TobaccoAsia/ InterTabac Podcast #56

00:00:04: This is Tobacco and Vape News & Views, brought to you by Tobacco Asia in partnership with Business Insights.

00:00:11: The new digital platform of inter-Tobac and intersupply.

00:00:16: You host this.

00:00:16: tobacco asias Thomas Schmidt.

00:00:18: Welcome To A New Episode.

00:00:25: Hello everybody!

00:00:26: And welcome to a new episode.

00:00:28: Based In Brussels the European Cigar Manufacturers Association or ECMA is the premier trade association representing cigar and cigarillo producers in the European Union.

00:00:43: Established in early nineteen nineties, its members account for over eighty-five percent of traditional cigars and cigarrillos placed on EU market.

00:00:54: At present ECMA represents over thirty companies.

00:00:57: The vast majority are family owned medium sized enterprises.

00:01:03: Members are operating roughly twenty-five manufacturing plants across Europe in countries such as Belgium, Denmark Germany Italy Spain Switzerland and the Netherlands providing shops for literally thousands of people.

00:01:20: And with that short introduction it is now my pleasure to welcome ECMA Director General Paul Varakas to the mic.

00:01:29: Hello Paul!

00:01:30: Great to have you here

00:01:32: Artemis, it's fantastic to be here with you.

00:01:35: Wonderful!

00:01:36: So let's delve right in... Paul I have already mentioned that the ECMA counts the creme de la crème of Europe's cigar and cigareo manufacturers among its members Daniman, Fandomar Lyri, Scandi-Naming Tobacco Group Continental, Manifature Cigaro Toscano Just to name a few.

00:01:59: But interestingly, the member roster also comprises Ertinger Davidoff from The Dominican Republic, Oliva from Nicaragua and Maya Selva whose cigars are manufactured in Honduras & Nicaragua.

00:02:16: They're obviously not from Europe so how come they are part of ECMA?

00:02:22: Well thanks for your question Thomas!

00:02:25: That's always a tricky one... But to make it simpler of course, ECMA as the name suggests we represent European cigar manufacturers.

00:02:34: The vast majority are which were founded within Europe on European territory and I think it is Jeremiah Merabzell that keeps reminding everyone about the cigar industry from its origin is predominantly European And we see it as well from a machine-made perspective.

00:02:53: So in that sense, the companies you name are founded and rooted in Europe but they also have operations outside of Europe.

00:03:02: Petrion Davidoff is a Swiss based company operating from the Dominican Republic... ...and Maya Selva is French national which headquarters actually are in Paris!

00:03:12: The Oliva Company's HQs are located on Lovelace Web again in Belgium.

00:03:17: All right.. That makes sense.

00:03:20: And having clarified that, let's move on.

00:03:24: ECMA as you call it or E-C-M-A obviously acts the main lobbying and representative body for the cigar industry in the European Union.

00:03:36: What are the main tasks with which the ECMA involves itself on behalf of its members?

00:03:43: Well look Tamasa would say that the primary work of ECMA is obviously advocacy both for the European as well, at a national level.

00:03:52: That's very important because we can imagine in Europe that there are concerns about regulation and over-regulation which is different than what happens across the world.

00:04:08: Here, ECMA does advocate especially to educate decision makers on specifics educate about the specificities around the cigars and cigarrio sector.

00:04:21: That's number one, Number two is obviously for these manufacturers that are family owned companies and SMEs' companies trying to make sense into latest EU regulation coming up.

00:04:37: One example would be new packaging waste regulations.

00:04:41: What do you with it?

00:04:42: With Cigar boxes?

00:04:43: Do you print the required marking on a cigar?

00:04:47: On the box, that kind of thing.

00:04:50: And thirdly we are platform where ECMA members, big owners CEOs or operators gather twice per year to discuss future of the cigar industry in Europe and includes member outside of Europe as well as colleagues across jurisdiction including my colleague from US.

00:05:11: Now, it seems that also at the center of your activities again on behalf of you members are tasks like advocating for balanced tobacco tax policies and product display regulations as far as cigars and cigarrios concerned.

00:05:29: I think one of your main arguments is that regulators sometimes tend to pursue a one-size fits all approach.

00:05:39: With that, I mean they tend to apply the same tax regiments.

