Tobacco product or cessation device? Reduced-harm alternative or trendy gateway to underage smoking?
Whether on NPR, in The New York Times or at a local tobacco shop, there’s plenty of debate on how electronic cigarettes should be classified. Yet rarely do you hear these products described as what they truly are: tech devices.
Just look at the rapid rate at which e-cigs have innovated since they burst onto the scene in 2003: The sleek, inexpensive and user-friendly products of today bear little resemblance to their heavy, awkward— and costly—predecessors.
“The product that you saw just two years ago is dramatically different than you see today because of innovation,” says Miguel Martin, president of Pompano Beach, Fla.-based Logic Technologies.
“An electronic cigarette is more than just a consumable,” agrees Andries Verleur, CEO and co-founder of Miami-based V2 Cigs. “As with other small-electronics categories, innovation and a rapid upgrade cycle are critical to ensure ongoing consumer interest. That’s why you see a new iPhone every summer: The technology has to evolve to remain a viable option and stay competitive.”
Such a rate of innovation has been largely foreign to the tobacco category, in which most new products have centered on flavors or packaging as opposed to how the products actually operate. It’s this potential that has attracted even longtime tobacco manufacturers, such as Swisher International, Jacksonville, Fla.
“Cigarettes, cigars and smokeless tobacco have been around for centuries, and while there is some new innovation, there is far more potential for innovation in the e-cigarette category,” says Ed Denk, Swisher’s director of marketing. “I think technology being the driving factor will make it easier for companies and brands with the best innovations and product offerings to succeed, rather than the one with the most money to promote or the lowest price. This is totally different than what we see in the traditional tobacco segments.”
Echoing Denk’s sentiments, Wells Fargo analyst Bonnie Herzog says, “When you’re talking about combustible cigarettes, innovation is important. But when you’re talking about e-cigarettes, I think it’s critical—especially where we’re at in the life cycle of this growing segment.”
The question is whether governing bodies such as the FDA will allow the segment to grow through technology and science- based innovations. Verleur describes these kinds of advancements as “critical to furthering the industry’s success,” meaning the application of the strict, lengthy new product requirements for cigarettes could stifle a segment still in its infancy.
“It’s through technology advancement that we’ll meet our goal of making the e-cig experience closer to the traditional one,” Verleur says. “Candidly, I don’t believe that ‘gold standard’ has been reached yet.”
But are we close? A deeper look at the science behind these tobacco-tech hybrids certainly shows tech-based innovation is happening at many different companies, in many different ways.
The Basics
Just as few people truly understand the inner workings of a smartphone, it’s equally rare to find a consumer who gets the complexities of an e-cigarette.
While smokers can grasp the combustible triggers of a traditional cigarette, electronic cigarettes are a different story. Just look at how Richard Smith, spokesman for Winston-Salem, N.C.-based Reynolds American Inc., defines an e-cig: “a battery-powered device that heats a solution containing nicotine, creating vapor that is inhaled.”
“In very simplistic terms, the products activate when a user draws on its end,” Denk says. “A battery inside the unit is activated by the air flow and heats a coil; when the e-liquid contacts this heated coil, the liquid vaporizes and is inhaled by the user.” Sounds like simple chemistry.
Consider what Reynolds calls the “Smart Technology” that, it says, distinguishes Reynolds’ Vuse e-cigs from the field.
“Vuse incorporates a microprocessor- based control system that works in tandem with a SmartMemory chip to regulate and monitor major product characteristics, including puff count, puff duration, battery performance and V-Liquid cartridge management,” Smith says in an email interview.
Reynolds is hardly alone in touting its technology. Scottsdale, Ariz.-based NJOY and Charlotte, N.C.-based blu (owned by Lorillard Tobacco Co.) have promised to unveil significant product advancements this year.
“Technology-wise, we’re at a point where we need to see the next-step function,” Herzog says. “I think many of the e-cig manufacturers are close.”
Differentiating Details
While NJOY and blu declined to elaborate on what those advancements might be (not wanting to give anything away to their competitors), there are plenty of examples of how other electronic-cigarette companies are already relying on scientific research.
V2 Cigs, for example, houses a massive research and development facility at its Miami headquarters. Like most electronic cigarettes, V2’s products are manufactured in China; however, the company tests every batch of e-liquid at its research lab and allows consumers to review the results on its website.
