OAKBROOK TERRACE, Ill. -- While vape shops and their advocates rail about fears of their demise, convenience-store retailers are adopting a more nuanced look toward the FDA’s recently increased regulatory reach into tobacco products.
As critics cry against what they consider excessively burdensome prerequisites leveled against electronic cigarettes and vaping innovation, several retailers interviewed sighed a breath of relief that the tobacco industry as a whole should remain healthy for decades to come.
“I don’t think they (the new deeming regulations) are impactful at retail. Many retailers were already carding at this age for quite some time,” the tobacco director at one major convenience chain said on condition of anonymity.
“As far as the issue surrounding the predicate date,” the retailer added, “I worry about some of our e-cig manufacturing partners and their ability to manage the costs involved, but we’ll end up with just the strongest ones left. That’s not necessarily a bad thing for retailers.
“And, finally, we may see a slight, yet temporary, spike in sales with all of the media attention now. FDA involvement is not always bad; this category needed it.”
New Rules
The U.S. Food and Drug Administration last week released the long-anticipated deeming regulations, a 499-page document that gives the agency oversight of the upstart vaping and e-cig segment, as well as cigars, which unlike their cigarette brethren, had hitherto been unregulated.
Some of the rule’s key provisions are:
- Not allowing products to be sold to persons under the age of 18 (both in person and online).
- Requiring age verification by photo ID.
- Prohibiting the sale of covered tobacco products in vending machines (unless in an adult-only facility).
- Banning the distribution of free samples.
Arguably the most controversial provision to the final deeming rule is that once it goes into effect, manufacturers of newly regulated products will be required to submit a premarket tobacco application (PMTA) to the FDA unless the product (or a substantially equivalent product) was on the market as of Feb. 15, 2007. That process is expected to take 1,700 hours per application—an arduous burden that many in the vaping sector say will essentially put them out of business.
Retailers Speak
As CSP Daily News continues its weeklong series into the implications of the new regulatory oversight, we asked executives and tobacco directors of several convenience stores their reaction to the deeming rules.
Gus Olympidis, the progressive proprietor of Valparaiso, Ind.-based Family Express, slammed the FDA’s harshness toward vaping innovation and described the actions as a “sad day for public health.”
“Most alternative nicotine-delivery products have been identified by some of the most renowned scientists in the world to be the ultimate solution to tobacco-related disease, and they have just fallen victim to the advocacy might of their mammoth competitors.
“Smart public policy continues to endure punishment, because of the endless appetite of government to regulate and ultimately tax,” Olympidis said. “These regulations are another page in the voluminous book of crony capitalism suppressing competition and innovation on the one hand, and a sad day for public health on the other.”
Tim Cote, who as marketing vice president at Beaverton, Ore.-based Plaid Pantry oversees tobacco, points out that the deeming regulations are just a starting point and that Congress is likely to weigh in, specifically on the predicate rule.
“There is already a bill in the House to move the predicate date,” he said. “That noted, I cannot believe many vape-only companies [will] survive. Seems like the costs of PMTA will wipe most of them out.
“Same thing from vape shops. Fewer vape manufacturing companies will drive product offering sameness and no back-room blending will likely be fatal for most of these stores.”
In that vein, Cote said the legislative process will be critical in determining whether vaping—and the innovation necessary to turn it into a long-term player in the tobacco universe—has a viable future.
“Right now most of the focus for the manufacturers has to be on getting existing product that hit the shelf after the predicate date legal and working with lawmakers on final regulations,” he said. “This, in turn, will likely hurt sales growth moving forward. Why would any retailer invest heavily in the category right now, especially with a smaller partner? The risks are too high.”
But for all the talk on vaping, Cote hints at another major issue. “The bigger battle that could really hurt c-store(s) … is yet to come: flavored cigars.”
See tomorrow’s CSP Daily News for more on where the cigar issue stands.
Join CSP's Tobacco Update webinar on May 24 to hear industry experts' input on how the new regulatory landscape could affect tobacco retailing.
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