Big Tobacco Makes a Move Into E-Cigarettes

“A battery-operated, addiction-based market.”

While the FDA dithered, and health advocates argued, Big Tobacco began placing its bets on the e-cigarette market last year. Tobacco firm Lorillard Inc., the third largest tobacco company in America, bought privately held Blue Ecigs of Charlotte, N.C., for $135 million, driven by what the company says is a market that’s been doubling ever year since e-cigs first arrived from China in 2008.

According to the Wall Street Journal, Blue Ecigs had $30 million in revenues last year, selling through retail outlets like Walgreens, where it competes with e-brands such as NJOY and 21s Century. The FDA has announced vague plans to regulate, and state lawmakers have threatened to ban them outright, or at least place them under the same public smoking bans as cigarettes—bans that some e-smokers love to flout. (E-cigarette manufacturers, based primarily in Asia, quickly changed the electric orange glow at the end of the e-cigarette to a cool shade of blue, to help make clear to bartenders and bouncers that the thing wasn’t a lit cigarette.)

Meanwhile, Reynolds, an industry leader in smokeless products, is developing its own line of e-cigs, and is test-marketing its Vuse and Zonnic brands. “We will be in this category in 2013,” an RJ Reynolds representative said in a CNBC article by Jane Wells. “We have very big plans.”

Altria, the industry giant, is now generating $1.6 billion from smokeless tobacco products, and is expected to make a move into what is viewed as a billion-dollar industry with unlimited growth potential. Last year, the company began testing a new “nicotine-extract product” called Verve, a lozenge that can be sucked or chewed and contains about 1.5 milligrams of nicotine. Late last year, the company reportedly engaged in acquisition talks with e-cig maker Eonsmoke.

Meanwhile, the company that invented the electronic cigarette, Dragonite/Ruyan, is suing practically everybody. And the Argentinean and Venezuelan governments have attempted to ban the use and marketing of electronic cigarettes altogether.

In December, astute American TV viewers may have noticed what looked for all the world like a television commercial for cigarettes—the first since 1971, when Congress banned cigarette ads on TV. It was a commercial for NJOY Kings electronic cigarettes, a brand that currently owns about one-third of the U.S. e-cig market. Patent lawyer Mark Weiss, who founded NJOY, told Time that the company was only competing for the 45 million Americans who are current smokers, not attempting to make new recruits. In the article, Weiss noted three advantages for e-cigarettes: They’re odor free, they don’t burn tobacco, and, at about $8 per e-cigarette, Weiss claims, they’ll last you as long as two regular packs of cigarettes.

When major tobacco companies make moves like this, people notice. “I think they see this as an opportunity to get a seat at the table with opportunities to talk to the FDA about regulation over this growing category,” according to Bonnie Herzog, senior analyst and managing director of tobacco, beverage and consumer research for Wells Fargo Securities. “Lorillard wants to help steer that conversation in the right direction.”

While still a relatively modest market—no more than $500 million, compared to the $100 billion tobacco market in the U.S.—electronic cigarettes have the potential of becoming the most contentious entry in the market for nicotine delivery systems since the advent of the machine-rolled cigarette. “We think e-cigs are to tobacco what energy drinks are to beverages,” Herzog told the media.

Lorillard chairman and CEO Murray Kessler said in an earnings conference call late last year that with e-cigarettes, “you get all of the benefits of not having combustion, but on the other hand you are maintaining the behavior that cigarette smokers enjoyed.” That’s one way of putting it. And according to critics, that’s part of the problem. Anti-smoking activists often view e-cigarettes as gateway products for young adults.

They are cheaper, primarily because of heavy taxes on traditional cigarettes, and produce no second-hand smoke, only steam-like vapor that quickly dissipates. But they have had a rocky start in the U.S. An article in the Winston-Salem Journal in prime tobacco country stated that consumers have “shied away out of safety concerns since most e-cigs are made in China.” Even North Carolina health officials have expressed concerns about “limited regulatory oversight of their contents.” But according to Wells Fargo’s Herzog, Lorillard’s purchase of Blu Ecigs had the effect of “lending credibility and legitimacy to the entire category.”

Brad Rodu, professor of medicine at the University of Louisville, insisted that “tobacco manufacturers have an obligation to smokers to develop, manufacture and sell these vastly safer cigarette substitutes.” In this view, smokers smoke for the nicotine, but it’s the tar that kills them. 

