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  • A Balancing Act

    A Balancing Act

    Photos: Taco Tuinstra

    Embracing tobacco harm reduction might help Indonesia ease the tension between dependence on tobacco revenues and rising healthcare costs.

    By Stefanie Rossel

    Tobacco or health—for Indonesia, the choice embodied in that slogan presents a real dilemma. On the one hand, the world’s second-largest cigarette market and fifth-largest producer of leaf tobacco is highly dependent on the revenue from the sector. Statista expects revenue from the cigarette segment to reach $24.86 billion in 2022, up 5.8 percent from 2021. On the other hand, the country is facing increasing healthcare costs for the treatment of tobacco-related illness. An October 2021 study by the Indonesian Development Foundation found that tobacco-induced morbidity, disability and premature deaths were responsible for economic losses of IDR375 trillion ($26.04 billion) in 2019—a fifth of the total state budget.

    Indonesia is unlikely to find a way out of this quandary soon. Smoking and tobacco cultivation have been deeply rooted in the nation’s culture since the 19th century. The market is unique in that it is largely dominated by kreteks or clove cigarettes, which represent around 95 percent of all cigarette sales. While tobacco consumption has been declining, Indonesians still smoked a whopping 300.2 billion cigarettes in 2019. With roughly 75 percent, the vast majority of cigarettes consumed are machine-made kreteks. Hand-rolled kreteks account for around 20 percent of the market.

    Indonesia has one of the highest smoking rates in the world. According to a national survey from 2018, the country is home to almost 100 million smokers. More than one-third (33.6 percent) of adults use tobacco. Smoking is a male habit; 62.9 percent of men are smokers compared to only 4.8 percent of women. Worryingly, smoking is also common—and increasing—among minors. Ministry of Health data show that 33.8 percent of youths under the age of 15 smoked in 2018, up from 32.8 percent in 2016. Other data suggest that an estimated 20 percent of children under the age of 10 have tried a cigarette.

    The Covid-19 pandemic, in combination with cigarette excise tax increases, has depressed incomes and pushed smokers toward lower priced products, a trend the industry has met with smaller packages. This, in turn, has driven up demand for higher tar kreteks.

    In 2020, five major corporations controlled almost 90 percent of the Indonesian cigarette market, according to the Southeast Asia Tobacco Control Alliance. Sampoerna led the market with a share of 32.5 percent followed by Gudang Garam (27.5 percent), Djarum (18.7 percent), Bentoel (8 percent) and Nojorono Tobacco Indonesia (3 percent). The remaining 10.3 percent are made up by an estimated 500 small-sized to medium-sized manufacturers.

    Tobacco is a major employer, providing work to 5.98 million people, of which 4.28 million work in the cigarette manufacturing and distribution sectors and 1.7 million in tobacco cultivation, according to the Indonesian Development Foundation. In 2019, this corresponded to 0.34 percent of total employment in the manufacturing sector. As in many tobacco-cultivating countries, leaf is grown mainly by small-scale farmers who rely solely on tobacco. The tobacco farming sector also struggles with child labor. In 2002, Indonesia committed to eliminating it in all forms by 2022. In 2019, the U.S. Department of Labor noted that Indonesia had made “moderate advancement” toward this goal (see “Homework Due,” Tobacco Reporter, February 2021).

    The tobacco industry remains a major employer in Indonesia.

    Incoherent Policies

    With tobacco playing such a large role in the country’s economy, Indonesia’s tobacco control efforts have been halfhearted. It is one of only nine countries that have yet to ratify the World Health Organization Framework Convention on Tobacco Control. Decentralized decision-making has led to fragmented policies. Responsibility for tobacco policy is spread among the president’s office, six national ministries and an independent agency.

    Nonetheless, some progress has been made. Since 2014, cigarette makers must print pictorial health warnings covering 40 percent of each pack. Smoking bans have been implemented for public transport, healthcare facilities, educational facilities, places of worship and playgrounds. Tobacco advertising on TV and radio remains permitted with certain restrictions. There is no minimum age limit to buy cigarettes, and selling cigarettes by the stick is common practice.

    Despite regular excise tax hikes, cigarette prices in Indonesia remain among the lowest in the Asia-Pacific region. The tobacco excise tax remains far below the 75 percent of retail price recommended by the WHO. Indonesia’s tobacco taxation system is also dauntingly complex. Until recently, cigarette tax rates were divided into 10 tiers based on product type, volume and price. The tiers are meant to protect smaller manufacturers and local jobs from competition. Under the government’s 2017 “tobacco roadmap,” the number of tax tiers were supposed to be cut to five by 2021 to reduce the incentive for smokers to switch to cheaper products. The plan, however, was withdrawn in 2019. In November 2018, the coordinating ministry of economic affairs launched a new tobacco roadmap emphasizing the importance of the industry and arguing for its protection until 2025.

