Tag: Curved Papers

  • Rolling With The Punches

    Rolling With The Punches

    Photo: Republic Brands

    Rolling paper manufacturers benefit from pandemic-related downtrading and moves to legalize cannabis.

    By Stefanie Rossel

    With Covid-19 refusing to clear the stage and Russia invading Ukraine, crisis appears to have become the new normal. For many industries, business as usual ceased when the pandemic broke out two years ago, bringing about an economic slump. Worldwide, consumers have had to cope with lower disposable incomes. Such a development often prompts smokers to switch from expensive factory-made cigarettes to more affordable roll-your-own or make-your-own products—and, indeed, manufacturers of cigarette rolling papers have noted a positive effect on their businesses.

    “Speaking exclusively from a business perspective, we had two extremely strong years with record sales levels,” relates Santiago Sanchez, executive president of Republic Brands in France. “We were fortunate to have our plants running at full capacity as we didn’t have to shut them down for a day. Of course, the health of our employees was a priority, but thanks to the strict sanitary measures taken from day one, we were able to maintain or even increase our volumes.”

    Michael O’Malley, founder and CEO of Curved Papers in the U.S., says his rolling paper sales were up 40 percent last year. “People are just blazing weed like never before,” he says. “And it’s a good alternative among the choices people have made to cope.”

    Lisa Esser, head of corporate affairs and business development at Gizeh Raucherbedarf in Germany, has observed an enormous shift of sales within Europe due to closed borders during the pandemic. While in 2019, almost 20 percent of cigarettes consumed had been nonduty paid, it was “only” 14 percent in 2021, she points out. The development was similar for rolling tobacco. However, while the absolute share of duty-paid tobacco sales in Germany grew during the pandemic, this does not reflect more tobacco consumption in absolute terms. Rather, says Esser, a large share of the previous cross-border sales has returned to national retail.

    Curved Papers’ sales jumped 40 percent in 2021.
    (Photo: Curved Papers)

    Rising Production Costs

    Santiago Sanchez

    The numerous pandemic-related disruptions, including container shortages and raw material price increases, have also impacted suppliers of rolling paper. The availability of cartons and cellulose have been especially affected. “The vast increases in energy costs are not only hitting us but also our suppliers, who often pass on these costs to us,” says Esser. “There are also considerable challenges in logistics, with much longer lead times and shipping costs partly exploding. We expect price hikes of 10 [percent] to 20 percent across the entire value chain. Nevertheless, our supply of materials has been secured and continues to be of highest priority for us.”

    During the first days of the lockdown, particularly in 2020, Republic Brands was concerned about logistical problems, both in the supply of raw materials and in the shipment of their finished products, according to Sanchez. “Thanks to the strong mobilization of logistics companies, our activities have not suffered in terms of logistics,” he says. “On the other hand, in the second half of 2021, we faced, like all other industries, difficulties in the Chinese supply chain, particularly the shortage of containers. These were just the beginnings of the tensions we are currently experiencing.”

    Curved Papers, which caters mainly to the U.S. and Canadian markets, says it has been able to keep its stocks at the required levels. “Shipping has made us take a hit, but we’re not yet changing our price to the customer,” says O’Malley. While the conflict in Ukraine has not directly impacted his company, the global double whammy of a pandemic followed by the threat of World War III has made it hard to start new initiatives around the world. “It seems a matter of keeping what you have together and trying to respond to demand,” says O’Malley.

    Esser expects a dramatic rise in costs and purchasing prices. “Risk assessment has shown that the pricing situation represents the biggest risk,” she says. “The situation has been exacerbated by the Ukraine crisis. We must contend with difficult conditions and are in close contact with our suppliers to be able to mitigate potential hurdles early on.”

    Republic Brands is present in more than 100 markets and, as a result, feels the impact of the conflict, according to Sanchez. “I will not say anything original if I say that the Ukrainian war, in addition to being a humanitarian disaster in Europe, is significantly affecting all our activities in every sense of the word,” he says. “I have never seen anything like this before. Rising prices [for raw materials] are not the only problem. There is also a lot of pressure on the availability of raw materials. Just as there is a lot of pressure on the availability and consumption of energy. Some companies in our sector or in related industries—cigarette paper, acetate tow, etc.—consume lots of energy and are therefore highly exposed to the risk of increased energy costs. For our part, and even if it is symbolic, we have decided to stop our sales in Russia and Belarus. This is the minimum we could do.”

