Headquartered in Istanbul, the company has begun constructing a reconstituted tobacco factory in Bizerte, Tunisia. The new facility will be the company’s fourth such operation worldwide.
Comprising two plants with an annual capacity of 1.2 million kg each, the factory is the first of its kind in the region. The facility will serve the domestic market and may expand its business to serve customers in Morocco and Algeria, depending on the success of the operation.
Star Agritech expects the new factory to be operational by the middle of 2023. Prior to announcing the new recon facility, Star Agritech established offices in Tunisia, Egypt and South Africa. The Tunisian office will assume responsibility for Star’s business in north Africa, the Sahel and west Africa.
In November 2022, Star Agritech established Star Agritech Commodities Trading in Yaounde, Cameroon, to strengthen its cigar leaf growing and sourcing operations in Bartouri and Bertoua. The Cameroonian facility will also implement sourcing at the farm gate for Cameroonian cacao and coffee.
In December, Star Agritech set up shop in New Delhi to further develop its sourcing of Indian tobacco. In the same month it incorporated Star Agritech Zimbabwe to enter the domestic market for flue-cured Virginia tobaccos. Star Zimbabwe will participate in the 2023 marketing season, which kicked off March 8.
Meanwhile, Star Agritech has set up a company in Norfolk, Virginia, USA to supply the North American market with tobacco and tobacco derivatives.
The company believes its nano fiber reconstituted tobacco, which can help cigarette manufacturers reduce their products’ tar and nicotine levels, has considerable potential in the United States, given the Food and Drug Administration’s intention to mandate reduced levels of nicotine in tobacco products.
Reconstituted tobacco can help cigarette manufacturers reduce waste and control cost. It is also a useful tool for product design. Most recently, recon has played an instrumental role in the development of tobacco-heating products. Perhaps less well known are the further environmental gains that have been brought about by refining reconstituted tobacco processes. Tobacco Reporter spoke with representatives of IOTO and SWM to discuss the latest developments in the field.
Bruno de Veyrac
A Diminished Carbon Footprint: SWM Reduces Its Dependence on Fossil Fuels
In August, the Physical Science working group of the International Panel on Climate Change (IPCC) published its contribution to the Sixth Assessment Report of the IPCC, and it made scary reading. At the same time, however, it helped reinvigorate the environmental debate and encouraged us all to run informal audits on our own carbon footprints and those of the organizations, companies and industries with which we are associated.
An environmental audit of the tobacco industry would prove to be incredibly complex, but one thing is obvious: the industry’s positive developments are often brought about by a desire to save costs. And one of the prime examples of this has been seen in the development of reconstituted tobacco, which is formed largely from tobacco that would otherwise go to waste.
This is well known. But what is probably less well known is that, during the 40 or so years the industry has been using reconstituted tobacco, further environmental gains have been brought about by refining reconstitution processes. In answer to a question posed during an email exchange in August, SWM said that it had decreased its CO2 emissions by 140,000 tons during the past six years following the installation during 2014 of a biomass boiler at its LTR production site in France. That is apparently the same environmental advantage as would be achieved by cancelling 140,000 round-trip flights from Paris to New York.
According to plant manager Antoine Uzu, the biomass boiler, which has reduced the plant’s dependence on fossil fuels, operates on locally sourced wood harvested from sustainable, well-managed forests and supplies the steam needed to operate the plant’s machines 24 hours a day. Additionally, the hot water generated during the production process is used for heating some of the company’s buildings, and SWM’s LTR production site strategy is to continue to reduce its fossil-fuel consumption until, within two years, it will have all of its buildings heated using renewable energy—what would otherwise be thermal losses from its renewable energy-driven process. And, as part of its global Operational Excellence program, it is studying whether it would be possible to use by-products of its own manufacturing as fuel for the biomass boiler, an exciting prospect that would reduce its waste production while increasing the share of renewables in its energy consumption.
In summary, what you have here is a process largely driven by renewables in which tobacco that would otherwise have to be disposed of is being reconstituted and returned to the tobacco manufacturing process, and the prospect that the waste from the reconstitution process will be used to help drive that process. Little wonder then that Bruno de Veyrac, director of NGP [new-generation products] & Recon at SWM, described the reconstitution process as working on the principles of the circular economy by adding value to tobacco that would otherwise be difficult to use by providing for a better control and specification of traditional tobacco products, and by enhancing the tobacco so that it can be used as the raw material for reduced-risk, heated-tobacco products (HTPs).
SWM has decreased its CO2 emissions by 140,000 tons following the 2014 installation of a biomass boiler at its LTR production site in France. (Photo: SWM)
Another way in which reconstituted tobacco might be thought of as contributing to the positive environmental credentials of the industry is that it can be used in traditional-cigarette manufacturing facilities without the need for modifications, and it allows companies to start manufacturing HTPs using as much as possible of their existing assets. In part, this is because it is delivered in the same sizes of lamina and strips as is raw tobacco and in the same C48 cases. But it is also because of the advantages that have accrued from SWM having upgraded the quality standards of its LTR factory and having invested significantly in its analytical laboratory.
Meanwhile, special reconstituted tobacco products have been developed to help smaller manufacturers move more easily into the production of HTPs by making it unnecessary for them to undergo major research and product development programs. Bruno Stefani, product manager of heated-tobacco products at SWM, said his company had developed a portfolio of ready-to-use augmented tobaccos, each of which had been developed using the company’s expertise in aerosol generation—expertise that had been built up during a seven-year research and development program and that was based on the selection of the right tobacco grades and their processing into high-quality materials.
SWM’s reconstituted-tobacco filler substitute Nexfill allows manufacturers to replace part of their filler tobacco and offers security of supply at a time when deliveries of raw material might be interrupted.
The major use of reconstituted tobacco remains, of course, as a component of traditional cigarette blends where it is used to help with blend design and in contributing positively to smoke delivery controls. De Veyrac pointed out that reconstituted tobacco was a convenient tool to help manufacturers better comply with existing regulations and to help the industry prepare for more demanding regulations in the future.
And as de Veyrac pointed out, such future regulation could include a requirement by the U.S. Food and Drug Administration that nicotine deliveries are tightly controlled. Given such a situation, he said, reconstituted tobacco could be used to help reduce nicotine deliveries. The key advantage of SWM’s reconstitution process, which is based on the paper-making process, was that it worked on the basis of separating the fibers and the extract, and then adding back the extract, at which point various compounds, such as nicotine, could be removed or their level controlled. Otherwise, other reconstituted botanicals with no nicotine could be added to blends, alone or in combination with reconstituted tobacco.
