Sales of electronic cigarettes are slowing, but the Centers for Disease Control may have just done the industry a favor that could help reignite growth.
According to a recent survey of tobacco shops and convenience stores, the once meteoric expansion of alternative-smoking products is moderating, and may soon be stubbed out, particularly with the Food & Drug Administration poised to implement new rules that could cause virtually all products to be pulled from store shelves. But a new study by the CDC hints at the benefits the industry offers, and may be what e-cigs need to light a fire under sales.
According to the National Public Health Institutes, few people other than smokers are using electronic cigarettes, and those who are using them are doing so to quit smoking tobacco. Because that's long been touted as a benefit of the products, it could be used to slow the juggernaut of regulation and control that's speeding ahead trying to stamp them out.
Although the CDC has long buried the positive effects of vaping, choosing instead to highlight only those points that further the anti-tobacco company agenda it's pushing, its latest study of adults who use electronic cigarettes found that, while 12.6% of Americans have tried an e-cig, only 3.4% of non-smokers have tried one. Moreover, just 0.4% of people who never smoked a combustible cigarette currently used an e-cig.
That belies the claim made that electronic cigarettes are something of a "gateway drug" to introduce people to smoking. In the same way that marijuana is supposedly a stepping stone to cocaine use on the way to heroin and meth addiction, e-cigs are reportedly an avenue traveled by Big Tobacco to get nonsmokers to start smoking tobacco. This study undercuts that theory, but more importantly highlights the benefits that e-cigs provide.
Its biggest findings revolve around those who actually do partake in e-cigs:
- 47.6% of current smokers had tried e-cigs
- 55.4% of smokers who had quit had used e-cigs
What that shows is that people who smoke are using electronic cigarettes to try and quit. If healthcare advocates are really looking to cut down the incidence of smoking, they should be applauding the role e-cigs could play in achieving that.
According to Wells Fargo, e-cig sales should hit $1.5 billion this year, with personal vapor products growing to an even larger $2 billion sales level. But where it was once thought that e-cig sales would become a $10 billion industry, and sales would surpass those of combustible cigarettes, a CSP-RBC Capital Markets tobacco survey indicates there may be more smoke than fire there as tobacco stores are seeing demand peter out. Wells Fargo reports year-over-year sales are down as pricing has been slashed, even as unit sales are up.
Much of the blame is laid on a lack of product innovation, which could be the result of the biggest cigarette companies wading into the market and buying up some of the e-cig industry's biggest players.
Lorillard got the ball rolling several years ago with its acquisition of blu eCigs, which quickly jumped out front with a near-50% market share. But that has fallen to below 30% in recent periods as Reynolds-American (NYSE:RAI) and Altria (NYSE:MO) introduced their own brands. And when Reynolds bought Lorillard earlier this year, it sold off blu to British cigarette company Imperial Tobacco so that it could promote its own Vuse brand, which has quickly become the top-selling vapor product in convenience stores and gas stations.
But the so-called cigalike boom may become a bust if it doesn't attract more people, which is why the CDC study is helpful. It points out that e-cigs are proving effective in helping smokers reduce their cigarette use, or quit altogether.
Several other studies back this up, including one from The American Association of Public Health Physicians, which concluded that e-cigarettes could "save the lives of 4 million of the 8 million current adult American smokers," while the influential journal The Lancet published another that indicated e-cigs were as effective as nicotine patches in helping smokers quit.
There are real costs associated with smoking, costs that can be ameliorated by the use of electronic cigarettes. By promoting the nicotine replacement-therapy products as a viable and effective alternative in reducing the incidence of smoking, the Centers for Disease Control may have unwittingly given the industry a big shot in the arm, and saved it from the anti-smoking lobby and itself.
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