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  • South Africa: Treasury Outlines Vapor Taxation Proposal

    South Africa: Treasury Outlines Vapor Taxation Proposal

    Photo: Nishihama

    South Africa’s National Treasury has outlined a proposal on the taxation of electronic nicotine-delivery systems (ENDS), reports BusinessTech.

    Among other measures, the agency is considering taxes on hardware and e-liquids, with higher nicotine products attracting higher levies than low-nicotine varieties.

    While the market for ENDS is still in its infancy in South Africa, the National Treasury expects it to grow. The agency says it wants to learn from the experience of other countries where growth of ENDS has raised concerns about underage consumption. The agency said it is also aware of concerns about the potential of ENDS to undermine global tobacco control efforts and public health.

    Vaping products are covered neither by South Africa’s Tobacco Products Control Act nor by the country’s Medicines Act. The government has proposed the Control of Tobacco Products and Electronic Nicotine-Delivery Systems Bill in which it hopes to regulate vapor products in a similar way as cigarettes.  

    The bill was introduced for public comment in 2018 but remains in a draft form.

    According to a 2021 study commissioned by the Vapor Products Association of SA, the vapor industry in 2019 contributed ZAR2.49 billion to South Africa’s GDP while paying ZAR710 million in taxes. More than 350,000 South Africans use vapor products.

  • Momentum Building in U.S. for Regulating Synthetic Nicotine

    Momentum Building in U.S. for Regulating Synthetic Nicotine

    Photo: Aliaksandr Barouski

    Momentum appears to be building for the regulation of synthetic nicotine in the United States.

    On Dec. 15, U.S. Representative Mikie Sherrill introduced a bill designed to give the U.S. Food and Drug Administration the authority to regulate synthetic nicotine products just as it regulates nicotine products made or derived from tobacco.

    “This bill will ensure all tobacco products, including products made with synthetic nicotine, are regulated by the FDA in order to protect kids in our communities and those who may seek to use these products,” Sherrill said in a statement.

    The Federal Food, Drug and Cosmetic Act (FDCA) currently defines “tobacco product” as “any product made or derived from tobacco that is intended for human consumption, including any component, part or accessory of a tobacco product.”

    In November, FDA Center for Tobacco Products Director Mitch Zeller suggested synthetic nicotine could be considered a component of e-cigarettes, which would allow the agency to regulate it.

    The FDA could also seek to regulate synthetic nicotine as a drug. The FDCA defines drugs, among other things, as “articles (other than food) intended to affect the structure or any function of the body.”

    In the 1990s, the FDA tried to regulate nicotine as a drug and cigarettes and smokeless tobacco as “drug delivery devices.” In FDA v. Brown & Williamson Tobacco Corp., the U.S. Supreme Court found that the FDA lacked such authority.

    The 2009 Family Smoking Prevention and Tobacco Control Act gave the FDA the authority to regulate tobacco products. Should the FDA regulate synthetic nicotine as a drug today, it could point to recent legislation from Congress giving the FDA a role in this space more broadly. So far, however, the FDA has not taken this approach.

    Following a flurry of marketing denial orders in which the FDA forced many products containing tobacco-derived nicotine off the market, several manufacturers have switched to synthetic nicotine to avoid the agency’s rigorous and costly premarket review process.

    In response to such moves, lawmakers have initiated investigations and called for regulation of the category. On Nov. 16, nine senators sent a letter to the FDA imploring the agency to regulate synthetic nicotine products. The authors expressed concerns that e-cigarette manufacturers like Puff Bar are switching to synthetic nicotine to skirt FDA oversight and premarket review requirements to continue selling their products—including flavored products—that they assert appeal to youth.

    That same day, the North Carolina attorney general launched an investigation into Puff Bar. On Nov. 8, he sent letters to e-cigarette manufacturers Puff Bar and Next Generation Labs requesting extensive records pertaining to the production and marketing of the companies’ synthetic nicotine products.

  • Duterte Urged to Sign Vape Bill into Law

    Duterte Urged to Sign Vape Bill into Law

    Photo: juniart

    Tobacco harm reduction proponents are urging Philippine President Rodrigo Duterte to sign into law a bill that makes it easier for smokers to switch from cigarettes to less harmful nicotine products, reports The Manila Bulletin.

    In a letter addressed to Duterte, consumers and harm reduction advocacy groups said the passage of the Vape Bill can save the lives of millions of Filipino smokers, “because legitimate alternative products will be allowed to be sold to smokers who want to stop smoking.” 

    The letter was signed by Vapers PH, Vaper Ako, Smoke Free Conversation PH, Nicotine Consumers Union of the Philippines, Philippine E-cigarette Industry Association, Quit For Good, Heated Equipment as Alternative to Traditional Smoking Philippines, PROVAPE, Philippine Tobacco Harm Reduction Advocates and Consumer Choice Philippines.