Specifically, SWM offers two reconstituted-tobacco filler substitutes that were launched two years ago under the name Nexfill, one lemon-style and one orange-style flue-cured Virginia product. De Veyrac said these products had been popular from the start because they allowed manufacturers to replace part of their filler tobacco but that they had come into their own recently because they offered security of supply at a time when deliveries of raw material might be interrupted, such as during the current pandemic. Two other Nexfill products are on their way. Nexfill Oriental, which has been developed recently, and Nexfill Burley, which is still under development.
Not surprisingly, given the above, de Veyrac seems confident about the future. The flexibility of the reconstitution process meant that it was capable of helping the tobacco industry meet the challenges it was facing with regard to the need for waste management and recyclability, he said. SWM today offered a wide range of products for the manufacture of cigarettes, cigars, cigarillos and NGPs. It had also developed its product and service portfolio, which included prototyping and scientific support in developing HTPs. From the new NexFill family of grades to special grades for HTPs, and reconstituted botanicals, innovation is to the fore more than it ever has been. —G.G.
Hemp cut rag (Photo: IOTO)
Herbal materials present new opportunities for reconstituted products.
It would be wrong to give the impression that homogenized herbal materials make up anything but a small fraction of the market for the various reconstituted plant-based products that, mostly and traditionally, have been used in tobacco production. Nevertheless, it is difficult not to become caught up in the buzz that surrounds these materials.
In the past, reconstituted tobacco has been the utilitarian product par excellence. It has played all manner of important—sometimes vital—roles in the development of tobacco products, most recently in respect of heat-not-burn (HnB) products, but it has done so largely out of sight; it has tended, for various reasons, to hide its light under a bushel.
Reconstituted herbal materials, however, partly because of their range and, sometimes, their rather exotic constituents, but mostly perhaps because they offer a wealth of new opportunities, seem to be destined for the spotlight. During an email exchange earlier this year, Helder Tullio, director of operations at IOTO International, the U.S.-based and Brazil-based manufacturer of homogenized wrapper, cut filler and binder for the smoking industry, told Tobacco Reporter that his company had already manufactured herbal sheets from many different materials, including yerba mate, chamomile, sage, cocoa, lemongrass, coffee, hibiscus, clove, stevia and black, green and white tea. “We can produce herbal blends according to our customers’ demands,” said Tullio. “IOTO is committed to partner with our customers for the development of reconstituted herbal products according to their needs. Some herbal materials we have manufactured were suggested by our customers.”
This, of course, raises a question about what determines whether a particular herb can be made into a homogenized product. Naturally, it has to be readily available in big enough quantities, but are there other factors, such as fiber structure? “The cell wall composition and fiber structure are the main factors that determine the conversion of the herbal materials into reconstituted sheets,” said Tullio. “However, due to our process flexibility and expertise to adapt our formulas, we have succeeded even when using soft materials, such as hibiscus flowers.”
One of the things that I found most exciting about the availability of such a range of reconstituted herbal materials and the potential for expanding that range was the fact that, in a press note earlier this year, IOTO talked of being able to accommodate smaller initial production runs. This clearly has the potential to attract entrepreneurs who could take such materials into new markets and new areas. In fact, Tullio said that IOTO could work with production runs of as low as 50 kg, which would help small and new companies get a foot on the ladder leading to increasing volumes.
The press note issued by IOTO earlier this year announced that the company had expanded its herbal offerings to include U.S.-produced premium reconstituted hemp sheet. Demand for reconstituted hemp wrappers has been increasing significantly in the U.S. and it is fortunate that, due to its high fiber content, hemp is easily converted into homogenized sheet. Additionally, there is a plentiful supply of hemp in the market, and IOTO’s process can accommodate different parts of the hemp plant, such as its flowers, leaves and stems.
“All the hemp materials used by IOTO are tested for THC content, heavy metals, residual pesticides and presence of microbes to guarantee the best quality products to our customers,” said Tullio. “A full cannabinoids spectrum analysis is also performed to guarantee the highest quality of hemp.”
Testing the hemp for THC content is important to ensure that the level is below the legal definition of marijuana because IOTO is based in North Carolina where marijuana is not legal. However, given the similarities between hemp and marijuana, the company says it will be able to process marijuana when and if it is made legal there.
IOTO can provide reconstituted hemp on bobbins for use in the production of wrappers and cones, and the company can provide it in square sheets, threshed sheets and cut rag for use as filler materials. In addition, since IOTO’s process is patented, it is able to sell its equipment and license customers to produce their own homogenized sheets.
So what is the outlook for reconstituted hemp? Well, according to Tullio, demand will certainly grow in every country in which hemp and or cannabis is legalized. Before hemp was an alternative, tobacco and paper were the rolling products of choice for most RYO smokers, he said. But, once legalized, hemp naturally became an alternative because hemp wraps provided a flavorful, slower burn for hemp and cannabis users. Hemp wraps offered the advantage of retaining the terpenes and CBD naturally present in the plant, and they were being offered in the market in a variety of flavors, such as grape, pineapple, lemon and lime.
The reconstituted herbal sheet market is seen by IOTO as a growing one, not only in respect of hemp cigarettes but also for other nontobacco products, such as cocoa and tea. But Tullio said it was already a very competitive market, and to thrive in it, companies were adding a variety of flavors to their herbal products as a means of differentiating them.
Meanwhile, originally used as a tool to reduce waste and costs during cigarette production, reconstituted tobacco is now a key component of blends, in no small part because it can help manufacturers regulate nicotine levels and the chemical composition of smoke in line with the restrictions placed on tobacco product delivery levels. It can be used also as cigar binders and wrappers.
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.
IOTO will leverage its experience in tobacco to serve the hemp industry. (Photo courtesy of IOTO)
IOTO International, a U.S. and Brazil-based manufacturer of homogenized wrapper, cut filler and binder, has expanded its Yerba Mate, Chamomile and other herbal homogenized sheet offerings to include premium reconstituted hemp sheet.
Utilizing qualified and tested hemp flower, leaf or stem supplied by customers (or directly sourced locally by IOTO), the company is now able to offer customized manufacture of hemp sheet to the specific herbal content requirements of its clients.
