Tag: Cerdia

  • A Clean Sweep

    A Clean Sweep

    Holger Twrdy

    At Cerdia’s much-anticipated 12th filter colloquium, speakers detailed the progress in reducing the industry’s carbon footprint.

    By Stefanie Rossel

    “On the road toward a sustainable future” was the theme of Cerdia’s 12th filter colloquium, which took place in Freiburg, Germany, June 3–5. The conference has a rich tradition. Except for the time of the Covid-19 pandemic, the acetate tow manufacturer’s event has taken place every three years since the mid-1980s. This year, speakers from all parts of the tobacco industry supply chain shared their strategies to reduce their carbon footprint.

    Sustainability has always been important to Cerdia, which was created after the Blackstone Group purchased Rhodia’s acetate tow business in 2016. However, as Cerdia CEO Jens Ebinghaus explained in his opening speech, the topic gained even greater prominence after the acquisition and the company’s subsequent rebranding.

    Cerdia employs approximately 1,100 people worldwide and has revenues of around $750 million. In addition to its Freiburg facility, it operates factories in Santo Andre, Brazil; Serpukhov, Russia; and Kingsport, Tennessee, USA. While investing in core filter tow technology and diversifying into new business segments, the company focuses heavily on ESG, which encompasses energy diversity and efficiency as well as safety, compliance and governance, and community engagement.

    In 2023, Cerdia allocated 45 percent of its capital expenditure to projects supporting sustainability. According to Ebinghaus, the business environment for tow manufacturers has become significantly more volatile since 2019. The rising costs of raw materials, for example, has forced manufacturers to increase efficiencies. At times and often regionally, the industry also suffered from issues relating to transportation, disrupting supply chains. In addition, the geopolitical situation has become more challenging, with conflicts in Ukraine and the Middle East erecting new hurdles for business, for example. At the same time, business opportunities have emerged from next-generation products such as heated-tobacco products (HTPs), sales of which have been growing rapidly in recent years.

    Maria Viloria

    Lots of Levers

    Part of Cerdia’s roadmap to sustainability was a “double materiality” assessment, carried out in 2022, according to Maria Viloria, Cerdia’s head of sustainability and R&D. Through a survey, the company learned what was most important to its customers, suppliers and other stakeholders. Based on these findings, it created a “significance map” that put Cerdia’s ESG priorities in perspective. The company then developed a set of sustainability objectives that are in line with the U.N. Sustainable Development goals and established a sustainability committee to support its strategy.

    By 2030, Cerdia aims to reduce its greenhouse gas emissions by 30 percent, its landfill waste to zero and its water withdrawal by 10 percent compared to 2019. Medium and major injuries are to be reduced to zero and complaints to under 0.5 per delivered kiloton. The company has been sourcing its wood pulp from 100 percent certified sustainable forestry for years.

    By 2030, Cerdia aims to have trained 95 percent of its employees in compliance and to have fully implemented the EU Corporate Sustainability Reporting Directive (CSRD). In autumn 2024, Cerdia will move its Basel headquarters to a new, carbon dioxide (CO2)-neutral building. The company, which in 2021 received a silver medal from the business sustainability rating provider Ecovadis, is now aiming for gold.

    Cerdia’s new biosteam project, which is planned to come online in the first quarter of 2025, will play a vital role in the company’s CO2 reduction strategy by using biomass for steam production, according to Holger Twrdy, Cerdia’s vice president, manufacturing. The power plant will reduce the Freiburg factory’s CO2 emissions by 15 percent to 20 percent, or 26,000 tons annually, and Cerdia’s overall CO2 emissions by 10 percent.

    Further CO2 reduction of around 1,500 tons per year will come from a new absorption column in the Freiburg plant’s acetone absorption division, which will also start production early next year. In addition, the company will expand an existing CO2-free residential heating project, supplying green energy to Freiburg’s Dietenbach district.

