E-cigarettes--devices that turn nicotine-infused liquid into vapor to be inhaled--are rapidly gaining in popularity. That popularity could be spurred by new findings in the peer-reviewed journal PLOS Magazine that suggest e-cigarettes can help smokers quit. By the end of the study cited, 13 percent of the group that first received the highest-dose nicotine cartridges was no longer smoking.
According to Michael Siegel, professor at Boston University’ School of Public Health, e-cigarettes are just as effective as getting people to quit than FDA-approved smoking cessation aids, if not more so.
The e-cigarette market is expected to top $1 billion in the next few years. And tobacco companies, losing more and more American customers ever year, are gearing up to join the nascent market.
Altria (MO) is testing an e-cigarette called MarkTen in August. Reynolds American (ROI) is testing their Vuse e-cigarettes in Colorado in July. Lorillard (LO) and British American (BTI) also have e-cigarettes in the pipeline.
As more and more smokers drop the habit (smoking rates have been more than halved since 1965) tobacco companies have to find new ways to generate revenue. E-cigarettes are ideal: they have largely the same customer base as cigarettes, and the product is used in much the same manner as regular cigarettes. The similarity between the way the two products are used was cited by Siegel as a major reason why e-cigarettes are so effective at curbing smoking.
E-cigarettes aren’t the only smokeless nicotine delivery systems tobacco companies are looking to for new sources of revenue. Altria plans to expand sales on Verve, a chewable, spit-free, oral product that contains nicotine but no tobacco. Both Verve and MarkTen are developed by Altria subsidiary NuMark.
As they’re such a new product, it’s unclear what the long-term health consequences of e-cigarettes and chewable nicotine lozenges are. Right now, the cigarette makers make no health claims about e-cigarettes ability to wean smokers off cigarettes, and only plan on putting health advisories on the packets. The U.S. Food and Drug Administration’s plans to regulate e-cigarettes as tobacco products are still in the works.
E-cigarettes also aren’t currently encumbered by a nationwide bad on print and television advertising like cigarettes are. According to the New York Times local broadcasters in New York, Los Angeles, Chicago, Dallas, San Francisco and Seattle have agreed to run ads.
While smokeless nicotine is still nowhere near the levels of old-fashioned cigarettes (a $60 billion dollar a year industry) the industry is paying attention. Wells Fargo tobacco analyst Bonnie Herzog summed up e-cigarettes future thus: “(They) are to tobacco what energy drinks were or are to beverages.” That is, the Next Big Thing.
On the findings, the major tobacco companies are all up. Altria is up .97 percent (almost 8 percent on the year) to close out at $35.27 a share. Reynolds American was up 1.12 percent to close at $48.55. Lorillard is up .57 percent to finish up at $43.87 a share. And British American Tobacco had a nice jump, gaining 1.42 percent to end up at $104.70 a share.
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