February 5th, 2014 — Acquisitions, Current Issues, Electronic Cigarettes, General, Preventing Youth Consumption, Regulations: FDA etc., Science, tobacco, Tobacco Harm Reduction
Altria Group Inc. is set to acquire electronic cigarette company Green Smoke Inc. for about $110 million, ABC News reported.
The Richmond, Va.-based owner of Philip Morris USA announced that the transaction is expected to close in the second quarter.
The deal with Altria’s Nu Mark subsidiary also includes up to $20 million in incentive payments. Altria began test marketing its own electronic cigarette under the MarkTen brand in August.
Altria noted that Green Smoke’s experience in the category, along with its supply chain, products and customer service, will complement its business.
Green Smoke was founded in 2008 and has operations in the U.S. and Israel. Its revenue in 2013 was about $40 million.
February 5th, 2014 — Current Issues, Electronic Cigarettes, Preventing Youth Consumption, Regulations: FDA etc., Science, Snus, Snuff & Alternative Products in US Markets, tobacco, Tobacco Harm Reduction
CVS to sacrifice $2 billion in annual sales as it looks to solidify its position as a healthcare provider.
CVS Caremark Corp announced on Wednesday, Feb. 5 that it plans to stop selling tobacco products at its 7,600 stores by October, Reuters reported.
CVS, the second largest drugstore chain in the U.S., is now the first national drugstore chain in the U.S. to take cigarettes off the shelf. Public health experts called the decision a precedent-setting step that could pressure other retailers to follow suit.
President Barack Obama, a former smoker, also responded to the decision. “Today’s decision will help advance my Administration’s efforts to reduce tobacco-related deaths, cancer, and heart disease, as well as bring down healthcare costs,” Obama said in a statement.
CVS, whose Caremark unit is a major pharmacy benefits manager for corporations and the U.S. government’s Medicare program, said the decision would strengthen its position as a healthcare provider, according to Reuters. “I think it will put pressure on other retailers who want to be in healthcare,” said CVS Caremark Chief Medical Officer Dr. Troyen Brennan.
“We believe this will have no impact on tobacco manufacturers as smokers will still buy cigs and other tobacco products—rather, they will simply go to other retailers, such as c-stores, dollar stores and tobacco shops,” according to Wells Fargo Securities. “Therefore, this is a positive for c-stores as we believe a portion of the 15% of total tobacco volume sold through drug stores and supermarkest will move to c-stores and other retailers, especially if more drug retailers follow suit and discontinue sales of tobacco products. Further, if more tobacco consumers are going into c-stores this bodes well for the c-stores’ other non-tobacco merchandise sales.”
Walgreen Co, the largest pharmacy chain, said it would still sell cigarettes for now but will continue to evaluate the product category.
“The company has been evaluating its tobacco line for ‘some time,’ and said it ‘will continue to evaluate the choice of products our customers want, while also helping to educate them and providing smoking cessation products and alternatives that help reduce the demand for tobacco products,’” Michael Polzin, Walgreens spokesperson toldCSD.Walgreens has also announced a partnership with GlaxoSmithKline Consumer Healthcare to launch a free, Internet-based smoking cessation program called Sponsorship to Quit. The program will provide smokers with customized tools to track their progress in quitting smoking.
Third-ranked Rite Aid Corp did not immediately respond to a request for comment by Reuters.
CVS noted that the cost of eliminating cigarettes and other tobacco products would be about $2 billion in annual sales and six cents to nine cents in profit per share this year. Analysts expect CVS to report 2014 revenue of $132.9 billion and earnings of $4.47 per share, according to Reuters.
CVS executives told Reuters that the company would replace some of lost cigarette sales through smoking cessation programs at its pharmacies and through Caremark.
January 10th, 2014 — Current Issues, prices, Regulations: FDA etc.
By Melissa Kress
ALBANY, N.Y. — It’s been more than two years since the courts gave New York State the go-ahead to collect an excise tax on national brand cigarettes sold onNative American reservations in the state. The move should have been a win for competing convenience stores, which had been at a price disadvantage due to the state’s $4.35-per-pack levy. The reality, though, is that c-stores across the Empire State are still suffering the effects of having the highest state cigarette excise tax in the country.