    Effective Jan. 1, 2022, Indonesia increased its tobacco excise across cigarette types by an average of 12 percent. In addition, the number of tax tiers was reduced from 10 to eight. According to the ministry of finance, the tax reform aims to counter the rising healthcare costs caused by increasing smoking prevalence and to reduce the smoking rate among adolescents aged 10 years to 18 years.

    Harris Siagian

    Promoting Tobacco Harm Reduction

    To help the country escape move forward, the Indonesian Development Foundation has proposed a tobacco transformation program that seeks to address certain policy gaps. It has created a roadmap that, among other things, proposes to complement existing policies with harm reduction initiatives. By emphasizing reduced-risk products (RRPs), the foundation believes Indonesia can reach smokers who have been overlooked by the current policies.

    “The draft roadmap targets to diminish substantial economic costs and productivity losses associated with cigarette smoking by introducing a cost-benefit analysis approach to estimate the strengths and weaknesses of alternative, reduced-risk products,” explains Harris Siagian, one of the authors of the report. “It will measure and compare the costs of cigarette smoking-attributable diseases and the economic costs of reduced-risk product use.”

    The guideline also recommends increasing the affordability and accessibility of RRPs. According to its authors, the excise tax on RRPs should be lower than that for combustible products.

    Indonesia classifies noncigarette tobacco products as “other tobacco processing products,” or Hasil Pengolahan Tembakau Lainnya (HPTL). These include molasses-based tobacco products, snuff, chewing tobacco and RRPs, such as e-cigarettes and heated-tobacco products (HTP). All HPTL products are subject to the maximum excise tax rate of 57 percent.

    Among RRPs, e-cigarettes, which hit the market in 2010, are significantly more popular than HTPs, which were introduced to Indonesia in 2019, and the vape market is growing. According to the Indonesian Development Foundation Report, there were 2.2 million vapers in the country in 2020. Apart from provisions on import and excise tariffs, there is no specific and comprehensive regulation of HPTL products yet, and policies appear uncoordinated between regulators. While the Food and Drug Monitoring Agency would like to ban vape products altogether, claiming they could be a gateway to youth smoking, the health ministry wants to regulate e-cigarettes as conventional tobacco products. This, in turn, is opposed by the ministry of agriculture, which fears that such regulation would burden tobacco farmers.

    Indonesia aims to simplify its complex tax ystem.

    Complex Task

    To address such conflicts, the Indonesian Development Foundation committee team advocates incorporating RRPs in the national smoking cessation programs. “The products will be available to users, on an incentive basis, through registered outlets and clinics,” says Siagian. To help fund the initiative, the committee suggests using money from the revenue-sharing fund of tobacco products excise, which collects 2 percent of the total tobacco excise funds at the national level and distributes it to regional governments.

    The roadmap also takes farmers into consideration. Locally grown tobacco will be directed toward RRPs, and farmers will be encouraged to diversify into other crops. To help eliminate child labor, the program calls for strengthening local government initiatives to provide basic education access and other supportive measures for children involved in tobacco farming.

    Affordability is a well-known challenge to the success of RRPs in low-income and middle-income countries. Nonetheless, Siagian is confident that RRPs will succeed in Indonesia: “Over the past 20 years, there has been a significant shift of the vulnerable lower middle-class population that has climbed out of poverty and into the aspiring educated middle class, and these demographic groups are shifting toward more health-conscious and hygiene products, including in their use of tobacco products,” he says.

    “The educated middle class, which currently accounts for 52 million people out of a total population of 273 million Indonesians, are favoring e-cigarettes as part of their lifestyle, and these population groups are more open to healthy-yet-stylish products, which means a great opportunity for RRPs. The Indonesian middle class has been a major driver of economic growth as the group’s consumption has grown at 12 percent annually since 2002 and now represents close to half of all household consumption in Indonesia, which means that price is not a major concern for these groups when purchasing RRPs. A suitable brand ambassador, product choices, accessibility and affordability will play an important role in RRPs for the middle-class groups.”

    Transforming Indonesia’s tobacco control policies will be a tough nut to crack. The Indonesian Development Foundation’s proposed roadmap, therefore, is a multi-step plan, with the first stage of implementation expected to be concluded within a two-year period—provided that the country’s development priority plan, which includes the elimination of child labor, remains under the control of the current government, says Siagian. “The overall program is expected to be accomplished in five years, with an additional three years of implementation under the next government as the continuation of the first-stage program,” he says.

     

    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.
  • Pure Play

    Pure Play

    Photo: Essentra

    Filter manufacturers consider their strategies in an increasingly challenging environment.

    By Stefanie Rossel

    In October last year, Essentra fueled speculation about the future of its filter business: The Singapore-based company, which manufactures plastic caps, work-holding clamps, fasteners and knobs, said it was studying strategic options for two of its three divisions, cigarette filters and packaging, in an attempt to become a “pure play” components business over time. The review is expected to conclude by the end of June 2022 at the earliest. Since the announcement, the company has appointed several new people to key positions, including Robert Pye as Essentra Filters’ managing director.

