The popularity of electronic cigarettes (e-cigarettes) has exploded internationally, particularly in France, where smoking has long been part of the social fabric and culture. Both longtime and new smokers have gravitated toward this innovative device-drug combination, which costs significantly less than traditional cigarettes and benefits from a smokeless and odorless technology. Many claim that e-cigarettes’ noncarcinogenic liquid-vapor-based formula demonstrates a health profile superior to that of conventional cigarettes.
However, product characteristics vary significantly, owing to the market’s rapid and unregulated development, and medical experts express uncertainty about long-term health implications. The rapid rise of the global e-cigarette market — which registered global sales CAGR (compound annual growth rate) of 57% between 2010 and 2012 and is expected to be worth around US$2 billion by the end of 2013 — has eaten into the broader tobacco market and prompted calls for government regulation. This research explores the sociocultural, economic, and political implications of e-cigarettes’ growth in France and internationally.
E-cigarettes have been around longer than most people realize. The first was “a smokeless non-tobacco cigarette,” invented and patented by American Herbert A. Gilbert in 1965; however, his device was never commercialized. Hon Lik, a Chinese pharmacist, invented the present-day e-cigarette, introducing it to the Chinese market in 2004 and expanding sales internationally in 2006. Lik’s legacy continues today; among the more than 400 e-cigarette device and component manufacturers worldwide, the majority are Chinese.
At the core of the device is its atomizer, a technology that heats a nicotine-infused propylene glycol liquid, converting it into a vapor (hence the verb “to vape” and the appellation vapoteurs given to product converts in France) that users inhale through a plastic cartridge mouthpiece. The device is powered by a lithium-ion battery, which is rechargeable through a USB port, an AC wall outlet, a car adapter, or a portable charging case.
Despite its many novel properties, significant concerns remain regarding the safety of the devices’ evolving delivery technologies.
E-cigarette liquids (also known as e-liquids) are sold separately from the device in the form of disposable glass or plastic vials. E-liquid solutions lack the tar, arsenic, and carcinogens associated with tobacco and are available in varying nicotine concentration levels, ranging from 0 to 24 milligrams per milliliter of solution. France’s vapoteurs can choose from hundreds of flavors. Selections available across Paris boutiques include e-liquids replicating the tastes of American tobacco, exotic fruits, mojito cocktails, and even bubble gum.
A Novel (and Healthier) Alternative?
While noncombustible e-cigarette technologies represent an innovative break from the past, manufacturers have mimicked the habitual smoking experience associated with conventional cigarettes. Even though e-cigarette devices are visibly different from paper-enveloped tobacco, their functionality is imitative. Although some emit a light, odorless mist, all atomizers are smokeless, thus preventing the risks of “secondhand” inhalation. Many devices are tipped with an LED light that glows like burning ash, and select products simulate the noise associated with the puff of a traditional cigarette. Most of all, e-cigarettes provide the routine hand-to-mouth gesture that smokers crave.
After vaping an e-cigarette for the first time at a Paris boutique, a woman who describes herself as “a social smoker” stated: “I have the sensation that I am smoking a real cigarette, but without the bad smell.” She is just one example of France’s many e-cigarette converts who suggest that the product is a game changer, successfully bridging the gap between traditional cigarettes and nicotine-based alternatives (such as gum, patches, and other smoking cessation tools).
Yet significant concerns remain regarding the safety of the devices’ evolving delivery technologies. There have been incidents reported of defective e-cigarettes exploding as the result of battery and electrical-charge defaults, causing second-degree burns to the users’ faces. Likewise, the discovery of toxic chemicals in the devices has raised questions about quality control at factories. Furthermore, given inconsistent technical specifications and lack of regulation for marketed devices and e-liquids, nicotine and chemical concentration levels in the inhaled mist vary across products.
Given the novelty of e-cigarette development, the variability of marketed products, and the limited, partial, and contradictory nature of clinical research findings to date, it is difficult to evaluate the health repercussions of vaping in the short term, much less the long term. The World Health Organization (WHO) has cautioned that, until national regulators have endorsed the safety and effectiveness of e-cigarettes, “Consumers should be strongly advised not to use any of these products.” A May 2013 study conducted by the GermanCancerResearchCenter suggests that the devices’ substances may cause airway irritation and allergic reactions among users, although the breadth of potential health consequences are yet unknown. The fact remains that the nicotine content in e-cigarettes is addictive, and excessive intake of the substance may result in overdose or poisoning.
While e-cigarettes do not produce the tar, arsenic, or other cancer-causing toxins associated with conventional cigarettes, the jury is still out as to whether they are the lesser of two evils. Today, smoking remains the leading cause of preventable mortality in France, with an estimated 73,000 deaths each year. France’s National Institution for Prevention and Health Education estimates that tobacco costs the government more than €47 billion (US$63 billion) annually in terms of health expenditures, prevention campaigns, and loss of income and productivity.
