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The ball is rolling internationally as more countries ban menthol cigarettes, including flavour capsules, as well as other flavoured tobacco products.

The rationale to ban menthol is clear and compelling.

Menthol soothes the throat making it easier to smoke, and makes it easier for kids to experiment and get addicted.

Menthol also discourages adults from quitting.

On 31 May 2015, the Canadian province of Nova Scotia became the first place in the world to implement a menthol cigarette ban. The menthol ban applies to all tobacco products. 7 out of 10 Canadian provinces have adopted menthol bans as part of broader flavoured tobacco bans.

The Canadian government is preparing a national menthol cigarette ban.

In the European Union (EU), a menthol cigarette ban will come into force 20 May 2020 for all 28 EU countries. Turkey and Moldova will do likewise on 20 May 2020. In Africa, Ethiopia and Uganda have adopted legislation banning flavours including menthol.

In recent years, a major tobacco industry strategy has been the marketing of cigarettes with squeezable flavour capsules. Sales of capsule cigarettes are significant and growing in many countries. While menthol is the most common flavour in capsules, other flavours are also being used.

In the EU, a ban on flavoured capsules came into force at the manufacturer level on 20 May 2016. Germany and Belgium were the first countries with cigarette capsule bans, prior to the EU requirement. Canadian provincial legislation banning menthol includes a capsule ban.

There is a positive, accelerating international trend to ban menthol, capsules and flavours in tobacco products, and thus respond to industry practices to increase tobacco product attractiveness and sales.

Rob Cunningham
Canadian Cancer Society

Blu unveils new vaping range to comply with EU tobacco product legislation

E-smoking brand Blu has unveiled its next-generation range ahead of the deadline for retailers to sell off stocks that don’t comply with strict EU legislation.

From 27 May 2017, it will be unlawful to sell vaping products that contravene EU Tobacco Products Directive II (EUTPD II), which focus on quality and safety, and include the requirement for a product warning stating, “This product contains nicotine, which is a highly addictive substance.”

The new EUTPD II-compliant line-up from Blu will roll out on 1 November with improved technology ‘to provide a better experience for consumers’. It includes a PRO e-cig kit, with a Clearomiser mouthpiece, and a selection of e-liquids.

The brand has also launched a guide to EUTPD II to help retailers understand the changes being put in place.

The vaping market was booming, with a retail sales value of £168m and showing an 18% increase on sales last year, according to Jennifer Roberts, vice-president of customer marketing at Blu (UK). “But it’s going to see a lot of change over the next six to nine months as the next stage of legislation comes into effect,” she added.

Retailers should begin to promote non-compliant stock to sell through, said Roberts. “By beginning the changeover to compliant stock as soon as possible, retailers will give a positive message to shoppers and show they understand the category and are a credible vaping stockist.”

Sex, Lies, and Cigarettes

In this Emmy-nominated documentary, Christof Putzel investigates Big Tobacco’s successful and deadly expansion into the developing world. From the smoking baby to the Marlboro Man, little is off limits in the “Wild West” of the world’s fastest growing smokers market.

-Overseas Press Club Award
-Prism Award

Sex, Lies, and Cigarettes from Christof Putzel on Vimeo.

European fund firms largely resist tobacco divestment campaign

Eighteen months after the launch of a global campaign to persuade money managers to black-list tobacco stocks, just one major European investor has answered the rallying cry.

Others are largely sticking with an industry that remains lucrative despite tightening restrictions on smoking and a series of lawsuits in the United States, saying they are duty-bound to seek the best returns for their clients.

Even a United Nations-backed treaty which aims to cut tobacco consumption by almost a third within 10 years is failing to deter many investors in the likes of Philip Morris International (PM.N), British American Tobacco (BATS.L), Japan Tobacco (2914.T) and Imperial Brands (IMB.L).

“We are firmly of the view that profits, cash and dividends from tobacco stocks have many years of strong growth ahead,” said Stephen Lamacraft, fund manager at Woodford Investment Management.

Still, the Global Taskforce for Tobacco Free Portfolios, backed by the Union for International Cancer Control, has scored one big victory since it began campaigning in March 2015 for financial institutions and pension funds to divest an estimated $60 billion from the industry.

In May this year, French insurer and fund manager Axa agreed to ditch its tobacco holdings, becoming the first major European investor to sign up to the campaign, although others had already opted out of tobacco before it was launched.

Axa said its role as a health insurer meant it could no longer justify investing in something that had such a “tragic” impact on public health. At the time it held 200 million euros in tobacco stocks and about 1.6 billion euros ($1.8 billion) in bonds issued by the cigarette makers.

Even then, the process is lengthy. Axa has almost completed selling the shares but will keep the bonds until they mature. Only in 2027 will the bulk – 97 percent – be off its books.

