Top Five Tobacco Stories of 2015
The year’s most newsworthy stories, from mergers to smoking-hot cigarette sales
OAKBROOK TERRACE, Ill. -- Ah tobacco. Frequently regulated, often attacked and always interesting. Like every year, 2015 was filled with ample newsworthy moments regarding the tobacco category, some anticipated, some downright shocking. Here are five of this year’s biggest tobacco and vape stories (in order of date):
One of the larger news stories of 2014 was the fact that, for the first time ever, the U.S. Food and Drug Administration (FDA) would consider an application to market a tobacco product (Swedish Match’s General Snus) as modified risk. Though the agency has not officially ruled on the modified risk tobacco product (MRTP) application, a potentially devastating blow was dealt in April 2015, when a TPSAC (Tobacco Products Scientific Advisory Committee) panel advised the FDA to reject the request. The implications of this move went beyond Swedish Match: many in the industry predict that if General Snus—which has years of positive usage research due to its popularity in Sweden—can’t garner TPSAC approval, it’s nearly impossible that newer products like electronic cigarettes will be able to do so.
Though the potential deal was announced in the summer of 2014, there was skepticism that the merger between No. 2 tobacco player Reynolds American Inc. and No. 3 player Lorillard Inc. would go through as planned. Early in 2015, rumors swirled that the U.S. Federal Trade Commission (FTC) would require further divestitures or block the deal outright. That didn’t happen and the $25.9 billion deal officially went through as proposed on June 12, 2015. In its wake, Imperial Tobacco Group PLC acquired the KOOL, Salem, Winston, Maverick and blu eCigs brands, and other assets and liabilities for $7.1 billion in cash, making it the third largest tobacco company in the United States.
Other states have tried to raise the minimum purchase age for tobacco products to 21, but in June of 2015, Hawaii became the first state to actually do so. Since then, cities like Boston and Cleveland have passed laws raising the minimum purchase age to 21 and dual bills titled the “Tobacco to 21 Act” were introduced in the U.S. Senate and the U.S House to up the minimum purchase age nationally.
Early in the year, presenters at the NACS State of the Industry Summit looked at 2014’s 0.1% increase in cigarette sales and proclaimed “flat is the new up.” In 2015, that trend didn’t just continue—it improved, with sales actually growing in the first half of the year. You can argue about the factors—were it lower gas costs or dwindling e-cig sales responsible?—or whether it’s possible such trends will continue in 2016; but at the end of the day, positive numbers on a $1 billion category that historically declines by 3%-4% per year is a big, big deal.
Perhaps the biggest news of the year was the lack of news on the FDA’s long-awaited deeming regulations. With the public commenting period ending in August 2014, many expected the agency to finalize the rule that would grant it authority to regulate previously undeemed tobacco products (including cigars and electronic cigarettes) in 2015. It would appear the FDA came just shy of hitting that goal, sending the proposed final rule to the White House Office of Management and Budget (OMB) in October. While the OMB has been reviewing the regulations, at least 30 meetings have been scheduled with manufacturers, retailers and trade organizations to discuss the implications deeming will have on the industry, likely drawing out the process. Until the final regulations are officially announced by the FDA, the rest of us will have to collectively hold our breath.