If you haven’t seen the latest Newsweek feature on vaping and you’re currently reading a vaping blog, what are you even doing? The article, written by Simon Akam, briefly chronicles the slow descent of the tobacco industry since the 1970s (descent is a relative term here; despite the fact that in much of the world the prevalence of smoking has halved over the past 40 years, the four largest tobacco producers still reaped in some $32 billion in pre-tax profits last year, as Akam points out) before delving into the industry’s battle to stay afloat by entering and monopolizing the electronic cigarette market. The focus is primarily on British American Tobacco’s (BAT) efforts to keep electronic cigarettes from sinking them by joining the e-cig movement themselves.
I totally recommend that you read the actual article – I neither can nor plan on doing it justice in a measly 500 word blog post – but if for some reason you choose not to, fear not, for we here at VaporPuffs have the TL;DR version. So, without further ado, here are some of the most interesting points made.
- Based on the insanely rapid spread of e-cigs, tobacco companies appear to think of e-cigs as Kodak should have thought of digital photography; instead of taking the stance that e-cigs are only a fad, big tobacco appears to think that e-cigs are a potentially disruptive technology that will ultimately revolutionize the way in which people intake nicotine.
- Big tobacco has been struggling to develop a safer alternative to smoking for decades, to no avail. Of course, it must never have occurred to these companies to quit supplementing the tobacco used in their cigarettes with countless addictive additives.
- At the outset of the vaping boom, few people thought that electronic cigarettes would be able to eschew being subsumed under a medical regulatory framework, and, if they were to become regulated as medical devices, few people thought they would pass all the necessary tests in their propylene glycol/vapor-producing formulation; as a result, BAT invested heavily in the development of nicotine inhalers. This brings up a pretty good question about why big pharma has been so terrible at coming up with an actually effective nicotine replacement therapy.
- BAT now has nicotine inhalers, e-liquid e-cigs, and dry herb (i.e. tobacco) vapes in the works; presumably this diversification is meant to ward off a rapid collapse of the business, should cigarettes really be on their way out. Smart move, I guess.
- Though electronic cigarettes are more costly to produce than analog cigarettes, there are financial incentives to expanding into the vaping market. “BAT documentation suggests that, in the UK, a higher profit margin is possible for e-cigarette refills than for cigarettes – more than 20% as opposed to less than 10%.”
- Marketing strategies for e-cigs fall into one of three camps. For one thing, there is the Blu advertising strategy, which basically just mimics old-school tobacco marketing strategy. For another, there is the tactic best exemplified by NJOY, which suggests that e-cigs are healthier than cigarettes. And then there is the BAT strategy, which basically piggybacks on the other two for raising awareness and then just positions itself as the best vaping option for people who already know they want to vape.
- There is reason to believe that ultimately big tobacco might buy out smaller producers; Hon Lik, the inventor of the first widely distributed e-cig, now works for Imperial Tobacco. On the other hand, the booming advanced generation vaping device industry will be difficult to compete with except by state regulation. Perhaps this explains the EU’s regulations, one of which will limit e-cig tanks to 2mL. To that I say: Good luck, and LOL
Again, I totally recommend that you read the Newsweek article. Also…