What Lies Ahead for Flavored Capsule Cigarettes

One of the industry’s most innovative and popular products in recent years has undoubtedly been flavor capsules, those crushable beads embedded in cigarette filters that give bursts of flavor to the tobacco. Over recent years, flavored capsule cigarettes have continuously gained increasing popularity with consumers the world over.

Staff Report

Flavor capsules first came into the market back in the 1960s, with the introduction of a cigarette with capsules of water in its filter, releasing moisture and flavor when pinched. Fast-forward a few decades to 2007, and the flavored capsule took a new turn when the release of menthol-flavored capsule filters in Japan introduced a new resurgence for this niche product, with capsules no longer limited only to menthol but also including flavors such as clove, spearmint, lemon mint, apple mint, grape, berry, etc. Currently, flavor capsule cigarettes come in two varieties: those with double-mentholated or menthol-to-menthol capsule filters, allowing the smoker to control the strength of the menthol flavor, and those with hybrid or regular-to-menthol capsules, by which smokers can turn a regular cigarette into a menthol-or-other flavor one.

However, as is the norm for the tobacco industry, newer, innovative technologies deliver newer, even more innovative products. The TwinSense™ filter recently developed by leading filter manufacturer, Essentra, for example, is one such product. The TwinSense is a unique dual segment filter with capsules in both segments providing one filter but twice the flavor, on demand. “This premium product offers the consumer the greatest control as they can choose to not burst the capsule at all, or to burst one or both capsules, for a single - or a combination of flavor,” explained Patrick Meredith, Essentra’s innovations director.

“To guarantee these premium products are always delivered to the customer in optimal condition, Essentra has developed considerable capabilities and invested heavily in specific processes, such as detection and quality control. These procedures have helped to ensure that the breakable capsule is carefully positioned in the filter prior to incorporation in the finished cigarette.”

A recent Euromonitor study revealed that the market penetration for flavor capsule cigarettes is very high in Latin American markets, which make up all five of the top five markets for a percentage share of capsule consumption. Flavor capsules cigarettes have been most popular in Chile, where they accounted for 32.0% of the tobacco market in 2015, followed by Peru (22.8%), Guatemala (19.3%), Argentina (15.6%), and Mexico (13.7%). Rounding up the top 10 markets were Sweden (13%), Ireland (10%), Slovakia (9.3%), Japan (8.4%), and the UK (7.9%). Even one of the world’s largest population of tobacco consumers, China, has started to pick up on this trend (see Niche Products Become Powerful Weapons, page 34 in this issue).

According to Meredith, demand for flavored capsule filters has grown globally. “We are seeing an increasing demand in multiple markets for capsule filters, mainly due to the flexibility, variety, and personalization they provide consumers,” he said. “Although our initial capacity was installed in North America, our markets have expanded so that there is now considerable demand in all regions.  In addition, while the focus was initially on menthol based capsules, many flavors have since been introduced, reflecting the diversity of the markets and consumers served. In order to increase both our capacity and capability to cater for this growth in demand, we have made considerable investments in our Dubai, Thailand, and Indonesian sites. This is hugely exciting for us as we now have capsule filter manufacturing capability across all regions.”

This popularity among consumers for flavored capsule cigarettes could be largely attributed to the fact that consumers perceive flavored capsule cigarettes are less harmful than regular cigarettes, lighter and smoother in taste, and also more stylish.

All that being said, there still seems to be some uncertainty because of the US FDA and EU TPD2 regulations looming over the future of flavored capsule filters. Some believe it is too soon to really know how much an effect the regulations will have.

“There are currently considerable sales of capsule products in both the US and European markets, so it is still too early to be able to objectively judge any impact to date,” explained Meredith. “That said, where legislation proposes to prohibit the use of characterizing flavors, this would likely pose a considerable risk to the future of capsule filters if implemented accordingly. “We expect that capsule filters will remain a key area of focus for the industry and continue to grow, particularly in the short term and as stricter regulation is enforced across the globe.

For example, although a slightly different technology, a new water capsule filter product was recently launched in Japan. The water capsule itself modifies the taste but in a different way, by cooling rather than imparting a flavor. Water is also known to have some filtration properties if it is present in the appropriate quantities, so there may be an additional benefit in this regard. By combining different technologies, such as a capsule segment with a tube segment even in slimmer formats, significant differentiation can be achieved. The future for capsule filters is bright and we are excited about the possibilities that experimenting with new and different technologies presents in this market.”