Jim Calvin, president of the New York Association of Convenience Stores (NYACS), told CSNews Onlinethat Gov. Andrew Cuomo’s administration won its legal challenge to collect taxes on national brand cigarettes that are shipped through the conventional chain of supply — manufacturer to licensed wholesale distributor to retail stores. However, after the ruling, the Native American tribes instead decided to stop selling national brands and no longer accept delivery of brands such as Marlboro, Camel and Newport through those traditional channels.
“In the three to six months following the start of enforcement, national brand product in tribal stores in New York started drying up and by the end of about six months, the national product was virtually gone from the shelves in tribal stores,” Calvin explained. “That led to a significant increase in sales of national brand cigarettes in the non-tribal stores in closest proximity to those tribal enterprises. But the significant increase didn’t last long. The sales quickly flattened out and, in some cases, began to drop again.”
Part of the problem, according to Calvin, is that cigarettes manufactured by the Native American tribes are still not subject to the state levy. Some tribes were already making their own brands and those that weren’t began to do so. “They simply substituted their own brand for [the] national brands they had been carrying up to that point. Their tobacco business continued to flourish,” Calvin said.
New York convenience store retailer NOCO Inc. saw “a minor blip up” in cigarette sales at the company’s NOCO Express stores immediately following enforcement, but that uptick soon died down.
“A lot of the tribes were able to use the money they had saved on the taxes to build their own brands,” explained Mike Newman, executive vice president of NOCO. “What we are finding now [is that] Native American brands that avoid all the taxes are now a big piece, or at least a share of the market. It really just displaced the existing premium smoker to a Native American brand.”
While some smokers are loyal to their brands, Native American tribes were able to use things like taste profiles to mirror some of the major brands, Newman added. “Not only were they switching people because of price, but they were offering them a similar taste profile,” he said.
In addition to turning to tribal brands, smokers began looking for other options — think black market and counterfeit cigarettes. “The illegal trade in national brand cigarettes increased sharply and as a result, the stores that initially saw a bump in their sales volume saw the bump disappear and in some cases, resume the decline they had been experiencing” NYACS’ Calvin explained.
According to the association head, many New York c-stores are no better off now than they were prior to the start of enforcement. In fact, many retailers and wholesalers continue to report a significant drop year to year and month to month in their taxable-sales cigarettes.
“The cigarette tax evasion epidemic had already been allowed to get so big. It had become such a pervasive problem that addressing only one part of it only fed another part of it,” Calvin told CSNews Online. “There is such a clamor for untaxed or lower-taxed cigarettes in New York State that it is out of control. It is proving almost impossible to put the genie back in the bottle.”
N.Y. C-stores See Little Benefit From Native American Tax Change
November 22nd, 2013 — Conferences, Current Issues, Electronic Cigarettes, Key International Business & Market Developments, Regulations: FDA etc., Retail Cigarette Brand Prices Around the World, Science, Snus, Snuff & Alternative Products in US Markets, tobacco, Tobacco Harm Reduction
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.
Beverage, Tobacco & Convenience Store Research
Wells Fargo Securities, LLC
375 Park Ave
New York, NY 10152
Phone: (212) 214-5051
November 13th, 2013 — Current Issues, Electronic Cigarettes, Preventing Youth Consumption, Regulations: FDA etc., Science, Tobacco Harm Reduction
The Scientific Evidence for E-Cigarettes
I am honored to join Drs. Riccardo Polosa and Pasquale Caponnetto and their colleagues at the University of Catania in Italy as a coauthor of a new scientific article on e-cigarettes published in Harm Reduction Journal (available here). We scientifically disprove the stated premise of a recent NPR broadcast (here), “… little is known about the potential health effects [of e-cigarettes].” NPR “expert” Stanton Glantz stated that “e-cigarettes today are the triumph of wishful thinking over data.” Our publication shows that e-cigarettes are the triumph of scientific evidence over feigned ignorance.
