WASHINGTON—The “freeze date” of Aug. 8 for new products over much of the emerging OTP category—with special focus on electronic cigarettes and vapor—came and went with little ramifications for retailers, at least in the near term.
The so-called “deeming” rules, in which the U.S. Food and Drug Administration (FDA), Washington, essentially asserts authority over many other tobacco products (OTP) categories, essentially ban any new products in several OTP categories in which manufacturers fail to properly apply for and receive approval from the FDA. Many observers believe the overall effect will be to stifle innovation and give a major edge to large companies with the resources to navigate FDA processes.
“While the final deeming e-cig regulation brings much needed structure and oversight to the e-cig/vapor category, there is little doubt that the cost and complexity of compliance overwhelmingly favor big tobacco … at the expense of smaller, less well-funded players,” said Bonnie Herzog, senior analyst for Wells Fargo, New York, in a research note.
Reynolds American Inc., Winston-Salem, N.C., has already launched numerous VUSE applications ahead of the Aug. 8 deadline, while Altria Group Inc., Richmond, Va., did its part in persuading the FDA not to enforce its descriptor ban on its Black & Mild cigar brand, “demonstrating its command of the issues and legal acumen,” Herzog said.
Retailers attending CSP's recent Total Nicotine Conference in Chicago expressed concern over knowing which products to carry going forward, because not all suppliers would have the resources to apply for the complicated and costly FDA-approval process.
“I’m concerned about being stuck with product that I’ll have to take off the shelves, or carrying brands that will eventually go away,” said one Midwest retailer, who spoke on condition of anonymity.
Most panelists speaking at the conference agreed that grace periods for existing products would mean retailers would see little immediate effects with the Aug. 8 deadline, but many suggested retailers keep in close contact with their suppliers.
“Choose your partnerships carefully,” said Kevin Roberts, director of regulatory affairs and communications for Logic, Pompano Beach, Fla. “There’s going to be a consolidation of the category.”
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