Tag: Covid-19

Battening Down the Hatches

Photo: Synthex
Having weathered the supply disruptions of Covid-19, tobacco freight forwarders must now dodge missiles in one of the world’s busiest waterways.
By Stefanie Rossel
Forwarding businesses that are specialized in the shipping and storage of tobacco have gone through some challenging years: The Covid-19 pandemic led to a scarcity of containers and caused shipping rates to skyrocket in 2020–2022. The situation eased in 2023 when inflation tempered demand and eventually even reversed the supply and demand balance.
The end of last year, however, brought about a new test for the sector. Just as global supply chains returned to normal, the Houthis, a Shia Islamist political and military organization that emerged from Yemen in the 1990s, began attacking container ships and oil tankers passing through the southern Red Sea and even hijacked one of the vessels.
The attacks with ballistic missiles and drones near the entrance to the Bab-el-Mandeb Strait—a vital corridor for global shipping—started Nov. 19, shortly after the outbreak of the war between Israel and Hamas in early October. The strikes are in retaliation for Israel’s military offensive in the Gaza Strip, which by mid-February had killed around 27,500 civilians, according to Gaza’s health ministry. The Houthis claim that they target vessels linked to Israel and its U.S. and British allies, although ships associated with other nations have reportedly been hit as well.
There is strong evidence that Iran is bankrolling and arming the militants, who have meanwhile extended their attacks to include the neighboring Gulf of Aden. In response to the continuing attacks, U.S. and British forces have struck Houthi targets in Yemen to secure the waterway. The European Union is also planning a military operation to protect one of the world’s most important maritime trade routes.
Despite the airstrikes on the Houthis’ bases in Yemen, the rebel group’s drone and missile activity continues. Shipping companies began avoiding trade routes via the Suez Canal In December, rerouting their journeys via Africa’s Cape of Good Hope—a detour that greatly increases the time and cost of many shipments. According to data from supply chain platform Project44, the number of container vessels sailing through the Suez Canal fell by about 65 percent between December 2023 and the end of January 2024.
Longer Travel Time, Higher Costs
The Suez Canal carries an estimated 12 percent of global trade and is the shortest sea route between Southeast Asia and Europe. Cargo travels 8,500 nautical miles in 26 days to be shipped from Singapore to Rotterdam, for instance. By contrast, the trip around the southern tip of Africa takes 36 days and measures 11,800 nautical miles.
The Red Sea shipping disruptions impact many nations, but European countries are likely to feel the heaviest impact, according to business intelligence firm Euromonitor International. While electronics, chemicals, automotive, machinery and other engineering industries in Europe—which rely heavily on components imported from Asia—are the most vulnerable to trade disruptions, production disruptions would also impact upstream industries and cause temporary deficits of components or manufactured goods. “In turn, this would add to the higher inflationary pressures across Europe,” writes Euromonitor in a report. “Companies are also likely to face greater pressure on their profit margins as slower economic and consumer income growth make it more difficult to fully pass on cost increases to the end consumer.”
Nonetheless, Euromonitor says that large-scale trade disruptions as witnessed during the Covid-19 pandemic are unlikely because global production capacity remains sufficient and shipping companies and buyers have greater flexibility in adjusting their trade routes and production processes. This, however, will result in higher logistics costs for the companies. Euromonitor estimates that the 10 extra days needed to sail around the Cape of Good Hope require approximately $900,000 in additional fuel. Increased travel time and higher insurance costs for shipping companies also directly impact shipping rates, the research company points out. “For example, freight prices for a 40-foot-equivalent container on Asia-Europe routes have more than doubled to $4,000.”
The shipping disruptions lead to a series of other issues, including delays further down the transportation network. “Changes and disruptions to shipping schedules will cause challenges in ports and put greater pressure on cargo handling and road transport sectors to efficiently handle the goods and avoid major delays,” writes Euromonitor. “For buyers of logistics services, it will likely result in higher prices, as logistics providers will face higher labor, fuel and fleet management costs.”
Challenging Shipments
Lisa Rautenbach | Photo courtesy of Andromeda Forwarding
Sea freight accounts for 80 percent of Andromeda Forwarding and Logistics’ operations. While it offers all the services of a carrier, the Rotterdam-headquartered company does not own any vessels.
Until the Houthi attacks began, 80 percent of Andromeda’s shipments went through the Suez Canal, according to Lisa Rautenbach, Andromeda’s tobacco department manager. “This issue has so far impacted all commodities that have to be transported through the Red Sea and the Suez Canal,” she says. “Routings dramatically changed, with the result that they have a very long transit, and some routings have added an extra 30 days prior to arrival.”
Meanwhile, shipments are being delayed, leading to longer transit times and additional surcharges, with minimum equipment and space available for new bookings. Vessels are overbooked, leaving little space for additional shipments. “Blank sailings,” which is when an ocean carrier cancels or skips a scheduled port of call or region in the middle of a fixed rotation, also occur.
Freight rates increase, and liners use the Red Sea crisis as an excuse to raise rates for routings that don’t even need to be rerouted or were never planned for the Red Sea route, according to Rautenbach. “After finally having seen stable rates after the pandemic, we now have to cope with supplementary fees that are added to pending shipments already sailing; with shipments forced to be rerouted while already on route; and, unfortunately, with disappointing our customers, which is out of our control.”
While it is uncertain how much longer the security crisis in the Red Sea will last, shippers, vessel operators and manufacturers may perhaps take comfort in the fact that they have learned from the Covid pandemic. In a recent article on U.S. National Public Radio, supply chain experts noted that affected companies quickly evaluated the emerging threat this time and took action much sooner. Manufacturers benefit from having gone back from a just-in-time to a just-in-case inventory due to the pandemic, experts said. The bottom line, however, is that all stakeholders involved in the forwarding business must learn to live with uncertainty.
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.

