2014 in e-cigs: sound and fury, but what did they signify?

Janus - Quinn Dombrowski 300x1802014 was the year Oxford Dictionaries chose “vaping” as its favourite new term, and the year that people in the e-cig industry said the word “deeming” more than they had in their entire preceding lives.

It was a year of words in many other ways too: media scares and gee-whiz, politicians’ grandstanding, vapers’ own increasing vociferousness; little kernels of revelation buried deep in scientific hedging; big words, like “death” and “addiction” and “prohibition”, always forming the context but rarely spoken bluntly.

This was as true in the sphere of e-cigarette regulation as anywhere else. 2014 began with comparatively little e-cig law in place anywhere; seemed to promise a great deal; but ended with less than you might think having actually changed on a large-scale regulatory level, despite the constant flow of proposals and counter-proposals.

We may look back on it, though, as being a prelude to 2015 and 2016, the years when Big Government will finally enter the market.

Early in 2014, of course, the European Union (EU) started that process by passing its revised Tobacco Products Directive (TPD), a raft of measures covering areas as diverse as nicotine concentration and advertising which will have to be implemented by member states before mid-2016.

Some consider it ill-conceived, others consider that it could have been far worse for the industry (most obviously, if it had mandated the treatment of e-cigs as pharmaceutical products, mooted at one point). Either way, it will likely seem out of touch with market realities – notably the shift away from cigalikes toward tank-based systems – even before it is implemented in member states’ domestic legislation.

There are legal challenges to the TPD afoot which could declaw it. But it would be optimistic in the extreme for the industry to depend on these bringing about any substantive taming of European law on e-cigarettes. Much more likely is that, while 2014 was the year when the TPD seized attention but didn’t actually change anything on the ground, 2015 is the year when that will start to happen.

Regulate this

In the United States, meanwhile, there was similar sound and fury – and uncertainty about what, if anything, it signified – over the release by the Food and Drug Administration (FDA) of its proposed deeming regulations. But it will now probably be at least two years, and maybe more, until they finally become real (though some foresee a much shorter timescale).

What will the final regulations, shorn of the word “deeming”, look like?  We don’t know, given that the FDA asked for so much input, which may inform any final rule or another proposed rule. All we can say is that it looks like the FDA will move to regulate e-cigs in some way as a tobacco product over the next several years; and this is exactly what we would have said in January 2014.

Meanwhile, on the state and municipal level there are attempts to regulate public use and sale, and to impose taxes, and these look like being the avenues for real regulatory activity in the U.S. for the next couple of years too.

WHO says

A step still further from real-life impact was the pronouncement of the World Health Organization’s Framework Convention on Tobacco Control conference (WHO FCTC COP6). Even if the WHO had said unequivocally that all e-cigarettes and their dastardly purveyors should be deported forthwith to comet 67P/Churyumov–Gerasimenko, its recommendation would have been no more than a recommendation. So we can expect even less immediate, direct effect from it than from the TPD and the FDA.

But that is not to say it will be devoid of influence. The very real inclination in India to ban e-cigs altogether, for example, will be greatly strengthened by the WHO’s tone of doubt and disapproval, as important as any specific policy suggestions that the international body made.

Other, smaller, less commented-upon regulatory steps may be equally strong indicators of the future. We’ve mentioned taxation in the United States; other jurisdictions, such as Italy, are now also looking at taxing e-cigs as a separate product category, and we can expect more of this.

In Britain, meanwhile, the Committee of Advertising Practice’s guidelines for e-cig ads are being held up as a model of enlightened marketing regulation that protects consumers where they are vulnerable without starving them of information or stifling a new industry. Italy has taken a similarly benign approach.

The Italian case is particularly interesting because – albeit that the government has hardly been consistent – its position on both tax and advertising signals explicit recognition in Rome that e-cigarettes are not tobacco products, with all that that implies. (The British ad rules, while commendably sensible, are self-regulation rather than governmental.)

Tanked up

Within the market itself, there was more action and at least a bit less talk.

The year was too busy to sum up in a single trend, but it was partly characterised by two apparently contradictory forces which are likely to continue through 2015: the recognition of refillable tanks as a major segment of sales, accompanied by a consumer move toward vape stores; yet alongside that, an increased presence by Big Tobacco, through both acquisitions and new product development.

The latter included products like Voke and iQOS which aren’t strictly  e-cigs but will clearly compete for the same smokers. Swedish Match also made the first modified risk tobacco product applications to the FDA this year. And we can expect to see more alternatives to the e-cig emerge, if not in 2015 then in 2016, and it may well be that before long we start to think less of an “e-cig market” and more of a “smoking alternatives market”.

Also important in 2014, though much less headline-grabbing, was the gathering pace of the standards-setting process for the e-cig category, notably in France and the UK but also in the U.S.

However, an outsider would be forgiven for not noticing much of this, because real activity both in regulation and in the marketplace was often completely overshadowed by perceptions. Many of these were negative and furthered by the media: e-cigs allegedly poisoned children and pets, started fires, even spread computer viruses.

Professionals were not immune either. In more than one instance, academic and publishing organisations sexed up low-key scientific findings to sound more dramatic, while in the U.S. the Centers for Disease Control and Prevention (CDC) continued to trawl its data sets for the faintest glimmer of a suggestion that e-cigarettes just might be encouraging kids to smoke. All this contributed not only to a degree of mistrust among non-vaping consumers, but also to doubts in health and regulatory circles.

What lies ahead

2014 gives some clues to 2015.

In Europe, the practical impact of the TPD will start to be understood as EU member states get down to the nitty-gritty of legislation.

In the U.S., the regulatory outlook is less clear; the FDA is unlikely to finalise its deeming regulations without any modifications, given the vast variety of issues it sought advice on, but that doesn’t mean we should expect Deeming Regs Mark 2 in the coming months.

It’s quite possible the agency will do nothing at all publicly this year. A newly Republican Congress and the beginning of campaigns for the 2016 presidential election won’t improve the FDA’s confidence, and we may well see municipalities and states continue as the main sources of e-cig regulation.

In the rest of the world, Canada can hope to finally get some clarity on the law relating to e-cigs. Probably at least one large or medium-sized country will ban e-cigs outright, but many more will seek to tax them.

In the market, we will undoubtedly see both the role of Big Tobacco and the move toward tanks and vape stores continuing. Some convergence of the two trends is likely in the form of a mass-market tank system. There could be more consolidation among independent e-cig suppliers, and the time for it among vape stores is surely ripe in many countries. 2015 could also be the year when a major retailer launches its own chain of vape stores, Britain being a plausible location.

The impact of the planned Reynolds American-Lorillard takeover, assuming it receives regulatory and shareholder approval, is hard to read. It may well be slight for the e-cigarette sector, or at least not felt in 2015.

Not over yet

And as for the science – well, it will probably continue to leave the biggest questions unanswered (do e-cigs definitely reduce tobacco smoking? what are their long-term effects?) for the simple reason that answers require long-term longitudinal studies which researchers simply haven’t had the necessary years to conduct. The first Cochrane review, released toward the end of 2014, was only a start – if a welcome one – at making sense of often conflicting science.

So the coming of a new year won’t stop more scare stories, but it won’t stop more people vaping either. And our most confident prediction is that we’ll end 2015 writing a 2016 forecast that again reflects a growing, complex, messy, patchily regulated sector.

The detail will be utterly different, yet the bottom line may remain the same: e-cigs have somewhere big to go, but it’s not yet entirely clear where that is, or precisely how they’ll get there.

– Barnaby Page ECigIntelligence staff

Photo: Quinn Dombrowski

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