    The groups said that by passing the Vape Bill, the Philippines will join the growing list of progressive countries that believe in providing less harmful alternatives to their smoker population who don’t want to stop smoking.

    “Our country will join the ranks of the European Union, the United Kingdom, the United States, New Zealand, Italy, Bulgaria, Cyprus, Norway, Greece, Portugal, Switzerland, Egypt and Uruguay, among many others that believe in providing smokers with alternative products to save their lives,” the activists wrote.

    The group noted that the bill bans sales of vapor products to minors and has provisions to prevent the sale of unregulated products.

    The legislation bans the sale to and use by minors of vape products, along with the sale, advertising and promotion of vape products within 100 meters of school perimeter and playground. Use of flavor descriptors that unduly appeal to minors in vape products and the display of vape products immediately next to products of particular interest to minors are prohibited.

    The activists stressed that with the “growing positive scientific evidence coupled with our life-changing experiences, our resolve is stronger that vaping saves lives.”

     

  • Turkey Raises Special Consumption Tax on Tobacco

    Turkey Raises Special Consumption Tax on Tobacco

    Photo: Rawf8

    Turkey has increased the special consumption tax on tobacco by 47.4 percent to TRY14.39 ($1.10) per pack, reports Bianet.

    The special consumption tax is based on the domestic producer price index. It is calculated both as a minimum fixed tax and a fixed tax. Each of these has been increased from TRY0.48 to TRY0.7 lira for a pack of cigarettes.

     The minimum price of a pack of cigarettes will be TRY22.85.

  • Armenia Bans Tobacco Product Displays

    Armenia Bans Tobacco Product Displays

    Photo: Taco Tuinstra

    Retailers in Armenia are no longer allowed to show their customers tobacco products, reports Public Radio of Armenia.

    A new tobacco law, passed in February 2020, prohibits the public display of any tobacco product, including traditional cigarettes, e-cigarettes and electronic nicotine delivery devices at trade centers or in public catering establishments.

    The public display of empty boxes, blocks, trademarks or symbols is also prohibited.

    “The full application of these provisions over time will significantly reduce tobacco use in the country, which will significantly improve the health of the population and the development of the country’s economy,” said says then-Minister of Health Arsen Torosyan after the law passed.

    In March, Armenia will also ban smoking in cafés and restaurants.

  • Sri Lanka Plans Annual Tobacco Tax Hikes

    Sri Lanka Plans Annual Tobacco Tax Hikes

    Photo: sezerozger

    Sri Lanka’s National Authority on Tobacco and Alcohol (NATA) wants to change taxes so that cigarette prices increase by 6 percent each year, reports The Island.

    The proposed tax formula comprises six components––cigarette tax percentage, proposed price for next year, inflation, present price, GDP and the “externality factor” of 4 percent. 

    “The 4 percent is added to ensure that the price of a cigarette is increased every year even if inflation drops to zero,” said Samadhi Rajapaksa, Chairman, NATA.

    Rajapaksa noted that Sri Lankan depends less on tobacco tax revenue than many people believe. “Our tax revenue from these sources is about 11 percent only,” he said. 

    Earlier, Rajapaksa said that the NATA would increase the minimum age for sale, purchase and promotion of tobacco products from 21 to 24 in 2022. 

    Rajapaksa told the media that NATA had decided to amend the National Authority on Tobacco and Alcohol Act this year. 

    The increase of the minimum age for sale, purchase and promotion of tobacco products was one of the proposed amendments to the Act, he said. 

    “Already advertising, promotion and sponsorship of tobacco is prohibited. We want to stop the cross border advertising of tobacco products, too,” he said. 

  • Cigarette Taxes up in the Philippines

    Cigarette Taxes up in the Philippines

    Photo: mehaniq41

    Cigarette excise taxes in the Philippines increased from PHP55 ($1.08)) to PHP55 per pack on Jan. 1, reports The Philippine Daily Inquirer. Under the tobacco tax law of 2019, they will continue rising by PHP5 per pack annually until they reach PHP60 per pack in 2023.  

    Meanwhile, the excise tax rate on conventional freebase or classic nicotine vaping products increased to PHP55 per 10 ml from PHP50 last year. The rate for nicotine salt vapes rose to PHP47 per ml from last year’s PHP42 per ml.

    Despite the coronavirus pandemic-induced recession in 2020, “sin” tax collections from cigarette and alcohol products rose to PHP227.6 billion from PHP224.6 billion in 2019. Actual 2020 collections exceeded the conservative PHP201.5-billion target, as lockdowns dampened sales and limited distribution of tobacco and alcohol products due to movement restrictions on non-essential goods.

