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JT considers major restructuring in EU

| October 7, 2014

Japan Tobacco today announced a proposal to restructure its manufacturing facilities in the European Union (EU) for the purpose of optimizing its operations and strengthening its competitive position in a challenging operating environment. The company will undertake appropriate consultations with employees’ representatives and the European Works Council on the proposal to change its product sourcing, which could lead to the closure of some of its manufacturing sites.

The prolonged challenging economic environment and excise tax pressure has triggered industry volume contraction in key European countries. This is compounded by the need to comply with legislation, including the revised EU Tobacco Products Directive, which will significantly reduce the number of pack formats to be produced for various markets. These developments have forced the company to review its manufacturing operations.

Under the proposal, the company’s facilities in Lisnafillan, Northern Ireland, and Wervik, Belgium would cease to operate, with production moving to other facilities, potentially in Poland and Romania.

Other tobacco product manufacturing in Trier, Germany, would also be relocated, with the exception of Ploom-related production.

Support for affected employees will be discussed as part of the consultation process. This proposal would affect approximately 1,100 full-time jobs across the EU.

JT says the restructuring proposal will be implemented in phases, recognizing the needs of each country, with factory closures completed between 2016 and 2018.

E-cig maker to challenge Tobacco Directive

| October 7, 2014

Totally Wicked, a leading U.K. e-cigarette manufacturer, has won the right to formally challenge the validity of the EU Tobacco Products Directive (TPD) at the Court of Justice of the EU (CJEU) in Luxembourg.

At a hearing at the Royal Courts of Justice, Justice Green decided that a preliminary ruling reference should be made to the CJEU, to determine whether Article 20 of the TPD breaches EU law. It is expected that a hearing will take place at the CJEU in 2015.

Totally Wicked becomes the first e-cigarette manufacturer to win the right to challenge a directive that will bring e-cigarettes and e-liquid within its regulatory scope as a tobacco-related product and subject e-cigarettes to more stringent regulation than some conventional tobacco products.

Totally Wicked believes that the TPD is likely to adversely impact the availability of good quality, e-cigarettes and e-liquids, and jeopardize their potential as a less harmful alternative to combustible tobacco.

Totally Wicked’s challenge is based on its view that Article 20 of the TPD represents a disproportionate impediment to the free movement of goods and the free provision of services, places e-cigarettes at an unjustified competitive disadvantage to tobacco products, fails to comply with the general EU principle of equality, and breaches the fundamental rights of e-cigarette manufacturers.

AOI to enter Uganda

| October 6, 2014

Alliance One International (AOI) has announced its intention to enter the Ugandan tobacco leaf market once all relevant governmental approvals and licenses, including registration of its new Ugandan subsidiary, Alliance One Tobacco Uganda (AOU), are complete.

AOU’s core business plans to include providing agronomy services to tobacco growers through an integrated production system that supports sustainable compliant tobacco leaf production. To execute on its plan, AOU expects to employ agronomy and support staff in Uganda, drawing from local talent to develop a dedicated country team. To meet first-year production goals, AOU intends to register and sponsor farmers that produce both flue-cured and burley tobaccos for the upcoming 2015 crop.

“Once complete, the addition of Uganda to our existing African footprint further strengthens our regional position as a leading supplier to both new and existing customers,” says Pieter Sikkel, AOI’s president and chief executive officer.

“Ugandan tobaccos have a good range of quality flavor and semi flavor styles that complement tobaccos from our other supply origins. We are excited about the heightened prospects for Ugandan tobacco on the world market.”


VMR vaporizers under OCB brand

| October 6, 2014

ocb vaporizer

VMR Products, a leading e-cigarette manufacturer, has partnered with Republic Technologies International (RTI), a global distributor of rolling papers and smoking accessories, to create a new line of advanced vaporizers for the EU market. The new vaporizers will be developed by VMR and distributed by RTI under the OCB brand.

OCB is well established in the EU’s roll-your-own and make-your-own tobacco markets, with a strong presence in France, Spain, Germany and Austria.

Following the success of VMR’s recently launched V2 Pro vaporizer, the new line of OCB-branded devices will be designed for the emerging large vapor device category. Models will be able to vaporize e-liquid, loose leaf tobacco and essential oils.

VMR and RTI expect the multi-medium devices to be one of the most disruptive innovations to enter the vaporizer category in the EU.