    Esther Abe

    HTPs on the Rise

    Esther Abe, Cerdia’s market intelligence manager, provided an overview of the global tobacco market during the colloquium. After years of decline, cigarette sales stabilized in 2020, and Abe expects them to grow slightly, with increases in HTP and super-slim cigarette sales offsetting declines in other categories.

    She expected the global cigarette market to reach 5.55 trillion sticks in 2024 and anticipates it to increase to 5.7 trillion units by 2030. According to Abe, China’s cigarette market is likely to increase by a compound annual growth rate (CAGR) of 0.3 percent by 2030 due to the rising popularity of super slims and restrictions on vape products while HTPs are the fastest-growing segment in the rest of the world.

    Abe expects sales of combustible cigarettes to remain stable in China but to decline in the Commonwealth of Independent States, the Americas and Europe. The main sources of volume growth will likely be Africa and the Middle East, she said.

    The HTP category is envisaged to grow by a CAGR of 17 percent, to reach approximately 526 billion sticks in 2030. While Cerdia will remain focused on filter tow for the tobacco industry, which accounts for 85 percent of its business, it is also exploring other lines of business. To that end, the company recently established a new business development (NBD) team, which is exploring complementary acetate tow applications.

    According to NBD head Josef Hudina, the product is meltable in various recipes, soluble in many eco-friendly solvents and hydrophobic enough to be suitable as a plastic substitute. Moreover, it can be processed in the form of fibers, films, granules or powders. With its new cellulose acetate compounds, CellspherA Micro and CellspherA Granules, Cerdia offers an alternative to fossil materials that are widely used in the personal care industry. As the EU microplastic restriction boosts the demand for natural alternatives, Hudina is convinced that cellulose acetate could pass the EU microplastic exemption.

    Speakers at the colloquium anticipated tobacco industry regulations to increase further.

    Cerdia Product Stewardship Manager Emmerich Sackers detailed the scope and requirements of the European Deforestation Regulation, which entered into force in 2023 and will apply to large businesses from the end of this year.

    Jan Muecke, managing director of the German Association of the Tobacco Industry and New Products, pointed out that the recent decision at the 10th Conference of the Parties to the Framework Convention on Tobacco Control (FCTC) to focus on the environmental concerns described in FCTC Article 18 will likely influence how the EU Tobacco Products Directive, the U.N. International Plastic Treaty and the EU Single-Use Plastics Directive end up dealing with cigarette filters.

    Further legislative initiatives are underway under the European Green Deal, including the Packaging and Packaging Waste Regulation, the Corporate Sustainability Due Diligence Directive, the CSRD, the Ecodesign for Sustainable Products Regulation, the EU Batteries Regulation and the Green Claims Directive.

    Jens Ebinghaus

    Comprehensive Approach Required

    Instead of a one-size-fits-all approach, the road to sustainability is a puzzle with many pieces, all of which are vital. Logistics, for instance, account for 11 percent to 12 percent of total CO2 emissions, as Sergio Barbarino, chairperson of the Alliance for Logistics Innovation through Collaboration in Europe (ALICE), explained.

    The EU aims to decarbonize its transportation sector by 2050. ALICE has identified five pillars for the future of logistics: In addition to energy-efficient fleets and assets that use the lowest possible emissions energy source available, which presently is at the center of efforts, the focus in the mid-term should be on the management of demand, smart use of transport modes and sharing of fleets and assets.

    Procurement is another factor. Benjamin Saur, global category manager of sustainability at BAT, shared that 42 percent of his company’s greenhouse gas emissions are under the procurement department’s remit. BAT has designed a Supplier Climate Enablement Program that segments the approach to neither overburden suppliers’ own organizations nor BAT.

    In manufacturing, the biggest lever for increasing sustainability lies in increasing machine and process efficiency, according to Klaus Masuch, head of strategic product management secondary at Koerber Technologies. Options for actions, he said, are machinery-driven, people-driven and service-driven improvements along with data-driven and software-driven improvements, with a focus on tobacco savings and emphasis on the development of eco-friendly alternatives, such as biodegradable filters.