    Market leader Philip Morris Fortune Tobacco Co. estimates that illicit cigarettes increased their market share to 8.6 percent in 2021 from about 5 percent in 2020.

    The Bureaus of Internal Revenue estimates that the 2.5 million illicit cigarette packs it confiscated last year deprived the government of about PHP123.3 million in tax revenues.

    As of November 2021, law enforcement had apprehended 102 illicit cigarette traders and to seized 38,827 master cases of illicit cigarettes worth PHP1.3-billion.

     

     

  • Taking Root

    Taking Root

    Photo: ArtushFoto

    Programs to combat deforestation are gaining momentum in Zimbabwe.

    By Daisy Jeremani

    As Zimbabwe grapples with deforestation, of which 15 percent to 20 percent is attributed to tobacco curing, farmers, merchants and the government have taken a stand to push back the loss of woodlands estimated at 330,000 hectares per annum.

    One of the initiatives involves farmers contributing a portion of their seasonal income into a reforestation fund that is managed by the Forestry Commission of Zimbabwe (FCZ), a government agency.

    A second one is run by an association of tobacco merchants. Through the Sustainable Afforestation Association (SAA), buyers also contribute money for reforestation activities. The planting of trees started in 2014 with a buy-in from only six merchants, but now the number has risen to about 350 with a target of planting at least 3,000 hectares to 3,500 hectares of trees every year. So far, they have planted about 20,000 ha.

    In an interview with Tobacco Reporter, SAA’s business relations manager, Lloyd Mubaiwa, said his organization was set up by tobacco merchants “so that we create a sustainable source of fuel for tobacco curing so that we reduce the decimation on indigenous woodlands by tobacco farmers.”

    Besides loss attributable to the curing of tobacco, there has also been a massive decimation of natural woodlands and plantation forests due to various other factors, among them agricultural expansion, growth of settlements, infrastructure development, demand for firewood for domestic use and brick molding. Brick molding is almost the same as tobacco curing, as barns are built using bricks that would have been burned using traditional kilns, which require lots of wood to fire them up.

    The FCZ estimates that 330,000 hectares of natural forest are lost yearly, and 20 percent of that loss is caused by farmers, especially smallholders, cutting wood to cure tobacco. Approximately 80 percent of tobacco growers in Zimbabwe are smallholders who rely on forests nearby to cure the leaf because they lack money to buy coal, which better-resourced larger farmers use.

    A farmer using a conventional barn burns 9 kg of wood to cure 1 kg of tobacco, according to FCZ, whereas between 0.8 kg to 2.5 kg of coal are burnt to produce the same amount of leaf. A paper published by the International Journal of Development and Sustainability in 2014 said 0.6 ha of forest woodland are cleared yearly to process a hectare of tobacco.

    Native woods cut down for curing near a tobacco farm in Zimbabwe (Photos: Taco Tuinstra)

    Planting Trees

    To narrow the environmental cost of leaf processing, the government put in place a statutory instrument in 2012, which requires that for every three hectares of tobacco planted, the farmer must establish at least one hectare of trees for the curing of tobacco. Under the FCZ initiative, on each sale, the government is levying growers 0.75 percent, which goes through the Tobacco Industry Marketing Board (TIMB) and then to FCZ to be used to fund afforestation projects.

    Initially, merchants gave out mainly eucalyptus seeds to farmers when they came to sell their tobacco at the auction floors, but they realized that farmers did not establish any nurseries, according to Mubaiwa. After the seed initiative failed, the buyers started distributing seedlings, but, again, that failed as most of the seedlings just died under sheds at farms.

    “Now what we do is a farmer gives us the area that he intends to establish a plantation. We GPS the area, draft a contract he or she signs, and then we carry out the operations that are required,” Mubaiwa said.

    They sign 20-year contracts under which 20 percent of the harvest goes to the farmer and 80 percent goes toward a community fuel project. After 20 years, the plantation is handed over to the farmer and they can do whatever they want with it. SAA believes that the planation will be a lifetime investment, and the farmer should be able to harvest for the next 40 years to 50 years.

    “What we are saying is [that] we have taught the farmer how to grow the trees, how to look after them, how regenerate the coppicing or the shots and also [help] him identify and access markets to maximize his share value,” said Mubaiwa.

    There is also another incentive to the farmer during this partnership as SAA pays what it terms relief fees, which is money that it pays toward the farmer’s land tax obligations all the years that they are in partnership. The money is paid at $15 per ha.