Many other investors appear reluctant to discuss the issue. Reuters contacted 24 large fund managers which hold tobacco stocks, and all but seven declined comment or did not respond.


According to the World Health Organization (WHO), tobacco kills around 6 million people each year, including 600,000 non-smokers exposed to second-hand smoke.

Many of the passive victims are children.

The Taskforce’s global Project Manager, Melbourne-based Bronwyn King, has persuaded more than 30 Australian superannuation funds to ditch tobacco but the campaign faces a tougher challenge in Europe.

The same goes for the United States, where one influential investor, the California Public Employees’ Retirement System is reviewing a 16-year investment ban on tobacco after a study estimated the policy had cost it $2 billion to $3 billion in returns.

Campaigners reject the fiduciary duty argument – that funds must seek the best returns for their clients. They note that about 180 countries have signed up to the WHO’s Framework Convention on Tobacco Control, which aims to cut consumption by 30 percent by 2025 through new regulations and tax increases that will make tobacco less affordable.

Currently just a handful of countries fully comply with the treaty, implying a significant future hit to the value of tobacco stocks when others follow suit.

“Over the longer term, (the treaty) has to decrease the validity of the product – you will have fewer people wanting or being able to buy tobacco and that has to impact the investment appeal of the producers,” said Rachel Melsom, UK director of campaign group Tobacco Free Portfolios.

Philip Morris International, Imperial Brands and BAT declined to comment. Japan Tobacco did not immediately respond to a request for comment.


The tobacco industry sells about 5.6 trillion cigarettes a year to the world’s 1 billion smokers, many of whom live in low and middle-income countries. Here consumption is expected to keep rising due to growing populations and income.

More people are quitting smoking or cutting down in developed countries, but overall revenue and profit margins are consistently buoyed by companies’ ability to raise prices.

International players have also largely shielded themselves from direct exposure to the U.S. market, which has a history of litigation against big tobacco companies. For instance, Philip Morris has been separated from Altria (MO.N), which sells its Marlboro cigarettes in the United States.

In the 10 years to 2015 – a period that included the crisis of 2008-09 – the MSCI World Tobacco Index rose 10.4 percent compared with just 2.64 percent on the MSCI World Index.

All this appeals to many fund managers. For instance, the 9.2 billion pound ($12.3 billion) CF Woodford Equity Income Fund managed by veteran fund manager Neil Woodford holds BAT and Imperial Brands – makers of the Lucky Strike and Gauloises brands respectively – among its top 10 positions.

“(Tobacco’s) dependable dividends are increasingly highly-prized and still represent attractive yields,” said Lamacraft.

The dividend argument doesn’t always hold water. London-listed British American and Imperial reported dividend yields of 3.2 percent and 3.78 percent respectively, compared with an average 4.06 percent across the FTSE 100 index. New-York listed Philip Morris International has a 4.01 percent dividend yield.

Louise Dudley, portfolio manager at Hermes Investment, said she has barred tobacco stocks because she believes returns are unsustainable in the long-term.

“The industry has faced and continues to face increased regulation and consumers are becoming more aware of the health impacts of tobacco. The general trend is towards more healthy lifestyles. Tobacco products don’t tend to fit within that.”


A spokeswoman for Standard Life Investments (SLI) said its decision not to black-list tobacco reflected the needs and views of its clients. But Melsom said ordinary savers didn’t always know where their money was being invested.

“If every individual who has a pension fund could see their level of investment in tobacco and the costs associated with that, I think that would make a difference,” she said.
Client attitudes towards tobacco varied widely, according to Iain Richards, Head of Responsible Investment, EMEA, at Columbia Threadneedle Investments. “We are satisfied that, for our mainstream funds, our approach is measured, works well and serves our clients’ best interests. We therefore don’t intend to adopt a blanket divestment policy on tobacco,” he said.

Amra Balic, Head of BlackRock’s EMEA Investment Stewardship team (BLK.N), said her firm did not make social, ethical or environmental values judgments on behalf of clients, and company engagement was critical in addressing the health and social risks of tobacco.

“I don’t think that we will end up, by divestment, in a world where tobacco won’t exist, therefore engagement by responsible investors is key to holding companies to account on ESG (environmental, social and governance) issues”.

A spokeswoman for M&G, another investor in the sector, said it regularly discussed environmental, social and ethical risks with tobacco company management, and encouraged improvements where it considered performance to be poor.

SLI, BlackRock, M&G, Columbia Threadneedle, Handelsbanken and Aberdeen Asset Management all said clients could bypass tobacco with their socially responsible investment (SRI) funds. Handelsbanken said about 40 percent of the assets that it manages are in funds that exclude tobacco investments.

