

    “[In the EU, heated tobacco] is a big boy in the category already: over $5 billion in market size in 2021,” said Trilla. “And we expect that by 2025, it will be over $13 billion. This means that, nowadays, it’s about two times the size of the vaping sector. In 2025, we would expect it to be four times bigger than vaping. So, it’s growing very fast in the EU.”

    Trilla anticipates a future where only tobacco product flavors are allowed in the EU. While he doesn’t expect the trade block to implement U.S.-style regulations, with premarket authorization requirements, the growing concern about youth vaping could bring flavor bans. Trilla also anticipates plain packaging, progressive limitations on advertising and increases in environmental laws concerning e-cigarettes. He also said online sales are unlikely to continue.

    “I guess you all know that with the [U.S. Food and Drug Administration], basically you need to get authorization from the authorities before your product is allowed in the market. Why don’t we think this will happen [in the EU]? Our guess [is] because of basically a practical reason. Any country in the world, any authority in the world, everyone knows what has happened to the vaping industry in the U.S.,” he said. “How complicated it has been for the United States government to manage the thousands and thousands of applications of PMTAs [premarket tobacco product applications]; how many legal challenges they are having now. Premarket approval [requirements] are unlikely in the EU.”

    Reaction Time

    Following the disruption caused by the Covid-19 pandemic, the nicotine industry trade show scene in Europe is getting back to normal. Several exhibitors and attendees in Dortmund said it was beneficial for the industry to be able to showcase its innovations again. Oliver Pohland, CEO of the German E-Cigarette Retailers’ Association, said the growth of InterTabac/InterSupply 2022, with over 600 exhibitors (including an estimated 160 first-timers) and the more than 12,000 visitors, highlights how interest remains high in e-cigarettes as a risk-reduced alternative to combustible cigarettes.

    “A large number of exhibitors from our industry across Germany and beyond, including many who were attending InterTabac for the first time, took the opportunity to present new innovations and products for adult smokers,” he said. “Important contacts were made, and face-to-face conversations [were] conducted again after a long absence.”

    Dennis Dahlmann, CEO of InnoCigs, and Dustin Dahlmann, chief financial officer at InnoCigs, said the draw of InterTabac is its high-quality visitors. “It is of great importance for us to generate new customer relationships and above all to maintain and deepen our existing contacts,” they said. “We had the impression that the quality of the show had improved again compared to three years ago.”

    Rico Winkel, marketing manager at Dinner Lady, said that it was important to again be able to “present oneself and win potential new customers” face-to-face after InterTabac had been canceled for two years due to Covid. “This year, we’ve also been focusing on communicating new products,” Winkel said. “Also, the wide span of products we’ve [been] able to experience during these three days is giving us inspiration for evolving our own product range.”

    Jan Muecke, CEO of the German Association of the Tobacco Industry and Next-Generation Products (BVTE), said his organization was able to “marvel at the innovative strength” of the next-generation products industry during InterTabac. “Society and the economy are in a state of upheaval, and this year’s show has illustrated that the entire tobacco industry is united as we go through it,” said Muecke. “With new ideas, solutions and innovations, the nicotine and tobacco industry is getting ready for a sustainable future.” —T.S.D.

  • Sales up at Swedish Match

    Sales up at Swedish Match

    Photo: Swedish Match

    Sales of Swedish Match increased by 21 percent to SEK5.78 billion ($525.77 million) for the third quarter of 2022. In local currencies, group sales increased by 5 percent. The group’s operating profit increased to SEK2.4 billion from SEK2.08 billion in the comparable 2021 quarter.

    Operating profit from product segments increased by 15 percent to SEK2.4 billion. In local currencies, operating profit from product segments declined by 1 percent for the third quarter.

    In local currencies, operating profit grew by 12 percent for the smoke-free product segment. For the cigars product segment, operating profit declined, impacted by lower volumes. The lights product segment faced particularly tough conditions and reported a steep decline in operating profit.

    Lars Dahlgren

    Profit after tax increased to SEK1.78 billion from SEK1.54 billion in the comparable 2021 quarter.

    Swedish Match attributed its performance to continued momentum for the U.S. smoke-free business and the strong U.S. dollar.