00:05:43: The same display and advertising rules... ...the same regulatory framework for all tobacco products whether it's cigarettes, vapes or cigars.

00:05:54: And this disproportionality hurts cigar makers in the end.

00:06:00: Could you elaborate on why is one size fits-all approach unfair?

00:06:06: as far as cigars and cigarillos are concerned.

00:06:09: Well, thanks for that Thomas it's unfair let's say based on two main points.

00:06:17: the first one is really to go back into what are the objectives of tobacco control you know?

00:06:25: And I think this is an important one because tobacco control is not tobacco education Right?

00:06:31: I know that some entities would like to have a tobacco-free generation, Tobacco Free Society.

00:06:37: But even they are still recognizing that the Tobacco free society... The society where less than five percent of the population will be smoking That means there'll be smoking in future as well.

00:06:48: So when we talk about tobacco control objectives We're trying make sure from a Population level perspective The population stop smoking.

00:06:59: In general When you are a state, You have different project priorities that you need to fund.

00:07:06: And it means if your objective is tackle smoking prevalence... ...you will put resources into products that are driving tobacco or nicotine predators.

00:07:18: It's really to recognize that cigar, cigarets and pipe for example Are not the target.

00:07:25: We're NOT the one who drives smoking prevalence.

00:07:28: These are product predominantly consume on an occasional basis.

00:07:32: That's one!

00:07:34: And the second, it is exactly what you said One size fits all.

00:07:39: Cigar is not a cigarette and by that I mean its not produced in same way.

00:07:45: so take a box of cigar imported from the Dominican Republic goes into Europe.

00:07:54: Well... A box of cigars actually comes naked with brand there.

00:07:58: This is not some sort of cigarette pack that's pre-printed because the volumes are so big.

00:08:04: So when we elaborate, for example labeling rules can really apply this same labelling requirement legislation from a pre printed pack of cigarettes to box of cigar?

00:08:18: No and thats our objective to explain to regulators That production patterns are different Because producers are different most specialized manufacturers, they only produce cigars and or cigarios.

00:08:33: So one side's fits all isn't fair because obviously we are asking players with different financial and human resources to apply the same criteria.

00:08:47: that's why it is unfair.

00:08:48: I also would argue that cigars especially premier cigars Are an artisanal product not a mass produced product like cigarettes.

00:08:58: You don't smoke two boxes of cigars a day, like you would for example smoke.

00:09:04: Maybe two packs of cigarettes today right?

00:09:07: So it's like comparing apples and oranges

00:09:10: Exactly!

00:09:11: And that what I meant by these products are predominantly consumed on an occasional basis.

00:09:16: Most cigar CROs consumers do it less than once per month... ...and i think thats important.

00:09:22: These products are not daily consumed And so they're not the one driving smoking prevalence.

00:09:29: You know what also irks me a lot of policymakers and NGOs, and activists... They often justify those restrictive tobacco control measures.

00:09:41: if you will with.

00:09:43: we must protect children and teenagers.

00:09:46: it's a sentence which is recited as If It Were A Holy Mantra but to be honest that Children and Teenagers are NOT the typical cigar smokers, are they?

00:09:57: So how do you counter that we must protect children

00:10:01: rhetoric?".

00:10:03: Well I would say absolutely.

00:10:04: We must protect our children from tobacco and nicotine addiction—that's one clear objective!

00:10:10: And because it is an objective…I'm also very confident in saying this isn't one policy aspect to be afraid of...because as Recent studies confirm and support the arguments that cigar cigareos are a niche, traditional product... ...that is indeed not consumed by young people.

00:10:34: And we'll even go further!

00:10:36: The last euro barometer — so the euro bar meter….

00:10:39: …is the publicly funded study of the European Commission— confirms two things which are very important.

00:10:47: One, eighty-two percent of cigar cigar oil smokers in Europe are over a thirty-five year old.

00:10:55: That's one!

00:10:56: The second is the fact that the same euro barometer could not find any significant or statistically significant daily consumption by young people, I mean from fifteen to twenty four years old across Europe zero percent.

00:11:15: so you know here when you ask me how can i defend or justify this argument, and respond to it.

00:11:22: I would simply say that by data... By using the data that keeps confirming our narrative or story To the fact we are a traditional artisanal niche product with specific consumer profile.