“Demand for hemp smoking wrappers in the USA has increased exponentially over the last two years as brand developers have brought novel hemp cigarettes, cigars, hemp wrappers and hemp cones to the market,” said Helder Tullio, director of operations at IOTO, in a statement.
“Unfortunately, the majority of the hemp wrap available today is generic and not crafted to meet the specific smoking qualities required by brand owners.
At IOTO, we are set up to run both small-scale and high-volume production, and we are able to meet the specific formulation needs of the client.
We can help make smaller brands more viable and give them real points of differentiation.
“Given our scaled manufacturing approach, we can work with smaller initial production runs and ultimately grow with brand owners as sales volumes expand. In effect, we can help make smaller brands more viable and give them real points of differentiation from the generic hemp wrapper offerings that are in the market today.
“The IOTO hemp wrapper is a highly durable hemp sheet, and we believe our manufacturing process gives us a distinct edge over competitors and delivers a superior quality hemp sheet for clients. In addition, IOTO’s capabilities in flavor development also help our customers meet their targeted taste profile requirements when making flavored hemp sheet.”
Garbuio has developed a new process for making reconstituted leaf tobacco.
By Stefanie Rossel
With the advent of heated-tobacco products (HTPs), reconstituted tobacco leaf (RTL) experienced a renaissance. The consumables of HTPs require a dedicated form of recon, custom-made from carefully blended tobacco leaves. Invented in the 1950s to save the valuable raw material by combining remnants of virgin tobacco during production, recon is today used in the tobacco blend to reduce the filling cost for cigarettes, cigars or of pipe and smoking tobacco blends. It also plays an essential role in cigarette blend design. Enriched with cloves for kretek cigarettes or containing hemp components, RTL even allows for the creation of completely new products.
There are several methods to produce reconstituted tobacco. Next to the paper-making technique, there is the nano fiber technology and a process called band cast, which is also known as slurry-type recon. All recon types can be used in HTP consumables. Paper recon and slurry recon are currently the most widely used forms but require much space and energy to produce, while taste, drying and tensile strength can present challenges.
Now Garbuio, an Italian specialist in primary machinery and part of the Hauni Group, has developed an alternative technology. The company has designed a recon plant that works with what it calls the tobacco dust amalgamation (TDA) process, an evolution of the slurry technology. The raw material, which can be tobacco, hemp or clove, is first ground to a powder. Moist components, including glycerin, water and binder, are then added to produce a dough, and cellulose microfibers are added to stabilize the tobacco foil.
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Alexander Dzingel
The latter ingredient is not used in the slurry process. Instead of spreading the thick mass on a metal belt conveyor as would happen during slurry making, it is taken into an extruder where it is pressed into pellets that are transferred into a rolling mill. Under high pressure, rollers flatten it into an even paste before it is dried. “Through this process, we get a tobacco foil with uniform and controlled thickness, which cannot be achieved with the slurry method,” explains Alexander Dzingel, product consultant HTP at Hauni. “Roller spacing can be adjusted exactly. In the future, the main application of recon will be in HTP, for which the accuracy and constancy of material thickness will be decisive. This guarantees consistency in downstream processes and helps to ensure that important product specifications, such as nicotine content, are always within the specified range.”
If used for HTP or wrapping cigars, the rolled recon sheet is wound on a bobbin. Optionally it can be cut into flakes if intended as an add-back for the primary.
Garbuio’s tobacco dust amalgamation technology retains more flavor and uses less water.
Pilot plant for testing
There are a number of other advantages to the TDA process: In contrast to the paper-making and slurry technologies, in which the raw material has a water content of up to 95 percent and 60 percent to 70 percent, respectively, the TDA technology needs little water. The dough contains only 20 percent to 40 percent moisture. As a consequence, the drying process of the mass is significantly reduced—Garbuio’s recon plant works with a dryer instead of a long drying line; preheating processes are unnecessary. Water and energy consumption are hence considerably lower than in other recon technologies, and the plant has a much smaller footprint.
“As the paste dries much faster, there is a much better retention of nicotine and flavor in the material,” says Dzingel. “In other, more water-consuming processes, flavors that one would actually prefer to keep in the recon are partly lost during the long drying phase. Besides, the TDA process uses fewer binders, which reduces their unpleasant influence on flavor during combustion.”
The TDA process provides manufacturers with the option to produce recon in-house instead of buying it from specialized suppliers.
Garbuio has set up a TDA pilot plant at Hauni’s Hamburg-Bergedorf site, which customers can use to try out new products from various starting materials and manufacture mini-batches for test markets. “Our clients are very interested in the plant—we have had a lot of testing by leading cigarette manufacturers since the line was installed in late 2019,” says Dzingel. “In November, we sold a pilot plant to a customer who sees a lot of potential in producing recon in-house with substantially reduced energy consumption.”
The new plant has a much smaller footprint than that of previous facilities.
Specializing in HTP equipment
Allowing for a material width of up to 300 mm and an output of up to 40 kg per hour, the pilot has been designed for small production volumes (the typical industrial bandwidth would be around 1,000 mm). Capacity, however, can be expanded at any time and adapted to the needs of the location, the company says, so manufacturers can react quickly to changes in the market. Investment and production costs per kg, complexity and energy consumption as well as plant size remain low compared to the paper or cast sheet processes, Hauni claims, whereas filling power is medium to high and flavor excellent.
To further process the tobacco foil produced with TDA technology, Garbuio recommends a special cutting and rod making process, such as in Hauni’s Strip Cut Maker (SCM). It takes the recon sheet off the bobbin and cuts it into long, identical narrow strips with a width of 1 mm at a speed of 200 m per minute and turns it into rods for further combining of the final product.
“This is important for the construction of the HTP device,” says Dzingel. “The different models come with their own challenges. Some systems heat the consumable from the outside, which makes insertion or removal of the consumable easier and cleaner, since the tobacco does not need to be pushed onto a heating element. However, the tobacco needs to be heated through the paper, the smoldering temperature of which lies under the vaporization temperature of nicotine.
“Other systems use an element that heats the tobacco from the center of the rod. Inserting or removing this heating element can be difficult if the base rods are made purely from unstructured, cut tobacco. “The SCM provides manufacturers with a solution for making stable base rods without loose end. It creates a parallel arrangement of thin recon strips in the base rod segment. This makes it easier to insert and remove the heating element.”