    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.
  • A Common Thread

    A Common Thread

    Photo: Celanese

    Filter manufacturers face higher prices and tow shortages, though not everybody has been equally affected.

    By Stefanie Rossel

    Of the roughly 5.2 trillion cigarettes consumed globally each year, 98 percent feature a filter made from cellulose acetate (CA) tow, a thermoplastic cellulose fiber with excellent absorption characteristics manufactured from dissolved wood pulp. Over the past years, suppliers of this base material faced many challenges, among them the continuous decline in global cigarette consumption since 2013, which also meant decreasing demand for tow and cigarette filters.

    Since last year, however, the situation has reversed: The market for acetate tow has tightened. In May 2022, Celanese Corp., one of the world’s leading suppliers of acetate tow products, declared force majeure on western hemisphere acetyl chain and acetate tow products because of unanticipated interruptions in raw material supply in the Texas Gulf Coast. The condition was lifted again in December. Celanese Corp. was unavailable for comment.

    In the meantime, other tow manufacturers announced price hikes. Cerdia, for example, announced a cost surcharge of $0.46 per kilogram on all acetate tow grade shipments as of March 2022.

    Christian Chavassieu

    “Last year, prices for acetate pulp went through the roof because of rising costs for wood, chemicals, labor, energy and shipping,” says Christian Chavassieu, managing partner at CelCo Cellulose Consulting in Geneva. “Manufacturers could either accept the price increase or risk a shortage.” Acetate tow suppliers also suffered from other issues, such as a lack of essential chemicals. Acetate tow is made by dissolving wood pulp in a mixture of acetic anhydride and sulfuric acid. The resulting solution is then extruded through small holes to form thin fibers, which are cut into small lengths after cooling.

    To create high-purity cellulose pulp as used in acetate tow, 95 percent to 97 percent of the cellulose content has to be extracted. Only a handful of specialized companies are capable of this process. The cellulose “bank” is the world’s biggest source of organic raw material with 700 billion tons, according to CelCo Cellulose Consulting. The overwhelming part of cellulose products manufactured every year is used to manufacture paper, packaging and tissue.

    The specialty cellulose industry, of which acetate tow manufacturers are a part, accounts for only 2.5 percent of the entire processed cellulose spectrum. “Hit with higher pulp prices, suppliers of acetate tow have been forced to pass the increase on to their customers. In its recently published second quarter results, Eastman Chemical said that prices for acetate tow went up 33 percent, leading to 32 percent higher selling prices,” says Chavassieu.

    Higher selling prices were also due to more efficient use of production facilities. “Some players, such as Eastman, have diversified their mills to produce textile fibers to improve their capacity utilization,” explains Chavassieu.

    HTPs Drive Demand

    Hyunyoung Park

    Hyunyoung Park, sales and business development manager at Taeyoung Industry Corp., a South Korea-based supplier of mono, dual and triple filters, says the scarcity of acetate tow occurred in part to an unplanned production stoppage at a leading supplier. “This trend has not ended and will continue until the balance shows stable figures,” he says.

    The increasing popularity of heated-tobacco products (HTPs), too, has contributed to the tight market, according to Robert Pye, CEO of specialty filter manufacturer Filtrona. “We see rapid double-digit growth in HTPs, which basically use different grades of tow but actually increase the amount of tow that is used in comparison with combustible cigarettes because of the filter design. It eats up the decline in demand we have seen from traditional cigarettes.”

    Pye also attributes the current challenges in the acetate tow market to the Covid-19 pandemic, which decoupled supply chains. “Before, we were all in a just-in-time sort of mode, developing strategies for our supply chains,” he says. “This has changed—we have seen people wanting to have more inventory in their supply chain. Basically, manufacturers have reduced the risk of shortage and developed a different way of managing supply chains.”