In the same Winston-Salem Journal article, a professor of family and community medicine at Wake Forest School of Medicine said that “many of the carcinogens in tobacco are volatile and would vaporize, and thus be inhaled when heated. I would not recommend that product.”

It seems safe to predict that this “battery-operated, addiction-based market,” as Forbes dubbed it, will be one to watch.

For Smokers, Nowhere to Run and Nowhere to Hide

(With love and apologies to Martha and the Vandellas.)

That wonderful song goes on to declare:

'Cause I know
You're no good for me
But you’ve become
A part of me.

The song is not about cigarette addiction, but it could be. Full Disclosure: I smoked cigarettes myself for almost 25 years. And then, after several failed attempts, I quit. I out myself on this subject because a paper from the May 25 issue of the New England Journal of Medicine (NEJM) decries what the authors call the “denormalization” of smoking—and I find myself agreeing with them, smokeless though I may be. I recently visited New York, coincidentally on the day that smoking outdoors in New York City became illegal. Okay, that’s not quite fair to say—it became illegal to smoke in Central Park, or at Brighton Beach, or along the newly pedestrian mallways of Times Square. There is no smoking along the High Line. There is no smoking at any park, beach, or pedestrian mall. As both the tobacco industry and anti-smoking activists well know, this was an iconic victory that has the potential to change smoking laws in virtually every other American city.

It’s a fascinating progression, starting in the 70s when the Civil Aeronautics Board decreed non-smoking sections on domestic airline flights, to the recent New York City Council Decision to ban smoking en plein air, so to speak. Thomas Farley, New York City Health Commissioner, summed it up as follows in a public hearing: “I think in the future, we will look back on this time and say ‘How could we have ever tolerated smoking in a park?’”

I’m not so sure on that, myself. James Colgrove, Ronald Bayer, and Kathleen Bachynski of the Mailman School of Public Health at Columbia University wrote the paper, entitled “Nowhere Left to Hide? The Banishment of Smoking from Public Spaces,” in the NEJM. The authors note that more than 500 towns and cities in 43 different states have already enacted laws banning smoking “in outdoor recreation areas.” At first, as the authors summarize the history, it all seems like a sensible compromise, built on common courtesy. First airplanes and buses, then restaurants and bars, began setting aside seats for non-smokers. By the early 90s, the first data on secondhand smoke was rolling in. Schools, convention centers, and finally even private workplaces either banned smoking or created smoke-free areas. But even then, the primary motivator, according to the researchers, was that secondhand smoke was “unpleasant and annoying,” not deadly. Smokers weren’t being asked to refrain from public smoking for the good of their own health, but as a courtesy to others.

The solid scientific evidence kept accumulating, however—even though tobacco cigarettes were, and still are, completely legal products for adult Americans to purchase and consume if they so choose. Now the arguments shifted to the innocent bystanders, those within the six-foot ring, the immediate smoke zone surrounding a smoker, and the elevated risk of lung cancer, heart disease, and asthma that smokers were subjecting them to. In 1993, the Environmental Protection Agency (EPA) classified secondhand smoke as a Class A carcinogen, and more school, stadiums and offices proscribed smoking.

So far so good, really, from a public health standpoint. But now comes the bend in the road. Suddenly, parks and beaches were being added to the no-smoking roster. “As the zones of prohibition are extended from indoor to outdoor spaces, however, the evidence of physical harm to bystanders grows more tenuous.” In 2008, the authors report, “The editor of the journal Tobacco Control dismissed as ‘flimsy’ the evidence that secondhand smoke poses a threat to the health of nonsmokers in most outdoor settings.”

This confusion was much in evidence at public hearings last fall on the proposed outdoor smoking bans. While Health commissioner Farley argued that 57% of New Yorkers showed nicotine by-products in their blood, he also argued that exposing young children to adults in the carnal act of smoking was detrimental to the public health and welfare. “Families,” he said, “should be able to bring their children to parks and beaches knowing that they won’t see others smoking.” This is really quite an astonishing assertion, given the range of bad habits youngsters are exposed to as they go about a normal day in the adult world. The authors are particularly concerned about this push to stigmatize smokers. “Given the addictive nature of nicotine and the difficultly of quitting smoking, strategies of denormalization raise both pragmatic and ethical concerns.” Furthermore:

The decline in U.S. smoking rates since the 1960s has coincided with the development of a sharp gradient along the lines of socioeconomic status. Whereas about one fifth of all Americans are smokers, about one third of those with incomes below the federal poverty level smoke. These data are especially pertinent to the question of bans in parks. Since smokers are more likely to be poor and therefore dependent on free public spaces for enjoyment and recreation, refusing to allow them to smoke in those places poses potential problems of fairness.