March 1, 2024
PMI, Medicago Cut Ties After WHO Rejection

Credit: Antonioguillem
Philip Morris International and the health group Medicago have severed ties after the World Health Organization rejected Medicago’s Covid-19 vaccine, according to a tobacco control body.
Covifenz, the world’s first plant-based Covid-19 vaccine, was jointly developed by Medicago, which is owned by Mitsubishi Chemical, Philip Morris and Glaxo, according to Bloomberg. The Canadian government, which provided $173 million in funding for its development, has cleared it for use.
The government of Quebec previously said it wanted to help Medicago replace its shareholder PMI with another investor so that the biotech firm can distribute its Covifenz Covid-19 vaccine internationally.
“Tobacco corporations, vaccines and governments don’t mix well, and we applaud the expulsion of Philip Morris from the Medicago collaboration,” Les Hagen, the executive director of not-for-profit organization ASH Canada, said in a statement.
Medicago’s request for an emergency-use listing was denied earlier this year by the World Health Organization because of the links with tobacco industry.
Earlier this year, Medicago announced it would cut 62 jobs at its manufacturing facility in Durham, North Carolina, USA, which played a key role in producing the company’s tobacco plant-based Covid-19 vaccine.
December 26, 2022
Study: Major Drop in Vaping by Under-20s

Use of e-cigarettes vaping devices dropped during the first year of the Covid-19 pandemic, according to a new study.
Researchers from Johns Hopkins University in Baltimore, Maryland, found that usage of vaping products dropped seven percent overall from 2018 to 2020 – including a 17 percent drop among people aged 18 to 20.
Researchers published their findings Friday on the JAMA Network Open after gathering data from the U.S. Centers for Disease Control (CDC) and Prevention’s Behavioral Risk Factor Surveillance System for the study, according to media reports.
The survey included a total of 994,307 respondents. In 2017, the CDC reported 4.4 percent of U.S. adults reported use of an e-cigarette. The figure climbed 25 percent to 5.5 percent in 2018.
‘This increase, primarily observed in younger age groups, was associated with the concurrent rise in the availability of flavored products and high nicotine–concentration pod mod devices (modular vaping devices with refillable or replaceable nicotine cartridges, or pods, such as JUUL brand devices),’ the researcher’s wrote in the study.
Data from 2019 was not gathered. In 2020, overall usage of e-cigarettes fell to 5.1 percent, a seven percent drop from two years earlier. The most dramatic shift was seen among people aged 18 to 20 years old – the youngest group included in the study.
July 23, 2022
Top Court Reviews Tobacco Ban