    SK Low

    “A strategic review normally covers the full range of strategic options for a business, i.e., the best structure for that business to reach its full potential and deliver value for shareholders,” explains Seng Keong Low (SK), global marketing manager at Essentra Filters. “These reviews can include a number of potential outcomes including sale, demerger and other outcomes. We don’t yet know what the outcome of the filters review will be, and no decisions have been made regarding any of the divisions. The filters business will still be in operation, just that it may or may not be under the banner of Essentra pending the outcome of the strategic review. The most recent appointments to the global filters leadership team are longtime filters leaders, which were decided before the announcement of the strategic review.”

    According to the company’s 2021 pre-close trading update, the filter division performed well in the fourth quarter of 2021, with revenue up 22.3 percent during that period. “The division continues to benefit from higher volumes from outsourcing contracts and a strong performance in Europe,” the update said. “Further progress has been made in the delivery of its ‘game changers’ with the China joint venture continuing to gain momentum after successful commencement in June. Our range of proprietary eco and heated-tobacco products continue to attract increased interest. The number of projects underway continues to grow.”

    At the end of 2019, Essentra announced the establishment of a joint venture in China, China Tobacco Essentra (Xiamen) Filters, which launched in June 2021. Shareholders in the joint venture are Essentra with 49 percent, China Tobacco Fujian Industrial Co. with 21 percent, and three Chinese investment management companies holding ten percent each. The JV manufactures specialist and next-generation filters locally at a new facility in Xiamen in Fujian province.

    Tackling Logistics

    While awaiting the outcome of Essentra’s strategy review, filter manufacturers must navigate the ongoing global logistics crisis, which has led to a shortage of shipping containers, significant in freight rate hikes and delays in the supply chain. “We have been working closely with all partners covering long-term plans that required more accuracy than before,” says Hyunyoung Park, sales and business development manager at Taeyoung Industry Corp. in South Korea. “Nevertheless, other activities, such as keeping a high level of stock or production capacity build-up, can help to mitigate the delivery issue. However, it is affecting factory operation severely.”

    Essentra says it is experiencing extended lead times on deliveries from many suppliers. “To ensure supply continuity, we are working several BCP (business continuity planning) plans, e.g., holding more safety stocks, working on finding more local solutions, etc.,” says SK. “To minimize supply disruption and delay to our customers, we are doing additional pre-build where possible, making advance bookings for deliveries and driving more end-to-end synchronization of our materials planning with finished goods delivery.”

    In addition to supply chain challenges, the price of raw materials, including wood, has risen significantly due to the Covid-19 pandemic. Wood, of course, is the basis of cellulose acetate tow used in cigarette filter production. “We have seen increases across our raw materials as well as other commodities, from packaging materials to spare parts,” says SK. “The increase in wood prices has affected our plug wrap suppliers, acetate tow suppliers, packaging and pallet suppliers. We are also seeing significant increases in power prices.” Because of these developments, Essentra Filters had to raise prices in 2021. “We have to find the right balance in accepting and passing on any price increases and constantly evaluate our positions with both suppliers and customers given any potential changes in the pandemic situation around the world,” says SK.

    Park has also observed an impact on prices due to the logistic and raw material situation. “Raw material price is affecting not only our factory operation but [those of] other manufacturers as well. However, the cost of logistics is underlying geographical influences, which made it difficult for the export business and increased chances to find alternative suppliers for cost saving or minimizing cost impact, and these activities will concern all manufacturers involved in the cigarette business except major players.”

    Growing Importance

    Another theme affecting the filter sector is sustainability. In July 2021, more parts of the European Union’s Single-Use Plastics Directive entered into force. While cigarette butts have been exempted from the rules for the time being, a provisional agreement in the legislative process seeks to further encourage innovation in the development of sustainable alternatives to plastic-containing tobacco filters through the introduction of extended producer responsibility (EPR).

    EU member states have until Dec. 5, 2023, to set up EPR schemes for tobacco filters, but to date, there is no implementation guidance for member states. Since July 3, 2021, all packs of filtered tobacco products in the EU have been required to display a pictogram against littering.

    Legislators in other jurisdictions are considering similar measures. In February 2022, Californian lawmakers introduced a bill that would ban the sale of single-use cigarette filters and vapor products. Under the bill, sellers would risk fines of $500 per violation, defined as the sale of one to 20 items. Ninety percent of the approximately 12 billion cigarettes sold in California each year are filtered. The state spends millions of dollars annually on cleaning up cigarette litter, according to proponents of the ban.

