The rise of disruptive smoking

E-cigarettes are growing in popularity, but that brings with it a whole new range of issues

Every industry has moments when a game-changing innovation disrupts traditional markets, creating waves with consumers, governments and regulators. For the tobacco industry right now, electronic cigarettes are posing just that challenge.

Developed in China and introduced to the US in 2007 before coming to the UK, these products look like cigarettes and mimic a cigarette’s functions. However, they function as vaporisers rather than tobacco-burning products, using an electronic mechanism to heat up a liquid nicotine solution which is inhaled without the tar and carcinogens found in smoke.

Powered by battery and controlled via microchip, they allow users to adjust the amounts of nicotine they intake, gradually weaning themselves off their addiction if they choose.

E-cigarettes have become increasingly popular, with global sales rising from $20 million in 2008 to about $3 billion last year (£1.76 billion), according to financial services group Canaccord Genuity. Annual cigarette sales, meanwhile, are worth more than $700 billion (£412 billion), says research group Euromonitor.

In 2012, Goldman Sachs declared e-cigarettes one of the top ten disruptive technologies to watch. ‘The value proposition of e-cigarettes is clear,’ says John Quelch, professor of business administration at Harvard Business School.

‘They provide the dubious pleasure of nicotine without all the cancer-inducing toxins associated with tobacco.’

That makes e-cigarettes sound like a public relations professional’s dream product to market, with clear benefits for healthcare and public finances.

However, e-cigarettes raise complicated and sometimes contradictory emotions.

Debate is raging, for example, on the Mumsnet social networking web community where some mothers want e-cigarettes banned in case children progress from using them to smoking tobacco.

Electronic cigarettes have also got regulators into a funk. The World Health Organisation is calling for them to be regulated just like tobacco cigarettes.

In America, the US Food and Drug Administration is planning to introduce marketing and product regulations governing e-cigarettes.

With the European Union, the Tobacco Products Directive proposed by the European Commission would create two classes of nicotine products – licensed medicines, such as inhalers, that would be regulated as pharmaceuticals and consumer products that would be unlicensed but would still face advertising and other restrictions.

Such regulations are unlikely to be in force until 2016. In the meantime, French health minister Marisol Touraine has tabled a bill that would make France the first European country to subject e-cigarettes to the same bans in public places as tobacco cigarettes.

In the UK, the chemicals used in the manufacturer of e-cigarettes are to be licensed as a medicine from 2016.

There are also changes afoot in Britain’s advertising regulatory regime. E-cigarettes are currently classified as tobacco products for advertising purposes in the UK, so cannot be advertised as being for smokers.

However, the Committee of Advertising Practice and the Broadcast Committee of Advertising Practice have launched consultation exercises looking at how that framework could be changed.

Pharmaceutical companies, which market nicotine patches and other smoking-reduction products, are also watching e-cigarettes, while employers don’t seem to know what to do about them.

Insurer Standard Life has banned use of e-cigarettes at the desks of its 5,500 staff, while some local authorities, such as Cheshire East Council, want to outlaw them in their offices and vehicles.

A problem for such campaigners is that the medical evidence currently points in the other direction.

The latest figures from anti-smoking lobbyists Action on Smoking and Health (ASH) show that while UK e-cigarette use has tripled over the past two years to 2.1 million a year, the main customers are smokers trying to reduce or give up their habit.

‘The dramatic rise in use of electronic cigarettes over the last four years suggests that smokers are increasingly turning to these devices to help them cut down or quit smoking,’ says ASH chief executive Deborah Arnott. ‘Significantly, usage among non-smokers remains negligible.’

Separate research was recently carried out in England for Smoking in England, a web portal on smoking cessation supported by the Department of Health and Cancer Research and fervent anti-tobacco campaigner Robert West, a professor at University College London.

The Smoking Toolkit Study found that electronic cigarettes are overtaking the use of nicotine products, such as patches and gum, as an aid to quitting smoking, while smoking rates in England are continuing to fall.

‘Despite claims that use of electronic cigarettes risks re-normalising smoking, we found no evidence to support this view,’ says West.

‘On the contrary, electronic cigarettes may be helping to reduce smoking as more people use them as an aid to quitting.’