The performance of SRI funds, which often also avoid industries such as armaments and alcohol, is typically benchmarked against indexes that exclude tobacco firms.

But mainstream funds are benchmarked against indexes that usually include them. Any that chooses to drop tobacco stocks is likely to underperform its benchmark index, putting pressure on managers to stick with the status quo.

“You need to benchmark against other funds that don’t include tobacco and see how you how perform in other investments you have put in its place,” Melsom said.

The following firms declined to comment or didn’t respond to a Reuters request for comment:

JPMorgan Asset Management, Nordea Asset Management, Invesco Perpetual, Morgan Stanley Investment Management, Vanguard, Franklin Mutual, Capital Group, RBC, Legal & General Investment Management, Credit Suisse Private Banking, SEB Investment Management, Andra AP Fonden, Forsta AP Fonden, Oppenheimer Funds, Gabelli Funds, Capital Research and Reinet Investments.

($1 = 0.7482 pounds)
($1 = 0.8965 euros)
(additional reporting by Martinne Geller; editing by David Stamp)

The ‘ethical’ investment funds pumping millions into oil firms and big tobacco

Companies backed by the multi-billion dollar funds include Exxon Mobil which has been accused of hiding climate change science and British American Tobacco, Europes largest cigarette maker

Funds are putting investors cash into companies such as BP and Exxon which have questionable ethics records Reuters

Thinking of putting your money into a fund that describes itself as ethical? You’d better read the fine print if backing Exxon Mobil and British American Tobacco isn’t your idea of doing good.

The oil company accused of misleading investors by hiding evidence about climate change and Europe’s biggest cigarette maker are among the holdings of some of the 30 biggest funds that invest following environmental or social governance guidelines, according to data compiled by Bloomberg.

While some funds are strict about supporting only clean-energy producers, others buy securities from Big Oil to Big Tobacco along with consumer brands such as Unilever and Facebook. The wide range of holdings is the result of each institution deciding on its own what meets the ethical threshold.

Loosening that definition has helped ethical investing grow about 80 per cent over the past five years to $223 billion, data compiled by Bloomberg show.

“The industry hasn’t done itself many favors in making sure people understand what’s what,” said Charlie Thomas, who manages €950 million under Jupiter’s Ecology funds, which exclude oil and tobacco in favour of companies that have a solution for environmental issues.

“The challenge that we have as a sector is to be very clear with the investor so they know what they’re actually buying. Not all ethical funds are the same.”

There’s no agreed definition on what an ethical fund should be. That has allowed to mushroom the number of funds saying they support companies guided by standards on environmental and social governance. There are no set criteria for how companies report performance on those metrics, and no regulator lhas set out rules.

The looseness of the system is a concern to the G20 nations, which asked a panel led by Mark Carney, governor of the Bank of England to draw up a proposal for voluntary reporting standards that companies could follow if they chose.

Ethical investing has grown into a $223 billion dollar business (Bloomberg)

Ethical investing has grown into a $223 billion dollar business (Bloomberg)

That’s likely to offer best practices to companies and accounting firms that draw up sustainability reports and release data through organizations such as the non-profit CDP and Bloomberg.

Ethical, Social and Governance (ESG) fund strategies range from excluding only companies they score the worst in their industries on specific metrics to including only the best of their class. Some seek to spur change by working as activist shareholders. A few will invest only in companies that benefit the environment. The only way to tell the difference is to look at what the fund is holding.

No Simple Label

“There’s not a simple label you can slap on it to solve the problem,” said Greg Elders, an analyst at Bloomberg Intelligence in London tracking ESG data. “Clients think it’s a shortcut for seeing how sustainable a fund is.”

The Bloomberg survey found the number of environmentally friendly or ESG funds has more than doubled in the past decade to about 730. Of the top 30, at least six hold oil companies.

At Impax Asset Management Group, which runs a $568 million Environmental Markets fund, the number of companies that meet its rules has jumped to 1,500 from 250 in 1999, with the pool of firms eligible to be included growing to $4.1 trillion, according to Jon Forster, a portfolio manager at the firm.

Investors have benefited from the diversification of green funds. The main ethical investing index, the MSCI KLD 400 Social Index, has risen more than 225 per cent from the March 2009 low, about as much as the S&P 500. The gauge includes 400 companies, with Microsoft, Procter & Gamble and Verizon having the biggest weightings.

Growth in the sustainable-fund business, regardless of how “green” some of its investments are, is set to continue. A boom in renewable energy investment along with tighter environmental rules and increasing interest from younger people are the main drivers, said Sarbjit Nahal, head of thematic investing at Bank of America in London.

“The word I would stress is ‘mainstream,’” Nahal said. “There’s been a huge change towards taking longer-term issues into account. This is a space that you want to be in.”