Even though the harmful health consequences of conventional cigarettes are widely accepted, some current smokers express reluctance to transition to an electronic equivalent. As one French smoker of 32 years suggested, “I have not and do not plan to test e-cigarettes. I try to avoid putting chemicals in my body, and I still do not know which substances are in that liquid.” In its Tobacco-Related Health Fraud Policy, the U.S. Federal Drug Administration (FDA) states that, “to date, no tobacco products have been scientifically proven to reduce risk of tobacco-related disease, improve safety or cause less harm than other tobacco products.” France’s most authoritative report to date, published in May 2013 by the French Office for Tobacco Prevention (OFT), provides an alternative assessment: “If properly fabricated and used, the e-cigarette presents significantly less danger than the cigarette, but its dangers are not entirely absent.”
In France, where economic woes have taken a toll, many vapoteurs cite financial reasons for their transition from traditional cigarettes to e-cigarettes.
Beyond current questions regarding health implications, medical experts are now assessing whether the e-cigarette is simply a tobacco alternative or something that may be utilized as a smoking cessation tool. While some vapoteur converts consume e-cigarettes at levels consistent with their habitual nicotine-usage patterns and express no ambitions to quit, many others have transitioned methodologically to e-cigarettes in order to eventually quit altogether, developing tailored programs to gradually reduce nicotine intake levels (sometimes to nothing). “Many of our clients suggest e-cigarettes also reduce cravings and withdrawal symptoms, thus leading them to cut down on nicotine intake,” suggests Xavier Lebigot, the manager of Vapostore, an e-cigarette boutique in Paris’ 6th Arrondissement.
In a June 2013 report, the British Royal College of Physicians recommended that e-cigarettes “be made available as part of a harm reduction approach to tobacco.” Likewise, the OFT report suggested that, “among smokers addicted to tobacco, e-cigarette tobacco replacement should in theory help reduce risk and damage.” A 2011 survey-based study in The American Journal of Preventive Medicine indicated “that e-cigarettes may hold promise as a smoking cessation method and that they are worthy of further study using more-rigorous research designs.” In September 2013, The Lancet published results of a six-month randomized trial of current smokers to compare the efficacy of nicotine e-cigarettes, nicotine patches, and placebo e-cigarettes. Ultimately, the study concluded that e-cigarettes are modestly effective in supporting smoking cessation and are statistically comparable to nicotine patches. However, discord and uncertainty remain regarding the efficacy of e-cigarettes in reducing nicotine dependence.
While the vast majority of today’s vapoteurs have transitioned from traditional smoking, many e-cigarette critics express concerns that the devices may serve as a path to dependency for the next generation of smokers. French health officials fear that their à la mode status, colorful advertising, and exotic vapor flavors might induce young people, women, and the unemployed to start smoking. In a 2012 survey of more than 3,400 Parisian schoolchildren, ages 12-19, more than 8% indicated that they had tried e-cigarettes, two-thirds of whom were nonsmokers.
In France, where economic woes and high unemployment have taken a toll, many vapoteurs also cite financial reasons for their transition from traditional cigarettes to e-cigarettes. French federal tax reform has increased tobacco prices, and the average monthly cost of smoking one pack of cigarettes daily is more than €200 (US$265). E-cigarettes, on the other hand, cost less than half this amount. Many e-cigarette users opt to purchase starter kits, which include a battery, a charger, and a range of atomizer-cartridge ensembles, at a cost of €90 (US$120). Each e-liquid vial, the equivalent of 400-500 puffs (between one and three cigarette packs), costs €6 (US$8). As an alternative to e-cigarette kits, some vapoteurs use disposable devices, which cost €10 (US$13), also have a lifespan of 400-500 puffs, and are fully discarded upon depletion.
Growth of a Multibillion-dollar Global Industry
According to Linarch and Citigroup analyst estimates, worldwide e-cigarette sales grew from US$461 million in 2010 to more than US$1 billion in 2012, representing a CAGR of 57% over the period. By the end of 2013, the global market is projected to be worth approximately US$2 billion. This robust growth trajectory is expected to continue in the near-to-medium term, with about US$3.3 billion in sales by 2015. Wells Fargo industry analyst Bonnie Herzog suggests that worldwide sales could exceed US$10 billion by 2017. Other analysts propose that e-cigarette sales could surpass traditional cigarette sales within the next decade.
In 2012, French e-cigarette sales reached €40 million (US$54 million), a figure that is expected to more than double to €100 million (US$134 million) by the end of 2013. A closer analysis of French e-cigarette usage habits, undertaken by the OFT and commissioned by the government, reveals similar growth. In France in mid-2013, more than one million individuals considered themselves to be “regular” users of e-cigarettes, compared with 500,000 at the end of 2012. However, e-cigarette smokers represent only a fraction of the 14 million traditional smokers in France, underscoring the significant potential for the devices.
