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Did This Study Just Quash the E-Cigarette Market?

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One of the major selling points for electronic cigarettes, or e-cigarettes, is that they are effective smoking-cessation devices. Altria Group (NYSE: MO  ) , Reynolds American (NYSE: RAI  ) , and Lorillard (NYSE: LO.DL  ) have made bets that smokers will switch to e-cigarettes as a healthier alternative to traditional cigarettes. However, that thesis may have just gone up in smoke, as new research suggests that e-cigarettes are not an effective smoking-cessation device.

Questions about e-cigarettes' effectiveness
The study, published in JAMA Internal Medicine, followed a nationwide sample of 1,549 participants for one year. It discovered that e-cigarette use did not result in a change in cigarette consumption.

This is mixed news for the tobacco industry, which is threatened by the potential for e-cigarettes to become an effective substitute for traditional cigarettes. However, Altria, Reynolds, and Lorillard are also positioned to reap the majority of the benefits from the e-cigarette boom. Lorillard acquired e-cigarette leader Blu in 2012 for $135 millon; it now has a nearly 50% market share. Reynolds and Altria are also rolling out e-cigarette brands nationwide this year.

Big tobacco's move into the e-cigarette market is as much a defensive stance as an attempt to boost profitability. Respected tobacco analyst Bonnie Herzog predicts that U.S. e-cigarette consumption will surpass that of traditional cigarette consumption within the next 10 years. Since much of the growth in e-cigarettes comes at the expense of traditional cigarettes, tobacco companies are merely playing defense.

However, there is widespread fear among anti-tobacco activists that e-cigarettes could make smoking cool again and serve as a gateway to cigarettes. A study published in JAMA Pediatrics found that e-cigarettes contributed to teenage nicotine addiction. E-cigarettes, which come in flavors like cherry, strawberry, and cookies & cream, are less harsh than cigarettes, making it easier for adventurous teenagers to pick up the habit. Moreover, the study showed that current smokers who had never used e-cigarettes were more determined to quit than those who had used e-cigarettes. Although scientists are far from reaching a consensus on the issue, these findings could put a damper on e-cigarette growth.

The Food and Drug Administration has not yet released comprehensive guidelines for e-cigarette regulation, but many states and municipalities are already clamping down on the tobacco-free devices. Bills in New York, Oregon, New Jersey, Washington, and a number of other states have proposed taxing and regulating e-cigarettes like other tobacco products. High taxes, marketing restrictions, and public awareness about the health risks associated with smoking tobacco have led to a long-term secular decline in cigarette consumption in the U.S. The same factors could put a lid on e-cigarette growth.

What it means for tobacco companies
Altria has the most to lose from e-cigarette growth. It was the last of the big three U.S. tobacco companies to announce a nationwide rollout of its e-cigarette brand, and its 50% share of the U.S. cigarette market gives it a dominant share of the industry's profits. Stunted e-cigarette growth would reaffirm Altria's dominant position in the industry.

Reynolds is in the same boat as Altria. Its Vuse e-cigarette has yet to gain wide adoption, while its Camel and Pall Mall brands combine for a 17.8% share of the cigarette market. All of the company's brands combine for a 26% share of the cigarette market.

Lorillard, on the other hand, could stand to gain another revenue source. Its revenue is largely dependent on Newport menthol cigarettes; Newport (mentholated and non-mentholated) accounts for 85% of Lorillard's cigarette volume. Given pending legislative restrictions on menthol cigarettes, Lorillard's small-but-growing e-cigarette business is an important source of diversification.

Nobody knows how e-cigarettes will be regulated; the rules have yet to be drawn up. However, Altria and Reynolds would not mind it if e-cigarettes were lumped in with tobacco products; the two leading tobacco companies have a lot more to lose from e-cigarette growth than they could hope to gain. Lorillard, on the other hand, stands to gain a meaningful new source of revenue if it can maintain a dominant share of a growing e-cigarette market. It is too early to tell which way regulators will go, so tobacco-industry investors must accept a high degree of uncertainty for the time being.

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Read/Post Comments (25) | Recommend This Article (6)

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  • Report this Comment On March 31, 2014, at 6:59 PM, Vaporizer wrote:

    Spreading junk science doesn't help anyone. Even when rationized as a good cause. Unfortunitly, this doesn't stop JAMA from printing this diatribe. I quit a 40 year smoking habit the day I started vaping. I found the ingredients were recertified by the FDA for inhalation and ingestion back in1987. I found nicotine isn't the poison we are lead to believe. A study of life long Snus users showed no difference in health from the general population. E-cigarette and Personal Vaporizers will kill the smoking habit if allowed to.

