Big Tobacco and Vaping: It’s Complicated.
With a mountain of money behind them, it seems logical that Big Tobacco would capitalize on the surging vaping market. Some have alleged the vaping industry is completely backed by the largest tobacco companies, that Big Tobacco is a puppeteer turning smokers and vapers against each other, profiting from both opposing views. Billions of dollars and international clout poise Big Tobacco for control and profit in this industry. We have investigated the relationship between Big Tobacco and vaping, with some alarming findings.
TROUBLE IN PARADISE:
At one time, the tobacco industry had untouchable power. Since America’s birth, tobacco has been a cash-crop. The bizarre mix of relaxing, stimulating, pain-relieving, and addicting properties kept Americans (and soon the world) coming back for more tobacco. A steady surge through the 19th century shot the industry to the apex of the American economy, reaching a fever-pitch at the end of World War II.
In 1951, epidemiologists Austin Bradford Hill and Richard Doll went on the attack. With about 40,000 British doctors, Doll and Hill linked tobacco smoke and serious illness. In the decades to come, smoking was bludgeoned with advertising bans, plain packaging, and diminishing demand.
Countless class action lawsuits threatened the future of smoking. Furious, grieving, and drowning in medical bills, citizens became increasingly litigious in the 1990’s. A product that kills a wide margin of its users is bound for trouble; Stella Liebeck’s “hot coffee” lawsuit had set a powerful precedent for consumer’s rights.
Tobacco was forced to adapt. Desperate to secure a future, the biggest tobacco companies reached out to the government. State Governments agreed to the Master Settlement Agreement, which would guarantee states would get a cut of Big Tobacco’s profits in exchange for tossing out the lawsuits. Many State Governments sold their shares to Wall Street for cash up front (based on tobacco sale projections through 2025), instead of waiting for the yearly payments. The governments had their money, Big Tobacco dodged a legal holocaust, and both parties were pleased. Temporarily.
Cigarette sales plummeted in the new millennium. The decline was sharper than even pessimistic analysts could have predicted. Dwindling revenue meant less money for the states, meaning the governments who had cashed out were now on the hook to fill the gap.
Just when it seemed like things couldn’t get worse for Big Tobacco, vaping hit the scene. Millions of smokers made the switch. This exacerbated the pressure on state governments. Vaping, the wild-card new variable, was demonized by state-funded groups. Organizations such as the California Department of Public Health have attempted to hamper the growth of vaping through aggressive, unreasonable legislation and propaganda/FUD campaigns.
BIG TOBACCO EXPANDS ITS HORIZONS:
Bonnie Herzog of Wells Fargo saw the surge of vaping sales coming. “It’s game-changing…I’m of the view that in the next decade consumption of these products will surpass consumption of tobacco cigs.” University of Ottawa law professor David Sweanor likens cigarettes to another antiquated product: The Kodak Scenario. Kodak film was once a powerhouse in the industry. Then along came digital photography. Kodak failed to adapt, and filed for bankruptcy in 2012. In business, you don’t want to “do a Kodak.”
With these intense changes to the world of nicotine consumption, what’s a behemoth tobacco company to do?
As covered before, Big Tobacco is no stranger to scrutiny. Executives and researchers in the tobacco industry have known how unhealthy cigarettes are, long before the research went public. Customer loyalty is hard to sustain when your customers are literally killed by your products.
Not surprisingly, in light of the mind-blowing success of vaping, Big Tobacco began buying out independent vapor companies. Lorillard purchased Blu for $135 million in April of 2012. British American Tobacco bought CN Creative. Imperial Tobacco made a deal with Hon Like, the Chinese inventor of modern e-cigarettes. Japan Tobacco bought Zandera, who manufactures E-Lites.
What does this mean for the future of vaping?
THE BIG SQUEEZE:
If the restrictive legislation such as the FDA’s proposed Deeming Regulations were to pass, only the very wealthy companies would survive. Every application to meet the requirements of new legislation would take upwards of 5,000 hours per application, per product combination. Not only would this process be tedious and limiting to the industry, but so expensive that it would snuff out the majority of independent and developing companies.
At this point, the stage would be set for Big Tobacco to establish a monopoly. The “Deeming Regulation” would hand the vaping industry to Big Tobacco, who has shown us again and again that they have no regard for public health. In addition, the “cigalike” products distributed by Big Tobacco are less effective in getting smokers to switch to vaping, when compared to open-system and higher power vaping products. In summation, the legislation proposed would kill independent companies, make wealthy tobacco companies richer, and more people would die from smoking.
Something to think about:
What do you think would happen if Big Tobacco had a monopoly on vaping?