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BAT invests a billion dollars in Romanian HnB factory

HnB Factory

There’s been a lot of talk recently from opponents of Heat not Burn – including, regrettably, some of the less intelligent vape reviewers – about how the technology has already peaked. Growth has slowed, they say; fewer smokers are switching to HnB, and the market is already saturated. It’s true that iQOS sales in Japan have slowed over the last quarter, but does this mean the great heated tobacco experiment is fizzling out?

Well, I’m not convinced. Has iQOS reached market saturation in Japan? It might have done. That wouldn’t really be a huge surprise. After all, iQOS is the first generation of HnB that’s really gone mass market. Maybe all the Japanese smokers who feel like switching have done so already, and sales are going to fall back to existing users replacing their devices. This happens when a new product disrupts an existing market.

What’s the good news?

Japan isn’t the only market for HnB, though – not by a long way. iQOS, the most widely available product, is now on sale in most of Europe as well as in Asia, but it hasn’t hit the huge US market yet. It’s still going through FDA approval, but if it gets there (and it probably will) millions more smokers are likely to switch. Then there’s Glo, which so far is only available in selected countries. Maybe KT&G will release their Lil outside South Korea – and I hope they do, because I have one on my desk right now and it’s excellent.

Then, of course, there’s the technology itself to consider. HnB has been around since the 1990s at least, but iQOS, Glo and Lil are the first generation of really effective devices. Compare that with e-cigarettes for a moment. The first really effective, widely available e-cig was probably the JoyeTech eGo. Now compare an eGo with today’s entry-level devices. There’s a bit of a difference, isn’t there? Well, iQOS and Glo are the eGo of heated tobacco.

Philip Morris, British American Tobacco, Japan Tobacco International and others are all working to improve and refine the technology that’s gone into their existing HnB systems. Over the next few years we can expect to see improved versions appearing – devices that will be even easier to use, come even closer to the experience of smoking a cigarette, and reduce the harm even more. A lot of smokers who weren’t quite convinced by the first generation of products will decide to switch once something even better is on the market.

Again, this is exactly what we saw with vaping. I found my first e-cig on a market stall in Kabul. It was an old-style three piece cigalike, and it was bloody awful. There was no way a device like that was going to replace my smoking habit, which seeing as 200 Marlboro cost a whole $10 in the PX was pretty heavy. On the other hand it did work just fine to keep nicotine deprivation at bay on my regular seven-hour flights home, so it was enough to keep e-cigs in my mind. Later, when I decided I really had to quit smoking, I found an eGo-C kit and that was actually good enough to do the job. What I’m using now, of course, blows an eGo – or a Marlboro, for that matter – right out of the water.

Growth to come

Anyway, I don’t think the market for Heat not Burn products has peaked, or even come close to its full potential. And, it seems, neither do British American Tobacco. I can say that pretty confidently, because BAT have just announced that they plan to spend a billion dollars upgrading one of their factories and turning it into their European centre for HnB manufacturing.

Romania was the first European market for Glo – and also an early one for iQOS – and BAT already have an established manufacturing capability there. The company’s market share in Romania is around 55%, and to support that they have a large factory at Ploiești. This is the factory that’s going to benefit from that billion-dollar investment over the next five years.

BAT’s plan is to roll Glo out across more European countries in the second half of this year, and to do that they need a reliable supply of Neostiks – ideally a supply that doesn’t involve shipping them from Asia. The plan is for Ploiești to become the sole European manufacturing and supply centre for Neostiks. The plant already supplies the European market with pods for the iFuse hybrid device, so it looks set to become a major centre for BAT’s reduced-harm products.

A bright future

If BAT weren’t anticipating strong sales of Glo in Europe, they’d be very unlikely to spend €800,000,000 on the infrastructure to support those sales. Clearly they’re confident, and I think they’re right to be. Glo will suit a lot of smokers who just didn’t get on with iQOS. Personally I think iQOS comes closer to the taste and sensation of a cigarette, but that has to be balanced against Glo’s huge battery capacity. Both devices have their strong points and I think Glo is going to do well as it hits new markets.

I’m not the only one who thinks that, either. The Times made BAT last week’s Share of the Week, citing the company’s investment in reduced harm products as a likely source of future growth. PMI might have seen their profit growth slow along with iQOS sales in Japan, but investors can obviously see a big market waiting to be tapped into.

Meanwhile, BAT’s Ploiești factory is going to get an extra 7,000 square metres of manufacturing space and plans to take on an extra 200 people to work on the new production line. PMI are also expanding in Romania, spending over $500 million to convert a cigarette factory near Bucharest into a HEET factory. I don’t expect these to be the last HnB projects launched in Europe.

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There’s a new HnB study – and you should ignore it

new HnB study

I’ve been involved in e-cig advocacy for years, so I’ve seen some truly awful studies. It takes a lot to surprise me these days because I’ve seen it all: Badly conducted experiments, tortured statistics, misrepresented data and straight-out bad science. It isn’t often I find myself shaking my head at just how crap something is, but step forward anyway South Korea’s Ministry of Food and Drug Safety, because you’ve achieved it.