    “Our core smoke-free business, and especially our nicotine pouch businesses, continued to demonstrate strength and attractive prospects, both commercially and from a tobacco harm reduction perspective,” said Swedish Match CEO Lars Dahlgren in a statement. “While we experienced some challenges in the quarter, underlying developments in several of our businesses were stronger than what the reported financials portrayed.”

  • Comments in FDA Assessment Suggest Agency in Disarray

    Comments in FDA Assessment Suggest Agency in Disarray

    Photo: BillionPhotos.com

    The U.S. Food and Drug Administration is in disarray and influenced by outside forces rather than scientific research, according to several comments submitted to the Reagan-Udall assessment of the performance of the FDA’s Center for Tobacco Products (CTP).

    In July, the FDA commissioned an independent review of the agency’s food and tobacco programs following months of criticism over its handling of a baby formula shortage and e-cigarette reviews. FDA Commissioner Robert Califf chose the nonprofit Reagan-Udall Foundation, a nongovernmental research group created by Congress to support the FDA’s work, to perform the review.

    As part of its work, the Reagan-Udall Foundation has been soliciting feedback from stakeholders.

    Many of the comments paint a picture of an agency struggling to fulfill its mandate.

    One commenter said that reviewers of premarket tobacco product applications (PMTAs) in the CTP Office of Science lack the autonomy to exercise “best scientific practices” in their reviews of PMTAs.

    “Scientific disagreement is frowned upon, if not entirely suppressed, and punished through various backhanded methods (e.g., lack of assignments, projects and other opportunities that are needed for career development/promotion),” this person wrote.

    “In some divisions (e.g., Division of Nonclinical Science), leadership pushes a ‘gotta get ’em’ mentality onto staff, which is unsupportive of a reviewer’s fundamental duty to provide an unbiased review using the best available science.”

    Another commenter claims that arbitrary and politically driven timelines set externally (by a judge for example) are driving reviews as opposed to allowing for a thorough scientific review. “When errors are found, the CTP reviewers are blamed when in fact the lack of adequate time to complete the reviews are at fault.

    “Staff are burned out and constantly told to do more in less time and blamed for not meeting insane deadlines,” the commenter wrote. “In cases where reviews are finished and scientific decisions are made, they are also overruled by political agendas and pushed to change decisions.”

    To read all comments, please visit the Reagan-Udall Foundation’s stakeholder portal.

  • Elliot Raises Stake in Swedish Match Again

    Elliot Raises Stake in Swedish Match Again

    Photo: Swedish Match

    Elliott Management Corp. raised its stake in Swedish Match to over 10 percent on Oct. 28. The move came one week before the Nov. 4 deadline when shareholders must decide whether to accept Philip Morris International’s takeover bid for the Swedish company.

    In May, PMI bid about $16 billion for Swedish Match. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp., objected, saying the bid undervalues their firm.

    Earlier this month, PMI increased the price of its bid to SEK116 ($10.34) per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.

    Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.

    By increasing its stake to 10.5 percent from 7.25 percent previously, Elliott could scupper the deal if it rejects the offer. When it announced its sweetened bid, PMI indicated it would not further increase the price of its revised offer.

    PMI also has the option to reduce the acceptance threshold and take a majority stake in order to prevent the bid from failing.

    Speaking to Reuters before Elliott disclosed the higher stake, Swedish Match CEO Lars Dahlgren said that he believed the company could thrive by itself or together with Philip Morris.

    “I believe we have exciting prospects as a standalone company, but I see exciting opportunities with a potential combination,” he said.

  • Zimbabwe: Tobacco Sales Hit $650 Million

    Zimbabwe: Tobacco Sales Hit $650 Million

    Photo: Taco Tuinstra

    Zimbabwe earned $650 million during the 2022 tobacco marketing season, which closed Oct. 21, reports All Africa. The figure was up from $589 million last year.

    In a statement announcing the end of the 2022 tobacco marketing season, the Tobacco Industry Marketing Board (TIMB) expressed delight with improved sales volumes and deliveries to auction floors.

    The value of sales was up 10.3 percent over last year while volume increased 0.75 percent, according to the regulatory body.

    As of Oct. 21, 2022, a total of 212,711,370 kg of tobacco had been sold compared with 211,100,219 kg sold during the same period in 2021.