    Eager to reduce the environmental footprint of their operations, rolling paper manufacturers are increasingly using fast-growing or recycled materials instead of fresh fibers in their products.
    (Photo: Gizeh Raucherbedarf)

    Greening Processes

    Michael O’Malley

    In addition to coping with current challenges, companies are working to become more sustainable. O’Malley, whose rolling papers are manufactured in the Dominican Republic, says his company’s paper comes from Forest Stewardship Council-certified forests and is produced under processes following strict European standards. “We would like to use more recycled material in our packaging,” he says. “We are always innovating.”

    Gizeh, meanwhile, is striving to install sustainable processes in all of its operations. “Improvement is an ongoing project,” says Esser. “The maximum reduction of energy consumption is given high priority. In Austria, for example—our largest production site—we have invested in a photovoltaic system. Besides, we are constantly trying to reduce the use of fresh fibers and instead utilize fast-growing alternatives or recycled materials.”

    Republic Brands, too, is continuously working to minimize its carbon footprint. “An important step has been obtaining the ISO 14001 certification, which confirms the implementation and the effectiveness of an environmental management system. The group and all its employees adhere to a set of common values that are grouped together in an environmental charter, which can be accessed from our website.” The company’s factory in Perpignan, France, and its booklet distribution warehouse are powered by hydroelectric power stations in the Pyrenees and in the Alps.

    Republic has launched a cigarette paper booklet with a CBD-infused gum line under Roor brand in select European countries. (Photo: Republic Brands)

    The Power of Pot

    While the current business environment for rolling papers is far from ideal, new opportunities keep arising as more jurisdictions around the world legalize cannabis. “In countries where legalization has occurred in recent years, such as Canada and the United States, we are seeing a growth in sales,” confirms Sanchez. “The debate is open in many European countries, and now the only question is how soon the legislation on cannabis use will be relaxed,” he says. “We were the first to develop a new product for this category—namely a cigarette paper booklet with a CBD-infused gum line. Under the iconic Roor brand, these products have been launched in select European countries. In addition, one of the products is made from rice paper. Currently, this is the only product containing real rice fiber—from Camargue, France—although many others print ‘rice’ in their packaging.”

    Founded in 2014, Curved Paper started out offering cigarette papers for cannabis consumption. “Eventually, hemp and flax came in as a couple of concerns or interests drove innovation of hemp and other nonwood material-based papers,” says O’Malley. “There is something to the don’t-cut-down-trees thing, of course, though we do it sustainably—but they do make the best rolling paper. The inexorable drive toward lighter papers, which zoomed right past the desirable range for a while there, was accompanied by this diversion away from wood pulp papers.

    “Hemp-based papers are popular as [hemp] is from the same plant as marijuana. The papers commonly called ‘rice papers’ are mostly made from hemp and flax. The term ‘rice’ is from the early days of fine paper centuries ago. Fine paper first came from China and was indeed made from rice. So as Europeans developed printing and the fine European paper we have had for centuries now, they called all fine paper rice paper, and that term of art remains in use till this day not only in rolling papers but in all kinds of paper industries.”

    Curved Paper offers seven styles based on four kinds of paper at two popular sizes, 1 1/4 and KSS. “Our marketing is still only U.S.[-based] and Canada-based, so our focus remains on cannabis,” says O’Malley. “Tobacco is 25 times as big. We have customers in the U.K. and the EU and all over the world, and we look forward to the global market, which is much larger for some of our exact same products. We are not looking to flood the market with a lot of silly products. In the long run, easy, simple and natural are going to be strong qualities to market. While cut corners are making a big move in 2022, our easy-to-roll curved edge is the next-generation solution to the same problem—and our key differentiator.”

    Having recently decided to legalize recreational marijuana (see “State of Euphoria,” Tobacco Reporter, February 2022), Germany is poised to become the EU’s most important cannabis market—although it will likely take years before cannabis will be legally available in the country. Esser welcomes sensible regulation, saying that consumers should have access to less risky, quality-controlled legal products.

    Unlike O’Malley, Sanchez does not necessarily believe that the best rolling papers are made from trees. Many cigarette and RYO paper companies, he says, use other fiber sources, such as hemp, flax, rice and bamboo, etc. These materials, notes Sanchez, are generally not inferior to base tree paper and in many cases cause less pollution.