After Japan, South Korea is one of the biggest markets in the world for Heat not Burn products. For South Koreans, conventional vaping is just a niche hobby; if you want to quit smoking you go with HnB. The country is also one of the most varied markets. As well as the now-familiar iQOS and BAT’s newer Glo, there’s an indigenous competitor, too – the Lil from Korean Tobacco and Ginseng. We’re still waiting for KT&G to send us a Lil, by the way, but when they do you’ll be the first to know what it’s like.

UPDATE: We now have the Lil! Expect a review on this website in the very near future.

Anyway, lots of South Koreans like HnB. All three products are selling well despite recent tax rises on the tobacco sticks for them, and smokers seem to be switching in pretty large numbers. So, as you’d expect, people who make a living telling smokers to quit are getting annoyed that the tobacco industry is doing their job better than they can.

So the knives are out for HnB in South Korea, and the Ministry of Food and Drugs just decided to have another go. This time their weapon of choice is an “independent” report by a group of Korean researchers that claims HnB isn’t less dangerous than smoking. At this point I’m going to stick in a disclaimer and say that there’s no formal evidence that it is less dangerous than smoking. That’s going to take decades of research and data collection, and with the products being so new we obviously don’t have that yet. What we do know is that, according to absolutely everything we understand about toxicology, it would be very surprising indeed if they weren’t significantly safer.

The shocking details

So what does this report say? Well, nothing good. It’s basically a toxicological analysis of the sticks for all three of the devices on the market. The media aren’t reporting any details of the study – such as the methods it used or even who conducted it – so there’s no way to tell what sort of science is behind this, but going by the results it’s extremely poor.

The headline conclusion is that HnB is no safer than smoking because it has nasty chemicals in it. This is in fact true; HnB sticks – and the vapour they produce – do have nasty chemicals in them. The problem is that, while true, this isn’t actually very informative. As any toxicologist will happily tell you, almost everything has nasty chemicals in it. If the mere presence of nasty chemicals was actually a problem, none of us would live long enough to be born.

What matters is how much of those chemicals is present. This is often expressed as “The dose makes the poison,” and it isn’t exactly a radical new concept that the “independent researchers” weren’t aware of yet – it goes back to Paracelsus, and he died in 1541. Some public health activists might claim there’s “no safe level” of whatever they’re attacking this week – second-hand smoke, alcohol, sugar – but they’re talking rubbish. The fact is that there’s a safe level of anything – arsenic, cyanide, even plutonium. That safe level might be extremely low, but it does exist. No matter how toxic or carcinogenic something is, there’s a level below which it just isn’t going to do you any harm.

Obviously, if it’s above that level there is potential for harm, but it isn’t a simple harm/no harm binary. If you swallow slightly above the safe level of arsenic you might feel a bit ill, but you’re not going to die. Similarly, if you inhale slightly above the safe level of some of the chemicals in cigarette smoke your risk of some cancers may rise slightly, but it’s not going to skyrocket like it would if you were firing up 20 Bensons every day.

And the authors of this shoddy study totally ignore that fact. They accurately picked up on the fact that HnB tobacco contains some of the same carcinogens as any other tobacco, but they totally ignored the relative concentrations in the vapour – and that is the only thing that matters. If they’d done their job properly they would have analysed the relative quantities and estimated a relative risk for that; instead they just found some nasty stuff and said “Yep, just as bad!” Sorry, but there’s no excuse for that – and their own data blows their argument to bits.

According to the report, analysis of HnB tobacco sticks found that they contained “up to five” human carcinogens. Just to put that into perspective, cigarette smoke contains at least 33 and even a humble carrot has over a dozen. If this report shows anything it’s that using an HnB device is, at least in terms of cancer risks, about as dangerous as eating salad.

Grasping at straws

The team also looked at two other components of both smoke and vapour – nicotine and tar. This is where they really lost contact with reality. They claimed that two of the products they tested produced more tar than an actual cigarette. This is where I would really like to know how they carried out the experiment, because in normal use there is just no way this is true. Tar is a mixture of combustion products, produced when tobacco burns – and HnB devices don’t burn the tobacco. It’s easy to see this by comparing the filters of a used Heet and a smoked cigarette; it’s tar that turns cigarette filters brown.

As for nicotine, their complaint about that was that all three products contained as much nicotine as a cigarette. Yes, they do. They’re supposed to, because if they don’t the devices won’t do what they’re supposed to do – give smokers an acceptable alternative to cigarettes. Any alternative to smoking depends on delivering enough nicotine that smokers are satisfied and don’t reach for a cigarette to deal with their cravings. Basically, the study is criticising HnB for being fit for purpose.

So does this study raise serious concerns about the risks of heated tobacco? Well, I think you can already guess what I’m going to say about that, can’t you? No, of course it doesn’t. It’s picking up on something that we already knew – that HnB vapour does contain some carcinogenic substances, although fewer of them and at lower levels than smoke does. It’s a reduced harm product, after all. The whole point is that, even if the harm isn’t totally eliminated, it’s much lower than continuing to smoke. That’s what basic toxicology tells us – and any study that conflicts with basic principles of science is wrong.