The anti-tobacco movement, frustrated by the slow pace of gains over several years of active efforts, with rates of smoking remaining essentially unchanged, has to face the fact that an outright ban on cigarettes is a ticket to black market, crime syndicate hell. But a de facto ban is something altogether different, and “steadily winnowing the spaces in which smoking is legally allowed may be leading to a kind of de facto prohibition.” More and more employers prohibit smoking in doorways, within ten feet of doorways, anywhere on university campuses, and so on. No one has voted to make cigarette smoking illegal. But the public space in which this legal activity can be pursued is disappearing. And here is where the tough questions start: “In the absence of direct health risks to others, bans on smoking in parks and beaches raise questions about the acceptable limits for government to impose on conduct,” the authors conclude. Not to mention issues of personal autonomy, individual choice, and the stigma attached to addictive behavior. Perhaps the ACLU will soon take an interest in the civil rights of outdoor smokers, where the only health being hazarded is the smokers’ own.

Colgrove J, Bayer R, & Bachynski KE (2011). Nowhere Left to Hide? The Banishment of Smoking from Public Spaces. The New England journal of medicine PMID: 21612464

Photo Credit: www.thinkstock.com

Update on Smoking Bans Around the World

The noose tightens.

Smoking bans are everywhere. But what does the global picture look like as 2011 gets underway? Herewith, a brief rundown of the smoking situation in assorted countries, courtesy of an analysis late last year by BBC News.

-- Canada. In a nation known as one of the toughest of all when it comes to regulating cigarettes, the Canadian Medical Association Journal says the strict laws have been responsible for “cutting hospital admissions for heart and respiratory problems by about a third.”

-- China. In contrast, 2010 gave observers little reason to think that the Chinese government was actually going to enforce the promised national ban on smoking in public places. Enforcement varied from city to city but in general remained vague at best. Only about 25 % of the adult population believes that smoking is linked to cancer. “The country has an estimated 350 million smokers. For every three cigarettes lit worldwide, one is smoked in China,” according to BBC News.

-- Germany. The smoke-free movement hit some snags in Germany, where a ban on smoking in pubs and restaurants in 2008 has been fiercely resisted in some quarters. Tavern owners complain of lost income, and the bans are also disliked “because of an earlier crackdown on smoking initiated by Adolf Hitler’s Nazi regime,” says BBC News. Nonetheless, cigarettes were banned from Munich’s Oktoberfest for the first time in history.

-- France. Curiously, in a nation that was expected to rise up as one against workplace smoking bans, “correspondents say attitudes to smoking have changed dramatically in France since the 2007 ban, and any fears that people would generally ignore the laws have proved false.”

-- United Kingdom. Smoking is banned almost everywhere—“nearly all enclosed public spaces”—in England, Scotland, Ireland and Wales. This year, England may become the first nation to sell cigarettes in plain brown wrappers—a move government officials hope will make the packages less attractive to younger smokers.

-- Iran. Back in 2003, Iran banned smoking in public buildings. According to the BBC, the measures have had “little effect. However, in July 2010 smokers were banned from taking high-ranking jobs in the Iranian government, the news agency ILNA reported.”

-- Russia. The heavy-smoking Russians continue to astound: “A 2009 survey by the World Health Organization found that Russia has 43.9 million smokers—about 40% of the population.” About 60% of Russian men smoke. 500,000 people die of smoking-related illness each year. The Russian government is considering a blanket no-smoking policy for enclosed spaces—starting in 2015.

-- Uruguay. The host of a recent international summit on tobacco control strategies, Uruguay has adopted some of the toughest anti-smoking laws in the world—so tough that the government was forced to back down on some of its sweeping new restrictions due to tobacco industry pressure.

-- Australia. Starting last September, there was no smoking “in cars carrying children, on sections of beaches, and within 10m (32ft) of playground equipment.” Australia also bans smoking in public workplaces, and plans to follow England’s lead in forcing tobacco companies to use plain wrappers for cigarette packages.

-- United States. California, a state that almost managed to pass a proposition legalizing marijuana, has the strictest and most extensive set of anti-tobacco laws on the planet. Smoking is banned not just within public buildings, but also within 20 feet of public buildings, and on all state beaches.

Graphics Credit: http://www.nicotineedge.com/