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Hauni is also working on a cross-cut process for its TDA recon, meaning the narrow strips are cut in shorter segments. “By cross-cutting the tobacco foil, you can influence the orientation of the fibers so that they are as parallel as necessary but still a bit more randomly oriented so that they have more filling power,” says Dzingel. The shorter strips can be processed in a way that has more similarity with cigarette making.
The TDA recon plant is only one element in a full range of equipment the company has developed for HTP, ranging from the primary for recon tobacco to base rod making, optional pre-combining, final combining and special logistics. “In short, everything you need for a powerful and efficient THP production plant.”
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.
New applications are creating new opportunities for reconstituted leaf tobacco.
By Stefanie Rossel
While many industries are still suffering the impact of the Covid-19 crisis, the reconstituted tobacco leaf (RTL) sector has remained largely unaffected. RTL suppliers report positive developments and remain optimistic. Also known as homogenized tobacco or recon, RTL was developed by SWM International (SWM) in the 1950s to save the valuable raw material by combining remnants of virgin tobacco during production. Today RTL is used for a multitude of applications.
In addition to reducing the filling cost of various tobacco product blends and reducing waste, RTL plays a vital role in cigarette blend design. What’s more, a dedicated form of recon, custom-made from carefully blended tobacco leaves, is the essential component of the consumables used in tobacco-heated products (THP).
There are several ways to produce reconstituted tobacco. Next to SWM’s papermaking method, there is the nano fiber technology developed by Star Agritech International (SAI) and a process called band cast, which is also known as slurry-type recon. Each of these types can be used in THP consumables.
Bruno de Veyrac
Bruno de Veyrac, SWM’s new generation product (NGP) director, says the RTL industry has held its own in the current challenging business environment. “So far, the Covid-19 pandemic has not affected our customers’ recon demand,” he says. “On the contrary, demand remains very strong during this period. We haven’t faced any supply disruption on both product lines conventional and THP. We have had to be creative to keep all our development programs with customers on track. And the global travel restriction makes it challenging to maintain close contact with our customers as we work to develop new products and to promote our product portfolio. We are working on virtual events to overcome this situation and will be sharing details on these events in the coming weeks.”
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SAI president and CEO Iqbal Lambat says that his company’s recon sales were impacted as many countries locked down. “This resulted in some of our client’s factories completely shutting down for three to four months. As a result, deliveries were delayed.”
Like de Veyrac, however, he remains optimistic. With global consumption of combustible cigarettes declining for years now, demand for recon was shrinking even before the pandemic. Currently, there is a discrepancy of about 50 percent between global RTL demand and capacity, which SWM estimates at 335,000 tons.
De Veyrac believes demand for recon will grow for several reasons. “First, apart from all multinationals and most tobacco monopolies, recon is not fully understood among small[-sized] and medium-sized companies. These companies represent 10 percent of global production. Second, the price of recon is cheaper than most tobaccos in the world. Having a ‘cheaper’ constituent in the blend with substitution rates of 10 [percent] to 20 percent and higher filling power than tobacco lamina drives better blend cost optimization. Third, with increasing legislation on lowering tar and nicotine levels worldwide, recon addition to the blend is one avenue to achieve this without compromising taste and draw.”
According to de Veyrac, recon can follow a different trajectory from cigarette sales as the inclusion rate can be adjusted upward or downward. “Thus it can offset or amplify the impact of the cigarette market attrition rate,” he explains. “This can vary from one customer to another and from one region to another. For the moment, we have been successful in mitigating the cigarette market attrition impact with our footprint in growing segments like cut rag and by promoting innovative products.”
De Veyrac cites SWM’s Nexfill as a success story. “This tobacco product was developed to deliver added value, such as an improved sensory experience, and allows blenders to substitute some tobacco strips thanks to advantages such as consistency, low degradability and immediate availability,” he says.
Since 2014, SWM has a joint venture with the China National Tobacco Corp.
Preparing for China
Meanwhile in China, the world’s largest market for combustible cigarettes with 350 million smokers, the excess RTL capacity versus demand remains unchanged, according to Steven Shu, general manager at SWM China. This is despite efforts in recent years to add a higher proportion of recon to cigarette blends, which traditionally have a rather low share of homogenized tobacco.
Steven Shu
Since 2014, SWM has a joint venture with the China National Tobacco Corp. (CNTC). “Functional, i.e., flavor sensory, RTL offers added value compared to cost-driven combustible cigarette blends,” Shu points out. “Therefore, the cost-driven RTL has higher share among low-end cigarette brands while the functional RTL has a higher share among medium-to-high-end brands. The key success factor in this market is the unique value offered for cigarette designing and processing. Indeed, the RTL product applications can be extended to cigarette peripheral applications such as cigarette paper, tipping paper and filter media. The commercialization and scale-up of THP products is a unique opportunity to boost overall RTL demand in China.”
Although China manufactures most of the world’s vapor hardware, domestic sales of next-generation products are comparatively small. “China has banned most electronic cigarette categories arguing that electronic cigarettes would take away market share from conventional cigarettes and progressively destroy the livelihoods of millions of farmers and workers employed by the tobacco sector,” Lambat explains. “There are some 30 million people engaged in the tobacco sector in China.”
For THP, no regulation has been implemented yet. According to Tobacco China Online, the CNTC is actively pursuing THPs. By March 2020, there were 852 open patents for THP and 56 patents for THP-related RTL, most of which were owned by the CNTC, the publication found.
“In the field of THP, China tobacco companies have made technological innovations and introduced various heating methods, such as chemical heating, infrared heating or other heating methods, to bypass Philip Morris International [PMI] IQOS’ heating method with a heating blade in order to reduce the possibility of intellectual property disputes with PMI,” says Lambat. “However, there are no THP products commercialized at present in China.”
Shu says that SWM is ready to supply the Chinese THP market as soon as it opens. “We have built a great expertise on THP papermaking recon over the past seven years, and we have the necessary assets to anticipate the THP market start in China. For the moment, CNTCs is conducting some market tests outside China with varied success. Product designs may evolve in the coming months, building on early consumer feedback and the challenging patent environment. Chinese authorities will most probably allow THP product sales in China only when they will be fully ready with the right products.”
Demand on the rise
China left aside, THP demand for RTL has increased remarkably in recent years, according to de Veyrac. “Over the last four years, we have managed to slow the erosion of recon papermaking in the conventional market, and it is now eroding less quickly than the conventional market. Indeed, papermaking recon sales for the THP market have been growing and now represent more than 20 percent of our recon sales. The THP market has shown some volatility, such as in Japan with the plateauing situation observed in 2018–2019, but hopefully the Japanese market is growing again. The launch of THP products in other markets, such as CIS and Europe, supports the global demand of THP papermaking recon, even if the growth rate is smaller than in Japan.”