The government wants to overturn a lower court’s verdict that the ban was unconstitutional.
South Africa’s Supreme Court of Appeal heard an appeal on Thursday arguing that the tobacco ban during the country’s Covid-19 lockdown was justifiable under the constitution, according to the Times Live.
In December 2020, the Western Cape High Court found that the tobacco ban had breached a number of human rights under the constitution and that the ban was unlawful because it was not “necessary” to prevent escalation or alleviate effects of the disaster (the coronavirus pandemic) as required by the Disaster Management Act.
The ban has not been in effect for a while, and President Cyril Ramaphosa said that the national state of disaster would soon be lifted as well, according to his state of the nation address. It is not guaranteed that another state of disaster would not be declared due to new and potentially more harmful Covid-19 variants, however. The court decision on the tobacco ban is important, then, because it would set precedent for future states of disaster.
“In a situation of evolving scientific knowledge, and with infection numbers rising and likely to continue to do so, the government had to take a cautious approach,” said Andrew Breitenbach, counsel for the government, arguing that the court judgment should not stand.
The goal of the ban was to relieve the strain on the healthcare system, and Breitenbach argued that the science at the time showed that smokers had higher rates of hospitalization and severe illness from Covid-19.
Alfred Cockrell, counsel for BAT South Africa, said it that the government needed to show that stopping smoking during lockdown would reverse or lessen the progression of Covid-19, not just that stopping smoking had an immediate “general good” effect.
“The point is that the dangers from cigarette smoking result from long-term chronic use,” Cockrell said.
More than 18 months after South Africa lifted its tobacco ban, the country is still coping with elevated levels of illicit cigarette sales.
March 4, 2022
Trump Officially Withdraws From WHO

It’s official. The Trump administration has withdrawn the United States from the World Health Organization. The news comes as the Covid-19 pandemic continues to grip the globe and infections spike across the U.S.
Withdraw requires a years notice, so it will not go into effect until July 6, 2021. This raises the possibility the action could be overturned.
Congress received formal notification of the decision on Tuesday, more than a month after President Donald Trump announced his intention to end the U.S. relationship with the WHO and blasted the multilateral institution as a tool of China, according to an article in USA Today.
Democrats said the decision was irresponsible and ill-considered, noting it comes as the pandemic is raging and international cooperation is vital to confront the crisis.
“This won’t protect American lives or interests – it leaves Americans sick & America alone,” Sen. Bob Menendez, the top Democrat on the Senate Foreign Affairs Committee, tweeted after receiving the White House’s notification. “To call Trump’s response to Covid chaotic & incoherent doesn’t do it justice.”
The formal withdrawal comes as the United States nears 3 million reported coronavirus cases and more than 130,000 deaths, according to Johns Hopkins University data. Globally, there have been 11.6 million cases and almost 540,000 deaths, according to the story.
Trump and his advisers have blasted the WHO for failing to press China to be more transparent about the scope and severity of the Covid-19 outbreak, which began in Wuhan, China.
Trump has said that China “has total control” over the WHO, even though it contributes far less than the US to the health organization’s budget. The U.S. has contributed approximately $450 million dollars a year, according to the story.
Amanda Glassman, a public health expert and executive vice president of the Center for Global Development think tank, noted the world doesn’t just face today’s threat of Covid-19 but also the threat of future pandemics, which are more likely because of increased zoonotic transmission.

July 7, 2020
The Unlikely Savior?
Smoking, nicotine and Covid-19: What is going on?
By Clive Bates

Photo: maja7777 from Pixabay
The world is enduring the worst crisis since the 1940s, and people are desperate for some good news. Could that good news come from a most unlikely source? Could smoking, or more precisely nicotine, have benefits in controlling the symptoms of Covid-19, the disease caused by the coronavirus SARS-CoV-2? There is emerging, though inconclusive, evidence that nicotine may have protective effects in preventing severe symptoms of Covid-19. If this turns out to be true, it would be extraordinarily good news—nicotine in its medical and recreational forms is widely available and easily affordable.
The picture is quite complicated, but discussion should start with clarity about which outcomes may be improved. There are at least four relevant stages: infection (simply contracting the disease, often with mild symptoms); hospitalization (serious symptoms); admission to an intensive care unit (ICU) (life-threatening symptoms); and finally death. If there is a protective effect, the data suggest it reduces the number reaching hospitalization. For the purposes of fighting the pandemic and returning to economic normality, preventing the onset of symptoms serious enough for hospitalization is the highest priority.
There are two main strands of evidence that suggest a protective effect: the apparent underrepresentation of smokers in Covid-19 hospital admissions and evidence from human biology.