The partnership marries VMR’s technology with RTI’s distribution network, which reaches more than 800,000 locations across Europe. The OCB vaporizer line will be gradually rolled out across that network over the next year, with 1 million devices expected to be sold by 2016.

“By partnering with RTI, we can quickly scale across the EU, bringing European consumers the first-rate technology and experience that VMR is known for,” said Jan Verleur, CEO and co-founder of VMR. “Abroad, we’ve seen consumers demand larger, open system devices that are naturally more customizable and powerful than their closed-system counterparts. We’re eager to meet that growing demand with RTI’s expansive distribution network and the OCB brand.”

The new OCB vaporizers will feature several industry innovations, such as a one-piece aluminum body with drop-in cartridges to eliminate the breakage and leakage that plague traditional large-scale devices.

The cartridges will couple to the vaporizers magnetically—rather than with threading—and will be “smart,” automatically controlling temperature. The vaporizers will also feature a breakthrough magnetic charger that permits usage of the devices while plugged into a power source.

“We’re combining VMR’s excellence in product design and manufacturing with RTI’s record of popular, world-class products in the roll-your-own and make-your-own markets,” says Santiago Sanchez, managing director of RTI. “Through the partnership, we can provide OCB customers who want high-performing vaporizers with a proven winner at both retail and online.”

The new line of OCB Premium Vaporizers was launched at the Inter-tabak trade exhibition in Germany, in September, and has already aroused great interest.


Tobacco Reporter announces 2014 Golden Leaf Awards

| October 6, 2014

Tobacco Reporter presented its 2014 Golden Leaf Awards on Oct. 2 during a festive ceremony at The Greenbrier resort in White Sulphur Springs, West Virginia, USA. The event was part of the Global Tobacco Networking Forum, which brought together hundreds of industry representatives and other stakeholders from around the world. Five companies were recognized for their achievements in areas such as innovation, corporate social responsibility and commitment to quality. The Golden Leaf Awards are sponsored exclusively by BMJ of Indonesia.

Alliance One International won a Golden Leaf Award in the Most outstanding service to the industry category for its Grower Management System (GMS), a standardized real-time global data capture system.

The industry faces rapidly expanding reporting requirements, driving mainly by manufacturers and anticipated regulation. The source of much of this data is at the primary producer level.

AOI contracts more than 250,000 growers. Using mobile devices, GMS allows the company to instantly gather information about location, scale of operation, cultural practices employed, crop inputs, curing management and reforestation, among other parameters. In doing so, GMS underpins the industry’s focus on Good Agriculutral Practices and Agricultural Labor Practices.

Having access to such information in real time reinforces sustainable and compliant tobacco production. Through back-office functions, GMS will link with grower accounting systems, product-integrity programs and support traceability in the packed product. A derived benefit has been improved allocation of management and field staff time.

GMS was developed in house. Microsoft certified the GMS app to be included in the Windows Phone Store in October 2012.

It is anticipated that GMS will also lend greater visibility to debt recovery, a critical parameter of the integrated production system, as a leaf supplier bears the principal risk with direct financing of growers.

GMS in current form is tobacco-centric, but readily lends itself to a much broader application in agriculture at large.

The Tobacco Board of India won a Golden Leaf Award in the Most impressive public service initiative category for its implementation of an electronic auction system, which has made the marketing of flue-cured tobacco in India more transparent and accountable.

With production of about 800 million kg, India is the world’s second-largest producer of tobacco, exporting leaf to more than 100 countries. The Tobacco Board is responsible, among other things, for ensuring fair prices to tobacco growers and establishing auction platforms for the sale of Virginia tobacco.

For more many years, tobacco was auctioned manually in India. Despite its obvious success, the auction system had certain shortcomings, including susceptibility to human errors, lack of traceability and scarcity of information for stakeholders.

The Tobacco Board realized these problems could be eliminated only through quality communication aids, electronic auctioning and effective information management.

The e-auction solution was developed on a high-performance and reliable platform to effectively manage the automation process. The system has not only simplified the administrative procedures but also removed any ambiguity by ensuring that, once recorded, the winning bid cannot be tampered with.

Not only farmers have benefited from the new systems. The large amounts of data generated allow buyers to make quicker and better-informed decisions.