    The Russia-Ukraine conflict has left its mark too, with some supply from those locations affected. “This has definitely made the supply chain more complex,” says Pye. Like Chavassieu, he expects these developments to continue. “We’re seeing an inflationary market in acetate tow,” Pye says. “Supply is somewhat tight. It won’t continue up, but how much it comes back would be something the market would have to see. I don’t see too much change for next year.”

    Their views are reflected by another major acetate tow manufacturer, Japan-based Daicel, whose management recently forecast that the worldwide demand for cigarettes would gradually start increasing after 2026. Daicel’s management said it anticipated demand for acetate tow to remain stable or increase, driven by the proportion of demand for HTPs, which currently account for 3 percent of the global tobacco market and are expected to increase by 0.5 percent to 1 percent annually in the future.

    An increase in the length of cigarette filters to cater to consumers’ growing health awareness and an increase in filter use in countries such as Indonesia, Bangladesh and India were named as further contributing factors. Daicel expected the recent increases in raw material and fuel prices to level off soon but the demand for acetate tow to consistently exceed supply.

    Sustainable Solutions

    Robert Pye

    As a long-time global player with long-term supplier contracts, Filtrona has been unaffected by the shortages, according to Pye. “The way we had our supply chains organized allowed us to grow in double digits that year. We also supply a sustainable range of products, which helped customers in some markets.”

    Park adds that his company has noticed new requirements for a secure supply chain and sourcing stability. “Customers are benefiting from the stable supply chain network we have built up and continued during the pandemic,” he says.

    Pye notes that the shortage of cellulose acetate has been driving interest in Filtrona’s biodegradable filters, such as the Eco range of products, in more regions, predominantly around western Europe but also elsewhere. “Also, products like BiTech, a mono-segment filter produced in a single pass and offered in various ratios of tow and either paper or other nonwoven materials, thus using less acetate tow than a normal filter, were more sought after,” he says.

    While paper-based solutions have traditionally been more expensive than CA filters, the price gap has narrowed recently. “These days, the cost and capability of the nonwoven products are more interesting,” says Pye. “There are certain characteristics to the product line that make them more interesting to compete with acetate tow.”

    Excluding China, special filters account for 5 percent of the global market. Of these, Filtrona has a market share of nearly 50 percent. The remaining share is divided between smaller local players. “We see the market growing, mainly in areas where tobacco companies may want to differentiate themselves from other brands, for example, when they operate in regions with plain packaging,” says Pye. “Special filters are also becoming increasingly popular with manufacturers with a maturing customer base, i.e., when consumers are moving up from their gross domestic product, more specialty products come into these markets. India is an example of this: A few years ago, the country had very limited flavor-based products. Today, it has lots of flavors, tubes and other complex filters. The market has more specialty filters in the last two years than in the last 10 years combined.”

    Pye thinks this trend will continue. “Filtrona’s task is to bring new filter technologies into these markets,” he says. “That’s why we have a joint venture in China. The Chinese market uses all sorts of slims, such as super slims or demi slims, but not too many combined filters, and previously, there hasn’t been a market for additives either.”

    Despite the challenges, the market is quite dynamic, according to Pye, with different regions having requirements for different filters and specialty filters and even in filter supply. “We see this dynamic playing out not on a daily but on a quite regular basis, with sustainability and HTPs becoming more important,” he says. “The challenges in supply chains haven’t quite left us, so I think it’s an interesting time. As a supplier and committed partner to this industry, we’re making sure that we can help the industry move into more sustainable solutions but also ensure they get the supply because their supply chains are challenged 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.
  • Innovation as a Driver

    Innovation as a Driver

    Photo: Celanese

    Even in challenging times, filter and tow suppliers find new business opportunities in innovative nicotine products.

    By Stefanie Rossel

    Over the past years, manufacturers of acetate filter tow and cigarette filters have come to learn how to best cope with challenges. The continuous decline in global cigarette consumption since 2013, which also resulted in lower demand for tow and filters, has been one such issue.