    SAA does not only contract farmers, but it also trains them to grow seedlings to its specifications. The seedlings are grown in floating trays that were developed specifically for forestry, which gives a good root-to-shoot ratio. The bigger nurseries are in Harare and smaller ones are in areas that the organization is planting in.

    Since its formation in 2013, SAA has established approximately 20,000 ha of commercial eucalyptus plantations through long-term partnership contracts with about 320 farmers in the four main tobacco growing areas north of the country. It targets to establish between 35,000 ha and 40,000 ha of eucalyptus plantations across the main tobacco growing areas in the next 10 years for sustainable tobacco curing in the country.

    Alternative Energy Options

    SAA does not only contract farmers, but it also trains them to grow seedlings to its specifications.

    “To augment its biomass energy drive,” Mubaiwa wrote on Zimbabwe Forestry Online in April this year, “SAA has also collaborated with recognized research institutions such as the University of Zimbabwe and the Tobacco Research Board (TRB) to explore the use of bamboo, ethanol, biogas and solar energy as alternative energy options for tobacco curing. There has been very little progress in the development of these modern technologies, primarily due to a lack of national strategies to promote them.”

    The afforestation levy on growers was introduced in 2015 at a rate of 1.5 percent of leaf sales per farmer and is run by FCZ. Growers complained that the levy was too high, so the government agreed that it would be reduced to 0.75 percent.

    FCZ spokesperson Violet Makoto said that although they started getting the funds from the treasury through the TIMB recently, the afforestation levy has enabled them to address the supply side of afforestation as well as enhance their research into species that can be used for tobacco curing and capacitating them to be visible to farmers and assist with Extension services.

    The government agency has also set up nurseries to address the issue of seedlings’ availability in the tobacco producing Mashonaland West, Manicaland, Mashonaland Central and Mashonaland East provinces. Besides urging farmers to grow fast-growing eucalyptus, Makoto said FCZ is also carrying out research into other species that can be used—preferably indigenous species.

    “So research is ongoing to try out in terms of biomass value of the different indigenous species to see if they will be suitable for tobacco curing,” Makoto told Tobacco Reporter.

    She could not disclose figures on the hectarage grown under the levy, saying farmers have just embarked on this program, but she said uptake has been encouraging from large-scale tobacco growers. Makoto estimates that each of the big growers have set aside two hectares of trees for tobacco curing. The FCZ is also trying to make inroads to smaller scale farmers so that they establish community woodlots that they can harvest from.

    Zimbabwean tobacco growers inspect new technologies to help reduce energy consumtion.

    New Technologies

    In addition to replenishing forests, the government, through the TRB, is researching into, developing and promoting adoption of more energy-efficient curing options as well as renewable curing systems.

    One of the new technologies being promoted is the rocket barn, which is suitable for smallholders. Invented in Malawi and adopted and further developed by the TRB, the barn utilizes 4 kg of wood to cure 1 kg of tobacco whereas the conventional barn consumes 9 kg of wood to cure 1 kg of the crop. The small diameter furnace, introduced locally in 2014, also cures 0.5 ha of crop in a five to six day cycle compared to seven to 10 days in a conventional barn.

    There is also the larger, more expensive, twin-turbo barn, which is the most energy efficient model so far. According to the TRB, this technology utilizes any flammable material, including sawdust, wood and liquefied petroleum gas. A farmer needs about 1.5 kg of firewood to produce 1 kg of tobacco.

    In September this year, the TIMB launched a tobacco value chain development plan that seeks to promote use of solar and other renewable technologies to gradually phase out heavily polluting wood and coal-based curing systems.

    The Zimbabwe Tobacco Association’s chief executive, Rodney Ambrose, regretted the teething problems that have affected the FCZ managed program.

    For three years since its launch, he said, officials bickered over how the fund was to be administered. Many opportunities were missed over the years the tobacco levy was deducted but kept in the TIMB bank account as officials differed.

    “Then in 2020, a decision was made that [the] Forestry Commission of Zimbabwe should do the afforestation,” he said.

    The Tobacco Farmers Union of Zimbabwe’s president, Believe Tevera, also a farmer in Mount Darwin, Mashonaland Central Province, is also critical of the FCZ initiative. He said it was high time they saw real environmental remedy though the levies as the rate at which degradation is happening was not congruent with the steps that are being taken to correct the problem.

    “In Mount Darwin, we have been advocating to have that money channeled through the promotion of community-owned woodlots because we have wetlands. We can actually utilize these wetlands by planting gumtrees (eucalyptus). We can also grow the trees in gullies as there is a lot of soil erosion, which is being caused by deforestation,” he said.

  • Back Choice, Beat Prohibition

    Back Choice, Beat Prohibition

    An inconvenient truth: Some people enjoy smoking. (Photo: pikselstock)

    There are millions of adult smokers who don’t want to quit. Their preference should be respected.