00:11:37: And apart from that Paul There already laws in place depending on country.

00:11:44: You must be over eighteen or twenty or twenty one even to buy a tobacco product.

00:11:51: So it's not like teenagers can go into the mall or do a cigar vending machine and get themselves two boxes of Davidoffs for example, so the laws are already in place

00:12:04: Absolutely!

00:12:05: And look these products very often only sold from specialized retailers.

00:12:11: I haven't heard any sort of specialized retailers that would see a teenager by a hundred euros box of cigars.

00:12:20: I mean, that's unearthed health!

00:12:22: This is the reality and this is exactly what i meant by.

00:12:26: are we really going to treat these products in the same way?

00:12:31: My point here simply can we have decent discussions about facts... And the facts are there That these products aren't indeed sold in dending machines.

00:12:43: They're not cool they're not disposable.

00:12:47: Those are all very valid points, Paul.

00:12:50: But there still is the European Union's tobacco products directive TBD to reckon with which I understand will be in the process of undergoing yet another revision... ...I think it's the third version.

00:13:05: that about being discussed or being deliberated.

00:13:10: Do you have any concerns regarding the upcoming TBD version?

00:13:15: Yeah, I do of course.

00:13:16: Otherwise it wouldn't have a job anyway.

00:13:19: That jokes aside sometimes i hear some economic operators looking with envy at what's happening across the Atlantic in the US where premium handmade cigars are being deregulated and that is fantastic for them because recognizing there are key specificities you constantly disregard when enact tobacco legislation.

00:13:44: But in Europe, we do things differently.

00:13:46: If it's legal you regulate.

00:13:47: so It is a very different mindset.

00:13:49: So we are regulated.

00:13:50: but I really want to remind the audience that We are currently regulated differently than cigarette and so our main threat is To have these exemptions or differentiated regulatory framework if like should be removed.

00:14:07: And That's Our biggest worry there.

00:14:10: What Do You Mean?

00:14:12: But to give you a proper example, we have smaller health warnings than for cigarettes.

00:14:18: You know?

00:14:18: For example, for cigareos actually the traditional ones... We are still allowed to keep flavors in because we use traditional flavors that all these new products have into the market.

00:14:30: and especially looking at both the fact some of this product do not need to carry health warnings Because they haven't been included.

00:14:39: well, TPD-II the second version of the Tobacco Crux Directive or you know I've been using flavors that are at least for some attractivity on people.

00:14:49: So the regulators is going to look into these aspects and our fear.

00:14:55: obviously it's much simpler for the regulators say like whoa!

00:14:58: It gets complicated.

00:14:59: i'm not giving an exemption from product X why product Z needs to have that etc.

00:15:05: etc.

00:15:06: so here simplicity to equalize regulations across tobacco and nicotine categories.

00:15:13: And that's something obviously ease of great

00:15:15: concern.".

00:15:16: I

00:15:17: see where this is going, so if you please forgive me for sounding a little overly dramatic here.

00:15:22: but what is ECMA actively doing to prevent the possible?

00:15:27: well let's call it disaster scenario?

00:15:31: As far as you know are there any indications at may actually take into account the concerns of Europe's cigar industry, in other words avoiding that disaster.

00:15:45: We have to remember these regulations are drawn up by bureaucrats who sometimes... ...have little real knowledge about what is going on IN THE STREET so-to speak.

00:15:56: just this same regulation for everything and everybody.

00:16:01: So how you actively trying to influence the European Commission to take into account your concerns.

00:16:10: Well, here it's a must.

00:16:11: actually I would be a bit kinder towards these bureaucrats.

00:16:15: Simply think that you know yeah they are just people.

00:16:19: A lot of my job is actually meet and deal with this people.

00:16:22: some of them Of course will be driven by ideologies but others when That's the vast majority They're driven by processes.

00:16:31: And fortunately in EU Processes to revise this legislation is actually quite formatted, meaning that not any cowboy can enter the saloon and start shooting for regulation.

00:16:46: There's a process through which regulators are opening calls for evidence.

00:16:51: they want to hear from everyone... ...and that feeds into a process of reports about how the current legislation is doing upcoming challenges or what are options on the table.