The recon weight-per-stick on today’s THP consumable is eight times to 15 times that of the conventional cigarette, he explains. “A current THP stick contains 100 percent of recon as opposed to 5 percent to 15 percent in a conventional cigarette. So the growth of THP papermaking recon demand is much faster than the attrition of conventional recon demand.”
SAI selectively supplies recon to THP manufacturers, relates Lambat. “To be forthright, there is only one successful THP product in the world—IQOS,” he says. “There are many companies looking at the segment, but none have been remotely successful. Initially launched in 2014 in Nagoya, Japan, and Milan, Italy, IQOS is being gradually rolled out to other countries. As of October 2019, I have been informed that IQOS is available in 49 countries. However, I am equally informed that as much as 90 percent of all IQOS sales take place in a single country—Japan.”
Last year, SAI developed a THP device and tobacco sticks with its Chinese partner, Global Leaf. The design of the product, named XGen, however, was changed into a Juul-like vaping device in light of Juul’s promising development. “Our foray into XGen in the test market of South Africa has been highly successful apart from the lockdown—i.e., total smoking ban—period [of] April to August.”
SAI nanofiber supplied as cut rag
All eyes on IQOS
Many expect the U.S. to become the next major market for IQOS. Following premarket approval by the Food and Drug Administration (FDA), PMI launched the product in select markets in 2019. In July 2020, the FDA granted PMI “exposure modification” orders for IQOS, allowing the company to tell consumers that the product releases fewer harmful chemicals than a combustible cigarette.
Initial growth has been slow and has likely been impacted by the Covid-19 pandemic, according to de Veyrac. PMI is vertically integrating for recon supply, he adds, so this is unlikely to impact the supply-demand balance. “However, the significant step of FDA recognition of IQOS as a ‘reduced exposure product’ is very positive for this segment,” he says.
Another development that might bring new opportunities for the RTL sector has not materialized yet. The FDA intends to restrict the amount of nicotine in cigarettes and other tobacco products to make them “minimally addictive.” To date, however, the agency has taken no action to achieve this goal. “Should this legislation pass, then the opportunity for recon will be significant in the USA as well as internationally as other countries follow a USA-copycat approach,” says Lambat.
“We believe that papermaking recon is a strategic tool for the reduction of tar in general and nicotine in particular,” de Veyrac explains. “The challenge will be to reduce the nicotine while maintaining an acceptable taste, but we can also consider blending some botanicals, which will deliver natural flavors without adding nicotine. We are working on this topic with cigarette manufacturers in this region. In parallel, our experience with THP helps as papermaking recon in this environment plays a central role for taste generation and nicotine regulation. Moreover, we have found that in this new field there is no limitation on the percentage of recon in a blend. It is very difficult to predict the impact on recon sales of this type of maximum nicotine rule as we do not know what thresholds will be set or where and when they will be applied. Nevertheless, we do not see a shortfall of capacity even in this region.”
Reconstituted tobacco leaf originally was developed by SWM International.
Opportunities ahead
SWM diversified from tobacco in 2013, complementing its traditional tobacco and paper business now part of its Engineered Papers unit, with a second business unit, Advanced Materials & Structures, which specializes in resin-based materials for a variety of industries and applications. RTL, however, continues to play an essential role.
De Veyrac believes that papermaking recon capacity will remain higher than demand for the foreseeable future. “I see this as a great opportunity for developing new recon utilization in various product lines,” he says. “THP is one, and we believe that new platforms will be launched in the near future which are not cigarette-like, and papermaking recon will remain the major active component to generate the aerosol and transfer the natural nicotine and taste contained in the original tobacco. We also see that papermaking recon is still attractive to conventional cigarettes and OTP products, such as shisha, RYO or snus. The change and volatility of some markets and the pressure on some crops due to geopolitical or weather effects provide some uncertainty on the balance between the tobacco supply and demand and give more incentive to balance risk on blend structure. Papermaking recon is a sustainable product with permanent availability and short lead-time delivery. In addition, the high control and standard of those next-generation products will be maintained and even reinforced. An industrial process such as papermaking will ensure that those standards are fully respected, which is critical for our customers.”
SWM has also used its expertise in the papermaking process to explore another promising business category: Through its LeafLAB botanical-based product platform, SWM produces hemp “recon,” a malleable sheet from hemp leaf and flower biomass that allows for custom-made blending (see “Recon Mission: Hemp,” page xx).
SAI has chosen a different road, diversifying within the field of tobacco. According to Lambat, the company is on its way to transform itself from being a trader to being a producer. It therefore has invested heavily in derivatives. Among other things, it runs two recon factories.
“In the past 12 months, we have had a full year of ownership and management of our nano fiber recon plant in Santa Cruz, Brazil,” says Lambat. “The Brazilian senior management team has further perfected the manufacturing line and increased the plant’s output by 25 percent through efficiency generated modifications. Our full capacity of 3,000 tons per annum is fully booked. This line produces both Virginia and American blend recon,” says Lambat.
SAI has created a team to focus on capacity expansion. “This will consist of establishing a brand-new nano fiber recon plant with a target capacity output of 6,000 tons per annum. This will be housed in a new, dedicated building in Santa Cruz and will bring together our leaf trading team under one roof. We expect the new Brazil plant to be operational in the second half of 2021. The current recon line in Brazil will be deployed to Asia, and the selection of country is not yet decided, but Malaysia and South Korea are high up on the selection list. The capacity of Brazil, Asia and South Africa will exceed 12,000 tons per annum.”
The company broke new ground when it opened a recon line in Surabaya, Indonesia, in June 2019 that is devoted exclusively to the clove-flavored kretek sector. “In Indonesia, our recon plant in Java is now serving multiple clients with multinational and local manufacturers,” says Lambat. “It has also started exporting to the Philippines, Malaysia and Australia. The main service in Indonesia is toll production of clients’ kretek waste to kretek recon. We are evaluating establishing a recon line in southern Africa, most likely producing band cast as it is simpler to produce than nano fiber. And finally, we are evaluating an RTL line in Europe that will focus on the production of recon for cigar wrapper and binder in machine-made cigars. Both projects are slated for implementation in 2021.”