For the benefit of members of the Flat Earth Society, I reproduce our summary here:
“The dream of a tobacco-free, nicotine-free world is just that—a dream. Nicotine’s beneficial effects include correcting problems with concentration, attention and memory, as well as improving symptoms of mood impairments. Keeping such disabilities at bay right now can be much stronger motivation to continue using nicotine than any threats of diseases that may strike years and years in the future.
“Nicotine’s beneficial effects can be controlled, and the detrimental effects of the smoky delivery system can be attenuated, by providing the drug via less hazardous delivery systems. Although more research is needed, e-cigs appear to be effective cigarette substitutes for inveterate smokers, and the health improvements enjoyed by switchers do not differ from those enjoyed by tobacco/nicotine abstainers.
“It is of paramount importance that government and trusted health authorities provide accurate and truthful information about the relative risks of smoking and alternatives to smoking. If the public continues to be misled about the risks of THR products, millions of smokers will be dissuaded from switching to these much less hazardous alternatives. One of us recently wrote that, “It’s time to be honest with the 50 million Americans, and hundreds of millions around the world, who use tobacco. The benefits they get from tobacco are very real. It’s time to abandon the myth that tobacco is devoid of benefits, and to focus on how we can help smokers continue to derive those benefits with a safer delivery system” [reference here].
“In the absence of regulatory standards, it is important that currently marketed products are of high quality. For example, the hardware should be reliable and should produce vapour consistently. The liquids should be manufactured under sanitary conditions and use pharmaceutical grade ingredients, and labels should contain a list of all ingredients and an accurate and standardized description of the nicotine content.
“According to a recent article by CDC researchers, the proportion of U.S. adults who have ever used electronic cigarettes more than quadrupled from 0.6% in 2009 to 2.7% in 2010 with an estimated number of current electronic cigarette users of about 2.5 million [reference here]. Although rigorous studies are required to establish THR potential and long term safety of electronic cigarettes, these figures clearly suggest that smokers are finding these products helpful. If they were ineffective one would not expect the market to take off as it is. Most importantly, even if this THR product proves to be effective for only 25% of the smoking population, it could save millions of lives world-wide over the next ten years.”
[Originally Published at Tobacco Truth
November 6th, 2013 — Current Issues, Electronic Cigarettes, Preventing Youth Consumption, Regulations: FDA etc., Science, Snus, Snuff & Alternative Products in US Markets, tobacco, Tobacco Harm Reduction
E-cigarettes: “Gateway to nowhere”— slope is not so slippery, after all.
While many public health experts well-versed in tobacco issues believe that e-cigarettes may be a major improvement in helping addicted smokers quit, a concern among others has been whether the devices might instead encourage non-smokers (especially teens) to experiment and then become nicotine addicted and even take up cigarettes, acting like a “gateway drug.” A new study suggests that scenario is highly unlikely, finding instead that more-than-occasional use of e-cigarettes occurred in exactly one student.
In September, the CDC and the FDA issued a report which seemed to indicate a doubling in teen use of e-cigarettes between 2011 and 2012. Subsequently, many physicians, anti-tobacco organizations, and some officials — including over 40 Attorneys-General — urged the FDA to regulate e-cigarettes as tobacco products, which would have effectively banned them for a period of at least several years. The report, issued as “Notes from the Field” — a forum usually reserved for updates on epidemic contagions and other urgent matters — seemed pretty clear at first glance, and led to quite an uproar, which is still underway.
However, a review of the actual data behind the report, from the National Youth Tobacco Survey, revealed a different picture from the scary scenario painted in the CDC’s press juggernaut. The number of teens actually using e-cigarettes (“vaping”) more than once a month was tiny. Some believe that a key factor in the CDC’s distorted interpretation of their data is that the FDA’s Center for Tobacco Products (headed by Mitchell Zeller) has announced that it will “soon” issue its ruling on how it plans to regulate e-cigarettes, a highly contentious and crucial decision. Further, it is no secret that the CDC, its head Dr. Tom Frieden, and a co-author of the report Dr. Tim McAfee are fervent opponents of endorsing e-cigarettes as a cessation agent or a harm-reduction tool.