00:17:03: And so our first, let's say attempt to influence is of course... ...to provide evidence on why cigar cigarios should be treated differently.

00:17:14: All the indicators are green here!

00:17:16: Nothing has changed since twenty-twelve when the European Commission as well.

00:17:22: in twenty fourteen when the Council of EU and the European Parliament actually recognized these specificities and granted us exemptions There was a clear recognition that these products are merely consumed by the minority of the population and mainly by older consumers.

00:17:41: And so when we look at criteria how you can commission basically justify this exemption, We can clearly and convincingly say That nothing has changed.

00:17:52: So Ergo if Nothing has changed You do not need to completely revolutionize their regulatory framework for us.

00:18:01: And especially, that's very important if any regulators are listening to us.

00:18:06: To remind them these exemptions aren't blanket check.

00:18:09: they're actually what we call conditional exemption.

00:18:12: If you become popular with market sales going up or becoming attractive for young people the commission can put in the same regulatory framework than cigarettes.

00:18:23: and don't do it because as confirmed last November We have not reached the thresholds that would justify to treat us like cigarettes.

00:18:32: So right now, we are in this process of providing evidence for decision-makers who treat us differently and I think it's important to remind everyone.

00:18:42: these jobs is done

00:18:44: but

00:18:46: our main challenge is because we're niche segments... ...we aren't a priority as its pros & cons The pros being just if Fire narratives, sure great.

00:18:57: But the cons is that nobody cares.

00:18:59: and if nobody cares then usually a lot of the findings about our specificities are in footnotes... ...of these EU studies.

00:19:10: so my job actually to read foot notes and annexes And remind decision makers your own studies clearly continue justify or specific regulatory framework.

00:19:23: We're simply asking you to look at your own evidence available.

00:19:28: And I can honestly say, since the first report on the second version of TPE back from twenty-twenty in six years nothing has changed.

00:19:38: and if nothing has change there is no need to change The way the law works.

00:19:45: So In other words You are looking forward with confidence To the next version of the Tobacco Products Directive TBT-III?

00:19:56: Well, confidence is a big word.

00:19:57: You know in a sense that I don't want to make promises to any of our audience... ...I'm simply saying if it's truly an evidence based process The evidence will speak for themselves.

00:20:10: Now off course you have an evidence policy process and then you had an ideology policy process.

00:20:16: And here your goal obviously put facts before ideology.

00:20:23: And that's another battle.

00:20:24: it is too soon to tell whether or not this one would be won, but I can simply say if there is an evidence-based process i'm confident into

00:20:34: that.".

00:20:35: No, it's great you're supplying regulators with evidences and try to nudge them in the right direction... But still a very powerful anti tobacco lobby across Europe might throw some Locks and rocks into your bay.

00:20:54: Well, they do but you know there are different ways to look at it.

00:20:57: I think It's good To have people that look over what we do.

00:21:01: if thinking is important It's healthy in a democracy That should have different points of views Different opinions that our fighting.

00:21:08: this is What democracy is about?

00:21:10: What really problematic Is when You Have A different sort Of Access Two decision-makers When Only One Side Evidence Is Being Taken Into Account because of the pedigree, political color reputation in industry.

00:21:25: And that's something very problematic from a democratic point-of view.

00:21:31: The same goes for funding.

00:21:33: It is pretty clear who is funding ECMA.

00:21:37: ECHMA My association is hundred percent funded by cigar manufacturers.

00:21:43: it's very clear.

00:21:44: But what happens when you have entities partially funded with the same regulators?

00:21:50: That's a problematic when the process is not transparent and then only one side listen, well to itself.

00:21:59: That's really problematic.

00:22:01: Now Paul there is of course another very recent development And I'm quite sure you have heard of it.

00:22:09: On June seventeen just a few days ago The European Parliament resoundingly rejected a European Commission proposal too once again revise excise duties for tobacco products.

00:22:23: Just to be clear about that, in European Commission speak revising always only means one thing – hiking up the tax!

00:22:32: So with that rejection by the European Parliament is there something... ...that alleviates some of your members' concerns?

00:22:42: Or put it other words did you welcome that

00:22:45: vote?!

00:22:47: Absolutely, I think this vote is a clear reminder of how democracy works.

