What a ban on e-cigarette flavors could mean for Big Tobacco

What a ban on e-cigarette flavors could mean for Big Tobacco

November 9, 2018 0 By Nazmul Khan


The US Food and Drug Administration (FDA) is moving to block gas stations and convenience stores from selling e-cigarette products in kid-friendly flavors, according to a report from The Washington Post. The ban, which is expected to be announced next week, is a step toward fighting what the FDA calls an epidemic of youth vaping. But depending on how the ban unfolds, it could also be a major win for Big Tobacco.

This isn’t a blanket ban on vapes, according to the Post, which cites an anonymous FDA official. Gas stations and convenience stores can keep selling mint or menthol-flavored pods, just not ones that taste like mango or nectar. (It’s not clear whether tobacco flavors will be permitted.) Sales of flavored products may still be allowed in vape and tobacco shops as well as online stores with strict age verification setups. Vape shops will still be allowed to continue selling open-tank vapes and liquids that come in bottles, the Post reports.

We don’t know precisely how the ban will work or if there will even be one. (The FDA isn’t commenting.) Still, if the ban the Post describes does go forward, it will affect closed-system pod vapes in general. That will hit Juul the hardest, says Jidong Huang, an associate professor at Georgia State University who specializes in the economics of tobacco control. Part of Juul’s appeal is its flavors, he says. And because Juul has dominated more than 70 percent of the e-cigarette market, cutting it off at the knees is good news for other tobacco companies whose vapes aren’t as competitive.

Plus, cigarette smoking is at an all-time low. Public health experts say that we can’t definitively attribute the drop in smokers to the uptick in vaping, but a majority of adults who use e-cigarettes use cigarettes as well, which means that tobacco companies are losing out. Market analysts say what’s bad for Juul is good for tobacco companies, including those that manufacture vapes of their own. “We continue to believe any FDA action to restrict sales of e-cigs to minors will benefit tobacco manufacturers,” Bonnie Herzog, managing director of equity research at Wells Fargo Securities LLC, says in an emailed analysis. “We therefore expect tobacco stocks to trade up on the news.”

Unlike brands like Blu, Vuse, and MarkTen, Juul is independent of Big Tobacco companies. So pulling flavored vape cartridges from convenience store shelves is unlikely to hit Big Tobacco in the pocketbook, Huang says. After all, tobacco giant Altria decided to yank its flavored products even before The Washington Post’s scoop. “It’s not because they are pro-public health; it’s because it doesn’t affect their bottom line,” Huang says. “It’s very likely that this ban is going to benefit the tobacco industry overall.”

James Campbell, a spokesperson for Fontem Ventures, the company behind Blu e-cigs and a subsidiary of tobacco company Imperial Brands PLC, also thinks this ban might be good for business. “A significant proportion of our sales are tobacco, menthol, and mint and we have multiple product formats,” Campbell says in an email to The Verge. “So we will come out of this as competitive or more competitive than before.”

Spokespeople for British American Tobacco (the company behind the Vuse line of vapes) and JT International (the company behind Logic) say they’re waiting to see the official plan from the FDA before speculating about its effects. Altria did not immediately respond to an emailed inquiry. Juul declined to comment — although The Wall Street Journal reports that Juul is already making moves to pull its kid-friendly flavors from retailers’ shelves. It looks like the e-cigarette giant might comply with the FDA without a fight.

The ban aims to address major public health concerns about a generation of young people who are getting hooked on vaping and nicotine. As far as public health goes, Huang predicts the effects of such a ban will be mixed: he expects it will restrict sales in retail stores and reduce youth vaping, but it might make it tougher for adults to switch away from combustible to electronic cigarettes. “What’s complicated is that flavor is something that kids like, but flavor is something that adult smokers like as well,” Huang says.

Still, while we know that flavored vapes are important starter products for kids, the jury is still out on how important flavors are when helping adults kick their smoking habit. It’s true that, for adult smokers, e-cigarettes are considered less harmful than the regular kind, according to a massive report from the National Academies of Sciences, Engineering, and Medicine. The trouble is that a growing number of kids are using them. While the Centers for Disease Control and Prevention and the FDA haven’t released the latest numbers, FDA commissioner Scott Gottlieb has said the data reveal an “epidemic of e-cigarette use among teenagers.”

It’s unclear what the ban actually prohibits because the FDA has declined to comment on it. The Post didn’t say, for example, whether the FDA also intends to stop the sales of flavored cigars and cigarillos, which Desmond Jenson, an attorney with the Public Health Law Center at the Mitchell Hamline School of Law, says would be important to include.

“When you talk to non-public health people about cigars, people are picturing Winston Churchill with a big stogie in his mouth, but that’s not what we’re talking about,” Jenson says. Cigars can come in multiple forms and flavors, including Black & Milds, Swisher Sweets, and other cigarette-like cigars. They don’t get the same attention that e-cigarettes do, and not as many people use them, he says. “But everyone is in universal agreement that combustible products are the most dangerous.”

That these could potentially be omitted from a flavor ban worries Huang because we’ve seen how bans can have spillover effects in the past. When the FDA prohibited sales of flavored cigarettes, for example, more people gravitated toward still-legal menthol cigarettes as well as flavored cigars and pipes, according to a paper published in the American Journal of Preventive Medicine. “You actually see a spike in sales of flavored cigars and cigarillos after the 2009 Tobacco Control Act,” Huang says.

That’s why Huang thinks that the FDA’s e-cig ban on gas stations and convenience stores should go farther. “They should also prohibit sales of all combustible tobacco products as well, in addition to the flavored e-cigarettes,” he says. Doing so would discourage kids from vaping, he adds. “But it also still gives incentives for adult smokers to switch from combustible cigarettes to e-cigarettes.” Jenson agrees that a flavor ban that only affects e-cigarettes doesn’t go far enough. “If we’re only talking about e-cigarettes and not cigars,” he says, “it’s a missed opportunity for the FDA.”



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