    “Sustainability has always been important to us at Essentra Filters, and we have long had nonplastic filters in our product portfolio,” says SK. At the end of last year, the company added two new varieties to its sustainable filter range: the ECO Active Filter, a plastic-free alternative to active carbon acetate filters that is 100 percent biodegradable, and the ECO Flute Filter, a nonplastic alternative to the company’s Combined Performance Superior Filters. The design of the Flute Filter is customizable for length, circumference, pressure drop and flute length and can be combined with other filter segments. “Our new ECO range is currently the largest step change in our sustainability efforts, and with an increasing number of customers asking us about sustainable, nonplastic filters, we are confident that investing our innovative efforts in sustainability is the correct strategy,” says SK.

    Park, who in a previous interview mentioned that Taeyoung’s research and development department was working on filter development with nonacetate tow and carrying out studies on the replacement of conventional filter materials, said that the company had made progress with that initiative. “However,” he added, “market feedback is more important for actualization. I believe this kind of development is continuing under rapidly changed business circumstances including environment, social, governance criteria.”

    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.
  • Laser Liaison

    Laser Liaison

    Photos: Heinen Koehl

    Heinen Koehl’s coding equipment combines serialization and aggregation in one unit.

    By Stefanie Rossel

    Last November, parties to the Protocol on Eliminating Illicit Trade in Tobacco Products gathered virtually to strengthen the treaty that had entered into force three years earlier. Among the decisions adopted was a roadmap to improve the global track-and-trace system. Currently, use of track-and-trace systems for tobacco products is probably most advanced in the European Union, where it is regulated under articles 15 and 16 of the Tobacco Products Directive. For cigarettes and roll-your-own products, the EU has mandated traceability and security features since May 20, 2019. By May 2024, it will be compulsory for all other tobacco products, including cigars, cigarillos and smokeless tobacco products, as well.

    For tobacco product manufacturers, placing individual identifying codes on each pack and then on each bundle is a challenging additional step in the production process. Heinen Koehl, a Luxemburg-based supplier of processing and logistics equipment for the tobacco industry, has developed several machines to facilitate that process. The Label Application System (LAS) and the Laser Coding Extension (LCE) have been designed for “pack-to-bundle” aggregation.

    “The LAS applies a bundle label onto the head side of each bundle and verifies this bundle with a camera. In contrast to the LAS, the LCE serializes each single pack within the bundle with a laser to provide it with a unique track-and-trace code,” says Stefan Hahn, managing director at Heinen Koehl. “This code is then verified with a camera system to carry out the aggregation. Contrary to traditional solutions available in the market, where various printing technologies such as CO2 or ink printers have to be implemented into existing bundle packers, we have developed a patented stand-alone solution. By using a special laser designed by expert company Koenig and Bauer Coding, we can apply the unique track-and-trace code to the pack through the overwrap without destroying the film. This is not only an advantage in production, but also for the security, availability and performance of the track-and-trace system.”

    Standardized Solution

    Easy integration is the greatest benefit of the LAS and LCE, which together can be built into the production line without changing the existing equipment. Since existing machinery doesn’t have to be adapted to additional hardware and functionality, the implementation time is significantly shorter than with other solutions. Similarly, the stand-alone combination can easily be moved to another production line or location without complex conversions of existing equipment, according to Hahn.

    “With our solutions, serialization and aggregation of individual packs into bundles is carried out in one unit,” he says. “Other technologies require several production steps between serialization and aggregation, which means potential risks for the track-and-trace functionality.”

    According to Heinen Koehl, the LAS/LCE combination is a standardized solution independent from packer type. This means that operators and maintenance staff don’t need special training. Maintenance is similar for both machines within a manageable expenditure of time.

    The LAS/LCE combination can be adapted to all bundle types and sizes and allows for easy format changes. It has been designed for all speed ranges with up to 100 bundles per minute and up to 1,000 packs per minute, respectively.

    While the LAS/LCE is presently being used for coding packs and bundles of cigarettes and cigars, Heinen Koehl has developed an additional machine especially for roll-your-own and pipe tobacco pouches based on the same technology. Known as LAS Pouch, this machine combines coding, verification, bundle label application and aggregation into one system that lasers the track-and-trace code on the pouch through the film.

    Heinen Koehl also offers solutions for the manual aggregation of tobacco products that can be adapted to customer requirements and minimize disruption of the production process.

    Suitable also for yet-to-be-regulated markets, Heinen Koehl is delivering its coding equipment to customers worldwide, including to clients in the U.S., Europe, Russia, the UAE, Saudi Arabia and Indonesia. As track-and-trace requirements spread around the world, Hahn says he sees great potential in other markets as well.

    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.
  • Holding the Line

    Holding the Line

    Photo: Schmidt Pest Management Consulting

    The war on tobacco insect pests continues.

