Tobacco Update

Black-market woes, e-cig booms, dollar-store growth and more news from the tobacco category

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“We’ve made a conscious choice to look like a tobacco cigarette,” said Craig Weiss, CEO of Scottsdale, Ariz.-based NJOY. “Our view was [that] the more familiar you make the product, the more likely people are to make the switch.”

Jim Raporte, president of industry leader blu Ecigs, Charlotte, N.C., argued that the numbers suggest otherwise: “Our market growth has been largely at the expense of the No. 2 brand. A big key is that we do not look like a traditional cigarette.”

Miguel Martin, president of Pompano Beach, Fla.-based Logic Technology, agreed with this assessment, citing that the two e-cig companies experiencing the most growth in Nielsen numbers—Logic and blu—in no way look like traditional cigarettes.

“We believe that when adult smokers move to this category, they want that bartender or friend across from them to know that they’re not smoking a cigarette,” he said.

 ‘Cigalike’ vs. Tanks. As a leading manufacturer of U.S. e-liquids, Christian Berkey, CEO of Johnson Creek Enterprises, is familiar with the open-source tank market and is confident that liquids already play a big role in the success of the e-cig movement.

“Hardware is why a smoker makes the first e-cig purchase, but the flavor is why they’ll make the second, third or fourth purchase,” he said.

Although Hartland, Wis.-based Johnson Creek primarily focuses on liquids—or smoke juices—it recently introduced a tank product with which to consume its juices. While tanks tend to be significantly larger and heavier than traditional e-cig (or “cigalike”) products, Berkey said there is a demand for larger products that allow vapers to mix their own flavors, and that technology will help grow that demand.

Verleur also sees potential there and announced that V2 will introduce a new brand in 2014 to address the tank market. “In the U.S., 26% of the base is open system/mod large-scale devices,” said Verleur. “That market is larger in Europe. I think there’s a place for it.”

Regulations, Public Health. The forum featured two panels: one on public health and one on regulatory issues. However, the two issues are so intertwined in the world of electronic cigarettes that both topics came up in both panels, and in many of the fireside chats.

In regards to advertising: “The burden of evidence (on youth usage) is not there to support an advertising ban,” said David Graham, NJOY’s senior vice president of international regulatory affairs. “We’d urge the FDA not to throw the baby out with the bathwater.”

Attendees also discussed regulating flavors. “A flavor ban is a possibility, and it’s something we’ve prepared for,” said Berkey of Johnson Creek Enterprises. “If flavors are strictly banned in a restrictive manner, it would create a black market, no doubt.”

Responding to a slew of recent releases from the Centers for Disease Control and Prevention (as mentioned in Zeller’s December webinar) that proclaim e-cigs are a gateway for minors, Jean-Francois Etter, an associate professor at the University of Geneva, Switzerland, told attendees that the message was not based on any published data.

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