Here are some of the top 30 ESG funds that hold oil and tobacco:

TIAA-CREF Social Choice Equity Fund, with $2.8 billion under management
Occidental Petroleum
Marathon Oil
KLP AksjeGlobal Indeks I, a $3.7 billion fund

The fund aims to achieve “positive change through active ownership,” said Annie Bersagel, responsible investment adviser at KLP.
DNB Global Indeks, a $1.4 billion fund

Avoids companies responsible for “grave harm to the environment” and that don’t meet DNB’s “minimum ethical requirements,” according to its website.

Mining giant BHP Billiton
ACTIAM NV’s $1.3 billion Responsible Index Fund

Invests “exclusively in shares that meet the ESG criteria, as formulated” by itself according to its website.

British American Tobacco
Royal Dutch Shell
Pax World Management LLC, which manages ESG funds including the $1.9 billion Pax Balanced Fund
Occidental Petroleum

The Balanced Fund selects the best assets from a social and environmental perspective relative to their peers, according to Joseph Keefe, Pax Chief Executive Officer, who said he doesn’t see the need for more definitive criteria in ESG investing.

Amundi Asset Management’s Atout Euroland $1.4 billion fund

Researchers find tobacco use linked to most fatal form of stroke

A possible link between a deadly form of stroke and smoking has been discovered by scientists.

Researchers in Finland found a sharp drop in the number of people who suffered a subarachnoid haemorrhage – the most fatal form of stroke – occurred in the same period as a decline in smoking numbers.

Between 1998 and 2012, the number of people who smoked plunged 30% among 15 to 64-year-olds in the country, the study found.

During this time, cases of the killer stroke also went down by 45% among women under 50 and 38% among men under 50, as well as by 16% among women over 50 and 26% among men over 50.

Scientists said they could not establish whether the change in smoking habits caused the drop, but it was “highly likely” Finnish tobacco policies played a role.

A British charity said the findings were a “wake-up call” to smokers.

In recent years, Finland has slashed smoking numbers through a series of public health campaigns and legislative action against the sale of tobacco and its use in public.

Professor Jaakko Kaprio of the University of Helsinki said of the findings, which were published in the journal Neurology: “It is extraordinary for the incidence of any cardiovascular disease to decrease so rapidly at the population level in such a short time.

“Even though we cannot demonstrate a direct causation in nation-wide studies, it is highly likely that the national tobacco policies in Finland have contributed to the decline in the incidence of this type of severe brain haemorrhage.”

Health charity Ash said the findings should motivate smokers in the UK to quit.

Chief executive Deborah Arnott said: “The Finnish study is a wake-up call to smokers.

“They need to know that if they don’t quit smoking they’re twice as likely to die from stroke than non-smokers.

“But stopping smoking can be tough, which is why it is so important to ensure that all smokers are given the best possible support and encouragement to give up.”

Why Big Tobacco has reason to fear the waking divestment giant

This week The Guardian published a long-form profile by veteran journalist Gideon Haigh of Dr Bronwyn King.

I wrote a column about her last October when her efforts to dissuade the Australian superannuation industry to divest itself of tobacco stocks had been followed by a dozen companies selling off more than A$1 billion worth of tobacco stock.

Haigh’s report details the recent decision of AXA, the world’s second biggest insurance company to sell €200m of tobacco shares and to start divesting €1.6 billion worth of tobacco bonds after interaction with King. She now heads an International Union Against Cancer project to spread it globally, and her work has all the momentum of a brakeless train.

In Haigh’s article, Dr Alan Blum – a long time tobacco-control advocate who was once editor of the Medical Journal of Australia – tried to pour cold water on the project:

As long as another investor buys what a university, pension fund, or a health insurer sells there’s no net loss of investor confidence in the stock or capital in the company’s coffers.

This is a profoundly myopic view of why King’s work will instead be of great concern to the global tobacco industry. It’s true that every time an owner sells tobacco stock, it is bought by another, and often at a higher price (tobacco stocks are mostly still highly valued). The net value of the industry may go up as a result.

But when the reasons for such transactions are publicised in terms of the seller wanting no further part in assisting the tobacco business (or profiting from it) there is an additional externality or “price” in the transaction that is of absolute importance.

If we try to answer the question “why do some governments enact tough legislation and policy that we know impacts hard on tobacco sales?” we cannot avoid considerations about the values that drive such decisions.

When I interviewed former Labor health minister and attorney general Nicola Roxon for our book (with Becky Freeman) on plain packs, she was emphatic that the decision to go down that path was seen as a political no brainer. She told me: everyone hates the tobacco industry. So any government hitting them hard will be seen as doing good work.

