Analyst Insight by Don Headley - Contributing Analyst
In addition to the E-lites acquisition by Japan Tobacco, much is happening elsewhere in the hyperactive vapour sector including the acquisition by a US e-cigarette company VEC of UK e-cigarette company Ten Motives which, interestingly, measures its growth in terms of the number of regular cigarettes it has replaced. The scramble to get a piece of the action in a new global FMCG continues. The number of e-cigarette users in the UK has soared, from 700,000 in 2012, to 2.1m in 2014 according to Action for Smoking on Health (ASH). The US investment bank Wells Fargo has predicted that e-cigarettes could be outselling conventional cigarettes within a decade. Another finding going the rounds is that half of former smokers have tried e-cigarettes. Meanwhile industry research continues in terms of product improvement (recently the Paris-based company Smokio launched the world's first smart e-cigarette which connects to a smartphone app tracking the owner's usage) with the industry well aware that low perceptions of product quality could have severe regulatory consequences. However the next big game changer for the global vapour industry could be China.
Interest in the e-cigarette sector is demonstrated in the level of corporate activity. US Victory Electronic Cigarettes (VEC) recently acquired Ten Motives, its third UK e-cigarette company in six months for US$104m (£62m). Ten Motives sells in a number of major UK retailers including Sainsbury's, Tesco and Bargain Booze. Since its founding, Ten Motives claims to have ‘replaced’ up to 400m regular cigarettes. This statement clearly attempts to position the company in an NRT context, probably with an eye on potential legislation. Victory's previous UK acquisitions include Vapestick for US$70m and VIP for US$50m.
Continue reading "Hyper-activity in E- Cigarettes But Are We Heading East...Or West?" »
Analyst Insight by Zora Milenkovic - Head of Tobacco Research
One of the questions I increasingly find myself fielding is whether the tobacco industry is in terminal decline. The short answer is that it appears to be heading that way. Euromonitor’s latest tobacco data for 2013 shows volume declines for cigarettes of around 4% globally last year, excluding China and also shows two of the largest markets for cigarettes in the world after China – Russia and the US - losing a combined total equivalent to the entire annual sales of Bangladesh in the next five years. Is this a sign of things to come? And are e-cigarettes the answer?
Continue reading "New Tobacco Data - What is it Telling Us?" »
Analyst Insight by Don Hedley - Contributing Tobacco Analyst
Euromonitor International data and recent academic surveys indicate there is currently major growth in consumption of small, flavoured cigars and cigarillos in the US (26% CAGR value growth between 2009 and 2013). The US Food and Drug Administration banned flavours other than menthol in cigarettes in the 2009 Family Smoking Prevention and Tobacco Control Act. One key justification for this was that ‘candy’ flavours were a gateway to young people starting smoking. However, the flavours ban did not extend to cigars, given the lack of FDA oversight of the category, leading to accusations of a legislative loophole. So with the April proposal to extend FDA regulation to small cigars is the loophole likely to be closed? Perhaps, but the same comments have been made about menthol in cigarettes.
Continue reading "Will the FDA Put A Stop to Flavoured Cigar Growth?" »
Analyst Insight by Shane MacGuill - Tobacco Analyst
After a public debate focusing on the well rehearsed themes of individual liberty and enforceability, on Monday, the UK Parliament adopted amendments to the 2013 Children and Families Bill which outlaw smoking in cars with children, the proxy purchasing of tobacco products for children and which also provide a basis for the statutory introduction of plain packaging in the UK. The greatest heat was generated by the proposal to ban smoking in cars with children - touching as it did on the great libertarian themes of personal responsibility and private space – but in truth the passing of this measure is (to coin the phrase of the week) more symbolic than material and the real significance of the vote lies elsewhere.
The ban on smoking in cars with children does represent the first incursion of the British state into the private spaces of its citizens with regard to tobacco use but beyond jibes about nanny-statism there was little serious appetite on the part of libertarians, and much less (if at any at all) on the part of the tobacco industry to argue for the positive right of people to deliver their kids from the school-run reeking of cigarette smoke.
Continue reading "House of Enablers – Does Anything Now Go For Tobacco Control in the UK?" »