The new study, presented at the American Association of Cancer Research meeting earlier this week, was undertaken by researchers led by Dr. Theodore Wagener, an assistant professor of pediatrics at the University of Oklahoma. He surveyed 1,300 college students about their tobacco and nicotine use. The average age of study participants was 19. According to a HealthDay/WebMD report, out of the 1,300 responses, 43 students said their first nicotine product was an e-cigarette. Of that group, only one person said they went on to smoke regular cigarettes. And the vast majority who started with e-cigarettes said they weren’t currently using any nicotine or tobacco.
“It didn’t seem as though it really proved to be a gateway to anything,” said Wagener, who presented his findings at a meeting of the American Association for Cancer Research, in National Harbor, Md.
ACSH’s Dr. Gilbert Ross, who has been following the e-cigarette story quite closely, commented: “The manipulation of data by scientists and anti-tobacco organizations to impede the truthful communication of the real risks and benefits of e-cigarettes to smokers is, in a word, sickening. The facts are that 45 million Americans are addicted to cigarettes, among whom over 400,000 die from cigarette smoking each year. Further, the FDA-approved products that these ‘experts’ are addicted to don’t work so well — this should make them stop and think when they issue false warnings. Instead of fearing and loathing the evil tobacco industry, I think the time has come when we should be investigating the evil ‘anti-tobacco industry’, whose monolithic disdain for harm reduction will certainly wind up killing American smokers.”
November 5th, 2013 — Current Issues, Electronic Cigarettes, General, Preventing Youth Consumption, Regulations: FDA etc., Science, Snus, Snuff & Alternative Products in US Markets, tobacco, Tobacco Harm Reduction
E-cigarette retailers and distributors need to understand and educate the public about the safer tobacco products on the market today.
By Lou Maiellano.
Something has happened to e-cigarettes. As recently as two years ago as I would visit distributors and retailers, I would be asked by those responsible for purchasing, “I’m thinking about adding an e-cigarette to my product mix. Can you recommend a few for me to take a look at and evaluate?”
Today, that discussion is more likely to go like this, “I currently carry four brands of e-cigarettes, and I’d like to get that number up to eight or 10. Any recommendations?” Also, a quick look at any trade magazine serving the retail and distributor community quickly confirms that there are more brands of e-cigarettes than ever before. But, before delving into the brands, I believe that it is critical for retailers and distributors to consider the challenges facing the product and product category and find ways to get smarter and to get involved.
As the e-cigarette phenomenon has grown, so has the media attention. Recent articles in The Wall Street Journal, The New York Times and dozens of regional publications, as well as numerous features on large metro-area television stations, confirm that interest in e-cigarettes has never been higher. That’s good. But, a cursory review of the stories and the clips also suggests that this increased visibility has not increased the overall knowledge about this product. And that’s bad.
Know the Products
Generally speaking, the media can be expected to cover the emerging e-cigarette mania in the following ways. First, they find a place where the products are being used—bars, restaurants, workplaces, sporting events and concerts. They interview a user who typically says something to this effect: “These are great. Now I can smoke anywhere.”
Then they interview someone from the FDA, the American Lung Association or the Coalition for Tobacco Free Kids. These groups usually say the following things: “We are concerned about e-cigarettes. They are currently unregulated, untested and we don’t know what’s in them.” Then they go on to say that they’re also concerned because the use of e-cigarettes will normalize smoking, undoing decades of public health initiatives, confuse public officials responsible for enforcing smoking bans and restrictions and introduce minors to the evils of nicotine, providing a gateway to smoking.
For the most part, the media attention has produced a frustrating mix of nonsense, good sense and the utterly senseless. So, if the product is going to continue to grow and prosper, providing revenue and profits for distributors and retailers, it’s critical that supporters of the product understand how to answer the most basic questions about the product.
First and foremost, it is important that everyone understand that e-cigarettes are not untested. In my opinion, the most comprehensive gathering of the significant relevant research that has been done on e-cigarettes exists on the Website of the very helpful e-cigarette trade association, the Smoke Free Alternatives Trade Association (SFATA). This information can be found at www.sfata.org.