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Evidence from Covid-19 hospital admissions
Most Covid-19 studies recording hospitalization and smoking status show smokers are strikingly underrepresented compared to the number that would be expected given smoking prevalence in the population. Being a smoker appears to make it less likely that a Covid-19 sufferer will end up in the hospital. There are many doubts and questions about the reliability of this data, but the effect is remarkably consistent across countries where the data is available. Greek cardiologist Konstantinos Farsalinos and his collaborators examined the literature available on April 25, 2020, to assess the smoking status of those entering the hospital with Covid-19 (see Farsalinos et al., “Prevalence of Current Smoking and Association with Adverse Outcome in Hospitalized Covid-19 Patients: A Systematic Review and Meta-Analysis”).
An unexpectedly low prevalence of current smoking was observed among hospitalized patients with Covid-19. Hospitalized current smokers had higher odds compared to noncurrent smokers but lower odds compared to former smokers for an adverse outcome.
These data suggest that fewer smokers are entering the hospital than we might expect, but once they are admitted, their outlook is worse. This is consistent with other findings showing a worse outlook for smokers once hospitalized. (For example, Vardavas and Nikitara, “Covid-19 and Smoking: A Systematic Review of the Evidence.”)
Notably, in the largest study that assessed severity, there were higher percentages of current and former smokers among patients that needed ICU support, mechanical ventilation or who had died and a higher percentage of smokers among the severe cases.
These authors did not draw attention to just how few smokers there were among the patients to start with—but that is the remarkable fact picked up by Farsalinos and his group. So, what could be going on? Farsalinos and colleagues have a theory:
“The possibility that nicotine may have a protective effect in Covid-19, which may be masked by smoking-related toxicity and by the abrupt cessation of nicotine intake when smokers are hospitalized, should be explored.”
So, it may be that nicotine is protecting smokers up to the point where they are admitted to the hospital. However, all respiratory wards require smoking cessation on admission, so smokers make an abrupt withdrawal from nicotine use. To understand what is happening, it is necessary to separate the effects of decades of smoke exposure, which may be causing underlying vulnerabilities through cardiovascular disease and other stresses, from the effect of nicotine, which may be protective. These two effects of smoking—one harmful, one protective—could be pushing against each other and may become relevant at different points in the progression of the disease.

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Evidence from human biology—does nicotine suppress the “cytokine storm”?
So far, this could all be wishful thinking based on poor quality data. However, the second line of evidence means it should be taken very seriously. This provides biological plausibility based on cell-level insights into the mechanism through which nicotine could provide a protective effect. A range of papers have explained the possible mechanism, starting with the renowned French neuroscientist Jean-Pierre Changeux who pioneered research on nicotine receptors in the 1970s (Changeux et al., “A Nicotinic Hypothesis for Covid-19 with Preventive and Therapeutic Implications”). This was followed by an in-depth peer-reviewed publication by Farsalinos and colleagues (Farsalinos et al., “Nicotine and SARS-CoV-2: Covid-19 May be a Disease of the Nicotinic Cholinergic System“).
These theories converge on the role nicotine can play in suppressing the most dangerous symptom of Covid-19, a dramatic immune system overreaction to the virus, a so-called “cytokine storm.” Inflammation is a normal response to infection as the body responds with a series of immune reactions to neutralize invading pathogens. In this model, it is not the virus itself that does the harm but the body’s own immune system triggered by the virus into an excessive response that causes extreme inflammation and damage to the lungs or other organs and ultimately death.
These technical papers suggest that severe Covid-19 symptoms arise from damage to the internal signaling and control system known as the cholinergic anti-inflammatory pathway. This system originates in the brain and makes use of the Vagus nerve, the signaling chemical, acetylcholine and nicotinic acetylcholine receptors throughout the body. Under this hypothesis, nicotine moderates the malfunctioning of the anti-inflammatory control system by inhibiting the release of pro-inflammatory cytokines.
While Covid-19 is clearly new, the idea that nicotine may have therapeutic effects, including on inflammatory diseases rooted in the brain, is not new. In May 2020, researchers at Oxford University published a new finding from the 65-year study of British doctors started by Sir Richard Doll and Sir Austin Bradford Hill in 1951 confirming years of research suggesting smoking (in practice, nicotine) has a protective effect against Parkinson’s disease (Mappin-Kasirer et al., “Tobacco Smoking and the Risk of Parkinson Disease”). A 2013 paper by the U.K.’s bioweapons defense lab at Porton Down highlighted the role nicotine could play in controlling the cytokine storm and moderating some severe respiratory diseases (D’Elia et al., “Targeting the ‘Cytokine Storm’ for Therapeutic Benefit”).
“Nicotine […] is able to suppress the production of proinflammatory cytokines by mimicking the binding of acetylcholine. It has been demonstrated that nicotine can selectively reduce the inflammatory response in a number of infection scenarios, including Legionella pneumophila and Chlamydia pneumoniae infection.”
Following their observation that smokers were underrepresented in Covid-19 admissions to the Pitie-Salpetriere Hospital in Paris (Miyara et al., “Low Rate of Daily Active Tobacco Smoking in Patients with Symptomatic Covid-19”), French researchers are now planning a clinical trial of nicotine-replacement therapy for Covid-19.

