After losing market share, Big Tobacco is going into the e-cig business
Sales in cigarettes dropped 6.2 percent in the first quarter of 2012 — a jump from the 3 percent to 4 percent declines they've seen in recent years.
Meanwhile, sales of e-cigarettes — those battery-powered tubes you see people puffing indoors — have doubled. According to a study by the Centers for Disease Control and Prevention, in 2011, 21 percent of smokers had tried e-cigs, up from 10 percent in 2010. And after making $500 million last year, retail sales of e-cigs are expected to balloon to $1 billion in 2013, says the Wall Street Journal.
The three biggest cigarette companies see a connection between tobacco's losses and e-cigs' gains — and they want in on the burgeoning industry.
Altria, the world's biggest tobacco company and owner of Marlboro, on Thursday announced plans to roll out its own e-cig in the second half of 2013. The second-largest tobacco company, Reynolds American, which already produces an e-cig called Vuse, said this week that they plan to expand distribution. The third giant, Lorillard, was the first on the trend: The company paid $135 million for the popular brand Blu Ecigs last year.
The cigarette industry has been under attack for decades now, and has seen a steady decline in sales since 1998. The largest yearly drop occurred between 2009 and 2010, after the Obama administration enacted a 62 cent tax hike per pack of cigarettes. Congress is now considering adding another 94 cents per pack, nearly doubling the current federal tax from $1.01 to $1.95.
So could e-cigarettes be the next big thing in the tobacco world?
They certainly have their benefits. For starters, they’re about half the cost of regular cigarettes. They also do not contain tar and other harmful carcinogens, leading some scientists to believe they are far healthier than traditional cigarettes. Furthermore, the nicotine in an e-cig is vaporized, avoiding the combustion process of a lit cigarette, which releases some of tobacco's most damaging toxins. On top of that, some studies say they actually help people quit smoking tobacco.
And possibly the best part? They don't smell bad.
But e-cigarettes aren't necessarily a panacea for America's dangerous smoking habit. The Journal reports that an FDA spokeswoman said Thursday that "'further research is needed' on the 'potential health benefits and risks' of electronic cigarettes." Furthermore, e-cigs still contain nicotine, a highly addictive substance.
And in the words of Consumer Reports:
Critics say that too little is known about the safety of e-cigarettes, which are unregulated. Some experts also worry that their availability online — where a user need only click a box saying he or she is 18 — could entice children and teens to try them. So could some of the flavors, such as piña colada and vanilla. [Consumer Reports]
Many states have already regulated the sale of e-cigarettes to minors.
Oh, and let's not forget the Florida man who claimed serious injuries in 2012, after an e-cigarette "exploded in his mouth."
Still, e-cig companies see a huge opportunity to expand their market beyond ex-smokers, and have started marketing campaigns to make the products seem hip. Here is the an Internet ad from NJoy, a popular e-cig brand, that features Hole singer and dedicated smoker Courtney Love:
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