Regulation for the drug-device combination remains complicated and inconsistent … given that e-cigarette categorization is blurred across tobacco, recreational, and medical products.
In the early days, e-cigarettes were sold exclusively through e-commerce channels. Over time, online retailers turned toward a brick-and-mortar model to allow consumers to experience the product firsthand. Today, there are approximately 100 dedicated e-cigarette boutiques in Paris alone and more than 500 stores in all of France. According to OFT estimates, this number is expected to double by the end of 2013. Moreover, additional sales channels are now trying to benefit from the growing market. France’s tabacs (convenience stores) are now selling e-cigarettes to compensate for the decline in traditional cigarette sales and have even proposed plans for exclusive rights to device sales. Today, points of sale are as wide-ranging as pharmacies, tanning salons, and consumer-electronics stores.
According to the FDA, there are more than 400 manufacturers of e-cigarette devices and components worldwide. Joyetech, a Chinese manufacturer established in 2007, is the world’s leading device and e-liquid manufacturer. Until recently, e-cigarettes were manufactured exclusively in China; however, some production has since shifted abroad, including to the U.S. and France.
Amid growing e-cigarette sales, tobacco and pharmaceutical firms are now trying to assess their competitive positions in the evolving nicotine-containing-product (NCP) landscape. Large tobacco players have entered the e-cigarette market by acquiring existing brands (e.g., Lorillard’s April 2012 purchase of Blu, the largest American e-cigarette manufacturer) and by launching their own e-cigarette products (e.g., Altria’s launch of MarkTen in the U.S. and British American Tobacco’s launch of Vype in the UK). This surge of interest from Big Tobacco raises two pertinent questions: Do investments in e-cigarettes represent a strategy to stave off potential competition, or do tobacco companies believe that e-cigarettes are the market’s future?
In an interview with the Financial Times, Nicandro Durante, the CFO of British American Tobacco, claimed that the size of the market for tobacco alternatives could account for as much as 40% of the company’s revenues (US$24 billion in 2012) in 20 years. Thus far, pharmaceutical companies, whose smoking cessation products have already been challenged by e-cigarettes, have lobbied for the regulation of the devices, rather than establishing links with the emerging industry.
A Regulatory Enigma
The current regulation of e-cigarettes remains blurred across geographies. In some countries, including the U.S., e-cigarettes are regulated neither as tobacco products nor as medical devices, although they share qualities with both categories. However, in the European Union,Brussels recently rejected a proposal to treat e-cigarettes as medicinal products. As a result, e-cigarettes are categorized by default as recreational products in most countries, including France. Because the products remain largely unregulated, they are not subject to health and safety standards or to the excise taxes usually applied to alcohol and tobacco products. Likewise, the marketing standards for e-cigarettes are inconsistent globally. E-cigarette retailers in France once advertised via the Internet, newspapers, and radio. However, in October 2013, the European Parliament voted to apply the same marketing standards and advertising rules that apply to conventional cigarettes, given that e-cigarettes evoke the act of smoking.
In light of the current regulatory environment, the French government recently took steps to manage the unprecedented growth of e-cigarettes. In May 2013, Marisol Touraine, the French Minister of Health, suggested establishing “the same laws for electronic cigarettes as for regular cigarettes,” owing to their nicotine content, potential as a gateway to smoking, and health repercussions. In June 2013, the French government prohibited the sale of e-cigarette products to minors. A new law banning public e-cigarette consumption is also under consideration; unlike traditional cigarettes, e-cigarettes are not currently banned in public places. One Parisian vapoteur, who previously smoked one pack of cigarettes a day, suggested that the dearth of French regulations render smokeless e-cigarettes the obvious choice: “Unlike cigarettes, I am not limited to smoking outdoors. I can vape inside shops and cafés, my office, and even the Metro.”
Despite the tremendous growth in e-cigarette consumption, the market outlook remains vulnerable to several forces. Consumers continue to adopt the e-cigarette both as a smoking cessation tool and as a less expensive and healthier nicotine alternative. Given currently available clinical data, medical experts largely agree that e-cigarettes are less toxic than traditional cigarettes and eliminate the risks of secondhand inhalation, even though their long-term public health implications remain unclear. Likewise, governments are grappling with how to regulate a nascent industry’s products, retail distribution, public usage, and promotion. Finally, competitors in the tobacco and pharmaceutical industries are confronting declining product sales while determining how to profit from the e-cigarette market’s unprecedented growth. Despite the uncertainty surrounding the market’s evolution, e-cigarettes continue to build on their successful growth as they gain global momentum.
This article was written by Akshay Jashnani and Allison Silverstein, members of the Lauder Class of 2015.