Does the US vaping industry belong to big tobacco?
Does the future of the US vaping industry belong to big tobacco? One analyst says that may be the case
Earlier this year, a senior analyst at Wells Fargo by the name of Bonnie Herzog published an 11 page report that was designed to provide an honest, investor’s-eye-view of what the vape industry will likely look like in the future. The report was titled “Good for the Goose, Less for the Gander,” and delivered a pretty drastic wake-up call to the US vaping industry in light of the pending FDA regulations that are about to crack-down on E-cigs.
As it turns out, the ‘cost and complexity of compliance’ may spell doom for many small-time vaping companies if something doesn’t change.
The highlights of the report
The entire report can really be summarized, for the most part, in the following quote by Herzog.
“While the final deeming e-cig regulation brings much needed structure and oversight to the e-cig/vapor category, there is little doubt that the cost and complexity of compliance overwhelmingly favors big tobacco (the goose) at the expense of smaller, less well funded players (the gander).”
The first detail to take note of is the fact that Altria and Reynolds American, Inc. (two of the biggest players in the US tobacco industry) are both ahead of the game already in terms of the new FDA regulations. They both have an insane amount of money to work with, have been ‘playing ball’ with the FDA for years, and have also already been in talks with the FDA about the regulations – and it’s even speculated that they hold some weight in exactly what some of the rules will be. All of these signs point toward the fact that big tobacco will survive the new regulations without an issue.
But everyone knows that the new regulations may make it almost impossible for smaller companies to compete. Here is a quote from the report that demonstrates this in no uncertain language.
“First off, we believe the sweep of the new regulation has been a real blow to the broader vapor industry, particularly smaller, less well-funded players, and innovation more broadly, given the costly and time consuming requirements and because innovation will likely be stifled. While perhaps not hugely evident yet, we believe many small industry players will be forced out of business as a result which has been foreshadowed by several announced leadership departures at many companies and industry/trade groups.”
To stay in business and to continue to compete, smaller E-cig companies have little choice but to fight it out the hard way. Plans for doing this include going to court, recruiting more smokers to vaping, writing letters to congress, raising money to help fight the new regulations, and trying not to give up in the face of the massive weight of new rules that literally threaten to crush the life out of most of the smaller e-cig companies that have done so much to further the cause of vaping in the United States thus far.
What is even more infuriating about this entire situation, however, is the fact that big tobacco seems poised to steamroll right over these smaller companies in the wake of the destruction that may come if something doesn’t change. These companies (big tobacco), with nearly limitless pocketbooks, may be the only players who actually have the funds on hand to handle the cost and complexity of the FDA’s regulations.
And they don’t even represent the people who are started all of this. Vaping began as a way to help people quit tobacco – and big tobacco has obviously been in the business of selling more cigarettes for as long as they’ve existed. So in a sense, these new regulations may potentially cause the ‘bad guy’ to win, just because he’s the only one with enough money to play the game.
What can you do?
Getting involved is very important – especially if you want to contribute and try to preserve vaping for the wonderful and helpful habit that it is. You can start by researching the new FDA regulations, and can go from there to getting into contact with US-based vaping associations. You can also get in touch with your congressman or senator to let them know that you don’t want to see vaping changed so drastically by the FDA.
If you’re not sure where to get started, you can visit the CASAA home page here: http://casaa.org/. The Consumer Advocates for Smoke-free Alternatives Association is on the forefront of the fight against the new FDA regulations, and you can learn more about how to get involved by visiting their site.