It’s not hard to find evidence that the tobacco industry is widely reviled. A 2011 survey of 85,000 international respondents (including an Australian sample of 5,611) conducted by the independent Reputation Institute and AMR Australia rated all major industries in 25 categories for reputation.

The top categories were consumer products (73.8), electrical and electronics (73.2) and computers (70.3). By far the worst performing category was tobacco which scored only 50.1 – well behind the next lowest category (utilities – 59). Few love their gouging power companies, but even fewer apparently love tobacco companies.

A 2005 Australian study found 79% of Australians thought tobacco companies either never or mostly did not tell the truth and another from 1999 found tobacco executives were rated the lowest of all occupational groups, including used car salesmen, traditionally the populist low-water mark of ethical business conduct.

This enduring stench didn’t happen capriciously or by fairy dust being cast about. It happened because over the years arc lights turned on the industry’s conduct and the unparalleled health consequences of its sales success stripped it of legitimacy and turned it into a pariah industry.

This is the key to why Bronwyn King’s work is so important. Each time she gets to argue for the reasons for divestment, and each time an investor repeats those reasons in making the announcement, the public and political narrative against tobacco consolidates an imperceptible, but cumulatively undeniable extra few steps forward.

As this inexorable momentum proceeds, people in power emerge, like Nicola Roxon, who translate that narrative into policy action which hammers the industry by reducing smoking.

With the narrative now rapidly percolating though the global finance community, King’s mission is now turbo-charging that narrative in a community which has always responded by reflecting Milton Friedman’s dictum from Capitalism and Freedom that:

Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.

The tobacco industry goes to great pains to paint itself as just another perfectly legal, legitimate industry selling products that fully informed customers choose to smoke, addiction notwithstanding.

But in the 19th century, other similarly perfectly legal industries like the slave, opium, and child labour trades, began to see their legitimate status eroded by the social revulsion that their activities caused. These industries also richly rewarded their owners and investors, but those considerations were pushed aside by other values.

This is what is now happening with the tobacco divestment momentum.

Share price is a very poor proxy for the goals of tobacco control which are to reduce tobacco use and therefore the massive disease burden being caused. As Big Tobacco’s share prices have risen around the world, smoking has often gone back the other way.

The negative value to the industry of the divestment argument is so much larger in the long term than any short term profit. Bronwyn King is doing historic work.

Simon Chapman, Emeritus Professor in Public Health, University of Sydney

EU has chance to stop illegal tobacco trade

The trade in illicit tobacco is a massive problem, but the European Commission has been presented with a golden opportunity to strike a blow against the smugglers. But it must look long-term, writes Eric Lequenne.

Eric Lequenne is International Business Development Manager at Worldline.

According to KPMG, illicit tobacco accounts for up to 12% of all cigarettes and more than 58 billion cigarettes in the EU alone. Aside from the obvious public health risk of illicit cigarettes flooding the EU, there’s a huge impact on tax revenues: as much as €12.5 billion a year. Those billions could go towards schools, infrastructure or tax cuts. That hurts us all, slowing growth, reducing competitiveness and costing jobs.

Cigarettes are among the top five illegally-traded products alongside drugs, arms, fuel and diamonds. By market share, smugglers run the third-largest tobacco business in the world.

So it’s understandable why the European Commission is focused on tackling the issue through the revised EU legislation on Tobacco Products (EUTPD), adopted in 2014. It is a good example of product-specific legislation, as it aims to protect public health, while improving the internal market for tobacco and related products. In this context, the EUTPD introduces new requirements to combat illicit trade that will be made operational through implementing acts on tracking, tracing and security features, expected to be finalised in late 2017.

The tobacco industry, its suppliers, law enforcement authorities, member states, and the EU should work together to eliminate this illicit trade. Everyone agrees that Europe needs a solution that can be implemented quickly, and meets the objectives of the Tobacco Products Directive. We need a system that encourages competition – flexible and effective solutions based on common standards. This will strengthen cooperation between enforcement, manufacturers, and others in the supply chain. We also need adequate control in place, and penalties for those who fail to comply, or simply cheat.

The department leading efforts on tobacco is DG SANTE. To help reach a decision, an independent consultancy was asked to conduct a feasibility study into different possible solutions that would meet the conditions of EU legislation.

The result? A report that correctly identified the need for universal standards, but failed to properly consider the emerging Track&Trace technologies being tested in the real world. The report also failed to encourage technological progress through competition.

We thus welcome the news that DG SANTE has commissioned a further study into the options available. It’s an opportunity to get it right and come up with a future-proof solution to the problem – a solution with a fighting chance of getting ahead of the criminals who feed off the trade.