    By George Gay

    On being asked recently whether the war against tobacco insect pests would ever be won, most of the experts and interested parties contacted, referring mainly to post-harvest tobacco in transit or storage, said no, qualified in one way or another. But Vernon Schmidt of Schmidt Pest Management Consulting wondered whether “winning” or “losing” was the best way to judge what was happening overall. The important point in the battle against the tobacco beetle and tobacco moth, he said, concerned whether industry players were working together, communicating well and implementing fundamental pest control strategies. In other words, was the industry stewarding its resources well to allow it to use the tools available to it wisely and thereby minimize tobacco and tobacco product losses?

    “Communication lines need to remain open, and cooperative research needs to be supported by the players within the industry in order for us to stay ahead of the insect pests,” said Schmidt in an email response. “This is the brilliance of Coresta and the work of its Subgroup on Pest and Sanitation Management in Stored Tobacco [PSMST].”

    Worryingly, however, he added a caveat that is unlikely to have come out of the blue. “Pulling out of cooperative endeavors and doing it on our own will not be a winning strategy,” said Schmidt, who was closely associated with Coresta and the PSMST in the past, and who is likely to be so again shortly after a break made necessary by his transition from an employee of Reynolds American to starting his own consultancy.

    And Schmidt had other warnings. There would be no success without the industry’s putting in the hard work of implementing fundamental pest control practices, and there would still be challenges, he added, even where the fundamentals were in place. Phosphine resistance remained a challenge and would continue to worsen if the industry did not address the causes. Insisting on quality phosphine fumigations remained a must, and consideration had to be given to eliminating ineffective fumigations, such as container fumigations, or, at least, implementing measures to improve them greatly by, for instance, requiring barrier sheeting be placed on the floors of containers before loading to minimize gas leakage.

    And in what seemed to me to be a minor bombshell, Schmidt admitted that the way in which phosphine worked as a fumigant still needed to be understood better and should continue to be investigated cooperatively. Such investigations, he added, would likely lead to a revision of the Coresta Fumigation Guide and require a new round of global training.

    Exploring Alternatives

    At the same time, the 30-year search for an alternative to phosphine should continue, again co-operatively, said Schmidt. There was promising work underway investigating a potential alternative to phosphine, sulfuryl fluoride, which offered a completely different mode of action from phosphine. This had the potential to break phosphine resistance where it existed and, additionally, preserve phosphine as an excellent tool for the industry.

    And moving away from fumigation techniques, Schmidt said controlled atmosphere (CA) and freezing treatments should be implemented where feasible.

    Rene Luyten, a director at b-Cat, which installs CA chambers, made the point that tobacco insects were difficult to control, partly because they were able to adapt to new circumstances. In other words, while it was possible to eliminate such insects in individual tobacco batches, there were often routes through which others could enter those batches. In part, this was down to the very nature of tobacco, which is a bulk product subject to transportation, division into smaller consignments and storage. Additionally, tobacco doesn’t exist in isolation but is sometimes stored alongside other products that also provide homes and breeding grounds for insects of concern.

    Indeed, Luyten said it was possible to have in-house clean tobacco free of insects or to receive clean tobacco on one day and the next day to have a huge issue with insects. Of course, the severity of the problem would depend, in part, on the location of the warehouse, with those in warmer climes likely to experience more insect activity. But such issues could arise in many places, added Luyten, even when everybody in the tobacco chain did their best to avoid infestation. Fumigators might comply with best practices that conformed with the guidelines laid down by Coresta. And warehouses might employ best practices in respect of storage, including the use of good sanitation programs. But it wasn’t always possible to have control of all factors, such as when a neighboring warehouse storing raw food didn’t employ strict and proper sanitation protocols.

    Controlled atmosphere technology offers a “green” solution for pest control.
    (Photo: b-Cat)

    Positives and Negatives

    Schmidt, too, saw positives and negatives stretching along the supply chain. A positive would see farmers eliminating carry-over tobacco, but the fact that farmers were unable to treat their post-harvested tobacco was a negative, he said. The receipt by processors of infested tobacco was a negative while the lethal effects to insects of processing was a positive. Reinfestation during transport was a negative while monitoring programs for transported tobacco provided a positive. Good segregation practices during storage constituted a positive, but undetected phosphine resistance was a negative. Continually improved cleaning programs at manufacturing plants constituted a positive, but insect harborages that could not be eliminated without dismantling equipment comprised a negative.

    There is at least one caveat you have to add to the idea that the war against tobacco insects cannot be won. It can be won in the sense that insects of all types and in all their life stages can be eliminated from tobacco just before it is manufactured. Luyten said an increasing number of tobacco manufacturing plants were installing CA technology, which he described as a “green and natural treatment method” offering a 100 percent mortality rate among insect pests in all their life stages. In fact, b-Cat’s main building program currently involves installing CA facilities, including remote control and monitoring systems, at manufacturing sites.

