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E-Cigs Have Gained Yet Another Powerful Enemy

Yet more bad news has recently emerged for the e-cig industry, as it turns out that the director of the Centers for Disease Control and Prevention, Dr. Tom Frieden, aggressively opposes e-cigs. Unfortunately, this could be bad news for Altria (NYSE: MO  ) , Reynolds American (NYSE: RAI  ) , and Lorillard (NYSE: LO.DL  ) .

Dr Frieden's opposition to e-cigs may come as a surprise to many. Indeed, the CDC is supposed to be on the lookout for ways to prevent and treat illnesses, so e-cigs, which are considered a reduced-risk alternative to smoking, should be great news for the organization.

However, Frieden's biggest concern about e-cigs is that they are a 'tobacco product' and he has stated five reasons why he believes e-cigs should be banned.

1. They are likely to get yet another generation of kids hooked on smoking as the number of kids trying e-cigs is rising.

2. If smokers who would have quit turn to e-cigs instead, then this could do more harm than good as e-cigs still contain nicotine.

3. If ex-smokers get back into the habit by using e-cigs, this is once again likely to do more harm than good due to nicotine addiction.

4. If people who want to quit smoking use e-cigs over nicotine-replacement products such as gum, this could lead to a relapse.

5. E-cigs re-glamorize smoking, and over the long term this could undo some of the work the CDC has done to eliminate smoking during the past few years.

Another problem is the issue of using e-cigs around kids, teens, and pregnant women and exposing them to nicotine via secondhand smoke; all of the above are very valid points.

Still, Dr Frieden does have some good things to say about e-cigs. The Dr. acknowledges that stick to stick, e-cigs are less toxic than cigarettes and e-cigs have helped some people quit, although the above risks override the advantages.

FDA decision helps
Many of the CDC's concerns around the use of e-cigs have their root causes in the glamorization of smoking, especially for kids.

Fortunately, the FDA has recently moved to address these concerns. The FDA wants rules introduced that will ban sales to minors and the provision of free samples, and require nicotine addiction warnings.

The FDA is making this move because of claims that the use of bright colors, TV advertisements, and music festival sponsorships have been designed to attract youth, who doubled their use of e-cigs in 2012 from prior years. Data for 2013 is not yet available.

It would appear that many industry participants are excited about the FDA's involvement in the market.

For example, Lorillard, the owner of the leading U.S. electronic cigarette company Blu eCigs, issued a press release on the decision applauding the FDA's decision to step in and regulate the industry.

It would seem as if the FDA's move to introduce some regulations for e-cigs is welcomed by all. It is generally considered that FDA involvement will reduce consumer concerns over the safety of the product.

This is great news for all e-cig companies, but Altria and Reynolds American in particular stand to benefit.

Set to benefit
Both Reynolds and Altria are rolling out their own e-cig products nationally during the next few quarters after conducting initial tests within 'trial' states.

Unfortunately for Lorillard, which has been able to achieve national dominance within the e-cig market as a first mover, the company will have to ramp up its marketing activities in order to compete with its larger peers.

Still, with the FDA's decision to regulate e-cigs still fresh in the minds of many consumers around the U.S., it is likely that Reynolds, Altria, and Lorillard will see their e-cig sales benefit from raised awareness.

Foolish summary
So the CDC's opposition against e-cigs is worrying but hopefully the FDA's decision to regulate the product will both reduce opposition to e-cigs and increase public awareness about the product.

All in all, this implies that Altria, Reynolds, and Lorillard will all see jumps in e-cig sales as public awareness increases. Altria and Reynolds will benefit the most because the FDA's decision comes at a time when they are increasing their promotional activity ahead of national roll-outs.

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Read/Post Comments (3) | Recommend This Article (2)

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  • Report this Comment On May 22, 2014, at 11:00 PM, joker831 wrote:

    So now the CDC is against ecigs/vaping. Too bad the article only highlighted the negative. This is plainly bought and paid for propaganda by Big Tobacco. I quit a 35 year two pack a day habit by switching. I have not even had the desire to smoke traditional tobacco. Vaping has saved my life. I literally quit overnight. And I am reducing the amount of nicotine. I hope to be at zero by the end of this year. Technology has given us a method to combat the number one killer in the world.... smoking. And now when big companies realize just how much money they are going to lose, they rally against it. Make no mistake that all the negative press and attention is brought on by Big Tobacco and their friends. This is not about public health. It is about money. Plain and simple. Billions, if not hundreds of billions of dollars in profits. We don't know what's in the eliquid. That's a lie. We don't know the long term effects. Another lie. Europe has about 50 years worth of data on it. Read it. It targets kids. Yeah.... so does flavored alcohol. I mean, afterall, there is not one single adult out there that likes the flavors of chocolate, strawberry, cotton candy or gummy bears.... right? It's all about the money. Big Tobacco is going to lose a LOT of money because of the healthier alternative. No more profiting on the deaths of half a million smokers a year.