    Hyunyoung Park

    In 2020, tobacco companies sold 5.06 trillion cigarettes worldwide, representing a decline of 3.7 percent compared to 2019, according to Euromonitor. Increasing restrictions on tobacco products as well as the rise of reduced-risk alternatives contributed to this development. “Philip Morris International’s conventional cigarette-free world mission is a big challenge to filter makers,” notes Hyunyoung Park, sales and business development manager at Taeyoung Industry Corp. of South Korea, a supplier of mono, dual and triple filters to multinational cigarette manufacturers.

    The year 2020 added more trials for the tobacco industry, most notably the Covid-19 pandemic. At the ITGA’s Issues Day in November 2020, Shane MacGuill, Euromonitor’s senior head of tobacco research, said he expected combustible cigarette volume to decline further in the next five years, aided by a pandemic that left many governments scrambling to refill their coffers.

    Harald Bruggeman

    For the time being, the most tangible effect of the pandemic for suppliers of acetate tow is logistic in nature, says Harald Bruggeman, vice president of commercial acetate tow at Celanese in the U.S. “A challenge for the entire industry is that the global liner market remains tight with lower performance and higher freight rates that continue to climb,” he says. “To ensure supply chain security, Celanese has a global warehouse network and healthy inventory levels.”

    Bruggeman notes that pandemic-related travel restrictions continue to impact business. To provide best possible service, he explains, Celanese provides remote sales and technical customer support by offering video conferences, online training, webinars, web-based software for item selection, filter and cigarette design calculations and RealWear devices, such as hands-free, voice activated, head-mounted tablets, for remote assistance.

    The pandemic follows a period during which tow manufacturers were busy preparing for tighter regulation. In February 2018, the European Commission published the classification of titanium dioxide (TiO2), a delustering agent that had been used in paints and varnish, plastics, paper, printing inks and many other applications for about 100 years, as a suspicious carcinogen for inhalation. Although many scientific studies show that TiO2 does not cause cancer in humans, the classification will take effect Oct. 1, 2021. “The filter tow manufacturers are transitioning to acetate tow without added TiO2, which increases complexity in manufacturing, portfolio and supply chain,” Bruggeman says. “Celanese has completed all necessary preparations for the commercial production of acetate tow without added TiO2 at both manufacturing sites, i.e., Narrows, Virginia, USA, and Lanaken, Belgium.”

    Jens Ebinghaus

    Jens Ebinghaus, CEO of Swiss-based acetate tow manufacturer Cerdia, formerly Rhodia Acetow, stresses the positive side of this challenge. In November 2018, the company launched DE-Tow, a tow made of cellulose acetate that is free from TiO2. “Most of our customers have already switched to TiO2-free filter tow while others still use tow with TiO2,” he says. “Supplying both customer groups adds complexity to the manufacturing process and creates opportunities to the most flexible suppliers.” In 2019, Cerdia’s Freiburg, Germany, plant committed to invest close to $100 to strengthen its competitiveness, to foster the growing market share of specialty filters produced in Freiburg and to focus on product innovation as well as diversification.

    Taeyoung Industry Corp. is developing filters with non-acetate tow and studying alternatives to conventional filter material.

    Toward Increased Sustainability

    While the pandemic is far from over, this summer brought about new challenges for the sector: On July 3, 2021, more parts of the European Union’s Single-Use Plastics Directive (SUPD) entered into force, banning the sale of items such as plates, cutlery, straws and cotton bud sticks made of plastic as well as food containers and expanded polystyrene cups. The directive was drafted to fight marine pollution. Although cigarette filters are among the 10 single-use plastic products most often found on Europe’s beaches and seas, representing as much as 60 percent of all waste items, they are not among the prohibited products. Worldwide, around 98 percent of cigarette filters are made of cellulose acetate, a bio-based polymer that biodegrades over several months to several years, depending on the conditions of the environment where it has been discarded.