    Away from the major manufacturing sites, things are rather different. For instance, Guy Harvey, the CEO of Transcom Sharaf in Africa, who is based out of Mozambique, said businesses in that part of the world used only chemical fumigation, though this was not for want of trying other methods. Harvey said his company had completed trials on the use of CA in Mozambique but that it seemed the industry was not ready for it yet, which I took to mean that companies further down the supply chain were not willing to help pick up additional costs arising from CA. Certainly, in Harvey’s view, the capital costs of CA were holding back its use in Mozambique.

    This might be unfortunate, though it has to be remembered that fumigation can be effective. Nico Vroom, who runs the consultancy N.I.C.O, also believes the war against tobacco insects will never be won, but he believes, too, that infestations can be kept to a “manageable level” through the use of good fumigation practices and through the employment of recent technological advances, such as sensors for constantly monitoring tobacco.

    While complete victory in the battle against tobacco insects is some ways off, infestations can be kept to a “manageable level” through the use of good fumigation practices and through the employment of recent technological advances, such as sensors for constantly monitoring tobacco.
    (Photo: Transcom Sharaf)

    Ongoing Monitoring

    One respondent who didn’t give an unequivocal “no” in answer to the question about whether the industry was winning the war against insects was Steven Bailey, managing director of the Barrettine Group, which manufactures the Mobe Combo insect monitoring trap. Bailey said he thought it unlikely that the industry was winning the war, but that it might be holding its own. Traditional treatment methods using fumigants were limited to only a few. He was unaware of any new pesticides coming through beyond, perhaps, sulfuryl fluoride, he added, and due to high regulatory and approval costs, didn’t expect there to be any anytime soon. This, together with ongoing phosphine-resistance issues, was a concern, but CA treatments in conjunction with insect monitoring and traditional methods were helping the industry to stay on top of the problem. The importance of ongoing insect monitoring was therefore essential in pinpointing infestations so that control measures could be carried out as soon as identified, thus preventing any infestation from escalating. 

    One of the matters that gets little airing in respect of tobacco insects concerns responsibility. Who is or should be responsible for ensuring tobacco is taken in at its destination—at the manufacturer’s site—insect-free? 

    Well, according to Rainer Busch of NewCo, currently, the shipper is obliged to fumigate tobacco before loading, even though it is very difficult for the shipper to control what happens to that tobacco during transport and when it is opened at its destination. And if the tobacco was found to have insect infestation at its destination, to have been infested during transport, it was necessary to refumigate it or put it through another treatment. It would therefore be better economically and financially to avoid having to carry out two treatments by switching the fumigation or other treatment from the point of shipment to the destination.

    It would seem that while the industry might not be winning the war against insects, it is not losing all the battles. Evripidis Christidis of Missirian told me that the application of integrated pest management techniques was helping the industry to win in the region in which his company operates—the region where classical oriental tobacco is produced. In general, the amount of leaf tobacco currently lost to insects was proportionally less than it had been during past decades. But, he added, this sort of success required close attention being paid in five areas:

    • Personnel training and awareness;
    • Facilities management, including cleaning and sanitation, operating with open structures and creating barriers to insects, such as air curtains and mesh nets, and segmenting the green and final products;
    • Selection of suitable means of transportation;
    • Pest monitoring, with pheromone traps, and the use of UV lamps and space/surface fogging when necessary during tobacco storage; and
    • Pest control methods.

    Another factor that had helped the industry attain better results was the use of only specialized and licensed contractors to perform control and prevention activities, said Christidis. And yet another had been the introduction of Coresta standards for the fumigation in respect of resistant beetle populations, which basically involved higher phosphine concentrations and longer exposure times. A radical but expensive proposal would involve vacuum or nitrogen packing of the final leaf product.

    Learning Lessons

    The importance of Coresta was raised by most respondents, and so it is unfortunate that the Covid-19 pandemic has interfered with some of its work, including the PSMST’s Infestation Control Conferences that, until the pandemic struck, had been held annually around the globe. Of course, there have been other problems caused by the pandemic. Shipping delays have created tobacco transport congestion, and there have been interruptions caused by staff shortages, supply chain difficulties and other transport issues. But the pandemic has also caused a lot of rethinks, some of them positive. Luyten told me that while the start of the pandemic had caused concern, it turned out the past two years had been the best ever for b-Cat’s business. When travelling became almost impossible, it was discovered that internet communications using Teams or Zoom could easily stand in for some face-to-face meetings. “I do hope that everybody is having the same idea,” said Luyten, “that we have learned from this pandemic that travelling, which was a common thing, is not always needed. We all can save a lot of time and help the planet.”

    Which brings us, perhaps, to the most important question. In fighting tobacco insects, are we winning or losing the environmental battle? And there seems to be some good news here. Schmidt told me that industry practices had little negative environmental impact. Beneficial insects were not threatened by current common practices, he said, and phosphine readily broke down in ultraviolet light. At the same time, however, continued training on best practices would help with reducing the improper use of insecticides and excessive fumigant use.