  • Report this Comment On March 31, 2014, at 8:41 PM, Locruid wrote:

    Remember when science PROVED that a 4 minute mile was impossible running?

    Remember when Science PROVED the Earth was Flat?


  • Report this Comment On March 31, 2014, at 8:42 PM, flatusm wrote:

    E-cigarettes are going to make smoking cool again?

    I don't think so. I think they look retarded, and so does everyone else. You try to do a cool smoking move like Andrew Dice Clay or Dr. Strangelove with a plastic gimmick and you immediately look like a total twink.

    What, you going to blaze that thing with a plastic toy zippo? You might as well build it into a bluetooth earpiece, run a little hose down to your mouth like some lung cancer guy with the things up his nose. That would be no less cool.

    Now, my wife bought one of these things for her medical marijuana. She cooked up some special juice from an extract we made with Everclear, reduced down to putty and dissolved in glycerin.

    Here's the funny thing--there is no smell. It's just THC and essential bud oil which smells vaguely like...sewing machine oil. She tried it in a comedy club recently, and the security came over and stood *in* the cloud she'd just blown out, and asked her to please not use that in there. She looked at him and said, "But this isn't even tobacco." The guy had no idea what she was saying. She managed four or five good hits, which is all you need of that stuff to be H-I-G-H. I mean 'medicated' of course.

    Now tell me that's not cool, but she still looks like an idiot doing it. Like some alien in the background of a Star Wars flick.

  • Report this Comment On March 31, 2014, at 10:42 PM, Charon9 wrote:

    I quit smoking on the first try, and first vape (after 33 years) - my mother quit in three weeks, my room-mate on the 2nd try (better fluid). In fact of the 30 or 40 smokers I know NONE of them smoke anymore they all quit using a "Vape" device (not those cheap dime store ones).

    This study of theirs maybe legit but slanted, if the first question was "Do you want to quit smoking" and only accepting those that said NO -- however I do not know a single person who has failed to quit smoking "if they want to quit" using a good device and good fluid (not mail / internet - china junk).

    Things like this are ALWAYS about money - and since no one paid them 4 million dollars for research, and they don't hold all the patents (like the other stop smoking junk that failed to help me quit) - then "they" want to make it look bad.

  • Report this Comment On March 31, 2014, at 11:03 PM, TexasBob86 wrote:

    JAMA is setting up a classic straw man. No manufacturer or retailer of e-cigs or e-juice ever claimed that they were for smoking cessation. To do so would invite regulation by the FDA.

    E-cigs are marketed, primarily, as an alternative to tobacco for use when you can't or don't want to smoke. I started vaping three years ago at times when I couldn't smoke.

    Having said that, I quit tobacco cigarettes five months ago. Now I vape instead. Why? I spent about $150 per month on cigarettes. Now I spend just $20 per month to vape. You do the math.

  • Report this Comment On April 01, 2014, at 12:41 AM, popeb wrote:

    Follow the money..simple.These "studies" are always slanted,and the misinformation out there on ecig's is absolutely crazy..most lump ecigs in with vapes for one thing..I have spent hundreds on cessation products,I have tried them all,Chantix(twice)gum,patches,hypnosis,Wellbutrin..NOTHING worked until I tried vaping.I have been free of cigarettes ever since the moment I started vaping.No body cared till they started getting popular,now they either want a piece of the action or to get rid of competition.Its ALL ABOUT THE MONEY!!Government wants tax money to blow ,Big tobacco wants no competition for their cash cow.Pharma wants to keep us sick and lining their pockets.Follow the money,that tells it all...

  • Report this Comment On April 01, 2014, at 4:40 AM, tunkamerica wrote:

    no. i have smoked maybe 40 cigarettes in 2 years since starting "vaping". Whereas that might be 2-4 days worth before. I've had a pack of rolling tobacco going stale on my desk for 6 months whereas before it wouldn't last a a week.

    Go on any forum talking about this issue and you'll hear the same by almost everyone. This is propaganda by one of two groups. Either it's big tobacco or it's non-smokers who can't stand the idea of smokers/ex-smokers not being miserable and failing consistently.

    A person on another forum proffered that e-cigs are not a tobacco cessation device but rather a tobacco avoidance device. They avoid the hundreds of cancer-causing ingredients and still get to enjoy the sensation of smoking.

    These products are a godsend for people who want to quit and limiting access will literally kill people.

