Sometimes organizations surprise us and in a move which simultaneously surprised and dismayed the vaping and tobacco industries, the Food and Drug Administration announced a series of changes that will have significant ramifications for years to come. The FDA commissioner, Scott Gottlieb, M.D. disclosed his plans to restrict nicotine levels found in traditional cigarettes. He believes that this strategy can provide an avenue for smokers to quit their habit, and move toward other, safer alternatives.
There’s no denying that the most distinct smoking alternative is vaping. It differs drastically from nicotine gum or patches. Vaporizers or e-cigarettes offer an experience analogous to smoking while substantially decreasing the risks associated with traditional cigarettes. Former smokers still crave the sensations of drawing in, or inhaling. Gums and patches simply fall well short of satisfying this desire. This is also the reason why such alternative products are not necessarily effective.
As both Dr. Gottlieb and the Food and Drug Administration state, nicotine-based tobacco products are the leading FDA to extend the regulations on electronic cigarettes
cause of preventable disease and death in the United States. In a bid to improve the health and standards of living of all Americans, in addition to eliminating unnecessary productivity losses, the FDA requires additional time to explore the benefits of tobacco alternatives. Which I have to say, makes sense and hopefully will benefit everyone around the world once they conclude. Medusa Juice is here to keep you updated as we get more information.
As we know, the Food and Drug Administration is committed to scientific research for the betterment of society, the administration decided to extend the deadline for alternative product oversight. This unexpected announcement has far ranging implications for the vaping industry. Under their initial proposal, vaporizer manufacturers were required to submit a costly approval application for any vaping product that hit retail markets after February 15, 2007, according to political newsletter The Hill.
Their findings were scheduled to be enforced in August of 2018. Under Dr. Gottlieb’s new plan, “applications for newly-regulated combustible products, such as cigars, pipe tobacco and hookah tobacco, would be submitted by Aug. 8, 2021, and applications for non-combustible products such as ENDS or e-cigarettes must be submitted by Aug. 8, 2022.” So there’s still a year or two of waiting for us vapers and also for the vendors.
While this may be great news for vaping manufacturers and the vaporizer community, it is still inconvenient for most of us. However, the Food and Drug Administration provided a critical, and most importantly, fair lifeline to small businesses across the United States. The impact, however, will extend much further than the promotion and normalization of vaping.
In order to truly understand the value of this Food and Drug Administration’s announcement, we need to consider the history of the vaporizer. The technology that drives e-cigarettes has been in place for decades, although it wasn’t until the late 1990s to early 2000s that vaping entered the retail platform.
Early on, vaporizers occupied what was a total niche market. These early renditions were functionally suspect and aesthetically displeasing. Nevertheless, early pioneers used this infancy phase to catalyze creative synergies. Then, through much trial and error, the vaporizer technologies that enthusiasts take for granted today were fostered during this inception period.
After working out the kinks in early vaping models, the next greatest challenge for the industry was marketability. Somehow, someway, vaporizer manufacturers had to convince the smoking-enthusiast sector that the digital platform was cleaner, safer, and all-around superior to the traditional analog platform.
This was admittedly no easy task. Obviously, the first go-around was far from profitable. For some upstart companies, the revenues barely covered expenses, if at all. Then, slowly but surely, the money started to trickle in. By 2008, the e-cigarette market raked in $20 million in sales, according to the Tobacco Vapor Electronic Cigarette Association.
This meant a huge wake-up to some large organizations, especially the Big Tobacco conglomerates. While $20 million is chump change, a rounding error in their gargantuan income statements, the wind of change was upon them. Astute tobacco executives began to take note of something extraordinary in the vaporizer industry. Then, 2009, one year after the onset of the Great Recession, total vaporizer sales jumped to $39 million, nearly doubling its pre-stock market crash sales. Now, that’s no little feat! Medusa Juice remembers.
By sharp contrast, Altria Group Inc. which is one of the biggest tobacco firms in the world and the North American Marlboro distributor saw their revenues decline 13% from 2008 to 2009. The global financial crisis disproved the common adage that cigarettes are secular products and therefore, immune to economic recessions.
Trying To Be Thorough
As it turns out, there is nothing that kicks a bad habit more than getting kicked in the wallet!
The extraordinary event was that vaporizers and e-cigarettes, which were not considered secular due to its innovative technology and lack of awareness at the time, were growing rapidly in the face of unprecedented economic turmoil. People began to wonder if consumer financials were this robust in the leanest of times, what would happen when the underlying economy improved?
The answer to that question from the vaporizer industry was rip-roaring sales. In years 2010 and 2011 we witnessed total revenues of $82 million and $195 million, respectively. Thanks to a combination of explosive manufacturer growth, and full-scale social media integration, vaping and vaporizers shed their niche market persona. Instead, we saw vaping become a culture.
This, in turn, sparked a previously unprecedented total revenue of a cool $500 million. And while these figures were still no match for tobacco’s old guard, they reaffirmed the tremendous grassroots sentiment for vaping. Suddenly, from 2012 and beyond, vaping had entered the mainstream conscious. Even the most respected journalistic outlets such as The Wall Street Journal covered vaping and its various avenues of subculture derivatives such as cloud chasing and industry conventions.
First the first time ever, Big Tobacco was on notice. They finally found the time to get involved and they started reacting. The small-business vaporizer manufacturers benefited from years of engineering know-how. Furthermore, vape companies analyzed vaping trends, and they developed strong relations with their customer base.
To try and steal back some of the lost revenue, Big Tobacco relied upon the one true advantage that they could depend upon, their untouchable resources. They soon found out that even that stick was going to be a severe challenge to wield as both the Food and Drug Administration and societal norms went to battle against nicotine.
