NEW YORK -- During a late fall kumbaya gathering of makers and marketers of electronic cigarettes and their accoutrements, one gentleman described the scene as a "sort of religious revival."
With respected Wells Fargo tobacco analyst Bonnie Herzog as the group's minister, the e-cig parishioners shared their stories of inspiration and optimism.
And why not? E-cigs were the rage. Everyone was toting and touting the device of tomorrow, one to overtake combustible cigarettes by 2025.
Today, a regulatory extinguisher is dousing the youthful enthusiasm. Suddenly, what seemed to promise revolutionary annual growth of 30% to 50% is now risking more moderate uptake of 10% to 15%.
While the world--from tobacco's harshest critics to the highly leveraged manufacturers of e-tobacco products--has waited for the federal Food & Drug Administration (FDA) to act on this nascent segment, life has continued--and not in a good way for the e-cigarette industry.
Frustrated by Washington's inaction, cities and states are acting--harshly and rashly.
Just this week, Los Angeles became the third major city to ban the use of e-cigarettes and vaping products in public spaces. And scariest of all, the vote wasn't even close.
LA's city council voted unanimously, 14 to 0, to hold e-cigarettes to the same strictures applied to combustible tobacco products. And while the measure does not officially take effect until Mayor Eric Garcetti's signature, a spokesperson for the mayor says don't expect a veto.
Despite protests from consumers and makers of electronic cigarettes, the vote was a slam dunk. In fact, if the past 12 months are a precursor--the pro-e-cigarette crowd is in trouble--big trouble.
Chicago and New York have issued similar bans. Three states--Utah, North Dakota and New Jersey--have already passed legislation banning e-cigarettes wherever smoking is prohibited.
And despite strong scientific arguments suggesting that e-cigarettes are far less destructive than combustible and may actually be the most effective conversion opportunity for today's puffers, e-cigarettes are losing the debate of public perception.
There are several reasons, and they are all wrapped up in a beautiful quote made in a joint statement made last December by leading members of New York's city council. To make this clearer, we are emhasizing the key words to their quote because if we cannot address their points, e-cigs will never reach their potential.
"Because e-cigarettes are designed to look like cigarettes, they pose a problem to business owners and threaten effective enforcement of the Smoke-Free Air Act. Furthermore, we all know that smoking is a particularly difficult habit to kick. Allowing smokers an easy way to maintain their nicotine intake indoors can make quitting even harder. Allowing the use of e-cigarettes in places where smoking is prohibited sends the wrong message to children--that smoking is safe. … Finally, exposure to the chemicals emitted by e-cigarettes, which are unregulated, poses unknown risks that we simply cannot afford to take."
One quote with four reasons that represent our biggest challenge.
How should the e-cig community respond?
We suggest the following:
- Multi-Media Education Campaign: We propose that e-cig makers coalesce to finance an education campaign. We're not talking about collusion or violations of anti-trust restrictions. But we are talking about a TV, radio, social-media public-service campaign to educate the country on what e-cigarettes are and, equally important, what they are not.
- Product Standards: Leading manufacturers should publicly share what ingredients are in their products and voluntarily adopt good-practice standards, until such standards are regulated by the federal government.
- Product Appearance: This is admittedly a difficult one for us to weigh in on, but compelling public perception compels us to recommend that future e-cigarettes NOT look like cigarettes. We have talked to local enforcement officials and their concern is the same: If an e-cigarette looks like a cigarette, it's going to be regulated like a cigarette. On crowded streets and in public parks, we are asking too much for enforcement agents to have to distinguish between a cigarette and an e-cigarette.
- Minimum Age: It is not enough to adopt minimum-age requirements; leading companies must ensure their marketing strategies do not even suggest in the slightest that they are appealing to school age kids. We would argue that at least a couple companies have crossed the line. And while unfair, the bad acts of a few harm the many.
Not sure you heard the news, but according to the latest Nielsen numbers, there are some red flags to be aware of. For the four-week period ending Feb. 15, e-cigarette dollar sales at convenience stores decelerated to 31% vs a nearly 47% over the 12-week stretch.
More serious, during that same four-week stretch, Nielsen observed lower net pricing of -14%--the first negative net pricing values recorded by Nielsen since it began tallying e-cigarette sales.
This is not to say e-cigarettes are a fad. They are not. E-cigarettes remain the most exciting innovation in the tobacco set in several generations. But we are concerned that their growth potential could be bludgeoned through a thousand blows by waiting for the FDA to act.
It's time to act now and show the public you're listening to their fears.
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