    “The increase in tobacco sold as well as the value is evidence of our efforts as an industry to establish a $5 billion industry by 2025,” said the TIMB.

  • Imperial Launches Blu 2.0 in U.K.

    Imperial Launches Blu 2.0 in U.K.

    Photo: Imperial Brands

    Imperial Brands has launched Blu 2.0, a new vaping device that replaces its existing Myblu system, in the U.K., reports The Grocer.

    According to Imperial Brands, the new product offers a smoother and richer vaping experience due to its ceramic heating pod technology, which replaces the previously used cotton wick option. It also features a longer-lasting battery and bigger 1.9 mL volume liquid pods.

    The new device also comes with a magnetic lock feature and “power tap,” which enables users to easily check the battery level.

    Imperial has also launched a new range of six flavored liquids for use with the system: Golden Tobacco, Polar Menthol, Fresh Mint, Berry Mix, Blueberry Ice and Fresh Mango. All come in 9 mg and 18 mg nicotine strength variants.

    “Through the launch of Blu 2.0, we’ve developed a product that looks better, tastes better and lasts longer than before to provide consumers with the next-generation vape product they’re looking for,” said Tom Gully, Imperial Tobacco’s head of consumer marketing for the U.K. and Ireland.

  • New Leaders at ITGA

    New Leaders at ITGA

    Photo: jirsak

    The International Tobacco Growers’ Association (ITGA) has named José Javier Aranda as its new president and Adam Gordon Strong as its new vice president, the organization announced in a press note.

    The appointments came during the group’s annual general meeting Oct. 26–29 in Castelo Blanco, Portugal.

    The gathering was the first in-person annual meeting in two years. The previous two events were held online due to the Covid-19 pandemic.

    During the meeting, growers called for greater inclusion in consultations shaping the future of the sector, such as those conducted by the Framework Convention on Tobacco Control.

    While tobacco prices have generally been up due to crop shortages in key markets, growers around the world have had to contend with skyrocketing inflation and rapidly rising costs of production.

  • U.K. Urged to Ban Pouch Sales to Minors

    U.K. Urged to Ban Pouch Sales to Minors

    Photo: Andrii

    U.K. health campaigners are calling for the closure of a loophole that allows nicotine pouches to be sold to under-18s, reports the BBC.

    Nicotine pouches, which are made without tobacco, are not regulated by rules that cover tobacco products, vaping products or medical products in the U.K. As a result, there are no age restrictions on sales.

    Action on Smoking and Health (ASH) says the lack of rules is a “Wild West.”

    Leading manufacturers, however, have introduced their own restrictions on age of sale and warnings on packaging.

    In a recent ASH survey of 13,000 people, about one in 25 said they had tried nicotine pouches, and awareness was highest among 18-year-olds to 24-year-olds, with 45 percent having heard of them.

    Leonie Brose, reader in nicotine research at King’s College London, agreed the current regulation should be reviewed.

    “If you are a smoker, then moving to something else is a good idea, but if you’ve never smoked, it’s not a good idea to take up nicotine because it is addictive and may produce a dependence,” she said.

    Japan Tobacco International, which sells Nordic Spirit nicotine pouches, welcomed the call for more regulation.

    Spokeswoman Nicky Small told the BBC that the company has spearheaded a self-regulation framework that governs the marketing of the product and limits access to over-18s.

  • BAT to Close Boncourt Factory

    BAT to Close Boncourt Factory

    Photo: BAT

    BAT will close its Boncourt cigarette factory in Switzerland and move production elsewhere in Europe, reports SWI.

    The factory employs more than 200 people, around half of them cross-border workers from France.

    The closure will not affect BAT’s Lausanne office, which employs more than 100 other staff.

    Boncourt mayor Lionel Maître described the decision as “a shock, a disappointment, a feeling of desperation and a mess.”

    The Boncourt factory was founded by the Burrus family in 1814 and was taken over by Rothmans International in 1996 before merging with BAT three years later. In 1887, the site started producing Parisienne, which is the second best-selling cigarette brand in Switzerland.

    In 2014, BAT closed a research and development facility in Boncourt with the loss of around 15 jobs.