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Where does that leave policy and practice?
With the Covid-19 pandemic raging everywhere, policymakers are in a position analogous to trying to repair an aircraft while flying it. It is not known for sure whether nicotine is protective against the more severe forms of Covid-19, just that it is suggested by data on hospital admissions and that it is biologically plausible. Yet decisions made today in hospitals and advice given to smokers and vapers could have life-saving or life-threatening consequences. The usual approach to such uncertainties would be to wait for more evidence and then make better-informed recommendations, but that is no different in practice to acting as though there is no protective effect.
It would be wrong to advise people to continue to smoke because of the longer term health implications and the underlying vulnerabilities to Covid-19 caused by smoking. But if people are advised to quit nicotine, they may be losing a protective effect at the point of their greatest vulnerability. The way to resolve this dilemma is to make a working assumption about the effect of nicotine based on what is known and what remains uncertain taking account of the consequences of making the wrong assumption. Recommending continued nicotine use in a situation where it turns out there is no protective effect does not seem likely to cause serious problems. Conversely, advising or requiring nicotine users to stop using nicotine only to find later that nicotine was protective may cause lethal harm. On a precautionary basis, policymakers should probably assume there is a protective effect until proven otherwise.
It follows that health professionals should advise smokers to quit smoking using any method that works but to maintain the use of nicotine—either by using nicotine-replacement therapy, vaping or some form of low-risk noncombustible tobacco—at least until there is a more complete understanding of the role nicotine plays. Vaping as an alternative to smoking should be encouraged not banned or locked down. What about people like me, who have never used nicotine and have no wish to—what should we do? Well, if I came down with Covid-19, I’d consider trying nicotine as a precautionary measure. What is there to lose?
Clive Bates is the director of Counterfactual Consulting and the former director of Action on Smoking and Health (U.K.).

June 1, 2020
Grace Under Pressure
Industry leaders relate how they have been coping with the coronavirus pandemic.
By Stefanie Rossel

Photo: Taco Tuinstra
Roughly six months have passed since China announced the outbreak of a mysterious lung disease, and Covid-19 is still raging around worldwide. On its journey around the globe, the virus has prompted governments to introduce strict measures to curb infections. Entire industries have been paralyzed, supply chains have been disrupted and global travel has been placed into an artificial coma. Under anti-coronavirus restrictions, consumer behavior changed in many countries as distribution channels were cut off and the question of what constitutes an “essential business” was hotly debated.
Living up to its reputation, the tobacco industry has so far appeared resilient (see “An Ill Wind,” Tobacco Reporter, May 2020). Amid growing uncertainty, Philip Morris International (PMI) in April announced strong quarterly results, generating net revenues of $7.15 billion in the first three months of 2020, up from $6.75 billion during the same period last year. However, CEO Andre Calantzopolous expected the pandemic to adversely impact PMI’s full-year results. The pandemic, he said, had already severely reduced the company’s duty-free sales, slowed IQOS user acquisition and delayed minimum price enforcement in Indonesia. “We also have to assume that, in certain markets, unemployment and related reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small retailers to operate,” said Calantzopolous.
The company reemphasized that it maintained sufficient inventory of inputs and finished goods and didn’t expect to see a disruption to its supply. According to the press release from April 21, all heated-tobacco unit facilities were operational while manufacturing facilities representing 20 percent of the company’s cigarette production were closed.
British American Tobacco (BAT) and Japan Tobacco International (JTI) provided a similar picture in their first quarter 2020 results. While acknowledging that the impact from the Covid-19 pandemic is difficult to predict, both maintained their full-year forecasts. BAT, which at the end of April stated that most of its factories were open and operating at full capacity, said it expected the global industry cigarette and heated-tobacco product volume to decline by around 5 percent, compared to 4 percent earlier, but maintained its forecast for a 5 percent drop in the U.S.