  • Report this Comment On April 01, 2014, at 7:07 AM, ecigssavelives wrote:

    The article appears to be written by someone who has never smoked a cigarette, tried to quit smoking or tried an electronic cigarette. If he had, he wouldn't be parroting the same garbage we've seen everywhere else.

    I don't know if e-cigarettes are smoking cessation devices, quit smoking devices, gateways to smoking or something else to blame Obama for. What I DO know is I haven't smoked a cigarette in over 5 years as a result of discovering electronic cigarettes. I started BEFORE there was anything resembling an "e-cigarette market". We were just people who got tired of being gauged by the government (taxes) and the tobacco industry. So when the hubbub dies down, we'll continue exactly what we were doing prior to widespread public awareness of electronic cigarettes.

    There's an old saying...far better for people to believe you're ignorant than to open your mouth and prove it to them. This reporter should stick to topics he can write intelligently about. Misinformation like this does nothing other then persuade some people to avoid what could be a healthier smoking alternative.

  • Report this Comment On April 01, 2014, at 9:30 AM, ridiculous wrote:

    Where do they get these same 1,549 people from over and over again? Why don’t these professionals survey the more than three times that number who always refute this crap in the comments sections?

    I see the same headlines over and over – “it’s over for e-cigarettes”, or “new warnings”, “new dangers”, etc. with the same, no substance articles. Nothing new. But that’s what they hope for – the article won’t be read – just the headline. Sadly, 90% of the time, they’re right.

    The best “dangers” they’ve been able to come up with is:

    "could make smoking cool again and serve as a gateway to cigarettes"


    “children will be drawn to it because of the flavors”


    "a toddler can accidentally drink it”


    "we still don't know the dangers" (which contradicts these articles titles)

    or this one:

    "it's not successful"

    These “studies” that show it has not been successful boggles the minds of those of us who have successfully quit because of them.

    My family were heavy smokers, including myself. That’s 7 of us. All 7 of us, because of e-cigarettes, are smoke free from Marlboro.

    Moreover, every single person I know who used e-cigs has been cigarette free for over a year. Not reduced smoking, but cigarette free. I would be hard pressed to find anyone I know, or anyone I have even met in the last two years still smoking cigarettes AND e-cigs at the same time.

    I’ve not had a cigarette in 2 years. I was a 2 pack a day smoker for nearly 25 years, and had tried everything on the market, without success. 1 year later, so did my entire family. Not 50% of my family, not 75% - but 100%.

    In my survey, that would be 100% success rate.

    For an entire family, so late in life, to have finally succeeded to get off of cigarettes with the help of e-cigs, is, in my opinion, a remarkable achievement.

    Then, my father, my mother, and 2 other siblings no longer even vape e-cigs. They've weaned themselves off. My father was diagnosed with COPD, and for the first time in years, he no longer has to use an inhaler.

    When I smoked cigarettes, I couldn't run a block without being out of breath. Within 3 months of switching to e-cigs, I could sprint 5 blocks without being out of breath, 3 months after that, I was jogging again.

    Within 90 days of switching to e-cigs, my bad cholesterol dropped 90 points. I had not dieted, I'd not yet begun exercising - I done nothing to change my routine - at all, except to stop smoking cigarettes.

    That’s MY measure of success.

    The F.D.A., after all, has steered us down the wrong path, many many times before - starting with over prescribing antibiotics, pain pills, and under regulation of others.

    Why don’t you do a side by side breakdown of the over 200 chemicals in each Newport, or Marlboro cigarette, and of those in an e-cigarette. Please include the second hand effects, as well.

  • Report this Comment On April 01, 2014, at 9:32 AM, donf109 wrote:

    This study is asinine. I smoked 3+ packs of cigs a day till April 9, 2012. I had to drive to Oklahoma just to buy cheaper cigs by the carton (3-4) then lose more money in the casinos. I figure it cost me $300-$400 every 2 weeks to fund my addiction. Now I spend less than $50 a MONTH for e-cig juice. That date, April 12th was when I started ecigs and haven't touched a tobacco cig since. I can smell tobacco smoke from an open window of a car two lanes over from me at a stop light and it's now disgusting for me to smell it. Now my wife has quit regular cigs and joins me in "vaping"

  • Report this Comment On April 01, 2014, at 10:49 AM, debyduz wrote:

    My son is/was a smoker. He never smokes in the house but the smell on his clothing and his room make me sick. I am an exsmoker for 25 years. I bough him the vaping system with the tank and he vaps in his room. There is no lingering smell. I can walk through a cloud of the vapors and it doesn't even bother me.