    He cites the example of Roor, which is already distributed in Germany without referencing cannabis. “We only develop our business in strict compliance with national regulations. However, as soon as legislation is made more flexible, we will develop our strategy accordingly.”

    For O’Malley, European cannabis is a promising horizon. “The way it came from the West Coast here to New York and then to Europe is a prediction we made long ago that is playing out,” he says. “After a rolling papers brand matures, unless there is a major innovation, like introducing a curved version, it often becomes a pseudo-lifestyle brand to engage already loyal customers. This opportunity is huge as the political engagement behind legalization activates communities, as it will in Europe in the coming years and as it will continue [to do] in the U.S. So, even though tobacco is the big opportunity in actual use of the products, the cannabis culture stuff will be rich with opportunities for content creation for rolling paper brands.”

    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 Golden Age

    A Golden Age

    Photos: Curved Papers and Republic Technologies

    The Covid-19 pandemic notwithstanding, rolling papers, blunt wraps and cones are flying off the shelves in some markets.

    By George Gay

    Michael O’Malley

    If you speak about the roll-your-own (RYO) sector with Michael O’Malley of Curved Papers, much of what he says revolves around marijuana, so it is easy to come away with the idea that RYO’s future lies in this direction. But he dismisses this idea, pointing to the huge disparity in volume sales between those of tobacco and those of marijuana, which, of course, favors the former. However, he concedes that, right now, marijuana is making the news and the running, partly by providing what he describes as a “vortex of innovation.”

    I guess this is only to be expected. Tobacco has been on sale legally for a long time while marijuana is only now gaining the stamp of legislative approval in a limited number of jurisdictions. This is the time for marijuana-use research and fast-moving, follow-up innovation, something that has attracted the attention of a wide range of companies, including major corporations involved with tobacco, beverages and consumer packaged goods: companies that are investing directly or indirectly in marijuana and associated intellectual property.

    Overall, the RYO market was steady globally, said O’Malley, but, at the same, it was generating a significant expansion in brands and products because of the entry of marijuana, primarily in North America. In 2017, Canada and Mexico both passed federal legislation on marijuana and, recently, Mexico followed through with full adult use (previously more usually termed “recreational use” to distinguish it from medicinal use), leaving the U.S., by far the largest market, the laggard on federal legislation. However, 17 U.S. states, including some populous ones, had now opted for full legalization while almost every state had a legal medical marijuana program.

    That last point is significant because the dynamics of U.S. state legalization has tended to see medicinal marijuana leading the way before being followed by adult use. In some states that allowed only medicinal use, programs were based on “no flower consumption”—that is, no smoking. However, under pressure from people making use of these programs, and with the support of medical professionals, new regulations and/or legislative amendments have been introduced to allow for smoking to be part of these programs.

    O’Malley, who is based in the U.S., believes the legalization of marijuana will sweep from state to state and will eventually lead the U.S. to align nationally on this issue and broadly with its North American neighbors, despite the existence of considerable resistance in some states and powerful opposition at the federal level.

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    Flying off the shelves

    Even with the situation as it is, O’Malley was moved to say that now was something of a “golden age” for the RYO market, encompassing both tobacco and marijuana. Rolling papers, blunt wraps and cones were all flying off the shelves like never before, he said, notwithstanding the Covid-19 pandemic. In part, this was because, in the U.S., outlets selling RYO products, including convenience stores, gas stations and dispensaries, were largely deemed essential at the outset of the pandemic while smoke shops and head shops had also been open for some time.

    At the time of writing in mid-April, Curved Papers had suffered no supply chain interruptions because of the pandemic and, as a consequence, had been able to absorb an uptick in demand for its products. O’Malley said the legalization of marijuana was attracting new smokers and that many of these were drawn to Curved Papers’ products because their curved edge made it easier to roll a cigarette with inexperienced fingers. At the same time, he added, expert rollers continued to enjoy the “elegant convenience of the easy-to-roll curved edge.” And he is confident about the future, saying that economics and consumer preferences would remain favorable for hand-rolling.