Iqbal Lambat
Increased demand
Analysts insist the cigarette industry continues to offer a haven in the current uncertain business environment. In a survey of 2,000 consumers, Morgan Stanley found that smoker behaviors and attitudes toward cigarettes appeared unaltered by the pandemic—an observation shared by Iqbal Lambat, president and CEO of Star Agritech International (SAI). Headquartered in Turkey and operating in 40 countries, SAI sources its leaf worldwide and thus has a good feel for the state of the global industry.
“Cigarette consumption has probably increased since social lockdowns were enacted,” says Lambat. “Our clients have also benefitted substantially from this phenomenon. As an example, in Italy at the start of the outbreak, the Italian government shut down all industries in the north in the Vicenza area. Two weeks later, the government declared cigarette production an absolute necessity and allowed cigarette factories to resume production. Our tobacco shipments to these clients have doubled as the factories try to keep up with demand. Demand has also grown with most of our clients worldwide, except in South Africa where the government imposed a complete ban on the sale of cigarettes, tobacco products and alcohol to minimize social gatherings.” The ban was not lifted when South Africa eased its lockdown restrictions on April 24. It is expected that the ban will only be lifted when the country declares a level 2 pandemic versus the current high level 4.

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The global reach of the pandemic is forcing tobacco firms to rethink their supply chains, which increasingly relied on just-in-time deliveries and minimal stock keeping. According to Lambat, SAI was already well positioned for the new operating conditions. “Star is the only leaf merchant in the world that has established tobacco depots within close geographic proximity to that region’s clients,” he says. “We store in these depots the most popular tobacco grades and tobacco derivatives, such as reconstituted tobacco, DIET, CRES, fines and stems for the clients of that geographic cluster.
“As such, we have tobaccos in Antwerp, Belgium, to service the EU; Kostrama, Russia, to service the CIS states; Johannesburg, South Africa, to service Southern Africa; Jember and Malang, Indonesia, to service South East Asia; Busan, South Korea, to service North Asia; and Santiago, Dominican Republic, to service cigar manufacturers in [the] Dominican Republic and Nicaragua.
“These depots are well stocked and replenished. So when the pandemic struck beginning [in] March, we were in excellent shape to continue supplying globally ex-depot. As the industry knows of our stocks’ availability, we even received requests to supply from our depots to new clients whose orders were blocked at origin.”
Several sourcing countries suspended their tobacco auctions due to the coronavirus crisis. SAI experienced disruptions in Argentina, India, Indonesia and China. “There were short temporary disruptions from Brazil,” he adds.
Most of the company’s Indian tobaccos are destined for Europe. “We typically carry a three-month rotating stock for these tobaccos in Antwerp,” says Lambat. “The late starts of auctions in Malawi and Zimbabwe will not affect Star Agritech as, over the years, we have migrated much of that sourcing to Argentina, Brazil and Tanzania.”

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A lesson to be learned
While warehouses will sustain the supply of leaf in the short term, replenishment of raw tobacco will become a challenge as travel restrictions persist. Buying tobacco usually involves the physical examination of leaf quality by the merchant. “This has become a problem,” says Lambat. “Fortunately, we work with excellent suppliers that minimize the risk of the merchandise not being in correlation with the received reference sample on which the order is placed.”
Assessing the future impact of the pandemic on the leaf sector, Lambat recalls the years 2014–2016 when the tobacco industry struggled with severe oversupply. “This was created by major buyers’ ‘bean counters’ who decided that manufacturers should not procure but de-stock to carry one year of inventory versus two years and minimize working capital,” he says. “As I respond to your questions, I am in lockdown in Turkey with most of the world in a similar situation. So this can go on for a long time.”
The lesson companies should learn from the coronavirus crisis, says Lambat, is about security of supply. While multinational manufacturers have the working capital to cope with the disruption, smaller players should consider partnerships with merchants that can ensure non-balance sheet security of supply, he suggests.

