Will E-Cigarettes Save Big Tobacco?

Back in April, I asked if E-Cigarettes would relight Big Tobacco’s prospects.  I had my doubts.

E-cigs seemed to be a more pleasurable version of a nicotine patch: something that an existing smoker might switch to for health reasons but not exactly an attractive or glamorous product for someone who doesn’t already smoke.  (Humphrey Bogart would not have been as cool in Casablanca with an e-cig dangling between his lips.  This is an indisputable fact, not an opinion.) It certainly made sense for Altria, Reynolds American RAI -3.43% and the rest of Big Tobacco to get in on the action; it’s better to extract a little more revenue from defecting cigarette smokers than to lose them altogether.

But investors should be realistic about the potential for e-cigs to make Big Tobacco a growth industry again.  It’s not going to happen. Though there are hundreds of millions of tobacco users worldwide (the World Health Organization puts the number of tobacco users at over 1 billion), public health campaigns, legal restrictions, and changing consumer tastes have put cigarette smoking in terminal decline in the developed world.  As a sobering (no pun intended) case in point, American teenagers are more likely to use illegal drugs than to light up a cigarette.

Perhaps most damaging, new “plain packaging” rules are directly assaulting the single most valuable assets of Big Tobacco companies: their brands.
In Australia, all cigarette boxes look identical, regardless of brand: plain white boxes with the brand name written in a uniform font, size and placement.  Oh, and the same graphic photos of people dying of lung cancer on the back.
 Similar rules are being considered in Canada, India, the UK and the European Union.  Big Tobacco is fighting it tooth and nail on trademark and intellectual property grounds, and I consider their objections valid.  But the assault on branding seems to be the next front in the ongoing war of attrition between public health advocates and Big Tobacco, and if history is any guide, the public health advocates will win.

This brings me back to e-cigarettes. Altria is jumping into the e-cig market with a new product under the brand name Mark Ten.  Nowhere on the packaging will there be any prominent mention of Altria or its best-known brand, Marlboro.
 I’m left scratching my head here.  There are over 250 e-cigarette brands currently on the market.  While I don’t see a smoker paying a large premium for a Marlboro-branded e-cig, I would certainly expect them to gravitate to a brand they already know. In failing to use the Marlboro name, Altria seems to be neutralizing its single biggest strength: a consumer brand that is behind only Coca-Cola KO -1.27% and Anheuser-Busch InBev ’s  Budweiser in name recognition.

This would be tantamount to calling Diet Coke “Healthy Pop” and leaving all mention of the Coke brand off the can.  It’s madness.
 If Big Tobacco is wanting to start fresh with new branding because of the toxic association between the existing brands and those filthy, old traditional cigarettes, they are wide off the mark.  Their market is existing smokers, not nonsmokers.  Unless they brand e-cigs as “portable flavored hookahs” or something with novelty appeal, it’s hard to imagine this product appealing to a young, unbiased consumer.

 This brings me to a related topic.  I noted last month that marijuana stocks were a terrible investment.  The companies engaged in legal production and marketing are small, poorly capitalized, and not likely to still be in business five years from now. But as the legal regime surrounding their product continues to be relaxed, there may be room for a large, well-capitalized company to sweep in and take over the market.  Big Tobacco’s massive production and distribution machine could be easily tweaked for the new product—which could be branded under familiar brand names such as Marlboro or Camel.

A lot of Americans would be put off by this, of course.  Fully 49% of Americans are against marijuana legalization for very valid reasons.  But the question Big Tobacco needs to ask is this: can their reputation get any worse than it already is?

Big Tobacco is already a pariah industry under constant attack.  What would they have to lose by marketing marijuana cigarettes in Colorado and Washington?  It’s hard to see a loyal cigarette smoker kicking the habit because of additional bad publicity.

At any rate, if Big Tobacco is going to continue to be a good investment for its shareholders, management needs to focus on leveraging their core brands.  The alternative is to slowly fade away.

Article source: Forbes

New Smokeless Products From Japan Tobacco Inc

Japan Tobacco Inc has declared about launch of two smokeless tobacco products called Zerostyle Snus Mint and Zerostyle Snus Regular. These products will be added to the existing line of smokeless products. First they will appear on the market of Osaka City in August 2013.

Today you may find tobacco in different varities such as cigars, cigarettes, snus, orbs, sticks, strips. Many people like to consume smokeless tobacco products (such as chewing tobacco and snuff) in addition to cigarettes. Smokeless tobacco products are perfect for using in public places where smoking cigarettes is prohibited. Last year these products became very popular among Japanese. However the growing popularity of smokeless tobacco does not lowers demands for tobacco cigarettes.

Snus is a smokeless tobacco product created in Sweden. How snus is used? Snus is placed in mouth, thus smoker enjoys flavor and aroma of tobacco without producing smoke. Last years its popularity has grown rapidly among smokers due to the unique property to use tobacco without smoke. Snus is Swedich national tobacco product which became popular in many countries of the world.

Zerostyle Snus is a successful line of smokeless products produced by Japan Tobacco Inc. After its introduction the product acquired popularity in a very short time. This kind of product does not require to be lightened and produces no smoke which usually annoys people around. Thus it makes possible to use this product everywhere without annoing someone.

Japan Tobacco Inc used its best knowledge of consumer needs and modern technologies in development of Zerostyle Snus. Japanese consumers higly appreciate these efforts. They like to put in mouth these powdered tobacco in sachets and enjoy aroma and flavor of tobacco.

Zerostyle Snus Regular is characterized with roasted flavor and mild sweetness. Zerostyle Snus Mint possesses a wonderful mint flavor. Both varieties are packed in stylish black boxes.

In the beginning Japan Tobacco Inc plans to sell these new products in 150 stores in Osaka City.. 
 

FDA Will Ban Menthol Cigarettes

African American Tobacco Control Leadership Council used the World No Tobacco Day (May 31) to ask FDA to ban menthol cigarettes as they encourage more African Americans to smoke cigarettes.

As you probably know, menthol is a substance obtained from peppermint or oils.
Besides this, the Council made up a petition and calls people to sign it. The petition was presented to FDA in April.

Council representatives say menthol cigarettes have a harsh taste and it attracts more people to smoking them. Beginners and youth choose menthol cigarettes for their first smoking experiences. 

Statistics shows that 19.4% of black people smoke and among them 82.6% prefer menthol cigarettes. Smokers can inhale menthol cigarettes longer than other cigarettes and this may cause lung diseases.

In the USA, in 2009, the FDA banned such cigarettes flavors as grape, strawberry, vanilla, orange, coffee and cinnamon in the course of the programm Family Smoking Prevention and Tobacco Control Act, but menthol cigarettes were not banned. To say, In Brazil menthol cigarettes were banned.

Council representatives claim manufacturers use special marketing tricks to attract African Americans and to make them buy menthol cigarettes. Thus they use more menthol cigarettes ads in black communities. These ads are larger and are placed close to schools. Besides this, in black communities menthol cigarettes are cheaper, experts say.

In 2002 there was made a research called "The African Americanization of menthol cigarette use in the United States," and it showed that tobacco industry has successfully promoted the idea that menthol cigarettes are safe. The idea was especially promoted among African Americans. Moreover, tobacco companies donated money to different organizations to encourage groups to support them. On the market there are numerous brands producing menthol cigarettes.

Experts say that the number of people smoking menthol cigarettes is increasing.