SWM is also considering such options.
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.
LeafLAB has revolutionized the all-natural hemp and CBD markets with its new, consistent and high-quality hemp-based botanical recon product.
By Timothy S. Donahue
Regulation is coming for the cannabidiol (CBD) industry. The U.S. Food and Drug Administration (FDA) has said that it recognizes the opportunities that cannabis or cannabis-derived compounds may offer and acknowledges the significant interest in these possibilities. However, the FDA is also aware that some companies are marketing products containing cannabis and cannabis-derived compounds in ways that violate the Federal Food, Drug and Cosmetic Act.
To prevent the health and safety of consumers from being placed at risk, the federal agency plans to regulate CBD and other consumable hemp products. It is expected that the FDA will regulate smokable CBD products much in the same way that it regulates traditional tobacco products. That means a product must be consistent and able to be tracked and traced back to the farm level. This could present several challenges for manufacturers, especially when trying to find consistency in quality and quantity of CBD and other variables in cannabis plants for smokable flower products.
LeafLAB, the botanical-based brand of SWM International, a manufacturer of tobacco papers and reconstituted tobacco technologies, can produce reconstituted cannabis substrates to use in the production of smokable CBD products and accessories. Among its many specializations in plant-based botanicals, LeafLAB produces product from all-natural industrial hemp biomass that complies with all regulations for THC content of less than 0.2 percent. The company also produces industrial hemp-based filtration media and papers for cigarette paper and traditional roll-your-own (RYO) applications, not to mention technical support, service and a global reach to its customers.
“We’re taking the knowledge and experience of our leadership in the tobacco industry to help bring a new market to fruition through the addition of new product opportunities for the existing consumer and our direct customer base,” says Alex Boone, director of alternative products for SWM. “Centuries of tobacco experience can now be used for those same components used in tobacco products but now replacing tobacco with all-natural industrial hemp-based raw materials.”
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Distinct parallels
Hemp wraps
LeafLAB’s ties to the tobacco industry play a pivotal role in the development of its smokable hemp products. “We believe the technologies and knowledge that we’ve developed over time in tobacco have a distinct and valued parallel for this new industry. Today, 45 percent of the legal cannabis market is still flower—smokable flower,” says Boone. “Not only have we created hemp-based botanical wraps to support the current combustible flower market, but our cut rag filler products allow our customers another opportunity to offer completely distinct product lines, including tobacco-free alternatives to mainstream cigarette smokers.”
LeafLAB specializes in all-natural products. Boone explains that with today’s lifestyles leaning toward more all-natural products, there are not many options beyond smokable flower. LeafLAB makes hemp products better through a patented process technology that eliminates the necessity for chemical additives, says Boone. Through its botanical process, LeafLAB uses legal cannabis flower to create smokable products efficiently using the same high-quality systems of infrastructure and quality control that is used in the tobacco industry.
“Instead of using hemp from just the stalk as is done in many textile and paper making processes, we are using the raw leaf and flower biomass to produce our product, and that’s the key. It’s naturally aromatic; you can still smell, and to a lesser degree taste, the natural terpene profile of the raw material. Many of our customers have said that our product looks, feels and smells like real hemp. That’s because it is—and all of this without a papery taste. By being neutral, our customers can apply their own terpene and or flavor profile,” Boone says. “The range of tastes from the consumer are infinite. From high terpene profiles to match cannabis-like flavors to heavy fruit and honey-based products for others. However, what they all want is something natural. Now, we can do that in a 100 percent hemp product that is completely tobacco and nicotine free.”
SWM’s Ancram Mill
Advances technologies
Over the last year, LeafLAB has developed advanced processes for making products such as hemp leaf and flower-based blunt wraps and cones and for machine-made CBD cigarillos (hemp pre-rolls). “We have a whole line of RYO hemp wrappers that complement our traditional lines of cigarette paper and RYO papers that can be used on machines to roll these new hemp sticks,” explains Boone. “In addition, we have an all-natural hemp-based filler or cut rag that is 100 percent hemp ‘recon’ in which terpenes, flavors and CBD can be added for mass market stick production where controlling levels of active ingredients is essential for meeting future potential regulatory control.”
SWM invented the reconstituted tobacco market in the mid-1950s, first with binders and wraps for machine-made cigars and later as a filler used by tobacco blenders, not only as a recycling option for expensive virgin material but also as a tool for blend design optimization through higher filling power and to control consistency from one tobacco crop year to the next.
“Much like in tobacco, LeafLAB’s hemp-based filler can use distinct blends to create this same consistency for its customer’s products year after year,” says Boone. “In addition to our cut rag offering previously mentioned, our hemp ‘recon’ is also a great blender with hemp flower allowing for better control. That blending not only enables a manufacturer to be able to blend from one crop to the next but allows for usage of high-speed machinery and control of sensory properties. Our recon substrates allow for excellent retention of flavor and active ingredients.”
LeafLAB uses specific biomass from suppliers or biomass that is directly specified by its customers. Boone explains that LeafLAB gives manufacturers that choice because many customers want that “farm-to-table” experience for their consumers. “We are also very choosy in the consistency of our raw materials. High leaf and flower content and low stem—that is the perfect fit for our process to allow for the best opportunity for paper forming characteristics and taste,” he says. “Regardless, all raw materials go through an extensive laboratory and taste profile testing prior to use in a commercial setting. Additionally, we require our suppliers to provide a full spectrum analysis—pesticides, heavy metals, THC/CBD content, etc.—and farm traceability of each biomass shipment. Our customers can be assured we are setting the appropriate standards necessary for safe and reliable products.”
Runnability
Alex Boone
The ability to have a hemp product work well on current cigarette rolling machine designs is important. Raw hemp flower is typically too sticky and granular to be used in traditional tobacco rolling machines. Boone says that LeafLAB’s hemp sheets help meet the needs necessary for bringing smokable hemp to a mass market.
“Today, legal cannabis runs very slowly on traditional cigarette machines. We estimate somewhere in the 300 sticks per minute range. This is not efficient for high-speed makers. We understand there is new machinery under development that is beginning to make the process easier. These new machines will run up to 1,500 sticks a minute and greatly improve pre-roll stick production,” says Boone. “With our product, you can run as high as 6,000 sticks per minute using our hemp wrapper and hemp cut rag combination and perhaps higher running a 100 percent hemp cut rag. Now, you are able to achieve the speeds of traditional cigarette production. So, suddenly, you can build to scale smokable hemp products that you otherwise could not have. This is a game changer.”