    This confidence is steadfast even in the light of the emergence of machines capable of producing cylindrical joints resembling tobacco cigarettes. In fact, O’Malley sees the products of these new machines, some of which are expected to be launched this year, as providing competition more for the products of the knockbox machines used for filling cones than for hand-rolled cigarettes. “These new machines will not eliminate rolling joints,” he said. “We see them as complementary to and supportive of our markets.” Smoking the flower had survived the onslaught of speculative product introductions in the past, he added, including that of vaping devices.

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    Ancillary products

    While recent developments have seen the introduction of a lot of new products and product categories, O’Malley points out that rolling papers still comprise the biggest of the ancillary products in both tobacco and marijuana. But this should not be interpreted as meaning that O’Malley is anti-new developments or anti-technology. He describes Curved Papers as being an innovative company with a soon-to-be-announced development that will have an impact on how rolling papers are made in the future.

    For the time being, however, the company is content to remain a supplier of an ancillary product that doesn’t become involved directly with marijuana plants and therefore doesn’t become tied up with the accompanying regulations.

    However, it has consulted with companies that are so involved, including those researching CBD rolling papers and marijuana wraps. And, O’Malley said, because sustainability was a core value for Curved Papers, it had collaborated in the field of so-called hemp plastic, from which it would like to see produced a truly recyclable “doob tube,” which, for the uninitiated such as me, is a container in which to keep pre-rolled joints.

    Finally, O’Malley mentioned that while it was difficult to predict how U.S. relations with China would develop, there were likely to be implications for the RYO sector. China-made rolling papers had fueled a previously unseen white label market that had undercut European suppliers on price and that was continuing to narrow the gap on quality. But that surge might be slowed if East-West relations chilled during the next decade, and it was possible that the positions taken by the U.S. and the EU on China might differ, leaving the U.S. more isolated. In that case, he said, it would be interesting to see if product manufacturing returned to the U.S., even in the case of ancillary products such as tobacco rolling papers. “We see a possible window opening, again aided by developments around marijuana,” he said.

    Environmental considerations

    Santiago Sanchez
    Santiago Sanchez

    For the time being in Europe, one of the main concerns of the RYO sector is the EU’s Single-use Plastics (SUP) directive, which Santiago Sanchez of Republic Technologies International (RTI) described as almost surreal. He said he agreed that the use of plastics should be restricted because the damage being done to wildlife was immense and the situation had to be reversed. And Republic was committed to playing its part in protecting the environment, he added, as was evidenced by the company’s rolling-papers booklet factory, which, since the beginning of last year, had been running only on “green electricity.”

    Nevertheless, Sanchez is concerned that the SUP regulations are not realistic in that the period given for their implementation is unreasonable. Under the regulations, suppliers of filters marketed for use in combination with tobacco products are required to have printed on their packaging “plastic in filter,” a legend that must be rendered in the language or languages of each EU member state on which these products are sold. Of itself, this might not have posed a problem, but the text was published officially only in March, and products must include this message if they are “placed on the market” after July 3. Additionally, it is not clear what is meant by “placed on the market,” and the EU, at the time of writing, was yet to clarify the term.

    Sanchez said that major industries could not work with such short timeframes, which eventually could lead to a situation whereby manufacturers might have to destroy products that fell foul of such timeframes. In this event, it was possible that the regulation would, bizarrely, lead to a waste of energy and raw materials, not to mention the financial loss.

    One area where Republic had been concerned about the possibility of cost-induced losses has not come to fruition, however. The uncertainty over Brexit meant the company had had to play safe by placing additional stock on the U.K. market so as to avoid the possibility of product shortages in the shops. But whereas successive delays in the implementation of the Brexit accords forced the company to keep such additional stocks for quite some time, in the end, procedures worked quite smoothly, and Republic was not negatively affected by Brexit apart from some additional costs engendered by the necessity of producing extra paperwork. Currently, the company is bringing down its U.K. stock levels to normal levels.    

    Meanwhile, the Covid-19 pandemic seems to have caused a significant increase in sales in all of Republic’s product categories. Whether consumers smoked more due to the stress, whether they switched to cheaper products or whether both phenomena were in play, the result has been an increase in demand for the company’s products. A big factor here, of course, was that these products were distributed by major chains and tobacco shops, which were declared essential almost everywhere, which meant the public had access to smoking items.  

    In most of Europe, meanwhile, people don’t have easy access to marijuana as many do in North America, and most of those who do cannot smoke it legally. But Sanchez recognizes there is a boom in progress in North America and notes that this development could spread. Even in the U.K., where even medicinal marijuana is generally frowned upon, the mayor of London is launching a consultation; though, already, the central government has declared this is not a matter for London alone.