  • Report this Comment On May 23, 2014, at 12:01 AM, YoFoZZ wrote:

    You can tell that they are getting desperate now and it shows in their continued propagandist attacks on e-cigarettes. The CDC is just now is stepping up to spout lies and instill fear. When in fact it should by definition of its name be in full support of and advancing our knowledge of this lifesaving technology. Considering that tobacco and not e-cigarettes are killing millions of people each year. A simple electronic device which is doing in grand style what decades of abusive morality taxes and the reckless waste of those monies have failed to do.

    Dr. Freiden be careful you might get pregnant from a dirty toilet seat. I might as well assume you would believe such nonsense coming from you considering your little list of nonsense in opposition of the e-cigarette.

    "1. They are likely to get yet another generation of kids hooked on smoking as the number of kids trying e-cigs is rising."

    A safer alternative is safer regardless. Even children can possess common sense and in turn make a healthier choice. If The e-cigarette has the chance to save one childs life from the ravages of smoked tobacco why would you deny them that? Is it money or ignorance?

    "2. If smokers who would have quit turn to e-cigs instead, then this could do more harm than good as e-cigs still contain nicotine."

    Nicotine by itself in small doses is relatively safe as is caffeine, or aspirin. It is found in a large variety of foods we eat. Tomatoes, eggplant, cauliflower, and potatoes. Nicotine does not have to come from tobacco as tobacco isn't the even close to being the best source in nature for nicotine. It is all the other stuff that is created in the burning of tobacco that is harmful. Or have you just been lying to us all this time out of personal conviction?

    "3. If ex-smokers get back into the habit by using e-cigs, this is once again likely to do more harm than good due to nicotine addiction."

    Another redundancy from you based on your personal, ignorant, and uneducated opinion. Safer is safer and if they choose a safer alternative it is better. The burning of tobacco once again is the culprit. If you are bothered by the physical act of vaping then you simply need a lesson in minding your own damn business.

    "4. If people who want to quit smoking use e-cigs over nicotine-replacement products such as gum, this could lead to a relapse."

    Almost any smoker can tell you horror stories about these replacement products. They themselves lead to relapse because they are not only ineffective but have strange side effects. Having an e-cigarette to relapse to is still better than the burning of tobacco.

    "5. E-cigs re-glamorize smoking, and over the long term this could undo some of the work the CDC has done to eliminate smoking during the past few years."

    The hard work you have done to accomplish absolutely nothing to help the millions who die every year. The billions of dollars wasted to produce commercials showing urinating and defecating animals. Comparing tobacco smoke to sucking flatulence out of your friends backside. Or peeling skin, pulling teeth, and being dragged outside for a tobacco smoke. When there is rapidly developing technology you should be looking to advance as it has the potential to save millions of lives. The CDC and the FDA are both incompetent and incapable of avoiding outside monetary influence. There are little boys growing breasts from their approved medicines and they attack truly lifesaving technology. You are fired!

  • Report this Comment On May 23, 2014, at 6:17 PM, Chelsea77 wrote:

    Can the Director of the CDC really be so ignorant? I hope for all our sakes that this article grossly oversimplifies Frieden's POV.

    This sort of "if..could" logic is the opposite of what you would expect from what is supposed to be a science-based organization.

    "It's likely to get another generation of kids hooked..." There's not a shred of evidence of this. In fact, the CDC's own statistics show very clearly that cigarette smoking among teens and kids has declined, and it has decreased over the very years that trial of e-cigs has risen. Correlation does not mean causation, and of course, e-cigs should not be sold to minors, but if anything, the research supports the harm reduction theory.

    Vaping has helped many people quit or cut down on deadly cigarettes. Remember, it's the combustion that causes cancer. To reject a less harmful product because it's better to quit any type of nicotine product doesn't make sense as a public health policy. E-cigs don't contain tobacco, they don't burn, and they don't cause cancer. Smoking does. It's irrefutable.

    Yes, in a perfect world, no one would smoke, but we don't live there. To let people die when there's a better alternative (and you're still waiting for them to be perfect) is poor policy to say the least.

    Finally, I don't think I'm the only one who's noticed that many of the so-called "research studies" that question the safety or efficacy of e-cigs are funded by pharma companies like Pfizer (NicoDerm) It's no coincidence, given that two large-scale studies show that e-cigarettes are better at helping smokers quit than the patch. Follow the money.

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Rupert Hargreaves

Rupert has been writing for the Motley Fool since December 2012. He primarily covers tobacco and resource companies with a passion for value-oriented investments. .

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