    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.
  • 22nd Century to Launch VLN in South Korea

    22nd Century to Launch VLN in South Korea

    Photo: 22nd Century Group

    South Korea will be the first international market to commence sales of 22nd Century’s VLN reduced nicotine content cigarettes, the company announced in a press release.

    “South Korea is an ideal international launch market in many ways, with a high smoking rate among developed countries and a government strongly committed to smoking harm reduction. We expect the first sale of VLN reduced nicotine content cigarettes to our South Korean partner to occur by the end of March,” said 22nd Centur4y’s CEO, James A. Mish.

    “Approximately one in three adult men in South Korea are smokers, and an estimated 6 percent of adult women smoke. The government has worked over the past two decades to promote smoking cessation through a variety of means, including heightened tobacco prices, and remains committed to advancing alternative products to help curb smoking activity in the country. We are excited to make VLN reduced nicotine content products available in South Korea to help break the nicotine addiction cycle and support this important effort.”

    The company will continue its launch process in additional markets in Asia and Europe with limited regulatory barriers while also leveraging VLN’s modified-risk tobacco product (MRTP) authorization in the United States toward seeking approval in additional markets with higher regulatory barriers.

    In addition to its first international launch of VLN reduced nicotine content cigarettes in the more than $800 billion global tobacco market, 22nd Century Group is actively moving forward to launch VLN in the $80 billion U.S. market.

    The U.S. FDA authorized 22nd Century’s VLN reduced nicotine content cigarette products on Dec. 23, 2021. The company is currently executing its 90-day post-authorization plan to launch in its first U.S. pilot market.

  • Duterte Urged to Sign Vaping Bill

    Duterte Urged to Sign Vaping Bill

    Photo: Gajus

    The Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA) has written to Philippine President Rodrigo Duterte asking him to urgently sign the Vaporized Nicotine Products Regulation Act into law.

    Both the Philippine Senate and House of Representatives have ratified the harmonized version of the act, which will regulate the use, manufacture, importation, sale, distribution and promotion of vaping and heated-tobacco products. It now awaits the president’s signature or veto.

    “The weight of the scientific evidence shows that potentially thousands of Filipino lives can be saved by making this act the law of the land,” wrote CAPHRA, backed by its expert advisory group and member organizations throughout the Asia-Pacific region.

    CAPHRA told Duterte that, when enacted, the legislation will provide 16 million Filipino smokers with the world’s most effective smoking cessation tool, saving the lives and enhancing the health of millions of Filipino smokers and their families, friends and co-workers.

    “Hundreds of peer-reviewed international scientific studies have found innovative smoke-free products such as e-cigarettes and heated-tobacco products to be far less harmful than combustible tobacco and offer the best options to make smokers switch or quit,” wrote Nancy Loucas, executive coordinator of CAPHRA. “The act will ensure the regulation of these products so that they meet government standards to protect consumers and will contribute revenue via taxation.”

    The letter said signing the act into law and giving Filipino smokers the option of choosing less harmful alternative nicotine products will create an enduring presidential legacy. It will prove to the world that Duterte is a leader who put the health and well-being of his people, based on science, above the special interests of foreigners.

  • Broughton Establishes U.S. Subsidiary

    Broughton Establishes U.S. Subsidiary

    Tony Jones (Photo: Broughton)

    Broughton is establishing a U.S. subsidiary to enhance its presence in the region. Leading the U.S. team will be Tony Jones, who joins Broughton as managing consultant. Jones has extensive experience in toxicology and risk assessment.

    “I am delighted to be spearheading this exciting next stage of the development of Broughton in the U.S. market,” said Jones. “I’m looking forward to introducing the full lifecycle development services offered by the Broughton team to U.S. clients across pharmaceuticals, nicotine and cannabinoids to help the company support their clients to accelerate innovation to market and improve health outcomes.” 

    Along with the appointment of Jones, Broughton has strengthened its consultancy team with several new members.

    Libby Clarke and Carol Beevers have joined the company’s toxicology team. Clarke is a European registered toxicologist and has substantial experience devising toxicology testing strategies and compiling submissions to regulatory bodies, such as the U.S. Food and Drug Administration and Health Canada. Beevers is a genetic toxicology specialist and has contributed to more than 20 papers in peer-reviewed journals. She is a member of the U.K. Committee on Mutagenicity and several international working groups on genotoxicity testing.

    In recognition of the growing importance of behavioral science in regulatory submissions, Broughton has also strengthened its in-house team with the appointment of Oliver Knight-West. Knight-West has conducted multiple behavioral and clinical studies into next-generation nicotine products and pharmaceuticals for dossier submission to the FDA, the U.K. Medicines and Healthcare products Regulatory Agency, and the European Medicines Agency.