    By Simon Clark

    The announcement in December that the New Zealand government intends to ban the sale of tobacco to anyone born after 2008 is merely the latest example of a process dubbed “creeping prohibition.” Smoking bans, the prohibition of flavored cigarettes and punitive taxation are just three measures that have only one aim and that’s to eradicate smoking and create a utopian “smoke-free” society.

    The health risks associated with smoking have been well known and widely understood for decades. As a result, millions of people have stopped smoking. Many more have chosen never to smoke. Nevertheless, many adults still enjoy smoking and don’t want to quit, and everyone—the tobacco industry, vaping advocates, public health campaigners and politicians—should respect their choice. Instead, a key stakeholder, the adult smoker who doesn’t want to quit, is increasingly marginalized and ignored.

    In 2016, as director of the smokers’ group Forest (Freedom Organisation for the Right to Enjoy Smoking Tobacco), I commissioned a report called “The Pleasure of Smoking: The Views of Confirmed Smokers.” Despite making every effort to promote it, the study was largely ignored, but it’s still relevant, and if we were to commission the same report today, the results would, I believe, be very similar.

    In brief, a survey of over 600 smokers by the Centre for Substance Use Research (CSUR) in Glasgow found that nearly all respondents (95 percent) gave pleasure as their primary reason for smoking. Most of those surveyed (77 percent) expected to smoke for many years, with only 5 percent envisaging a time in the near future when they might have stopped. More than half the respondents (59 percent) had used alternative nicotine-delivery products such as e-cigarettes. Few, however, were persuaded to switch permanently from combustible cigarettes to vaping.

    At the time, Neil McKeganey, director of the CSUR, said, “This research has provided considerable detailed information on the way in which smoking is viewed by a group of confirmed smokers, a body whose opinions are rarely taken into account by government or tobacco control groups. The implications of these findings from a smoking cessation perspective are significant because there is a clear gulf between the way smoking is typically viewed as a negative, somewhat reprehensible, behavior and how the smokers themselves saw smoking as a source of pleasure—a choice rather than an addiction.”

    One company that wants to eradicate combustible tobacco is tobacco giant Philip Morris International. In 2018, the company said it wanted to phase out cigarettes as soon as possible. In 2019, the then managing director of Philip Morris U.K. said, “There is no reason why people should smoke anymore.” Last year, the company even urged the U.K. government to ban the sale of cigarettes within a decade. While I applaud and support PMI’s commitment to developing reduced-risk products, this represents an outrageous attack on consumer choice—never mind rival companies—and is an insult to the many adults who enjoy smoking, don’t like vaping and don’t want to quit smoking.

    In addition to funding the Foundation for a Smoke-free World, launched in 2017, PMI also funded, in 2019, an online initiative called Quit Cigarettes. It was created by Change Incorporated, part of the VICE Media group. Headlines on a dedicated campaign website included: “How Smoking Increases Chances of Genital Warts,” “How Smoking is Ruining Your Sex Life,” “Is Smoking a Deal-Breaker on Tinder?” “How Cigarettes Blight British Seaside Towns” and “This is How Smoking Makes Your Penis Shrink.” The Change Incorporated website also included “witty” one-liners such as “Definition of a cigarette—a bit of tobacco with a fire at one end and a fool at the other.” To be fair to PMI, a disclaimer stated that “VICE maintains editorial control, so Philip Morris International may not share the views expressed,” but it’s hard to argue that the campaign did not broadly complement PMI’s own anti-smoking agenda.

    To be clear, Forest, which was founded in 1979, is fully supportive of efforts by PMI and other companies to develop, manufacture and market risk reduction products, be it e-cigarettes, heated-tobacco, nicotine pouches or products yet to be invented, because we believe in choice. We also support efforts to educate and inform consumers about the relative risks of different nicotine products so they can make informed choices, including not to smoke or vape.

    What we cannot support are campaigns and strategies that appear to undermine or belittle smokers who don’t want to quit while targeting a “smoke-free world” that, in our view, can only be achieved by creating a society in which generations of consumers are not only denied a choice of combustible products but are increasingly restricted from using them and punished or ostracized when they do. If smokers choose to quit or switch to reduced-risk products voluntarily and without coercion, there would be no cause for complaint. Embracing or meekly accepting measures designed to prevent adults from smoking is another matter.

