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42 tobaccoasia • Double your resource value • Use 100% expanded fine- cut for MYO and RYO • Untouchable product quality • Impex – pressure/vacuum technology • DIET - Dry Ice Expansion Technology AircoDIET has supplied more than 55 DIET plants worldwide, many of which have been turn-key. We continuously develop and refine the DIET process and our DIET plants have above 95% uptime with a dry yield better than 98.5% through the plant. www.aircodiet.com Over 100% tobacco expansion expansion expansion expansion tobacco monopoly regulations prohibit us from calling them 'cigarettes', we've opted to instead designate them as 'flower cigars'. But don't become confused, they are still cigarettes," smirked the company's sales manager, Yetao Zhu. But although China's tobacco market is strictly controlled by the state, the circum- stance that these 'flower cigars' contain neither tobacco nor nicotine in any form, af- forded TK-SAN a rather peculiar status. "We are currently the only privately-operated smoking products manufacturer in China, as we don't have to submit to government supervision and output quotas," said Zhu. The sampling of several TK-SAN cigarettes by Tobacco Asia positively confirmed that the blends indeed taste like regular tobacco. A number of other people commented about their pleasant scent and inquired which brand it was, voicing surprise when told that they were non-tobacco products. Although sales kicked off rather slowly in late 2011 when the TK-SAN brand was introduced in China, the company revved up quickly and by 2013 was already reported an annual revenue of RMB50 million (about US$8.2 million). In the second half of the same year, TK-SAN also began its push into the US market, and projects an astonish- ing 600% year-on-year revenue increase for 2014. "We expect sales to reach RMB300 million this year thanks to skyrocketing demand within China, as well as substantial order volumes from the US," elaborated Zhu. He even claimed the company had to curtail some orders placed by US customers as demand overwhelmed the current pro- duction capacity of its Shenzhen facility. "Our primary market still remains China, and we are obliged to fulfill domestic orders first." Readily admitting that the positive response from the US was thoroughly unex- pected, Zhu also said he didn't anticipate how comparatively easy it was to penetrate that market. As it turned out, TK-SAN cigarettes were not classified as tobacco, but rather as herbal products by the US authorities. "Besides enjoying a low import duty, we are also exempted from the very high US tobacco tax. This allows us to offer a very competitive retail price." The company is currently in the process of obtaining both FDA approval and FSC (fire safe cigarette) certification required by some federal states. Apart from being nicotine-free, independent testing at Labstat in Canada also re- vealed that TK-SAN cigarettes contain high amounts of selenium (Se), a trace element with anti-oxidant properties thought to be beneficial for cardio-vascular health, and moderate concentrations of nitric oxide (NO), an important cellular signaling molecule and powerful vasodilator. Since the products do not contain any tobacco at all, their tar content also is considerably lower than that of regular cigarettes. "I think we are on the right track with TK-SAN, as we offer smokers a healthier alternative. For many of them smoking is a pleasure like eating chocolate. You don't necessarily eat chocolate because you're hungry, but because you enjoy the taste. And that is exactly what TK-SAN flower cigarettes deliver," concluded Zhou. Matt Zhou with Tobacco Asia's Thomas Schmid