    I have seen him forget his e-cig and go to work and he just waits until he gets home. I am pretty sure he could just quit it if he wanted.

    The cost savings in incredible. I have a friend who was a very heavy smoker and switched to vaping and saved 2700 in a little over 6 months. He was smoking 3 pack a day. It has really helped him improve his health.

    I tried my son's e-cig and it made me cough. the hit of mild nicotine made me buzz around cleaning all afternoon much like a cup of coffee. It also made me not hungry. I won't be starting the habit. I have had no desire to try it again.

    I know from the number of times I tried to quit cigarettes that all it took was one puff to be back smoking. I think the addiction of cigarettes is more then just the nicotine.

    In my opinion it is still not good for you, but it is 1000 time better then cigarettes.

  • Report this Comment On April 01, 2014, at 11:44 AM, hazelnblonde wrote:

    I simply echo everyone in here, a smoker for over 30 years and have been cigarette free for over two years. It's funny isn't it that these same 1500 plus people surveyed seem to come up with the very same answers or at the very least, the answers they purpose them to be. I have turned countless people into non cigarette smokers and will continue to do so. Many have mentioned the cost savings, the almost immediate improved health factors and the vastly improved impact on the offensive smell that accompanies smokers, but when you read what "ridiculous" wrote and his entire family 7 of 7 quitting and the fact all they want is for people to read the well thought out headlines is spot on, it's just simply a good sales pitch for who ever these experts are. I can't tell you how many times I worried about my consumption of coffee based on those same fools and their smoke and mirrors predictions. Enough already!!!!


    A proud Former Smoker vaping in Colorado

  • Report this Comment On April 01, 2014, at 11:57 AM, timsanders88 wrote:

    bought my Medical-E-Joint in Denver and I love it. Medicate when and where I want.

    Cost $99 at store and see online for $109 at

    I have had 3 other units and this is the best unit I have bought. Big HIts, Looks Good, Long Lasting Batteries,

  • Report this Comment On April 01, 2014, at 12:20 PM, musicinmykey wrote:

    I quit after 30 years of smoking. Best cessation device ever!!! I don't even use the e-cig anymore. Stopped after about 3 months. Any one who tries to tell you otherwise has absolutely no clue what they are talking about and are likely being paid by big tobacco to limit the acceptance and use of e-cigs.

  • Report this Comment On April 01, 2014, at 3:25 PM, Neanie wrote:

    This article is a joke. I have used my Ego E-cig for over 3 yrs. I have COPD and half of my left lung was removed in 88. For the first time since then I can breathe again. I no longer use my inhaler, I can climb the stairs to my apt with no problem. I swear this ecig has actually improved my breathing, sounds crazy I know. I got my sister and my daughter using them. My daughter stills smokes, my sister does not, she only uses her ecig. It has been a Godsend to me and I will continue to use it. Big Pharma, Big Tobacco and the FDA need to stay out of the e-cig industry, e-liquid is NOT tobacco. They won't though. They would rather people continue on smoking, get lung cancer, bladder cancer then after making millions off of a person using their deadly cigarettes, they then are dependent upon expensive medications to try to cure them and keep them alive. How can that be right? Govt needs to stay out of my life and stop trying to take away a device that is helping me and so many people. VAPE ON! People, please sign every petition you find and share them. We can't give up and let these greedy people succeed.

  • Report this Comment On April 01, 2014, at 5:21 PM, sunshine4848 wrote:

    It is all about the money and Noting else !

    So many people are quitting smoking and the government and the states are losing millions in taxes .

    They are trying to find away to get the money back that is the bottom line .

    I was a 2 pack a day smoker for over 25 years , I quit in 2 days using the green smoke e-cig and will be 3 years smoke free this coming September .

    I still use the e-cig with the lower nicotine the next one will be nicotine free and many of my friends still use the nicotine free carts .. My doctor is find with it and told me she doesn't care if I use the e-cig forever .. she is really happy I quit smoking .

  • Report this Comment On April 01, 2014, at 5:50 PM, 4mikie wrote:

    It's always interesting to hear people brag about "quitting"-anything. Many are very successful but the rest are liars, who just replace their addiction with a different form-like cigarettes and cigars or cigarettes and "vaping". (Or Bourbon and Beer) Same thing-you're still addicted. Take Do'bama and his "gum". Does he really think he's fooling anyone? No one chews "gum" with that gusto unless it's "Nicorette".