    Unsurprisingly, several vaping advocacy groups and companies have also jumped on the anti-smoking bandwagon. In 2020, a leading vaping company in the U.K. backed calls to ban smoking outside pubs in England. Another wanted to see less smoking on TV. Meanwhile, a global vaping advocacy group is currently running a campaign called “Back Vaping, Beat Smoking.” The campaign logo features a boxing glove, and one campaign banner features a boxing ring with two boxers inside the ring. One represents vaping, the other smoking. The figure that represents “smoking” is cowering in a corner. The message is clear and, in my view, unnecessarily provocative. There are many positive ways to promote vaping to smokers, and this isn’t one of them.

    More anti-smoking messaging was evident at a rally organized by pro-vaping groups in London in November. One placard that read, “Back Vaping, Protect the NHS” implied that smokers are a drain on National Health Service (NHS) resources in a country where taxpayer-funded medical treatment is free at the point of use. In fact, the estimated cost of treating smoking-related diseases on the NHS is £2.7 billion ($5.57 billion) a year. The annual revenue from tobacco taxation is currently around £9 billion, so in financial terms, smokers are neither a burden on the health service nor the taxpayer.

    So why are these and other groups promoting the type of messages we would normally expect from anti-smoking activists? Perhaps they hope to win recognition or support from politicians and the public health industry. If so, they are likely to be disappointed because evidence suggests that the tobacco control industry, including politicians and campaigners, are only interested in vaping as a short-term “solution” to the “problem” of smoking. Few, if any, consider vaping to be a long-term alternative to smoking and certainly not a pleasurable habit in its own right. In their view, e-cigarettes and other reduced-risk products are smoking cessation aids and a stepping stone to giving up nicotine completely.

    Which brings me to the public health endgame. Is it smoke-free or nicotine-free? What is the long-term outlook for all nicotine consumers, even in more liberal markets, if governments achieve their initial target of a smoke-free world? It’s clear to me, and others, that even in countries like the U.K. that currently have a relatively relaxed attitude to e-cigarettes, the endgame for public health campaigners is the eradication of all forms of recreational nicotine.

    Some tobacco harm reduction advocates seem to think that eradicating combustible tobacco will ultimately benefit all smokers because their physical health will improve, but what about those like British artist David Hockney, 84, who says he smokes for his mental health? Is he, and millions like him, not entitled to make that choice for himself? “I couldn’t imagine not smoking,” says Hockney, “and when people tell me to stop, I always point this out. I’ve done it for 68 years, so are you telling me I’m doing something wrong?”

    Meanwhile, by failing to challenge the stop smoking brigade, tobacco harm reduction campaigners are actually advancing the inevitable attempt to force consumers to give up all forms of nicotine. Indeed, the idea that vaping will not be a future target for every public health campaigner, even those who are currently well disposed to vaping as a smoking cessation tool, is naive if not laughable.

    Millions of adults enjoy smoking and don’t want to quit. The war on smoking is therefore a war on choice and pleasure, and users of all recreational nicotine products should be fighting as one united army. Instead, by failing to support smokers who don’t want to stop, many tobacco harm reduction advocates are foolishly, for short-term gain, weakening the efforts of those who truly believe in freedom of choice and personal responsibility. And if we lose that battle, I guarantee we will lose the war on nicotine too.

    Simon Clark is director of the smokers’ lobby group Forest (Freedom Organisation for the Right to Enjoy Smoking Tobacco).
  • New Hurdles Ahead

    New Hurdles Ahead

    Photo: Attasit

    Growers discuss the challenges and opportunities facing their sector during ITGA’s annual Issues Day.

    By Stefanie Rossel

    Increasing regulatory pressure, sustainability, climate change and child labor emerged as the main challenges during the International Tobacco Growers’ Association’s (ITGA) Issues Day on Nov. 18. Due to the ongoing Covid-19 pandemic, the conference for took place virtually for the second year in a row.

    The ITGA’s president, Abiel M. Kalima Banda, described 2021 as another year of limitations. Interestingly, though, the Covid-19 crisis wasn’t as bad for the tobacco industry as it was for other businesses, as ITGA’s CEO Antonio Abrunhosa pointed out. Especially in the main leaf countries, production went back up again, with markets returning to normal.

    However, new regulations are presenting new challenges to farmers. For example, just one day before the ITGA meeting, the European Union executive outlined a draft law requiring companies to prove that agricultural commodities destined for the bloc’s 450 million consumers were not linked to deforestation. “The future of regulation will be tougher than it is now,” said Abrunhosa. “Growers will suffer the greatest part of sustainability issues. Buyers must be aware that farmers need a decent income to be sustainable and support their families.”

    While burley witnessed another year of decline, flue-cured Virginia (FCV) volumes in Brazil, Zimbabwe, the U.S. and China experienced a boost, according to ITGA tobacco expert Ivan Genov, referring to data provided by Universal Leaf. An even higher growth rate is expected for 2022, but it is likely to remain below the range that was the norm before the pandemic. Growers are faced with steadily increasing production costs, Genov said. “The situation remains volatile; the pressure on the sector remains strong. Sustainability issues will increase and intensify further.”