Imposing a single solution across the EU rather than defining open standards may seem superficially attractive. But the real-world implications are significant – and highly negative, if the chosen approach stifles innovation and competition among service providers. The key to fighting this battle – and winning it – is to supercharge the power of innovation. This means working with third parties to ensure the solutions compete with each other, continue to improve, and respond to changing threats – while meeting basic technical standards.

The World Health Organisation’s (WHO) Framework Convention on Tobacco Control (FCTC) and its Protocol to Eliminate the Illicit Trade in Tobacco Products provided a good model. The Protocol requires the implementation of T&T systems for tobacco products throughout the entire supply chain. But it rightly does not establish any specific global standards for implementation, since these would be impossible to apply. Instead, it requires governments to implement their own systems and work together to maximise effectiveness.

In the GSM telecoms sector, too, open standards have been effective in driving innovation, ensuring a competitive environment that hugely benefits businesses and consumers.

Many industries, including pharmaceuticals, alcohol, and luxury goods, face similar issues. They are responding with digital solutions that can effectively track, trace and authenticate products throughout the supply chain. Many of the most advanced solutions proposed by the technology and security industries today are embedded into the packs themselves, rather than being merely glued on with a physical stamp containing the security feature.

We have worked with many of the industries facing similar challenges. Worldline has seen the benefits of collaboration – essentially, taking advantage of the industries’ own expertise in fighting counterfeiting and illicit trade. We do recognise that the tobacco industry is different; some argue this industry should be excluded from participating in implementing any regulation. But we believe that leveraging their expertise can help fight the scourge of illicit trade. This should be part of a clear framework, based on independent auditing and effective controls – ensuring consistent best practice.

The directive’s acts may not be implemented until 2019. Who knows what new technology will be market-ready by this point? That’s why EU work must look beyond the prescriptive and restrictive, and take the more complex but ultimately more effective route of developing interoperable standards. The Commission now has a unique opportunity to deal a real blow to the criminals who trade in illicit tobacco.

Confusion still reigns over e-cigs

The European Union and US are huge e-cig markets with regulatory models in place. With Malaysia expected to table it’s vape laws soon, Sunday Star headed to Warsaw, Poland, for the recent Global Forum on Nicotine 2016, to see what’s happening globally.

IN May, e-cigarettes and other nicotine vapour products in the European Union (EU) were placed under the regulation of its Tobacco Products Directive (TPD).

In the United States, the “deeming” rule kicks in next month, meaning that e-cigs and vaping will be “deemed” to come under the aegis of the strict Family Smoking Prevention and Tobacco Control Act of 2009 (TCA).

Both these decisions have been challenged by vapers, manufacturers and NGOs that feel the regulations will stifle growth of a product that they claim is less harmful to health than regular cigarettes and that could help smokers give up the much more destructive habit.

However, the TPD and TCA don’t seem to take this into consideration and treat e-cigs and vaping the same way they treat regular cigarettes.

We spoke to industry reps and NGOs at the Global Forum on Nicotine 2016 held in Warsaw recently to survey their opinions on the regulations.


The TPD is meant to harmonise the market but there’s disharmony in its implementation and enforcement, says Gerry Stimson, emeritus professor Imperial College London, forum coordinator and formerly part of Britain’s National Institute for Health and Care Excellence working group that prepared guidelines on tobacco harm reduction.

According to Stimson, each EU member nation must still pass its own legislation to adopt the TPD.

Britain is doing the barest minimum but Poland and Spain are adding a ban on online and cross-border sales.

“That will kill e-cigs because everybody buys things on the Internet these days,” he sighs.

He expects the TPD to result in an e-cig industry dominated by large companies, with vapers seeing fewer products and less information in the market.

“The US ‘deeming rule’ is a magnification of the TPD’s problems. Looking at what we have now, perhaps Malaysia can come up with a better model for Asia to follow,” he says., the Britain-based independent resource that tracks regulations and market information for the e-cig sector, agrees that the TPD is not being implemented or enforced consistently. Barnaby Page, its editorial director, discusses the impact of some of the regulations at the forum.

“The TPD lists e-liquid ingredients that aren’t allowed so manufacturers follow the same standards across Europe. Then you get to Germany, and the list is more extensive with lots of small print.”

And while the under-18 sales ban is widely accepted, the approach to online sales differs among EU members, Page points out: member states can either ban, permit or only allow online sales within their respective borders.

Advertising on TV and radio and in print and online are outlawed but in-store and outdoor advertising (like billboards), are allowed. But, as with online sales, there is a mosaic of approaches across the continent, says Page: some countries, like Slovenia, allow outdoor but not in-store advertising while it is the reverse in Austria.

Furthermore, “E-cig taxation isn’t mandated by the TPD but there’s a huge variation in rates in the countries that impose a tax. In Serbia, the tax is €0.03/ml (S$0.04) while it is nearly €0.40/ml in Italy,” he says.

