Tobacco

FDA, Altria Running Parallel Paths on E-Cigs?

Pulling pod-based systems, some flavors may mirror agency’s direction, analyst says
Photograph by CSP Staff

RICHMOND, Va. -- A major tobacco manufacturer’s deliberate move to pull certain pod-based electronic cigarettes from the market could be a harbinger for the strategy the U.S. Food and Drug Administration (FDA) may launch in its attempt to reduce teen use of vaping devices, according to a category analyst.

Speaking at a tobacco webinar hosted by CSP and Swedish Match, Richmond, Va., on Nov. 6, Nik Modi, tobacco analyst for RBC Capital Markets, New York, said Altria Group Inc.’s recent announcements to pull its MarkTen Elite and Apex by MarkTen pod-based vaping systems and other products specifically based on flavors was probably a direct result of recent conversations executives had with the regulating agency.

Along with those product decisions, the Richmond, Va.-based Altria said it would support raising the minimum age to purchase tobacco products nationally from 18 to 21.

Modi said these were “proactive” choices that probably reflect the actions the FDA will soon require overall. “The template is laid out,” he said, adding that the agency is expected to provide further direction by the end of the year. “I think [the FDA’s] decision has already been made.”

Providing other tobacco-related updates, Modi said cigarette volumes have been declining at a faster rate in recent weeks. He said the normal rate is between 3% and 4%, but lately rates have been “on the upper end of 4%.”

He noted several reasons for the increase:

  • Gas prices. Street postings have spiked in recent months.
  • Customer perception. How customers perceive higher prices is relative. “It’s not year over year,” Modi said. “It’s what you saw last at the pump.”
  • Excise taxes. In states such as Oklahoma and Kentucky, new excise taxes have gone into effect. Inflation from those increases in high, per-capita, cigarette-consumption states has put pressure on sales.
  • Minimum-purchase age increases. In about 360 cities and 22 states, Modi said the legal age to purchase cigarettes has risen to 21 from the federal standard of 18.
  • Manufacturer-price increases. Tobacco makers have implemented what he called “larger than normal” price increases.
  • Vaping. The use of alternative, nicotine-delivery devices is a “headwind,” Modi said.

“It’s not an albatross,” Modi said, “but cigarette-volume decline rates have accelerated and it’s at odds with the [current, upbeat] economy.”

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