    Slight Recovery

    Ivan Genov

    World tobacco leaf production stood at an estimated 4.74 billion kg in 2021, with FCV production amounting to 3.47 billion kg, slightly up from 3.37 billion kg in 2020. By 2022, production is anticipated to reach 3.5 billion kg. Dark air-cured production remained stable at 111 million kg in 2021, whereas oriental declined from 155 million kg in 2020 to 128 million kg in 2021. Burley production declined to 411 million kg in 2021 from 446 million kg a year earlier. The latter crop is expected to recover next season, with production going back up to 468 million kg in 2022, which would still be below pre-Covid-19 levels.

    Seven of the world’s top 10 tobacco exporters by volume saw declines in 2020. Brazil’s exports dropped from 530 million kg in 2019 to 485 million kg in 2020; China’s exports declined from 194 million kg in 2019 to 186 million kg in 2020; and India’s exports decreased from 186 million kg in 2019 to 177 million kg in 2020. Only Argentina and Turkey registered a minor increase in production for export, according to U.N. Comtrade figures.

    In terms of value, Brazil finished first with $1.51 billion worth of tobacco exports in 2020, followed by Zimbabwe ($741 million) and the United States ($695 million). According to Universal Leaf, China will provide around 50 percent of global FCV production in 2021, followed by North, Central and South America with a combined 24 percent share. Africa and the Middle East, currently standing at 10 percent, are expected to increase production volumes in 2022.

    Growers in the U.S. and Zimbabwe suffered challenging working conditions in 2020. The U.S. fought a trade war with China, whereas Zimbabwe was hit hard by Covid-19, which delayed auctions. On Nov. 8, the country’s ministry of lands and agriculture announced plans to generate more value from its tobacco sector. It aims to create a $5 billion tobacco industry by 2025.

    Cigarette Value Under Pressure

    Shane Macguill

    Shane MacGuill, Euromonitor global lead for nicotine and cannabis, looked at the current key drivers in the global tobacco market. The Covid-19 disruption, he observed, has created both threats and opportunities. The pandemic will potentially have implications in the medium term regarding consumer choice and disposable income. Significant prevalence and visibility declines, caused by tobacco control, he noted, will probably be the long-term key driver. MacGuill expects this to ease a little in the future, though. Heated-tobacco products (HTPs) and nicotine pouches have broadened the nicotine universe and caused a fragmentation. “As a consequence, cigarette value will diminish over time,” he said. Regulatory innovation has been key in the tobacco space historically and is expected to continue, potentially even further. MacGuill singled out the “beyond nicotine” sector as another key driver.

    In 2020, global cigarette volumes just held up, whereas value came under pressure, according to MacGuill. Excluding China, consumption stood at 2.79 trillion cigarettes. Illicit product accounted for 12 percent of cigarette sales.

    The value of cigarette sales declined by 0.2 percent in 2019–2020, while stick equivalent value rose 1.4 percent. The overall value of the global cigarette market was $484 billion, and the global average pack price was $2.77, or $3.47 excluding China. Cigarettes represented an 84 percent share of total value sales (81 percent excluding China).

    Between 2015 and 2020, total cigarette demand grew most in Ethiopia, Jordan, Egypt, Hong Kong, Cambodia, Brazil, Vietnam, Algeria, Lebanon and El Salvador—primarily developing countries that saw migration from other tobacco categories into the cigarette category and perhaps lower regulation and excise. Demand fell most in Japan, Sri Lanka, South Africa, Ukraine, Peru, the Philippines, Australia, Saudi Arabia, Lithuania and Greece. Here, the decline was pushed by a combination of strong regulatory measures, increased taxation and the rise of cigarette alternatives. HTPs were driving substantial cigarette volume loss, most notably in Japan.

    Of the top 15 stick markets, Egypt, Vietnam, Bangladesh and India are expected to grow in stick/stick equivalent volume.

    HTPs Heating Up

    Global illicit cigarette trade dropped during 2020 as border closures and lockdowns interfered with illicit supply chains. However, MacGuill expects a return in growth, with illicit trade standing at around 15 percent eventually. Eastern Europe and Asia-Pacific will be among the most affected regions over the next five years as a result of affordability.

    “HTPs will cement their place at the head of the vapor growth narrative,” MacGuill predicted. “With the leading growth markets between 2020 and 2025 including Russia, Germany, Poland, the U.S., Japan, Italy, Ukraine and South Korea. To consumers, availability, ease of use, the possible impact on health but also price are among the most important product features. In a consumer survey, lack of information on the products was named as the essential barrier for not using HTPs.”