While the TPD recognises that non-nicotine products are not the same as nicotine, many countries still equate vaping with smoking.


According to Dr Miroslaw Dworniczak, Poland is among Europe’s top three e-cig markets, thanks to the lack of regulation.

The former scientist and lecturer at the Department of Chemistry, Adam Mickiewicz University, was a smoker for 35 years before he started Poland’s first vaping blog six years ago.

The Polish Government, he says, already has a draft legislation that will be implemented soon that goes even further than the TPD restrictions.

He worries particularly that a ban on online sales will deny those in smaller cities and the villages access to e-cigs. An online ban will halve the number of vapers, he predicts.

Poland, he says, is aiming to be a nicotine-free country by 2030 but for now e-cigs can be sold everywhere and to everyone, including minors.

“But soon, e-liquids and every e-cig component, like the battery and atomiser, must be registered.

“Product approval will take at least six months but e-cigs evolve rapidly. By the time retailers can sell the product, something new would have come along,” he says.

Poland’s largest e-cig supplier was bought over by a big tobacco company last year. And he foresees smaller shops being swallowed up soon when the regulations cause costs to soar.

Vapers there are trying to call for a public hearing to amend the draft legislation before it becomes law.

“The law should be as short as possible but the EU loves long legislations. The TPD should only have a ban for minors, a requirement for e-liquid analyses and proper labelling. Enough,” he argues.


The TPD isn’t ideal nor is the EU ready to regulate the industry but at least there’s something in place, observes Dr Farsalinos with a shrug.

“The transition period for implementation of the TPD is until November. But there’s still no submission system for product analysis and testing reports.

And there are some unnecessary restrictions that have nothing to do with quality or safety.”

Like Dr Dworniczak, he feels the six-month waiting period before a product can be released into the market is too long. Two to three weeks, he argues, is sufficient.

While he agrees that the TPD will slow down product innovation, the researcher at the Onassis Cardiac Surgery Center and University of Patras in Greece doesn’t think hefty cost complaints are justified.

“Yes, it costs money to implement but so does every other regulation. Companies should invest in the safety and quality of what they put out.”

Dr Farsalinos believes the TPD is much more sustainable and realistic than US regulations.

The problem, he explains, is the use of the Family Smoking Prevention and Tobacco Control Act (TCA) to govern e-cigs in the United States. This is because the TCA focuses mainly on preventing new tobacco products from being developed and marketed.

“When you apply a law like that to e-cigs, it’s effectively a ban on vaping. That’s why everyone’s taking the government to court.”

United States

Patricia I. Kovacevic is the general counsel and chief compliance officer of an American e-liquid and vaping device manufacturer; she also sits on the Global Tobacco and Nicotine Forum advisory board and the Vapour Technology Association board.

Generally, she says, the TCA gives the US Food and Drug Administration (FDA) the authority to regulate tobacco products. Through the “deeming rule”, however, the FDA has extended that authority to include things not derived from tobacco – like e-cig devices and non-nicotine e-liquids – because of the way they might be used with nicotine.

Since the FDA’s deeming rule was published in May, “All e-cigs and vaping products in the US are categorised as new tobacco products so pre-market applications for every items – including e-cig parts like coils and mouth pieces – must be filed with the FDA.

“It’s not realistic. Many will go out of business as innovation comes to a screeching halt,” she says, adding that other deeming rule requirements include filing product health effect reports, having nicotine and tobacco warning labels, as well as bans on sampling and modified exposure claims.

The deeming rule will come into force next month but the requirements will be implemented in stages.

The biggest problem, she feels, is the lack of product standards and good manufacturing practices.

“The FDA’s concern isn’t to make safer products for consumers but rather to take most products off the market,” she feels.

At least five lawsuits challenging the deeming rule have been filed in the United States, she says.

“The courts can either rule that no changes be made, set aside the deeming rule and force the FDA to go back to the drawing board, or set aside parts of the deeming rule or of the TCA.

“The cases could even end up in the Supreme Court on appeal.”

Dismissing the use of the EU’s TPD and America’s TCA to regulate e-cigs as “rubbish”, Clive Bates says they have resulted in an outcome that’s “worse than doing nothing”. He is the director of Counterfactual Consulting, a Britain-based public interest consultancy and advocacy practice.

As an example, he questions the sales ban to those under 18: This, he feels, is a political rather than a public health benefit decision because studies show that smoking has declined at a slower rate in states that ban e-cig sales to those under 18.

That, he says, is an example of an unintended consequence of a well-meaning policy.

Stressing that regulations must benefit consumers, he insists that the main objective of any government must be to reduce disease and promote informed choices.

Regulators must be rigorous about unintended consequences of policy interventions, he warns.