    In general, Sanchez said, demand for marijuana-related products was increasing and, in his opinion, would continue to do so. Companies, he added, should adapt to the new situation by taking advantage of the opportunities. “And in this sense, RTI is glad to confirm that it will launch shortly in selected markets a new range of rolling papers with CBD-infused natural gum,” he said. “It will be the first of its kind, and we are extremely proud of this development with a patented system that will bring a plus to marijuana consumers.”

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    In fits and spurts: Is the predicted growth in RYO sales sustainable?

    I’m told that the value of the global roll-your-own (RYO) tobacco product market is roughly about one percent of that of the all-embracing, global tobacco product market, but according to a February press note promoting analysis by Grand View Research, while the total product market is expected to expand at a compound annual growth rate (CAGR) of 1.8 percent from 2021 to 2028, the RYO market is expected to expand during the same period by a CAGR of 4.2 percent.

    This is positive news if you’re in the RYO business, especially if you are exclusively in that business. But before you start to cheer, it might be worthwhile spending a minute or two examining the reasons given for the predicted, relatively fast rise in RYO product business.

    “The rising consumption of [RYO] products among females and students is fueling market growth over the world,” the press note said. “The adoption rate of the product is increasing among the youth in major economies, including the U.S. Moreover, the financial stress caused by the Covid-19 pandemic has encouraged numerous smokers to shift from factory-made cigarettes to hand-rolled cigarettes due to the cost advantage of roll-your-own … tobacco products.”

    Although the Covid-19 pandemic might be seen as something exceptional, the reaction of smokers to the financial stresses that it has caused is anything but exceptional. It has been well documented in the past that, outside the core of RYO product consumers, there are smokers who move from factory-made cigarettes to RYO products and back again on a schedule that conforms roughly with the relative prices of RYO and factory-made cigarettes and with the health or otherwise of their finances, which might change according to their personal circumstances or local, national or global events, such as the economic hit caused by Covid-19. So the boost to the value of the RYO market that can be laid at the door of the pandemic is likely to evaporate if or when the virus is beaten, tamed or becomes part of the family, as with influenza; though, admittedly, with the current lack of attention to prevention, it’s always the case that another pandemic-inducing virus could be just around the corner.

    The other “problem” with the stated reasons for the predicted growth in the value of the RYO market is that they include rising consumption of such products among women and students around the world. Those opposed to tobacco consumption, especially the peculiar group that comprises people who seem to want tobacco manufacturer profits to be maintained as high as possible, will jump on this information as being indicative of the wicked nature of the RYO industry. In addition, the idea that RYO products should be sold around the world when, in the past, they have been confined largely to some specific geographical locations will not go down well. At the same time, even most of those championing sex equality will rail against any shift toward women of what has traditionally been a male-dominated habit. And, well, better we all fall down dead than a student or youth should be seen puffing on a rollie.

    What we have here is ammunition for those wanting to raise taxes on RYO products to the point where the cost of RYO smoking becomes as ridiculously high as that of factory-made cigarette smoking—all in the cause of helping the RYO smoker of course.

    It won’t help that the press note says the market for RYO filters will outperform that for other RYO products, with a 4.7 percent CAGR between 2021 to 2028, in part at least because of the introduction of biodegradable or environmentally friendly filters. Many people question whether cigarette filters perform any useful purpose beyond keeping tobacco out of the mouths of smokers, and they worry that filters tend to encourage smokers to keep smoking by giving them, in the view of those opposed to filters, a false sense of harm mitigation.

    But if there is one thing that is likely to raise the blood pressure of people opposed to smoking more than filters, it is flavors, and the report apparently describes how flavors are helping to propel the increase in the market for RYO products. And it gets worse. Flavors, different sized products and attractive packaging are said to be combining to propel a global demand for premium RYO products, an idea that will surely make it increasingly difficult to sell the idea that RYO is aimed largely at financially impoverished smokers.

    None of this is to say that the report’s authors should have shied away from describing what they see as the likely drivers of the market for RYO products; it’s just an interesting parallel to the phenomenon encountered by quantum physicists—that it is not possible to measure stuff without disturbing it. —G.G.

     

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.