LeafLAB started in 2014 as a botanical innovation platform for SWM that was geared toward using something other than tobacco to bring new products to market. LeafLAB started with reconstituted tea and moved on to reconstituted mint, sage and even cocoa, to name a few. “Today, we have a line of packaging paper using cocoa shells as its base material called Cocoa Paper,” adds Boone. “It’s really rather cool.”
With the tobacco industry in decline, Boone said LeafLAB was a catalyst to start using the knowledge and experience of SWM to invent new products, such as the recon-style tobacco substrates used in heated-tobacco products (HTP). Today, this dedicated form of recon is an essential component of the consumables used. Currently, LeafLAB has 15 patents and over $7 million invested in its product development.
Packaging is also important when developing a brand of products. That packaging can be designed to have a familiar feel to the end user. If someone is using smokable CBD to help stop smoking nicotine cigarettes, for example, having the same style of packaging and consistency of product are major influencers of getting a consumer to commit to a brand, according to Boone. “We’re suggesting that, if you have a product that’s consistent—you can control it—you can get that into the mainstream market,” he says. “You can also make it taste like tobacco if that’s what’s desired.”
Looking ahead, Boone says LeafLAB will continue helping to improve the commercial hemp industry by teaching the supply chain how to conform to its legacy business quality control and proven SWM protocols coupled with the requirements of the non-THC legal cannabis industry. “We’re blending those two to have a very good quality product that follows strict standards and where our customers can trust in our COA [certificate of analysis] that says, ‘This is California regulation compliant’ or ‘this is FDA complaint’ when the time comes. That is the ultimate goal,” Boone explains.
Moving past the unknown regulatory environment, Boone says there is plenty of opportunity for LeafLAB’s products throughout the world. “We’re watching Europe. I would say that the U.S. and Canada are growing quickly—plus 18 percent CAGR [compound annual growth rate]. The next major markets in [the] EU are Luxembourg, Belgium, Spain and Germany,” he says. “South Africa just issued industrial hemp legislation but remains conservative in their approach. Overall, it will take time, but we are bullish on growth of legal smokable hemp products.”
Timothy Donahue is the assistant editor
of Tobacco Reporter. Since joining our team in
January 2013, he has become not only an
expert on the traditional tobacco business but
also a well-respected voice in the rapidly developing
vapor industry. Tim spends much of his time on the
road, attending conferences and interviewing industry representatives.
His networking skills, work ethic and quick mind
are valuable assets to our diverse audience.
Having added the Impex business to its portfolio, Airco DIET is busier than ever.
By George Gay
Keld Laigaard of Airco DIET
A once-popular saying had it that if you wanted to get something done, you were best off asking a busy person to do it. If this remains true, I would suggest that those with a project call the Airco DIET director, Keld Laigaard. In his own words, his company is at the moment: “busy—very busy.”
And this isn’t the sort of busy that occurs when things head south and everybody has to run around looking for business. Despite the fact that many countries are still clawing their way out of recession, and perhaps in part because of this situation, Airco DIET has had to take on new staff as it works on existing contracts, deals with an ever-increasing level of interest and assimilates the Impex business acquired from IPEL Ltd. toward the end of last year.
The future, too, looks good, especially if, as some people expect, leaf tobacco supplies become restricted and there are further, stricter regulations on the contents and deliveries of tobacco products. For those unfamiliar with the process, DIET (dry ice expanded tobacco) high-expansion technology uses CO2 to puff up the intact cells of cut tobacco and then removes the CO2 in such a way that the expansion—in the range of 110-140 percent—is maintained. Tobacco savings are not the only advantage, however, because whereas regular tobacco is variable, DIET tobacco offers a stable filling capacity with a taste that is unchanged, though reduced in intensity. It provides the manufacturer with a tool to reduce and control delivery levels, mainly tar and nicotine. And it adds a degree of stiffness to the tobacco, which has the advantage of improving the draw of cigarettes.
When I spoke with Laigaard in the middle of last year, he told me that the level of inquiries for DIET plants was the highest it had been in 25 years. Last month he told me that nothing had changed, though whereas previously just about all of the interest had been focused on Airco DIET’s smallest, 300 kg/hr, plant, now there was interest also in the next size up, the 600 kg/hr plant.
“We are still seeing an increase in interest,” he said. “We’re building a tolling [contract DIET] facility just outside Jakarta. That is a little bit more than a DIET plant, and it’s taking a lot of manpower. But it’s a good big project for us. So with that and with some nice orders we got late last year, we’re busy—very busy.”
By the time it is completed at the end of this year, the Jakarta plant will provide a facility where manufacturers will be able to deliver their tobacco, have it expanded and then shipped back to them. It is being built, according to Laigaard, to facilitate the huge demand for DIET tobacco that is coming from smaller companies that don’t have the funds or the usage levels that would pay for or warrant their own DIET plant. So the Jakarta facility will give them the opportunity to have their own tobacco expanded or to buy expanded tobacco for use in their own blends.
Unexpected inquiries
Meanwhile, interest in expanded tobacco is coming from some new directions, and even Laigaard had to admit that he had been caught somewhat off guard. “I had always thought that DIET was for cut rag,” he said. “But we have been contacted several times, not only because of Impex, but because of DIET, for processing roll-your-own tobacco, which, while it is similar to cut rag, is actually a little bit different.
“And the cigar industry is talking to us about reducing the amount of filler being put into a cigar and about producing a lighter product in line with demand from younger people. Cigar filler is not like cut rag; it’s more like broken-up leaves. But you can actually put it through a DIET plant and it comes out very nicely, which is something I didn’t know. So I have learned something new. I know it’s being done. I have the product with me. It looks very good.”
One of the interesting aspects of this development is that, as is mentioned above, Airco DIET recently acquired the rights to the Impex process and that process has been associated with cigar filler expansion. So I asked Laigaard whether or not the discovery that the DIET process could also be used to process cigar filler was a complicating factor.
Not really, he replied. Most manufacturers who made enquiries largely had their minds set on what they wanted. Some wanted to go the DIET route and some wanted to go the Impex route.
While both systems provide high levels of expansion, the Impex process uses isopentane rather than carbon dioxide as the expansion agent. Isopentane does not dissolve nicotine and other volatiles, so the expanded product maintains its original flavor and color.