    Instead of the originally discussed consumption reduction targets for filter cigarettes, the European Parliament reached a provisional agreement stating that “the huge environmental impact caused by post-consumption waste of tobacco products with filters, discarded directly into the environment, needs to be reduced. Innovation and product development are expected to provide viable alternatives to filters containing plastic, and this development needs to be accelerated.” Through the introduction of extended producer responsibility (EPR), a reinforced application of “the polluter pays” principle, the provisional agreement seeks to further encourage innovation leading to the development of sustainable alternatives to tobacco product filters containing plastic.

    More specifically, the directive will require producers to cover the costs of consumer awareness-raising measures and EPR schemes tackling the clean up of litter and its subsequent transport and treatment, the costs of data gathering and reporting, and the costs of collection of waste of tobacco filters discarded in public collection systems. EU member states have until Dec. 5, 2023, to set up ERP schemes for tobacco filters that contain plastic, but to date, there is no available guidance for member states as to how such EPR schemes should be implemented. As of July 3, all packaging of tobacco products with filters are required to be marked with a pictogram warning against littering.

    “The most burning concern at the moment is the impact of the SUPD—how to deal with the directive and product solutions that are compatible with the criteria it sets out,” says Ebinghaus. “The role that biodegradability of filters and tow will play in the future depends heavily on littering regulations. Cellulose acetate is based on wood pulp, a renewable raw material. With Cerdia DE-Tow, we have already created a product that is characterized by certified rapid biodegradability. We are convinced that this topic will continue to accompany us in the future and are glad that we can already offer a future-proof solution to our customers.”

    “The criteria for biodegradability under the SUP directive are not expected to be established by the EU until 2027,” notes Bruggeman. “The EC is concerned about potential misleading claims around biodegradability of filters as it could likely have an inverse effect on littering behavior. Certifications of biodegradability alone do not resolve the fundamental problem of reducing the impact of ‘littering’—thus, the measures called for in the EU SUP directive remain as important and necessary to be adopted, i.e., contribute to awareness-raising EPR, including cleanup, collection and waste treatment, and labeling requirements for cigarette packs.”

    SK Low

    Seeking the Gold Standard

    Filter manufacturers are also busy trying to meet changing requirements for an expanding environmentally friendly products market. Taeyoung’s R&D department is working on filter development with non-acetate tow and is carrying out studies on the replacement of conventional filter material. Seng Keong Low (SK), global marketing manager at specialty filter manufacturer Essentra, explains that the greatest challenge now is to find the perfect substitute for cellulose acetate filters—“a gold standard, so to speak. While we have commercially launched paper-based filters from our ECO range, we also acknowledge that there are certain tradeoffs when using these alternative materials. That is why Essentra Filters continues to learn, innovate and improve upon these products to achieve that gold standard.” He relates that his company has several intermediary products within its portfolio of products, such as BiTech, which mixes cellulose acetate and paper, thus increasing the biodegradability of the product.

    Sustainability issues aside, filter designers continue to seek innovative solutions beyond the usual range. Filter and tow makers observe an ongoing shift toward slim and superslim formats while capsule filters remain popular. “Outside of the EU, flavors continue to play a role in driving consumer demand, especially in countries like China, Japan and Korea,” says SK.

    While cigarette consumption will likely continue to decrease, heated-tobacco products (HTPs) are creating new opportunities for filter and tow manufacturers. Like conventional cigarettes, HTP consumables require a—highly complex—filter. Cellulose acetate tow is found in vape products too; it can be used in e-cigarettes to prevent leakage of e-liquids. “We see great opportunities and great potential in developing and producing a broader spectrum of specialty items for more specific new-generation products and in the advancement, refinement and expansion of the [HTP] segment,” says Ebinghaus.

    “We observe continuous innovation and product launches in the strong growing HTP market, e.g., PMI’s IQOS Iluma, BAT’s Glo Hyper plus, JT’s Ploom X or KT&G’s Lil Solid 2.0,” echoes Bruggeman. “Celanese partners with the major players in the HTP segment for the development of new filters for heated-tobacco sticks.”

    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.