January 04, 2014

2014 And the Electronic Cigarette Industry?

What does 2014 have in store for the electronic cigarette industry?
What does 2014 have in store for the electronic cigarette industry?

Those who follow the electronic cigarette industry will be well aware that 2013 was a very active year with an array of new regulations, increased competition in the sector, growing popularity and speculation that the major tobacco cigarette companies have their eye on the industry. You may therefore be forgiven for assuming that 2014 should be a relatively quiet year but it seems as though there is much more to come over the next 12 months.

There are many factors to take into consideration which include:–

Increased regulation

Despite the fact that the European Parliament initially rejected regulatory advice from the European Commission, a number of new electronic cigarette guidelines and regulations were sneaked in by the back door. While many of the potential regulations have yet to kick in, requiring at least three European states to call for specific changes, there is a growing feeling that it is only a matter of time. This despite the fact that the number of electronic cigarette users in Europe continues to grow and can be counted in their millions. There is growing concern that the regulations are being forced through the European Parliament against the will of the elected members under pressure from various corporate entities and those with vested interests elsewhere.

The situation in the US is slightly more complicated due to the fact that the Food and Drug Administration (FDA) has yet to report on the electronic cigarette industry despite taking over two years to review the sector. There was speculation towards the end of 2013 that we would see an array of new regulations but these have yet to hit the public domain despite rumours and counter-rumours. The US market is set to grow to around $2 billion during 2014 and, as a consequence, some believe that the FDA has left it too late to bring in hard-hitting regulations due to the potential backlash from electronic cigarette users. Time will tell as to what the FDA finally recommends but after taking more than two years to look at the sector it is anybody’s guess as to when the report will be made public.

Growing popularity of electronic cigarettes

As we touched on above, the US market continues to lead the sector amid speculation that the worldwide market for electronic cigarettes was worth around $3.5 billion during 2013 – this is expected to increase dramatically in the short to medium term. Indeed some experts believe that the electronic cigarette industry could eventually overshadow the tobacco market which itself is worth around $750 billion worldwide.

While legally electronic cigarettes cannot be marketed as medical aids or a smoking cessation device, there is no doubt that more and more people are now finding electronic cigarettes a useful alternative to their tobacco cigarette counterparts. Even though electronic cigarette manufacturers, retailers and customers all acknowledge there is a need for further long-term medical trials, even the most ardent critics concede that electronic cigarettes are at worst “less harmful” than tobacco cigarettes. Indeed some medical figureheads have suggested that the emissions from electronic cigarettes are 99% less harmful than those from tobacco cigarettes. In due course we will no doubt see an array of new long-term medical trials which will further clarify the situation.

Corporate activity in the electronic cigarette sector

Despite the fact that many tobacco cigarette companies are looking to bring their own electronic cigarette brands to the market, there is intense speculation that some of the leading independent electronic cigarette manufacturers could find themselves on the end of large scale takeovers.

This in itself poses a very difficult quandary for the tobacco cigarette companies because they will be effectively marketing electronic cigarettes as “less harmful” than their tobacco cigarette counterparts, while also selling tobacco cigarettes to the wider public. However, this is unlikely to stop the ongoing march of the tobacco cigarette companies who have enormous financial resources to make large scale takeovers in the sector and dramatically increase their influence.

Conclusion

In many ways regulators around the world are behind the curve with regards to the growing popularity of electronic cigarettes. The FDA has taken more than two years to review the sector and a much rumoured report is still yet to be released into the public domain. The European Parliament decided recently that there were no real reasons for further regulation of the industry only to be thwarted by a clandestinely attempt to railroad through changes by the European Commission. It will be interesting to see how the European regulatory situation develops because it is very much a two-way battle between the European Parliament and the European Commission along with various companies and public bodies who seem to have a definite bias against electronic cigarettes.

Whatever happens, the ongoing popularity of electronic cigarettes will continue and we will see the tobacco companies making a major play for the industry while regulators battle to catch up lost ground on the regulatory front. Yes, 2014 is set to be an even more eventful year for the electronic cigarette industry than 2013!

Mark Benson
For more information on electronic cigarettes and the various products available please visit the OKCigs website.

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