Four takeaways from Tobacco Plus Expo
As cigarette volumes continue to decline in the United States and vapour products face new scrutiny from American public health officials, the tobacco industry is looking toward new products and strategies for the future. Tobacco Plus Expo, a three-day conference in Las Vegas, sparked discussion around innovation, new product development and future trends within the tobacco and cannabis industries. CBD exhibitors at the conference showcased a variety of products pointing towards an industry that is gaining further mainstream acceptance and recognition.
Governments at all levels continue to crack down on cigarettes
Much of the discussion related to cigarettes at the conference centered on the FDA’s efforts to curtail brands’ appeal to youth and announced plans looking to limit the addictiveness of cigarettes.
As Don Burke, Senior Vice President at Management Science Associates highlighted, some measures undertaken by governments have not met their intended goals. In Duluth Minnesota, restricting menthol cigarette sales to adult-only smoke shops did little to reduce consumption of menthol cigarettes. Instead, consumers opted to simply drive to adjacent municipalities where the measure was not in effect.
The possibility of large regulatory developments in coming years was a hot topic among cigarette retailers and producers. The possibility of an FDA measure limiting nicotine content in cigarettes as well as a potential ban on menthol cigarettes has led industry giants to invest in the reduced risk space.
According to Bonnie Herzog, Managing Director at Wells Fargo Securities, the harm that this legislation could produce for the cigarette market is partially what lead Altria to invest in JUUL, the leading player in the non-cig-a-like closed vapour system category.
Vapour matures and goes premium
Mainstream popularity of vapour products has led to transformations within the closed system category which favor the safety and ease-of-use over open systems. At the conference, closed systems demonstrated premium positioning with a unified aesthetic across brands that set them apart from open systems which are highly variable and modifiable.
The divergence in e-liquid flavors between open and closed systems was apparent on the show floor. Given JUUL’s recent move to restrict sales of flavoured pods in retail channels accessible to minors, it is not surprising that they and other closed system players have taken a more conservative approach to flavours in general. E-liquids used for open systems ranged from fruit and dessert varieties to variations of classic tobacco flavors.
For other vapour players, however, a large variety of flavours are an essential part of the vaping experience. According to Anthony Dillon, Senior Vice President with Pyxus International “…great overall taste is essential to a superior vape experience. Some of the most popular flavors are fruit inspired, especially strawberry and watermelon.” As concerns over certain flavors appealing to youth grow, companies such as Pyxus have reaffirmed their commitment to responsible marketing practices which only target legal age consumers.
CBD for delivers relief in fun and innovative forms
CBD captured much attention, with exhibitors displaying CBD-infused e-liquids for vapour systems as well as edible items like CBD infused chocolate, gummies and baked goods.
While some CBD producers focused product messaging on inflammation and anxiety reducing effects, others went beyond these health benefits and highlighted the flavors of their e-liquids and edibles.
Other CBD players at the show even forwent the edible and vapour delivery systems completely. For example, Cannadips produces snus-style (tobacco-free) CBD pouches, designed to offer the same health benefits as other CBD formats.
Cannadips is targeting convenience stores in addition to specialty tobacco stores with the idea that the familiar format will incentivise consumers in these environments to work CBD into their lifestyles.
An Industry in Motion
Tobacco Plus Expo was a testament to how change is the new norm in tobacco. With health and wellness products sharing floorspace with those that have often been labeled “public health enemy number one”, it is evident many industry players are looking to innovate and shed some of the negative baggage associated with tobacco.
While combustible tobacco will certainly remain the central category for the foreseeable future, vapour products can appeal to new consumers and those looking to switch from combustible cigarettes. The likelihood of an increasingly restrictive regulatory environment and the importance of health and wellness to consumers, as evidenced by CBD’s rise, mean the tobacco industry will undoubtedly continue to be characterised by a wealth of new products and innovation.