00:22:53: It wasn't simply a voter rejection by fifty plus one.

00:22:57: you know here we're talking about sixty eight percent of the parliament rejected to commission's original proposal.

00:23:04: last year in July The European Commission proposed to revise indeed the EU tobacco excise framework and with that equalizing all products same.

00:23:15: So they went to propose the EU minimum tax for cigars by up to one thousand percent.

00:23:21: You heard that correctly?

00:23:23: Yeah, so let's just say... The original proposal of the European Commission was clearly crazy.

00:23:30: There were discussions at the committee level in the European Parliament on dealing with economic and fiscal affairs That clearly rejected that And said look you went too far.

00:23:40: That proposal is completely out of touch with economic realities.

00:23:45: You cannot increase taxes by that much without creating a market collapse, right?

00:23:52: And so that's exactly what the message from European Parliament was against the Commission.

00:23:57: and that's very good news because it also shows you that checks and balances still exist even in this overblown organization calling itself The European Union.

00:24:09: European Commission cannot just do and implement whatever it intends or wants to.

00:24:17: Absolutely, that's always a good reminder for members of consumers.

00:24:22: there is way!

00:24:23: There are ways in which our voice can be heard.

00:24:28: ECMA nevertheless quite recently launched some sort of petition initiative.

00:24:36: A few words about that, perhaps.

00:24:38: What does the petition entice and what is it aiming to achieve?

00:24:44: Well... It's not so much a petition as being part of the democratic process.

00:24:50: The European Commission opens its doors from time-to-time To say we're here to listen.

00:24:56: This is what we call for evidence public consultation process where the commission says I want you hear your thoughts.

00:25:03: And So Here We Are Really Saying Two manufacturers, consumers, aficionados.

00:25:09: Now it's your time!

00:25:10: You are not happy with the current framework.

00:25:13: you want to defend the integrity and specificities of this category.

00:25:18: just say so.

00:25:20: The first part is called for evidence actually as close on the fifteenth June but the public consultation is running up until the fourteenth August.

00:25:28: There is time.

00:25:29: So please if have patience go through that form.

00:25:33: Just pour out your art and respond to the public consultation.

00:25:49: In the

00:26:06: product regulation section, you will find specific guidelines on how to end all and submit.

00:26:13: And what kind of evidence or message the European Commission is looking for?

00:26:19: You just go through the ECMA website... ...and do click like a tab or something.

00:26:24: That's correct!

00:26:25: Go in the ECMAA website then go into product regulations Then there are sections about public consultation And then simply follow the guidelines that will tell you which websites to go, how to register and how submit.

00:26:40: Okay so do anybody listening this podcast please file your evidence, file suggestions?

00:26:47: You find information on ECMA website and that's ecma.eu.

00:26:54: Correct Paul

00:26:56: That is correct.

00:26:57: ecma .eu.

00:26:59: Well Paul, I think that covers pretty much everything that i wanted to discuss with you.

00:27:04: Do have any final thoughts or comments?

00:27:08: First of all thank You very much Thomas for the time that you put in for allowing me to discuss European democracy and protection of cigar serials!

00:27:20: My colleagues from US are better than we are into motivating people.

00:27:27: So I think this is a very good opportunity for the listeners to just be reminded that we have a chance To achieve regulations that recognize The unique specificities of our sector, but We can't do it alone.

00:27:41: We need every person available to simply repeat the same message and to tell the truth about Cigar-Cigario consumption.

00:27:51: You know when you have evidence on your side?

00:27:56: Well said, Paul.

00:27:57: Very well said!

00:27:58: And that's about Repsid.

00:28:00: I guess... ...I will probably run into most of your members during the upcoming InterTabac show in Dortmund in September and perhaps i'll be able to engage one or another interesting chat with some of them.. ..i'm also very much looking forward to seeing you for now.

00:28:20: it is all the best to you and Ekma.

00:28:23: bye for now.

00:28:24: Thank You Thomas Bye bye and bye everyone.

00:28:33: This was Tobacco and Vape, news at views a podcast produced by Tobacco Asia for business insights.

00:28:40: Thank you for listening in.

00:28:42: please tune-in again next time.

00:28:44: your host was Thomas Schmidt.

00:28:46: if he didn't know now You do.