Bolstered by sufficient inventory of inputs and finished goods Philip Morris International expected to avoid a disruption to its supply. Photo: Philip Morris International
Two-months’ halt
Home to a state-of-the-art PMI cigarette/tobacco-heating unit factory and several prominent tobacco machinery manufacturers, Italy was among the hardest hit countries in the pandemic. On March 23, the Italian government extended its mandatory closure of nonessential commercial activities to heavy industry.
“The wise decision of our government, which perhaps came a little late, was very useful for the health of our population, and we are seeing and appreciating the good results now,” says Lorenzo Curina, chief operating officer and sales director of Godioli & Bellanti, a company specialized in leaf processing and primary equipment.
But economy is a different story, he notes. Production at Godioli & Bellanti was at a complete standstill for almost two months. “Now we have begun to work again—since April 28 at ‘full steam,’” says Curina. “With [the] corona[virus] being a pandemic, our international clients understood such a situation, and they have adapted to such an emergency. International solidarity!”
Throughout the crisis, Godioli & Bellanti kept in touch with its customers daily. “Thanks to smart working, ourselves and our engineers and our technicians operated locked down at their homes,” says Curina. “We utilized communication platforms to talk about work, to exchange technical opinions and to give each other psychological support in the sense of ‘don’t worry, our company is alive in spite of such an epidemic.’”
Italy’s statistical office estimates the economic damage of the lockdown at around €100 billion ($108 billion) per month in addition to a loss of added value of €27 billion. The country’s government has announced a €400 billion aid program for companies, which may also help some of the tobacco engineering firms affected by the crisis.

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Reviving Italy’s industries
Regarding the impact of the pandemic on his company’s supply chain, Curina distinguishes two phases: the period of deep lockdown and the current reopening. “During lockdown time, everything was slow: couriers, suppliers, providers, bankers,” he says. “Thank God we had in our warehouse most of the components and pieces necessary to continue assembly and production.”
Curina believes it’s to early to judge how the reopening will proceed, but he takes comfort from history. The greatest economic boom of the 20th century, Curina recalls, recurred after one of its greatest disasters—World War II. “I feel that people want to restart, want to work, want to show that they are alive,” he says.
The continuing travel restrictions, however, are an issue for Curina and his sales force as well as for his engineers and technicians. “This is a real problem and will be the last problem to be solved,” he says. “The pandemic is a world problem. Perhaps Italians will be authorized to fly out in the next few months while few countries where our customers live will still be locked down.”
Curina is cautiously optimistic that his country’s economy will recover. “I don’t have a crystal ball but today, Monday, May 4, is the first day we, as Italians, are authorized to begin production again, to open our factories just like before. If, in the next 15 to 20 days, the curves indicating the number of newly infected people and deaths do not rise, we can begin to cautiously think that the worst is over.”

Lorenzo Curina
E-cigarette delivery bottlenecks
The Covid-19 pandemic has also created considerable challenges for the vapor business. Because the pandemic originated in China where more than 90 percent of the world’s e-cigarette hardware is manufactured, the electronic nicotine-delivery system (ENDS) category experienced significant supply chain disruptions early on.
According to a report published by TMA in April, the coronavirus outbreak shuttered factories throughout Guangdong Province—the epicenter of China’s e-cigarette manufacturing industry—between January and mid-February 2020.
What’s more, the pandemic came on the heels of new restrictions on the online sales of vapor products in China to discourage underage access. As a result, many e-cigarette manufacturers were in the process of shifting sales to physical stores just when the pandemic hit. Coupled with the Covid-19 outbreak, the industry was hence dealt two heavy blows in a short time. By April 20, only a few enterprises in the ENDS industry had resumed production.
Horst Winkler
“The majority of technical components is being produced in China,” says Horst Winkler, spokesman of Verband des e-Zigarettenhandels (VdeH), a German association of e-cigarette retailers. “Since the corona[virus] outbreak there already led to extensive limitations and quarantine measures at the beginning of the year, there were delivery bottlenecks even before the pandemic reached Europe. Meanwhile, the China-based companies have recommenced manufacture under strict safety measures and are able to supply [their customers]. However, companies’ dispatch logistics are under enormous pressure, which causes further delays.”
VdeH is in continuous contact with its members in China. “We keep each other up to date with regard to the situation,” says Winkler. “As restrictions are increasingly being eased and the situation in China slowly begins to normalize, we expect the situation to improve in the short term.”
To comply with national regulations, most e-liquids for the German market are produced domestically or in other EU countries. When it comes to hardware, however, most countries depend heavily on China. “The production in Europe and especially in Germany is restricted to a few high-end devices that cannot replace Chinese products—neither in quantities nor in pricing,” says Winkler.