    Nicotine pouches reached a value of $1.2 billion in 2020. With benefits from lower barriers to consumers’ communication and—for the time being—less regulatory pressure, the segment is expected to grow by 40 percent to 2025.

    During 2020, overall monthly nicotine use grew in 17 markets, possibly due to pandemic-related factors, such as boredom and stress, according to Euromonitor. While cigarette use mostly declined or stayed flat and e-cigarette use plateaued in some key markets, HTPs saw a significant uptake. Across formats, price remained the key product feature.

    Many tobacco manufacturers see their future in “beyond nicotine” products, especially in the field of cannabis. According to MacGuill, investors are now assigning greater value to nicotine companies that are more diversified away from combustible products. Companies are also likely to focus more on cannabis as a potential substitute for their tobacco and nicotine products. Sales are set to reach $92 billion by 2026. Key trends in the cannabis space include a wider range of ingredients and formulations, targeting new populations, such as gamers, and new occasions, such as cannabis products in tins for dogwalkers.

    More Regulation Looming

    Michiel Reerink

    Michiel Reerink, corporate affairs director and managing director at Alliance One International, listed the outcomes of the ninth session of the Conference of the Parties (COP9) to the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC), which took place Nov. 8–13, 2021. Among other things, COP9 delegates agreed on the creation of an investment fund to support control activities and noted and deferred to WHO reports on technical matters including HTPs as well as on research and evidence on novel and emerging products without discussion or decision until COP10 in 2023.

    In the EU, the Supply Chain Due Diligence Act will increase the industry’s regulatory burden. In March 2021, the European Parliament adopted a resolution on corporate accountability, which stipulates a due diligence requirement for human rights and environmental standards that is likely to be aligned with OECD and United Nations Guiding Principles. By now, 15 EU member states have adopted human rights at the supply chain level. “Suppliers should prepare for this legislation,” Reerink said. “Due diligence should already be part of their company code of conduct.”

    Finding Alternative Livelihoods

    Heliodoro Campos, manager of the National Tobacco Fund in Colombia (Fedetabaco), described the plight of small-scale tobacco farmers in his home country. The sudden exits of Philip Morris International and British American Tobacco in 2019 and 2020, respectively, left thousands of tobacco famer families struggling for alternative sources of income (see “Blueprint for Exit,” Tobacco Reporter, March 2021). A conversion plan that envisaged the cultivation of permanent crops, such as Tahiti lemon, for the 30 percent of families that are landowners and transitory crops, such as maize or yuca, for the remaining 70 percent of families who lease their land did not materialize, as Colombia didn’t provide the required financing.

    Campos’ presentation was a cry for help. Stakeholders are now hoping that a new conversion plan that foresees the production of non-THC cannabis will yield better results. A pilot project is expected to provide insights into the cost of production and potential profitability next year. Campos said he was trying to find resources for this plan, also internationally.

    Stepping up the Fight

    Innocent Mugwagwa, senior manager of the Eliminating Child Labor in Tobacco Growing Foundation (ECLT), outlined the development of his organization, which has moved from focusing on implementing small projects in Africa in the first decade of the millennium to signing pledges of commitment with companies and addressing minimum requirements for businesses and human rights in the 2010s.

    In 2021, the foundation started concentrating on technical assistance, supporting governments so that they can protect children’s rights and supporting businesses to prevent and remedy child labor. It will also cooperate more closely with the ITGA to strengthen famers’ voices in defining fair standards and educate farmers in languages they understand. “We already worked together with the ITGA in the education of farmers on Covid[-19],” Mugwagwa explained. Furthermore, the ECLT will leverage governments and businesses to support ITGA members’ and farmers’ efforts in combatting child labor.

    The ITGA’s vice president, Jose Aranda, closed the conference by emphasizing that a unified voice and strengthened efforts were needed to fight the challenges. “We must understand that the new challenges to our sector are threatening, with increasing regulations and the growing popularity of products without tobacco. Some markets are already gone.”

    Antonio Abrunhosa

    Vázquez succeeds Abrunhosa as ITGA CEO

    The International Tobacco Growers Association appointed Mercedes Vázquez as its new CEO during the organization’s 36th annual general meeting, which took place virtually Nov. 18-19. Vázquez succeeds António Abrunhosa, who announced his retirement after serving in the position since 1998.

    Members expressed their gratitude and highlighted Abrunhosa’s role in positioning ITGA as a key player in the global tobacco sector.

    “In my new role I will do my best to continue this learning process from all of you so I can ensure and reinforce the long-lasting relations with our partners so we can together overcome the common challenges we are facing in our sector,” said Vázquez.

    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.