Tomra Sorting Solutions won a Golden Leaf Award in the Most promising new product introduction category for its Opus Tobacco Sorter, which helps tobacco processors address a negative side effect of the increasingly popular mechanical harvesting.

Rather than relying on manual labor, tobacco growers are increasingly using machines to harvest tobacco. Among other things, this allows them to clear larger fields, thus increasing efficiency and productivity.

But mechanical harvesting also has a downside. Machines are less effective at removing leaf from its stalk than humans are. This can present a problem for tobacco processors and cigarette manufacturers. Because stalks are woody, they behave complete differently than tobacco stems when processed.

If not removed, stem stalks can turn to slivers during cutting, which in turn can pierce cigarette paper. The result is efficiency losses, drops in yield and possibly lower product quality.

Presented with this problem, Tomra capitalized on its experience in multiple industries, combining technology already used for tobacco applications with solutions it had developed for the food industry.

Taking advantage Tomra proprietary camera and laser technologies, the “tobacconized” Opus sorter detects and rejects both traditional NTRM and the woody stem stalks, allowing the customer to avoid production stoppages, reduce waste and minimize energy consumption.

Shishapresso was recognized with a Golden Leaf Award in the Most exciting newcomer to the industry category.

While the cigarette industry has witnessed many innovations over the years, including mechanized production, the introduction of filters and special papers, the shisha business has remained largely unchanged. Today’s shisha smokers consume their tobacco in essentially the same way they did centuries ago.

Shishapresso is determined to change that. The company has developed a solution that eliminates the mess and hassle involved with the preparation of a hookah. Involving only three easy steps and a hookah, Shishapresso’s capsule and specially designed shisha ceramic head ensure a consistent smoking experience.

The Shishapresso capsules are filled with the finest shisha tobacco molasses, made from quality European Virginia tobacco leaves that are infused with quality flavors. Each capsule contains exactly the right amount of tobacco, the right texture and a unique foil-hole pattern. Smokers can select from 20 different flavors.

Shishapresso capsules are available in the U.S. and will be launched globally.

White Cloud Electronic Cigarettes won a Golden Leaf Award in the BMJ Most committed to quality category. While most e-cigarette manufacturers rely on Chinese manufacturing, which is cheaper due to lower labor cost and less-stringent government regulations, White Cloud is committed to setting up fully automated, U.S.-based operations.

In a major step toward that goal, the company relocated production of its e-cigarette cartridges entirely to the United States in May. Prior to that, the company was already sourcing and manufacturing its White Cloud e-liquid in the U.S.

The move to automation was made possible by the development of the company’s new proprietary cartridge, Cleardraw 2, which allows for automated production rather than the traditional hand filling techniques typically used by companies in China. Automated filling in the end market promotes not only greater quality control and better regulatory compliance, it also ensures fresh ingredients.

White Cloud’s development in quality and innovation comes on the heels of the recent FDA proposal for more stringent regulations within the e-cigarette industry. While the proposal was largely focused on marketing and age-restriction, it signaled a shift toward increased FDA control over e-cig production and manufacturing standards, which White Cloud believes makes automated production in the end market more important moving forward.


Questions over effectiveness of tobacco-funded EU anti-smuggling campaign

| September 29, 2014

A report being presented to the European Parliament’s Budgetary Control committee raises concerns over the effectiveness and monitoring of the deal under which the four biggest international tobacco manufacturers co-operate with the European Commission in the fight against the illegal trade in tobacco, according to a New Europe story.

The four companies pay about €200 million a year towards funding initiatives aimed at combating contraband, which is said currently to account for more than one in 10 of the cigarettes sold in the EU.

Bart Staes, a Belgian Green member of the European Parliament is presenting a report to the committee that suggests there are some uncertainties about what the funds are used for.

“Some of the member states earmark the payments to fight cigarette smuggling, while others direct the money to the general budget,” said Staes.

“The Commission has so far not provided the committee on Budgetary Control and the European Parliament with the movements on this account and the necessary explanations.”

Staes was quoted as saying the Commission had not followed up by asking the member states what the funds had been used for.

In addition, while the tobacco firms had to make payments if their cigarettes were discovered being smuggled, the payments made in 2012 had accounted for only about 20 million of the 3.8 billion cigarettes confiscated in the EU that year. The 3.8 billion figure presumably refers to all cigarette brands seized, as well as counterfeit products.

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