“The science behind the product is a key value for our users, and we like them to have access to it,” Verleur explains. But the Miami facility isn’t only for testing V2’s current product offerings; it’s also where the company develops future products. Verleur reports that the team of scientists, researchers and engineers he has assembled allows the company to go from idea to prototype completely in-house.
“I firmly believe that you cannot outsource innovation, which is why all of our products are designed and engineered in the United States,” he says. “As is the case with any technology product, having the best talent available to advance, upgrade and evolve is hugely important.”
Swisher also relies on locally based research for its E-Swisher line, producing the e-liquids and soft tips in the United States. Similarly, the final quality-control testing on the soft tips, batteries and overall performance is performed stateside.
“These last three processes are all completed by our proprietary automated machinery in an FDA-registered clean room, ensuring accuracy and sanitation,” Denk says.
Martin of Logic believes ongoing tech-based innovations to meet consumer demand is critical to the long-term success of both his company and the e-cigarette sector as a whole.
“Logic has continued to innovate and take advantage of the technology opportunities that a product like an electronic cigarette has,” he says. “I think that will be what differentiates companies and products in this space as we go forward.”
Endless Options
Hearing some talk about e-cig technology is like reading a sci-fi book or just thinking about how much cellphones have evolved over the past 15 years.
“I actually think that in 10 to 20 years, rather than comparing electronic-cigarette brands to traditional cigarettes, you’ll see more people likening them to other small electronics products,” says Verleur. “Today, a smartphone or a smartwatch are extensions of the user’s interests or style. As the technology in our space continues to get better and better, I think we’ll see something similar occur with electronic cigarettes.”
Though the options may be infinite, one certainty is that science and technology will continue to play a central role in the industry’s growth.
“We believe tech-based innovation is critical to success in this segment,” says Smith.
It’s the ability to innovate that prompted Bonnie Herzog’s oft-cited prediction that electronic cigarettes could outsell combustible cigarettes within the next decade—a prediction that even Herzog acknowledges would need to be updated if the e-cig industry loses some of its ability to innovate.
“If innovation and technology are stifled in some way, it won’t be 10 years; it might take longer,” she says. “Ultimately, what the consumer wants is something that’s very similar [but less harmful] than the traditional smoking experience.”
And, as Verleur and countless others have said, the industry hasn’t quite replicated the experience of combustible cigarettes yet.
“E-cig consumers have told us that the current products on the market, while satisfying their demand, have not yet met their complete needs,” says Denk. “We believe that we have the best product on the market currently, but we also understand that the electronic-cigarette category is in its infancy and there is plenty of room for continued innovation.”
Only time will tell whether regulatory agencies will recognize the tech element of electronic cigarettes and allow them to grow like other technology products, or restrict the industry with tobacco-like regulations. For now, the industry holds its collective breath.
“Technology is our industry’s lifeblood,” Verleur says. “The industry will only grow with advances in technology and sustained innovation. We, as a category, still have work to do.”
The China Debate
Companies such as Miami-based V2 Cigs and Jacksonville, Fla.-based Swisher cite U.S.- based e-liquid production and assembly as ways their products stand out to consumers. Because virtually all electronic-cigarette manufacturing is based in China, many consumers and retailers have expressed concerns over quality control. Miguel Martin of Logic Technologies argues that this stigma isn’t necessarily accurate.
“I would remind people that their iPhones, iPads and—in a lot of cases—their medical devices are made in China,” he says. “No one should feel like [being manufactured in China] is a knock on any electronic or technology-based product.”
Still—as is the case with iPhones and medical devices—there are valid concerns when any consumer product is being manufactured abroad, which is why Martin lists quality control as “critically important.” It’s why many e-cigarette companies not only have employees living in China to oversee the process, but also send U.S.-based honchos to the East on a regular basis to review the manufacturing themselves.
Besides the manufacturing process, e-cig companies also have to worry about the quality of the products once they arrive in the United States. Shipping electronic cigarettes from halfway across the globe means a great deal of time passes from when a product is assembled to when it’s consumed. Martin says this is why Logic ships its products by air—not via boat, which is cheaper but more time-consuming—and also uses a large 300 megahertz lithium battery.
“It makes a big difference, regardless of shipping,” he says. “A superior battery ensures that from the beginning of the use of the unit to the end of the use of the unit, you’re getting a consistent high-quality puff. When you have a lithium-based battery the size that we have, it makes a big difference, which has translated into higher adult consumer satisfaction and market share.”
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