Rise of e-cigarettes sparks tobacco industry plans

E-cigarettes are a nascent category, but Wall Street analysts predict the segment could become a $3 billion-a-year business in the next three years.

Success of the products hinges on how the category will be regulated and that is where the PR battle is being played out between e-cigarette manufacturers and public health advocates. Will e-cigarettes be taxed like regular cigarettes and face the same marketing restrictions or be treated as a safer alternative for smokers that should be encouraged?

Tobacco manufacturers are banking on the latter.

The third-largest tobacco organization - Lorillard, the holding company that owns Lorillard Tobacco and Blu eCigs electronic cigarettes - has taken an aggressive stance.

In a column for USA Today in September, Murray Kessler, chairman, president, and CEO of Lorillard, argued the products should be seen as a significant harm-reduction option for smokers. "Regulatory actions, including tax policy, should encourage cigarette smokers to switch to e-cigarettes," he wrote.

Transform the industry
Richard Smith, lead manager of communications for Reynolds American, parent company of RJ Reynolds Tobacco, says the company believes e-cigarettes could "help transform the tobacco industry." However, while he says e-cigarettes do not involve burning tobacco - they produce vapor instead of ash or smoke - the company is not making any health claims around its newly launched vapor e-cigarette, Vuse.

"There is no such thing as a safe tobacco product, and we're not making any health claims with respect to Vuse," he says. "We believe the FDA will regulate the e-cigarette category based on sound science." The company has been in contact with state and federal agencies.

This past July, RJ Reynolds launched Vuse in Colorado. It was supported by a marketing campaign that included TV, print, and radio ads. Press events were also held in New York and Denver, "the first of any such events for the Reynolds American operating companies in decades," Smith explains.

According to him, Colorado is just the first of many upcoming markets for Vuse. RJ Reynolds, the second-largest tobacco company in the US, has been working with the firm Taylor on its communications plan.

E-cigarettes also have the support of grassroots organizations such as the Consumer Advocates for Smoke-Free Alternatives Association (CASAA), which had a meeting with the FDA's Center for Tobacco Products in August in which it urged the need for consumer-friendly regulations, believing e-cigarettes are better for smokers and could even help them quit altogether.

Lobbying efforts
Gregory Conley, legislative director for the association and a lawyer, says the group has done a lot of lobbying work against bills looking to heavily tax e-cigarettes in states including Hawaii, where the bill was recently defeated. Only Minnesota has a state excise tax. But other jurisdictions have been contemplating such legislation.

CASAA enlisted a university professor - Igor Burstyn of Drexel University's School of Public Health - to do a review of all the medical evidence around e-cigarettes. He concluded that they pose minimal health risk.

"Our goal with that study was to have something that news media outlets could use," Conley says. "It helped us a lot."

Public health organizations argue that not enough is known about the products. Their worry is that e-cigarettes could lead more young people to smoke.

"There is a lack of comprehensive research in terms of the long-term impact," says Patricia McLaughlin, assistant VP for communications at the American Legacy Foundation. "We're not telling people what not to do, but asking them to approach it with caution."

Legacy has had its executives do media interviews, and has also produced a fact sheet as well as a leadership panel on the subject. "We're trying to keep a steady drum beat of news on this issue," says McLaughlin, who has noticed an uptick in media requests about the topic.

Health organizations have also reached out to the FDA, PRWeek has learned.

Although they did not speak on the record, they said they are urging the FDA to quickly regulate e-cigarettes.