Vaping State Of Mind-Quick Takes From Our Inaugural E-Cig Forum

For those who were not able to attend. It was a very good event! Lou                                                                                             Equity Research


Vaping State Of Mind-Quick Takes From Our Inaugural E-Cig Forum


  • E-Cigs Revolutionizing Tobacco – Excitement was in the air today (11/21) at Wells Fargo Securities’ Inaugural E-Cig Forum in NYC. We gathered e-cig industry leaders as well as public health and regulatory experts to discuss trends/opportunities in this rapidly growing category. We came away with even greater conviction that e-cigs will be a game changer and eventually be margin enhancing to the tobacco industry. We reiterate our Overweight rating on the tobacco sector as we are increasingly optimistic on e-cigs.
  • Continued Disruptive Innovation Needed to Propel the Category Forward – We hosted “fireside chats” with 10 e-cig companies; key takeaways include: (1) There is a vast opportunity for the category and it is only just getting started–we think there’s room for both responsible independents and Big Tobacco; (2) Companies are exploring international expansion–possible combinations or partnerships could be on the horizon; (3) E-cigs/vapor products are in the early stages of innovation–we expect meaningful and positive changes to come over next several months; (4) E-cigs margins said to be very attractive– rivaling those of combustible cigs with many companies moving towards the rechargeable/razor-blade model; (5) E-cig companies are differentiating themselves on both technology and branding; (6) Retailers and wholesalers continue to embrace the category given its attractive margins (~3x those of cigs).
  • Public Health Panel Suggests a Huge Global Health Opportunity for E-Cigs Despite the Challenges of “Threading a Moving Needle”-David Sweanor, adjunct professor of law at the University of Ottawa, moderated a panel of industry experts including David B. Abrams, PhD, Clive Bates, and Jean-Francois Etter, PhD, to discuss current perceptions on public health risks and trends for the e-cig category. Key takeaways include: (1) E-cigs likely significantly less harmful than traditional cigs and offer a compelling alternative to smokers, which isn’t universally known among smokers since relative risk claims are not allowed; (2) Current studies on e-cigs are both insufficient and often misinterpreted, leading to a misunderstanding about the risks/benefits of e-cigs by both the public and legislators; (3) Ongoing innovation is needed to improve “experiential” aspects of e-cigs and convert more existing smokers; (4) Regulation must be thoughtful and allow for (rather than stifle) innovation and education of the public. Bottom Line – There appears to be a broad belief in the benefits of e-cigs and the vast public health opportunity.
  • Regulators Must “Mind the Gap” of Differences Between Cigs and E-Cigs – Clive Bates, former head of ASH (Action on Smoking and Health) hosted a panel incl. Neil Wilcox (blu/LO), David Graham (NJOY), and Scott Ballin, JD. The panelists agreed regulation is good and necessary, but the regulation of e-cigs must be different than cigs. The panelists generally believe that Mitch Zeller understands this and were encouraged by his recent comments that regulation of all nicotine products should be comprehensive and based on a continuum of risk. Mr. Wilcox succinctly summarized the principals that he believed regulators should follow as: (1) Encourage robust research; (2) Employ rigorous quality standards; (3) Allow innovation to continue; (4) Ensure e-cigs are promoted to adult smokers only. Bottom Line – We believe there is an active, ongoing dialogue with relevant decision makers and believe forthcoming regulation could be an opportunity for e-cig manufacturers to better educate consumers and convert smokers.

Please call or email me with any questions.




Bonnie Herzog

Managing Director

Beverage, Tobacco & Convenience Store Research

Wells Fargo Securities, LLC

375 Park Ave

New York, NY 10152

Phone: (212) 214-5051


#1 Gil Ross MD/ACSH on 11.22.13 at 10:10 AM

It was a very valuable and somewhat educational conf., a debt of gratitude is owed to BHerzog and WFarco. BUT the 800 lb gorilla went way too unmentioned, except for my [long, ok] question: How did the unscientific, harmful “principles” of anti-THR, anti-cig agenda get institutionalized at the highest levels of our govt. and big NGOs and academic ctrs. e.g. Mayo, UCSF? AND more importantly perhaps, how can this lethal situation be countered and reversed most effectively? Gil Ross MD/

#2 Gil Ross MD/ACSH on 11.22.13 at 10:12 AM

The above entry by me should have said, “….anti-E-CIG agenda…”, not ‘anti-cig’. Sorry. G Ross

#3 marie on 11.23.13 at 6:27 PM

You should have a discussion about how we can get people to stop smoking…period not a cigarette substitution that will eventually lead to smoking….

#4 Gil Ross MD/ACSH on 11.23.13 at 7:25 PM

Marie, you are all wet. Certainly, the goal should be to get all smokers, and chewers, and snus-ers, off of addictive nicotine. BUT experience and clinical trials and observation shows that those addicted to cigarette-nicotine have a very poor record of quitting. Did you know that? Many do quit–but it often takes 5-10 or more tries over the course of decades–and then they still die of lung or other cancers or COPD, years after they finally quit. There is NO evidence that e-cigarettes “eventually lead to smoking”. The hope and logic indicate that smokers will switch away from cigarettes by vaping. The FDA-approved products don’t work, and cold turkey succeeds less than 5% of the time. What would you tell smokers who want to quit, but cannot, to do?
Gil Ross MD/

#5 Observer on 11.23.13 at 7:49 PM

E-cigarettes leading folks to smoking – what are you smoking Marie – very very little evidence. You are not in touch with the reality that exists.

#6 vapor vixen on 11.26.13 at 9:38 AM

Wish I knew about this conference – it sounds like it was a real win for the industry. Nicotine so similar to caffeine.

#7 Candy Girl on 11.26.13 at 11:30 AM

Based on the comments from a number of attendees that I know well- the regulatory and legal aspects discussed by a number of speakers and panelists were informative and enlightening. But, the sad attempts of small e-cig companies to position their companies to “sell” to big tobacco were obvious and off-putting. That’s what happens when an investment banker sponsors a conference!

#8 OTP Kid on 11.27.13 at 12:51 PM

These are gateway products pure and simple, everyone knows it. The denials are getting tiresome

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