The last great battle between vape shops and big tobacco, or what I like to refer to as the battle of “good versus evil” may not have begun outright just yet, but a very subtle disturbance in the water tells us that there is some major churning happening beneath the surface… a lot more on this later.
The Tobacco Atlas, a subset of the WHO Framework Convention on Tobacco Control’s Intergovernmental Negotiating Body, notes that roughly 5.8 trillion cigarettes were smoked worldwide in 2014, which means that smoking traditional cigarettes is still a very popular pastime in many parts of the world, in China especially, a nation that consumes more cigarettes than all other low and middle-income nations combined. Awfully disturbing news when one considers a recent abstract compiled by the Agency for Healthcare Research and Quality (AHRQ) that estimates tobacco use will prematurely kill 1 billion people globally during the 21st century.
However, in America, smoking traditional tobacco cigarettes— once a socially accepted behavior— is now the leading preventable cause of death, disability, and decline— a decline in sales that is, which is causing big tobacco to seriously rethink its efforts.
According to News Medical, an online medical information publication, the CDC reports that 19.3 percent of American adults over the age of 18 – roughly 45 million people – were smokers in 2010, down from 20.9 percent in 2005. And while 78.2 percent or 35.4 million people still smoke on a daily basis, data shows that these smokers are definitely cutting back. The CDC also reports that the percentage of smokers who had fewer than 10 cigarettes a day rose to 21.8 percent in 2010, up from 16.4 percent in 2005. Only 8.3 percent of daily smokers have 30 or more cigarettes per day, down from 12.7 percent in 2005.
Back in 2013, Forbes published an article stating that per capita cigarette consumption peaked in 1975 at about 145 packages (20 per pack) and by 2011 had plummeted to 48.5 packs or two thirds the per person peak level. According to the CDC, during the first decades of the 20th century, lung cancer was rare; however, as cigarette smoking became increasingly popular, first among men then later among women, the incidence of lung cancer reached epidemic proportions. In 1930, the lung cancer death rate for men was 4.9 per 100,000, however, in 1990, just 60 years later, the rate had increased to 75.6 per 100,000.
In 1998, after decades of death and destruction plagued the lives of millions, 46 states entered into the Tobacco Master Settlement Agreement, MSA, an agreement between the attorney generals of 46 states and the four largest United States tobacco companies (Phillip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard). The agreement settled medical lawsuits against the tobacco industry for the recovery of tobacco-related health-care costs, as well as exempting these said companies from private tort liability regarding harm cause by tobacco use. In total, the MSA settlement agreed to pay a minimum of $206 billion over a 25-year agreement period.
So, back to the original Armageddon theory…
In February of 2014— Nu Mark LLC a subsidiary of Altria Group, Inc., one of the world’s largest producers and marketers of tobacco cigarettes, entered into an agreement to acquire the E-Vapor Business of Green Smoke, Inc. and its affiliates for approximately $110 million in cash. At the time of the acquisition, Green Smoke, Inc. was one of the largest vaping related companies with annual earnings of over $40 million and operations in both the United States and Israel.
And just earlier this week, Altria announced that it had acquired a minority share of Avail Vapor LLC, a Virginia-based company that owns 102 vape shops in 12 states. According to the Richmond Times-Dispatch, Altria revealed the purchase at an investor meeting in Richmond last Thursday but did not specify how much cash was invested in the vapor business.
What these underpinnings tell me is that big tobacco could get bigger… I’m talking VERY BIG.
On July 8th, 2017, Scott Gottlieb, the Commissioner of the Food and Drug Administration (FDA) announced a new comprehensive plan for tobacco and nicotine regulation that would serve as a multi-year roadmap to better protect kids and significantly reduce tobacco-related disease and death.
“The overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettes – the only legal consumer product that, when used as intended, will kill half of all long-term users,” said FDA Commissioner Scott Gottlieb.
In addition, under this new comprehensive plan, applications for newly-regulated combustible products, otherwise known as Premarket Tobacco Application Process or PMTA, would need to be submitted by Aug. 8, 2021, and applications for non-combustible products such as ENDS or e-cigarettes would be submitted by Aug. 8, 2022, compared to the previous Aug. 8, 2017, deadline— a decision many feel is geared toward big tobacco entering the market with products of their own and boatloads of capital to boot.
In conclusion, I get it. Rather than outwardly engage in hand-to-hand combat, better to buy up the competition and control all markets.
Our newsletter subscribers know about our upcoming sales before anyone else. Make sure you’re in the know! Sign-up below. (Pssst, you will also get 30 loyalty points for signing up if you are a loyalty program member. More here: https://goo.gl/4tEfkh)