    He has published many scientific papers in several highly cited publications.

    To complement the appointment of Paul Hardman in 2021, Malcolm Saxton has joined the chemistry consultancy team. Saxton will help ensure that Broughton remains at the forefront of the industry in terms of novel method development aligned with evolving market and regulatory needs.

    “Since 2006, our focus has always been to help our clients succeed,” said Broughton CEO Chris Allen. “With a passion for enhancing societal health and well-being, the establishment of a North American subsidiary is a natural next step to enable us to better partner with our customers in the region.”

  • Canada Approves Medicago’s Vaccine

    Canada Approves Medicago’s Vaccine

    Photo: M.Rode-Foto

    Health Canada has approved Covifenz, a tobacco plant-based coronavirus vaccination developed by GlaxoSmithKline and Medicago, a biopharmaceutical company backed by Philip Morris International.

    “The approval of our Covid-19 vaccine is a significant milestone for Canada in the fight against the pandemic. We appreciate Health Canada’s timely review,” said Takashi Nagao, president and CEO of Medicago, in a statement. “We’re also grateful for the government of Canada’s support in the development of this new vaccine, and we are manufacturing doses to start fulfilling its order.”

    “This first approval is an important milestone in our approach of pairing GSK’s well-established pandemic adjuvant with promising antigens to develop protein-based, refrigerator-stable Covid-19 vaccines to help protect people against Covid-19 disease,” said Roger Connor, president of GSK Vaccines. “We look forward to working with Medicago to make the vaccine available in Canada and to progress further regulatory submissions.”

    The government of Canada has a contract with Medicago to supply the Covid-19 vaccine.

    “As one of our government’s top priorities has been to reverse the 40-year decline faced by Canada’s biomanufacturing sector, we are pleased to see Medicago’s vaccine approval. It is a great milestone for Canada’s biotechnology sector and for homegrown innovation. We will continue to support companies that want to produce vaccines in Canada and join the growing national biomanufacturing sector,” said François-Philippe Champagne, minister of innovation, science and industry.

    Health Canada based its decision on scientific data shared by Medicago as part of its rolling submission that began in April 2021 under an Interim Order and concluded with the filing of a New Drug Submission-CV.

    “Today is a great day for Medicago as Covifenz becomes its first approved vaccine,” said Yosuke Kimura, chief scientific officer at Medicago. “I’d like to thank the clinical investigators involved in our trials as well as Medicago’s passionate and curious team of over 500 scientific experts and employees. Today only reinforces our commitment to using our technology to provide rapid responses to emerging global health challenges and to advancing therapeutics against life-threatening diseases worldwide.”

    Covifenz uses coronavirus-like particle technology with the vaccine composed of recombinant spike (S) glycoprotein expressed as virus-like particles co-administered with GSK’s pandemic adjuvant. The vaccination regimen calls for two doses given intramuscularly 21 days apart (3.75 micrograms of coronavirus-like particle antigen in combination with GSK pandemic adjuvant in the same injection). The vaccine is stored at 2 degrees Celsius to 8 degrees Celsius. The Covifenz antigen will be manufactured in Canada and in North Carolina, USA.

  • South Africa Proposes New Vaping Tax

    South Africa Proposes New Vaping Tax

    Photo: Adrian | Adobe Stock

    The South African government will propose a new tax on vaping products to take effect in 2023, according to Vaping360.

    The move follows the government’s announcement last year that it intended to tax e-liquids.

    South African Finance Minister Enoch Godongwana outlined the new tax proposal as part of a package of new and increased excise taxes on tobacco, alcohol and high-sugar products. The vaping tax will appear in the 2022 Taxation Laws Amendment Bill, though it could be changed by Parliament before the bill is finalized. It is expected to be in place by Jan. 1, 2023, according to Godongwana.

    The new tax would apply to all e-liquid products, regardless of whether they include nicotine, and it would be “at least” ZAR2.90 ($0.19) per mL, essentially doubling the price of retail e-liquid. The taxation rate is supposed to be equivalent to 40 percent of the most popular brand’s retail price.

    South Africa currently has no specific governance on vaping products but is working to regulate the products under its tobacco laws.

  • PMI Suspends Operations in Ukraine

    PMI Suspends Operations in Ukraine

    Philip Morris International is suspending operations in Ukraine, including its factory in Kharkiv, following the invasion of Russian forces into the country, according to The Wall Street Journal.

    “The safety and security of our colleagues and their families is our primary concern, and we have, therefore, temporarily suspended our operations in Ukraine,” said PMI CEO Jacek Olczak. “Our employees are advised to stay at home or in any safe place and follow instructions from local authorities.”

    PMI has more than 1,300 employees in Ukraine. The country accounted for about 2 percent of PMI’s total cigarette and heated-tobacco shipment volume in 2021.

    PMI has stated that it has contingency plans in place to restart operations once conditions are safe.