Smokers switch to electronic cigarettes
Electronic cigarette makers have become increasingly aggressive in their advertising in the US, with one company even proclaiming that “Big Tobacco” has met its match.
The new assertiveness comes as tobacco analysts have started to acknowledge that growing demand for “e-cigs” in the US is peeling away customers from tobacco giants such as Altria and RJ Reynolds.
E-cigarette makers have even ventured into television in both the US and Britain – taboo for tobacco groups – with advertising for their products.
Sales of traditional cigarettes have been declining steadily in the past decade. According to the US Centers for Disease Control and Prevention, consumption of smoked tobacco products fell 27 per cent from 2000 to 2011, as taxes increased and smoking bans at bars and restaurants took hold.
Meanwhile, sales of e-cigarettes have soared, doubling during the past two years to $300 million in 2012 and on pace to reach $1 billion in annual sales in the next few years, according to estimates by Goldman Sachs.
The category is being compared with energy drinks and Greek yoghurt – bright spots in declining consumer markets.
“We continue to expect consumption of e-cigarettes could surpass consumption of traditional cigarettes within the next decade,” said Bonnie Herzog, tobacco analyst at Wells Fargo.
E-cigarettes work by vaporising nicotine-laced liquid that can be inhaled, replicating the effect of smoking without all of the carcinogens.
The success of e-cigarettes could soon hit some obstacles, however, with health regulators preparing new restrictions on the products and some US state legislatures considering taxing them.
E-cigarettes currently fall into a regulatory grey area. The US Food and Drug Administration is expected to offer guidance in April about how the products should be regulated. – Copyright The Financial Times Limited 2013