Worldwide, smoking is the cause of roughly six million deaths each and every year, and this number is expected to rise to eight million a year by 2030, according to the World Health Organisation. In the US, the Centre for Disease Control and Prevention (CDC) calculates that a little over 16 million Americans are living with a disease that is directly caused by smoking. It is no wonder then that more and more people are looking to quit the practice altogether, but old habits die hard.
To help ease the pain of giving up, many smokers turn to a number of smoking cessation aids. While there are many to choose from, including nicotine replacement therapy and cognitive behavioural support provided by medical practitioners, the most popular aid among smokers looking to kick the habit is the electronic cigarette or vaporiser.
Yet, smokers looking to quit aren’t the only force driving the boom in electronic cigarette sales. Another is young people looking to take up the habit. According to the CDC, the number of high school students choosing to puff on one of these devices has nearly tripled between 2013 and 2014. Data from the 2014 National Youth Tobacco Survey showed how the use of these devices among high school students had risen from 4.5 percent in 2013 to 13.4 percent in 2014, which represents an increase from roughly 660,000 to two million students.
Currently, the global e-cigarette market is worth around $3bn, which is impressive, but that figure is expected to grow to more than $50bn by 2025
“We want parents to know that nicotine is dangerous for kids at any age, whether it’s an e-cigarette, hookah, cigarette or cigar”, said CDC Director Tom Frieden, MD, MPH. “Adolescence is a critical time for brain development. Nicotine exposure at a young age may cause lasting harm to brain development, promote addiction, and lead to sustained tobacco use.”
Big tobacco
But despite the words of warning from health professionals, the humble ‘e-cig’ has grown so popular that big tobacco has reason to be concerned. Currently, the global e-cigarette market is worth around $3bn (see Fig. 1), which is impressive, but that figure is expected to grow to more than $50bn by 2025, according to a recent report. With growth figures like these, big tobacco is naturally worried about the industry overtaking its own. So, in an effort to capitalise on this growing trend, many of the world’s biggest tobacco companies have jumped on the bandwagon, entering the market with their own iterations.
Philip Morris International (PMI), famous for producing cigarette brands including Marlboro, L&M, Bond Street and Parliament, made its first foray into the e-cig market with its IQOS smokeless cigarette near the end of last year. The company describes its new device as a middle ground between traditional cigs and their electronic counterparts.
Speaking at a conference hosted by Morgan Stanley in late 2014, PMI’s CEO André Calantzopoulos explained how the launch of the device, which has since gone on sale in Italy, Australia, and Japan, was a “landmark moment”, which has begun the a “ground-breaking new chapter” in the company’s history.
So far, PMI has also been reluctant to make too big a dive into the electronic market, acquiring the UK-based brands Nicolite and Nicocig, but it is likely to strengthen its position globally, if growth rates continue as predicted.
PMI isn’t the only tobacco company looking to secure a piece of this highly lucrative market. Reynolds American and Imperial Tobacco have both dipped their toe in too. In fact, the former sold the world’s biggest producer of e-cigarettes, Blu, to the latter, so that Reynolds American had the necessary capital to finalise its acquisition of Lorillard Tobacco, which is responsible for the manufacturing of US brands, including Newport Maverick, Old Gold, Kent, True, Satin and Max.
Imperial Tobacco’s decision to purchase Blu and Skycigs in the UK, along with the development of its own brand of e-cigs called Puritane, exemplifies the company’s commitment to this promising market. It also establishes them as the market leader for the time being, which could lead to the company raking in massive profits should the market grow in line with analysts’ opinions.
Meanwhile, Reynolds’ decision to sell Blu in order to consolidate a greater share of the tobacco market is a clear indicator that the company is more concerned with the profits to be had from the $35bn industry, at least for now. It has, however, held onto the vaporisor brand Vuse, which is sold in the US, so they haven’t exited the market altogether.
Health kicks
In all honesty, it would be folly to do so anyway, as the electronic cigarette market is going to be the new battleground for big tobacco, because, like it or not, the public are better informed about the risks associated with smoking, leading many people to quit. And with retailers touting the benefits of switching to vaporisers those who still want their dose of nicotine without the smoke have found a viable alternative.
But while many medical professionals concede that the growth of the e-cigarette market has helped drive down the consumption of cigarettes, the jury is still out regarding the safety of electronic cigarettes.
“Over the last 50 years, 20 million Americans died because of tobacco. We are fiercely committed to preventing the tobacco industry from addicting another generation of smokers”, said Nancy Brown, CEO of the American Heart Association in a statement. “Recent studies raise concerns that e-cigarettes may be a gateway to traditional tobacco products for the nation’s youth, and could renormalise smoking in our society. These disturbing developments have helped convince the association that e-cigarettes need to be strongly regulated, thoroughly researched and closely monitored.
“In the years since the FDA first announced it would assert its authority over e-cigarettes the market for these products has grown dramatically”, she added. “We fear that any additional delay of these new regulations will have real, continuing public health consequences.”
China lighting up
America isn’t the only country looking to clamp down on the industry; China is too, and for good reason. The country possesses the largest number of smokers in the world, with more than 350 million people lighting up every day. It is also the largest supplier of e-cigarettes, supplying 80 percent of the global market, the majority of which are produced in the southeastern city of Shenzhen.
But despite this, there is currently no regulation of the industry, but that could all change. In fact, Mao Qua’an, a spokesperson for the National Health and Family Planning Commission in China addressed the issue during the 16th World Conference on Tobacco or Health.
“E-cigarettes have rapidly become popular across the world. China will act… to protect people, particularly as the nation has reached a crucial stage for tobacco control in general”, said Mao. “The health authority will coordinate related agencies and lobby for regulation of the sector.
“They target the young with a variety of fancy flavours, and have become another public health concern”, he added.
Mao did concede that more research must be conducted before regulation can be finalised. Until then, China is a fertile environment for the industry to flourish. After all, markets like China are essential if the e-cigarette market is to reach $10bn by 2017, as many analysts predict it will.
Smoking, as is the case everywhere, poses a serious health risk in China. Roughly 1.2 million people die each year there as a direct result of tobacco use, which puts a massive financial strain on major medical facilities run by the government. Therefore, it is in the interest of the People’s Republic to try and drive down consumption of traditional cigarettes, and pushing the electronic alternative is a great way of doing so, without losing the revenue that the tobacco industry provides.
As it stands, only one percent of the population uses vaporisers, but the government is attempting to change that. In April, China’s State Council banned government officials from smoking in public and on television in the hope that ordinary citizens will follow suit.
It is yet to be seen whether the move will drive down the consumption of tobacco, but if Chinese consumers get on board the e-cig boom then the industry looks set to not only reach its predicted targets, but smash through them.