Also, the Consumer Advocates for Smoke-Free Alternatives Association (CASAA), funded a study just released by Professor Igor Burstyn, Drexel University School of Public Health, confirming that chemicals in e-cigarettes pose no health concern for users or bystanders. This is the first definitive study of e-cigarette chemistry and finds that there are no health concerns based on generally accepted exposure limits.
In a statement from CASAA, the group explained, “By reviewing over 9,000 observations about the chemistry of the vapor and the liquid in e-cigarettes, Dr. Burstyn was able to determine that the levels of contaminants e-cigarette users are exposed to are insignificant, far below levels that would pose any health risk. Additionally, there is no health risk to bystanders. Proposals to ban e-cigarettes in places where smoking is banned have been based on concern there is a potential risk to bystanders, but the study shows there is no concern.”
In other words, e-cigarette vapor is not the equivalent of secondhand smoke. This is especially important because the media constantly asks, “How do we know that the stuff produced by e-cigarettes—the vapor—isn’t just as hazardous as secondhand smoke?”
Leaving aside my own bias with respect to secondhand smoke studies, let me say that the answer to this question is now fairly obvious. We know that it’s not, because we have a study that demonstrates that this is not a concern. As a result, we also know that bans on e-cigarette use are not productive. They serve to belittle and isolate smokers legitimately seeking to minimize the risk of their behaviors to themselves and others through the use of this innovative product.
As the tobacco industry found itself plagued by one difficult and problematic study after another from the 1960’s through today, it became increasing difficult to address the public health concerns associated with conventional cigarettes. Most of us in the tobacco trade were reluctant to do so because the scientific evidence was growing and it wasn’t good. But, in the case of e-cigarettes, I really believe that the facts will roll out differently. Rather than see one study after another demonstrating the risk of cigarette smoking, we are seeing just the opposite—studies confirming that e-cigarettes pose less risk than many in the anti-tobacco lobby now assume.
Work Needs to Be Done
There are still many hurdles that research and product development need to address with respect to e-cigarettes. There are still many studies to do and there is still the ever-present threat that the FDA could choose to regulate the product in ways that would severely restrict accessibility and innovation. But, thankfully, many in the e-cig industry are becoming more aware of the benefits of the product and many are becoming strong advocates by no longer allowing the mainstream media and the anti-tobacco zealots to define the discussion.
In my travels, I am seeing a surge in e-cigarette use, and interest is rising. But, as I noted earlier, knowledge is not growing at the same pace. I would urge as many retailers and distributors as possible to access the information that is now available to educate themselves. In addition, given how specialized and technical some of the issues are surrounding this product category, I would also encourage retailers and distributors to seriously consider joining some of the more reputable and responsible e-cigarette advocacy groups and trade associations. SFATA would be a good place to start, but there are many other organizations that would merit your time and attention, including The Tobacco Vapor Electronic Cigarette Association (TVECA).
Retailers and distributors would also be well served to regularly follow the activities of CASAA, who provides regular updates and “calls to action” whenever the accessibility and use of the product are challenged by local, regional or state authorities.
It’s simply not enough to assume that importers and manufacturers will protect you and the product going forward. If you want to continue to offer this product and benefit from increased sales and profits, it will become increasingly important that retailers and distributors become advocates so everyone can benefit.
Lou Maiellano spent more than 20 years in several operational positions with Sunoco, Mobil and Wawa and currently operates TobaccoToday (www.tobaccotoday.info), an interactive tobacco industry blog. He can be reached at (267) 229-3856 or via email at firstname.lastname@example.org.
November 5th, 2013 — Current Issues, General, Preventing Youth Consumption, tobacco
NYC Raises Smoking Age to 21
Oct 31, 2013
NYC Raises Smoking Age to 21
NEW YORK – The New York City Council voted to pass a bill raising the minimum age to purchasecigarettes and e-cigarettes from 18 to 21, according to an Associated Press report.
The legislation makes New York the most populous place in the United States to raise the tobacco-buying age to 21, rather than the federal minimum of 18 that is the standard in most locations.
Mayor Michael Bloomberg’s administration supports the age increase and says it will discourage teenagers from smoking.