Of course, the Impex process is very much the junior partner to DIET in the Airco DIET portfolio, so I asked Laigaard what advantages would accrue from the acquisition.
“Well, I think we will be able to serve the customer with a wider portfolio of high-expansion products,” he said. “While the DIET process has a distinct way of treating the tobacco, Impex has a different way of doing it, one where you can do a whole blend that is already flavored. You can expand that and go straight to roll-your-own pouches or direct into the cigarette maker. So it is a different process that gives different opportunities. We can go out and we can give the customer a little bit more to choose from.”
Mutually beneficial
In fact, the relationship between Airco DIET and its Impex customers is going to be a closely symbiotic one for some time to come. Airco DIET has assisted the tobacco industry by taking on board the Impex process, which otherwise might have disappeared from the scene. It has acquired all of the documentation associated with it and it can now carry out servicing, maintenance and the supply of spares. In fact, Laigaard says that it has everything it needs to assist existing customers.
And, of course, Airco DIET has the skills to enhance the system, though this, apparently, is hardly necessary. Laigaard told me that the Impex system was a very good one, though Airco DIET would be putting some effort into refining installation procedures. Installation times in the past had been overly long and had not always run to schedule, Laigaard said, and this was not something that Airco DIET could live with. “We have to, and we are, working on getting the package complete, so that when we go out and sell a system, we can give a timeline to the customer, one that will run on schedule and on budget,” he said.
So this is what Airco DIET can do for Impex customers, but those same customers have something to offer Airco DIET too, because many of them have considerable experience in running these plants, which are still fairly new as far as Airco DIET is concerned. “We have a very good relationship already with these people,” Laigaard said. “And we feel that they are going to help us in areas where we are not so strong because this is a new process for us. Obviously, we don’t know all of the details yet.”
With this in mind, Airco DIET has been busy making contact with as many Impex customers as it can and has already established relationships with Impex plant owners in Europe and the U.S. that are willing to carry out test runs on the tobacco of potential customers.
Finally, I asked Laigaard whether this sort of relationship was important to him. Yes, he said. Obviously, Airco DIET was interested in selling more systems and products, but the industry was getting smaller and smaller, and the more people who actually liked you the better off you were. Airco wanted to have a good name and reputation because, in the end, your reputation was all you had to run with.
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Reconstituted tobacco with cactus
Expanding tobacco either through the DIET or Impex process is a very effective way in which tobacco manufacturers can help reduce their usage of leaf tobacco, their most expensive ingredient, while at the same time helping to stabilize their products.
Another way to achieve these sorts of benefits is through the use of reconstituted tobacco, which allows manufacturers to use tobacco that might otherwise be wasted.
Of course, reconstitution would offer even more of an advantage if the sheet produced contained, as well as tobacco, something that was not as expensive as tobacco … cactus perhaps. And currently, China Kangtai Cactus Biotech (Kangtai), in conjunction with Shandong Yishui Ruibosi Tobacco and the Qingdao Cigarette Factory, is manufacturing just such a product—reconstituted tobacco sheet with cactus.
Kangtai is a leading grower of cactus plants as well as a developer, producer and marketer of cactus-derived products, including nutraceuticals; nutritious food; health and energy drinks; beer, wine and liquor; extracts and powders; and animal feed. Its high-quality “green” products are sold throughout China through a distribution network that covers 12 of China’s 23 provinces and two of the country’s four municipalities. And as part of its extensive research, it has developed a method for producing reconstituted tobacco that also contains cactus, a product that offers several advantages.
For instance, its cigarette brand, Sheng Cao, which is made in its own plant in Macao, has in the past been blended with tobacco, cactus, honeysuckle, ginkgo and tea leaves, a mix that is said to produce a very special flavor. But the company has found that the addition of reconstituted tobacco sheet blended with cactus further improves the taste of the cigarette while helping to control delivery levels.
Kangtai does not produce the reconstituted sheet itself but has signed an agreement with Shandong Yishui Ruibosi Tobacco (Ruibosi), a subsidiary of China Tobacco Shandong Industrial, which apparently is one of the four tobacco manufacturers in China designated by the State Tobacco Monopoly Administration to develop reconstituted tobacco using paper process technology.
Kangtai’s CEO, Jinjiang Wang, said earlier this year that samples of the new reconstituted sheet had been produced and that full production was planned to begin in May. And Ruibosi seems to be keen to take the project forward. Vice president Changsen Xue said Kangtai was an outstanding company that had shown remarkable growth in the cactus business. “We have great confidence in the future sales of Sheng Cao cigarettes, which we believe will have very promising market prospects and growth potential,” he said. “We have no doubt that consumers will like the taste very much.”
Meanwhile, Kangtai has signed, also, a joint manufacturing agreement with China Tobacco Import and Export Shandong Corp. (China Tobacco Shandong) to manufacture Tai Shan Sheng Chao cactus cigarettes.
The company is manufacturing this new brand, also using reconstituted sheet, in conjunction with China Tobacco Shandong’s subsidiary, the Qingdao Cigarette Factory. Full production was due to begin in February this year.
And whereas Sheng Cao cigarettes are sold in China, there are plans to sell Tai Shan Sheng Chao through China Tobacco Shandong’s established sales channels also in Russia, South Korea and Japan.
“This agreement creates mutual benefit for both companies,” said China Tobacco Shandong’s general manager, Jianli Bi. “The low-nicotine and non-nicotine cactus cigarette product coincides with the government’s initial step to promote less harmful products to the huge smoking population in China ….”
Kangtai does not make any health claims for its cactus cigarettes, however. I asked Frank Hawkins of Hawk Associates, a Florida-based investor relations firm that is working with Kangtai, whether any studies had been carried out into whether cactus cigarettes did offer a health benefit, and he said that Kangtai only made the point that because the cactus substituted for tobacco, the delivery levels of cigarettes containing cactus would be lower than would otherwise be the case.
Nevertheless, Hawkins is enthusiastic about the new products, partly because, as he points out, people living in the West aren’t exposed to too many cactus products. “But Kangtai is into that sort of thing,” he told me. “They have a big nutraceuticals business, they have a big beverage business and they sell the raw materials to others.
“Then, about a year or so ago, they came up with this whole idea of doing a cigarette. And it’s gotten everybody excited. They have sent samples to us and we have passed them around to investors, and they have created some excitement among investors. And now they think they can create a bit of an export business.”