    If you're not strong enough to quit your addiction, you've GOT to stop trying to BS people because you look even MORE the idiot-especially to yourself.

  • Report this Comment On April 01, 2014, at 6:08 PM, sasha123 wrote:

    I smoked for well over 30 years. After one week of using the e-cig I quit tobacco cigarettes for good! It has been almost three years now and I have no desire to smoke ever again.

    I have spoken to several doctors about using the e-cig and every one of them has stated it is a MUCH better alternative than tobacco.

    If our grand and glorious politicians decide to tax e-cigs like tobacco cigarettes I would consider that the same as murder! I believe e-cigs saved my life.

  • Report this Comment On April 01, 2014, at 7:55 PM, jackiejacks wrote:

    Let's put it this way.......I am 25 & I have 2 younger siblings, and I would rather see them smoke cigarettes or e-cigs, any day over pot, drugs & alcohol!

  • Report this Comment On April 02, 2014, at 7:55 AM, kyaku wrote:

    @ 4mikie

    "No one chews "gum" with that gusto unless it's "Nicorette". "

    LOL! You've never chewed Nicorette gum have you?

  • Report this Comment On April 02, 2014, at 8:07 AM, CrazyDocAl wrote:

    So what about all the other harmful drugs that are only found in real cigarettes? Isn't the fact that they are not going into the body a good enough reason to support vaping?

  • Report this Comment On April 02, 2014, at 10:07 AM, Julian000 wrote:

    Nothing will help someone stop smoking unless the person has the will power--just like diet pills don't magically shed pounds off a person with a change in diet and exercise. Perhaps the study participants didn't have the willpower or desire to quit. I'm a former tobacco smoker who switched to electronic cigarettes because the e-liquid of vapor smoking is safer than the thousands of cancer causing chemicals in tobacco cigarettes. This is a fact which no one has yet to prove otherwise. The nicotine in e-liquid is the same as used in nicotine gum paid for by Medicare, and it's food grade flavorings are propylene glycol based which is rated GRAS by the FDA, "generally regarded as safe" and used in many food products, the anti-smoking drug ZYBAN, and toothpaste. People can stop nicotine addiction with e-cigs if they want to by ordering safe e-liquid from reputable U.S. retailers like (where I buy) and choosing what nicotine level they want (0mg-24mg, typically), Order less nicotine each time you order to ween yourself off.

  • Report this Comment On April 02, 2014, at 2:13 PM, vio wrote:

    Really getting tired of these anti e-cig articles. This single study doesn't prove squat and doesn't reflect the reality I've observed. It's just being printed to slow down the growth of e-cig's and make them easier to regulate and tax like a tobacco product.

    Virtually every person I know who vapes who was a smoker prior has quit cancer sticks completely. This includes my wife, her parents, and step-mother. I'm 33 and started smoking at the young age of 14(typical high school peer pressure deal). I smoked off and on until about age 27 when I really kicked into high gear and started smoking about a pack a day. I got my first e-cig back in October and quit the cancer sticks almost immediately. Basically I finished up my last pack and that was it. I have not touched a cancer stick since then. It wasn't even difficult because e-cigs work THAT WELL! You get everything you get with a real cig, plus a huge variety of flavors and none of the nasty side effects of inhaling harsh smoke that contains thousands of dangerous toxins.

    Hey Motley Fool, how about you do an online poll on how many people have successfully quit smoking by switching over to e-cigs? I bet you find the results are far different than this study you posted.

    Also people, PLEASE do not use crap like Blu's. You probably will go back to regular cigs after using junk like that. Get yourself a quality e-cig like an EGO-Twist and find a local vape shop to buy your e-juice. Trust me, you will be happy.

  • Report this Comment On April 02, 2014, at 3:47 PM, sandysmithers wrote:

    Unbelievable how the media is trying to demonize a product that has the potential to save millions of lives! For all those on the fence about quitting with ecigs, I suggest you find a device from a place like and some inexpensive juice from someone like I have switched at least a dozen former smokers and they (and myself) couldn't be happier. Don't buy the media's BS!!!

  • Report this Comment On April 02, 2014, at 7:13 PM, annlthompson wrote:

    I quit a 37 year habit of smoking. I have been vaping for 4 1/2 months and haven't touched a REAL cigarette since. Don't understand how they can think that it doesn't help stop smoking. It helped me and at least 6 other people that I personally know.....

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Ted Cooper is a value investor based in Texas. He does not ride a horse to work.

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