However, major tobacco groups have hedged themselves on this issue by acquiring or launching their own e-cigarette brands and displaying such products alongside cigarettes.

Fontem Ventures, a stand-alone company formed by Imperial Tobacco to develop non-tobacco products, launched Puritane e-cigarettes earlier this year.

‘It’s such an evolving situation with regard to e-cigarettes,’ observes Simon Evans, Imperial’s group press officer. ‘They’re still a drop in the ocean compared to traditional tobacco products in terms of sales but they’re growing very quickly.

‘There are quite a lot of unknowns out there in terms of how the technologies will develop, how they will be seen by consumers, how they will be seen by regulators and whether there will be more consolidation in the industry.’

There are now an estimated 150 e-cigarette brands in the UK and the issues they face are different from those in the traditional tobacco industry.

‘As a tobacco company, there’s another realm of challenges,’ says Annie Brown, press relations manager at British American Tobacco, which launched Vype e-cigarettes through its Nicoventures non-tobacco arm last August. They are now on sale in more than 14,000 retail outlets.

‘People who are supportive of e-cigarettes are not necessarily supportive of tobacco companies being involved in launching them,’ she says. ‘At the moment, e-cigarettes are a very different market and there isn’t yet a framework in place.

‘You’ve got a lot of people in the market but not everyone is playing to the same guidelines because the regulatory environment is still in establishment.

‘We’re very clear that we’re aiming e-cigarettes at smokers. They’re an alternative for adult smokers who want a reduced-risk product. Our strategy is offering adult smokers a choice.’

Liz Freeborn, head of communications at Nicoventures, adds that social etiquette is also likely to develop regarding the use of e-cigarettes in restaurants, for example, where diners may not appreciate scents from flavoured e-cigarette products.

‘It’s the absence of regulation that leads to a polarity of views,’ she says. ‘You can’t say that anybody is right or wrong. But, if as many eminent academics think, e-cigarettes are not at all harmful and are helping people to stops smoking it’s difficult to square that with those who are against them for reasons that are unproven.

‘There’s no evidence that people who have never smoked are encouraged to smoke by e-cigarettes but there’s a fear out there, despite a lack of evidence.

‘It’s a concern and we recognise that. We just have to state the facts.’

Legal experts warn that bans on e-cigarettes would raise fundamental issues. While the smoking of tobacco products in enclosed or substantially-enclosed public places is forbidden in Britain by the Health Act of 2006, lawyers do not believe this legislation outlaws the public use of e-cigarettes, since no actual smoking takes place with the products and they are not believed to be harmful to others.

‘This leaves employers with a dilemma,’ says Philip Landau, an employment solicitor at Landau Zeffert Weir Solicitors. ‘If the use of e-cigarettes is not unlawful at work, should those employees that use them be treated in the same way as normal smokers and be directed to the designated smoking areas?

‘Users of e-cigarettes could argue that, as they are not actually smoking, they have a right to be provided with a smoke-free environment and should not be put with tobacco smokers.’

Because electronic cigarettes are untaxed they are significantly cheaper on a smoke-per-smoke basis than their heavily-taxed tobacco competition but also offer much greater profitability for manufacturers.

Yet taxation of e-cigarettes may be on the way, with some US states proposing to levy taxes similar to those that apply to cigarettes.

The inconsistencies of such proposals have not been lost on commentators.

‘I get the rationale for tobacco taxes,’ says Simon Brunori, deputy publisher of the Tax Analysts publication in the US. ‘You smoke, you get sick; society has to pay for your medical care.’

However, he adds: ‘Taxing e-cigarettes is a money grab. If people use e-cigarettes instead of real cigarettes, the state loses money. Truthfully we really don’t know what the long-term effects of e-cigarette use are but at the moment there’s no evidence they’re dangerous.’

As this issue promises to run and run, arriving at some sort of definitive expert medical opinion is likely to be the main determinant of future communications strategies.

‘Surely this is a public health issue,’ says Claire Anderson, professor of social pharmacy at Nottingham University. ‘These products are completely unregulated at present and nobody has any idea how safe they are. A lot more research is needed.’