“So before you intervene, make sure you’re not making things worse.”


EU: Tobacco giant PMI won’t start smuggling after deal ends

It almost looked like the anti-smuggling agreement between the European Union and tobacco giant Philip Morris International (PMI) would expire without any public acknowledgement.

After 12 years of cooperation, the increasingly controversial agreement expired on 9 July without any press release or public announcement.

On Monday (18 July), the EU commissioner responsible for the file, Kristalina Georgieva spoke to EUobserver to explain her decision not to renew it.

In her office in the commission’s Berlaymont building in Brussels, decorated with purple furniture, Georgieva said that it was the right decision in 2004 to sign the agreement, and it was the right decision in 2016 to let it expire.

“When we signed the agreement there was a lot of support for it in the European Parliament, among the public, and rightly so. Because it was a legal victory for the EU at the time when there was nothing else to fight illegal smuggling with. But today this is no longer the case,” she said.

The EU-PMI deal was agreed as part of an out-of-court settlement after PMI was accused of smuggling its own goods to avoid paying taxes.

More than a year ago, Georgieva promised MEPs an assessment report into the cost and benefits of the agreement, which made the EU, its member states and PMI partners in the fight against illegal tobacco smuggling.

It included reporting obligations for PMI, and payments into EU and member state coffers of around €1 billion during the 12-year period.

No Eureka moment

In February, the commission published the long-awaited assessment report that contained few strong arguments for renewing.

In March, the EU parliament adopted a text in which it urged Georgieva, one of the commission’s vice-presidents, not to renew the agreement.

“I wouldn’t say that was a moment when the light bulb came,” she said, adding that the picture became gradually more clear when laying out the pros and cons of continuing with the agreement, and talking to “numerous people”.

One argument in favour was that the new legal tools that are supposed to bring tobacco companies in check will not come into force until a few years.

“What determined that it is best to let it expire, was when we took a very careful look into what it has delivered so far and what is the risk of the regulatory gap,” said Georgieva.

She said she believed the risk of PMI smuggling its own cigarettes to avoid taxes “is very minimal, if not none”.

“Why? Because Philip Morris says so, they have committed very publicly that with or without the agreement they will continue the same practices,” she said.

She said the tobacco sector is also something of an oligopoly, with only four major companies selling most cigarettes in Europe, and the other three companies have similar agreements that run until 2022 and 2030.

Georgieva called it “the peer pressure factor”.

“In that peer group, in this particular sector, it is unlikely that the company would behave worse than its peers,” she said.

But the “most important” element of the agreement was that it convinced tobacco companies to introduce some kind of track-and-trace system. That way, if a smuggled product is found, its origins can be traced back to the factory.

Track-and-trace is part of the new tobacco products directive, and also part of an international treaty backed by the World Health Organisation (WHO).

The directive went into force in 2014, although the commission is still due to present detailed track-and-trace rules, which are expected next year.

The WHO’s Protocol to Eliminate Illicit Trade in Tobacco Products will enter into force once 40 countries have ratified it – so far 18 have done so.

“We are very much on the view that 2022 is realistically the target year for the protocol to be into force,” said Georgieva.

The EU is a signatory and ratified the text last month. Because the EU is not a country, its ratification does not count as one of the 40. But were all EU member states to ratify, the treaty would enter into force globally.

However, Georgieva said she wanted to focus her efforts on convincing countries where tobacco smuggling is “most pervasive”.

“I’m thinking of Belarus,” the Bulgarian politician said.

“Cigarettes are being bought legally in Belarus and they are smuggled into the European Union. In Belarus they are much much cheaper,” she said, although she was quick to add that in the eastern European country there was “a very strong commitment to fight illegal trade”.

Once the WHO protocol comes into force, it may spell trouble for the three remaining tobacco agreements.

The WHO has said that the deals are in conflict with the treaty to which the protocol is a supplement, the Framework Convention on Tobacco Control.

But Georgieva said the commission’s legal service had a different interpretation, and that both the existing agreements, as well as a renewed PMI deal, would have been legally possible.

“This being said, we did take also this into account – that there is difference in interpretation – and that although we feel we are on sound legal ground, given that what matters is not just the legality of it, but what matters is our collective sense of justice and doing the right thing, and so we did not prolong,” she added.

Although the agreement has gained several vocal opponents in the last two years, Georgieva said she wanted to stress that the PMI agreement has been “successful”.

“We cannot establish a direct causal consequence between: here is the agreement and here is the shrinking [of PMI goods being smuggled], but the fact is that 85 percent less tobacco products are smuggled,” she said.

“One of the things we need to learn as a human race is that when something is done, to call it quits. To say: great, we have achieved what we have been able to achieve, there is no need to continue.”