There’s no argument that nicotine has always been the Achilles’ Heel of Big Tobacco firms. Because without the substance, smokers cannot get the “throat hit” through the analog platform. And this is the unique experience of smoking, then combined with nicotine’s addictive nature, cynically provides a constant stream of revenue source and cash flow for traditional cigarette companies.
In the early days of tobacco, ignorance was bliss. As in the early 20th century, cigarettes were viewed as a status symbol. No one brought up the health risks associated with nicotine or the smoking process because such studies either did not exist or were quickly censored.
However, things changed after World War II. Scientists and researchers began to earnestly analyze smoking and its correlation to various conditions and diseases. They discovered a link between nicotine and smoking addiction. Furthermore, nicotine addiction exposed a smoker to health risks associated with the combustion of harmful chemicals, such as carbon monoxide poisoning. And it still does today.
Back in the 1970s and 1980s, through the present age, government and educational agencies promoted “butts out” campaigns aimed at curbing juvenile smoking. Although it was tough going at first, these social efforts did eventually begin to pay off, particularly in the late 1990s to the 2000s. Hey, every little bit helps, right?
Now days, these initiatives which were sparked decades ago have produced undeniable results. According to The Food and Drug Administration suggests: “Smoking in the United States is at an all-time low, with just fifteen percent of adults still lighting up. And tobacco use among youth has reached similarly historic lows, which has sparked hope among public health officials that a smoke-free generation may finally be within reach.” We here at Medusa Juice believe that to be the case. We don’t feel it is that far away either.
In fact, part of the reason why the FDA made their tobacco and vaping announcement is that they genuinely foresee a future without nicotine and traditional, analog smoking. However, given the enormous business and economic implications of an FDA approval process, the administration must tread very carefully.
For these big tobacco firms, the FDA announcement was a full-on fire alarm, not only because it impacted them, but because it largely has positive implications for the vaping industry. Which is a double whammy for this old and big moneyed business.
Currently, with the traditional platform, it’s impossible for cigarette smokers to avoid harm. This is because nicotine is one of the most addictive consumer elements available, and it can take years for the average smoker to fully kick the addiction. Also, even more critical, is that addicted smokers are constantly exposed to harmful substances brought about by the combustion process.
For those of you who may be unaware, combustion is the act of burning elements beyond their thermal threshold. The temperature ignites and changes chemicals into aerosol form, causing microscopic particles to enter a smoker’s bloodstream. And then the combustion process creates exhaust fumes, which continually emit carbon monoxide. Everyone knows that an excessive concentration of CO is fatal, but may not realize that even frequent, diluted exposure can also cause long-term health repercussions.
Whereas, vaporizers, on the other hand, deliver nicotine and other e-juice flavors through the vaporization process. This is where the name comes from. Vaporization is a far gentler approach than combustion, which also has the disadvantage of destroying much of the flavor content and replacing it with harmful residue and carcinogens. You do not have that with vaporizers, the end-user only inhales the purest essence of the desired material, with little to no toxic derivatives.
While the FDA continues to analyze this critical difference between combustion and vaporization, the official jury is still out. Still though, the tobacco firms know that the jig is over. It has been for years now, really. Meanwhile, the major conglomerates have been hard at work developing their own nicotine-alternative products, with varying degrees of success. Only now, they’re fighting on the vape manufacturers’ turf.
As you might expect, Wall Street has been unequivocally boarish following the FDA announcement. For instance, we saw British American Tobacco shares drop 7% in market value against the prior day’s trading session. Altria Group took a brutal bashing, hemorrhaging 9.5%. Even smaller tobacco outfits like Vector Group, which also sells e-cigarettes, dropped 4.7%. In contrast, publicly-traded vaping companies like mCig, Inc. have been rising ahead of the news. And it’s only going to continue.
It’s this ugliness in the markets that signal an end to the revenue stream of traditional cigarettes. In fact, it may very well change the entire paradigm of the broader enthusiast market. For once, Big Tobacco firms must adapt quickly or they risk everything..
If these same tobacco firms are looking for a reprieve, they shouldn’t hold their breath. Especially in-lieu of the record unpopularity of the Trump administration, the President can only rely on his business and economic acumen. If he were supporting vaping and vaping innovation, he would through logical extension, support small businesses and American industry. Where, were he to go the other way, President Trump would be perceived as bowing to multinational corporate interests. And he’s done plenty of that of late.
Vaping is one of the few industries in America where it is currently profitable to innovate and manufacture domestically. The Food and Drug Administration certainly are aware of the dual benefits of health and economics. Therefore, they are approaching the vaporizer markets in a more assuaging fashion.
Remember though, that whatever the outcome, Medusa Juice will keep you informed and we will continue to comply with all rules governing our products.
More than likely, vaping enthusiasts are safe in adopting a bullish approach to the FDA announcement. If the government agency were to hamstring vape manufacturers, inevitably, international competitors that don’t have onerous regulations will quickly gain a stronghold at American companies’ expense. That wouldn’t sit well with the administration, which has publicly prioritized that American interests should come first. But that is true of Great Britain as well. The United Kingdom will continue to be on the forefront of vaping technology, innovation and research.
It only stands to reason that eliminating nicotine without providing a viable alternative would mean lost profitability for shareholders and which can include retirees’ pension plans, as well as those pink-slipped workers. Tobacco firms’ own innovations would get hijacked before it ever had a chance to take off.
As it happens, the vaping market is continually increasing its awareness and integration. As such, government agencies can’t treat the vaporizer community as an esoteric, niche sector any longer. In conjunction with its health benefits and growing financial influence, vaping has made a very compelling case to the Food and Drug Administration.