Cigarette consumption has likely increased as smokers cope with greater anxiety and fewer restrictions to indulge while cooped up at home.
Is vaping essential?
Distribution of sales outlets
presented another problem for the German vapor industry during the early weeks of the pandemic. The decision of whether vape shops could stay open because they provide an essential service was made at the federal, state and local community levels, creating a patchwork of inconsistent rules until all shops with sizes up of to 800 square meters were allowed to open on April 24.
“Some retailers tried to compensate for the complete loss of revenues with collection and delivery services. But even in places where such services were possible, only a fraction of the otherwise usual turnover could be generated,” says Winkler. “Nevertheless, it was important to show some presence to regular clients and to enable them to cater to their needs.”
Many vape shops fear for their existence. “This could have been avoided if politics had assessed the meaning of e-cigarette retailers in the primary care of the population correctly from the start,” says Winkler. “Some shops have been closed permanently, but we do not have any concrete data yet. We will probably be able to determine the impact of the crisis only in a few months.”
Without doubt, he concludes, online retail was the big winner. His organization observed a considerable increase in the quantities ordered through that channel—although the gain was partly offset by capacity limitations among shipping companies.
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.

June 1, 2020
Trump Cuts U.S. Ties With WHO, Cites ‘China’s Control’

President Donald Trump said Friday that the U.S. will be terminating its relationship with the World Health Organization. He said that the UN agency failed to adequately respond to the coronavirus because China has “total control” over the global organization.
He said Chinese officials “ignored” their reporting obligations to the WHO and pressured the WHO to mislead the world when the virus was first discovered, according to an AP story.
He noted that the U.S. contributes about $450 million to the world body while China provides about $40 million.
The U.S. is the largest source of financial support to the WHO and its exit is expected to significantly weaken the organization. Trump said the U.S. would be “redirecting” the money to “other worldwide and deserving urgent global public health needs,” without providing specifics.
May 29, 2020
Trump Threatens to Permanently Defund WHO

Photo: Image by Gerd Altmann from Pixabay
U.S. President Donald Trump threatened to permanently end U.S. funding of the World Health Organization (WHO) amid accusations that the agency allowed China to cover up the coronavirus outbreak in the early stages.
Trump stated that the WHO must “actually demonstrate independence from China” and “commit to substantive improvements within the next 30 days,” but Chinese officials claimed that Trump was trying to shift the blame for his administration’s “incompetent response” to the pandemic, according to the Washington Post.
The threat to end WHO funding came after Trump stated that he has been taking hydroxychloroquine as a preventative for Covid-19. Experts have continuously urged people not to take this drug outside of hospitals or clinical trials as it can cause heart problems and other side effects, including death, and has not been proven to help prevent Covid-19 infections. The drug is usually used to treat lupus, rheumatoid arthritis and malaria.
May 19, 2020
Covid-19 Vaccine Ready for Human Trials, Says BAT

Photo: Pete Linforth | PixaBay
British American Tobacco (BAT) said on Friday it is ready to test its potential Covid-19 vaccine using proteins from tobacco leaves on humans, after it generated a positive immune response in pre-clinical trials, reports Reuters.
Once it gets approval from the U.S. Food and Drug administration (FDA) for the vaccine, the company plans to start testing on humans.
In April BAT announced it was developing a Covid-19 vaccine from tobacco leaves and could produce 1 million to 3 million doses per week if it got the support of government agencies and the right manufacturers.
Multiple companies from a variety of sectors have been racing to develop a vaccine for Covid-19, with some of the vaccines already in human trials. Experts have suggested that a Covid-19 vaccine could take 12-18 months to develop.
On Friday, BAT said it had submitted a pre-investigative new drug application to the FDA and that the agency had acknowledged the submission. BAT said it was also talking with other government agencies around the world about the vaccine.
The company said it has committed funds to conduct clinical trials, which it expects to start as early as late June. BAT has reportedly also invested in additional equipment to boost capacity.
May 15, 2020