Vaping is everywhere. Here on the busy streets of London,
you often encounter a cloud of sweet-smelling vapor or an abandoned e-cigarette on the floor.
But the industry is undergoing major change as governments look to restrict the sale of
disposable vapes amid concerns about the rise in vaping among young people
and non-smokers getting addicted.
As of October 2023, 28 countries have banned the sale of any type of e-cigarettes.
In addition, the U.K., Germany, France, Ireland
and Belgium, are among the countries looking into how they can ban disposable, or one-use vapes,
as they continue to grow in popularity.
So, what does the rise in vaping mean for
the tobacco industry, and is the hysteria over their impacts well-justified?
The vaping industry has exploded over the last decade, as health bodies have
promoted it as an aid to quit smoking while cigarettes continue to fall out of fashion.
In the U.K., we have encouraged vaping among people who are struggling to stop smoking,
and the use of e-cigarettes among those people has gone up over the years,
things like nicotine patches, gums, lozenges, and some drugs as well. You don't get that same
hit as you would with smoking a cigarette. Whereas with e-cigarettes, you do feel that
nicotine hit. So, it's a lot more similar to the experience of smoking. And as well as that,
you get the more social experience of going out and doing it with someone.
And with interest, comes innovation.
The first known design of a vape was actually
created almost 100 years ago in New York, but the technology wasn’t made until much later, in 1963.
Two designs preceded the vapes we know today. The first looked like a cigarette,
with a glowing light at the end, and the second was a much larger, metallic device.
Many of today’s designs are much sleeker and look more like a piece
of tech than an aid to stop smoking.
So this is actually one of our present-day
devices. The battery itself is a little bit bigger. Yes, it's a metallic, nice,
finished design, you get a screen on the front here to be able to tell people how much battery
life is left. Because all these elements, if you're not a vaper, you're sort of thinking,
that feels a little bit sophisticated. When you've made the transition across from cigarettes,
battery life, you don't want to be out and suddenly find that your e-cigarette may fail
on you. Because if you imagine when people have started on a single-use product, it's a very
simple device, you don't need to fill a product. You just take a sticker off, take a sticker off,
you go, and then hopefully dispose of it responsibly, not into household waste.
Hoping to capitalize on this fast-growing industry,
big tobacco companies waded into the market.
British American Tobacco was the first to move
into the space, when it acquired start-up CN Creative in 2012.
Imperial then acquired e-cigarette brand Blu in 2014.
Philip Morris bought UK e-cigarette company Nicocigs the same year.
And Japan Tobacco Incorporation bought E-lites in 2015.
The old cigarette model in terms of volume declines was becoming much more pressured.
There were increasing examples of countries outlining tobacco endgame policies within the
next 10 to 20 years. There was increasing ESG overhang from investors and how the investment
community viewed cigarettes and we started to see these products appear on the market from non-big
tobacco and take share from cigarettes, so, they were a competitive threat for the first time.
The number of adults using e-cigarettes rose to 9.1% of the U.K. population in 2022, which is the
highest ever, up from just 2.7% 10 years ago.
Meanwhile, the number of smokers has dropped
year on year, and fell to 12.9% of the population in 2022, the lowest since records began in 2011.
And those figures are translating into big profits. British American Tobacco saw revenue
from its vapor products increase by 40.3% in 2023 compared to 2022, so it’s unsurprising that
big tobacco is pivoting towards vaping.
But the huge growth in the legal vape
market is just one side of this story. In the last ten years,
illegal vapes have generated big sums of cash.
The market is worth between three and four billion.
You could estimate, and intelligence would suggest, that the illicit market could be
as much as two thirds of that. So you’ve got a double issue,
you've got unregulated products to a vast degree in the market, and actually, then youths accessing
the product because those retailers prepared to stop those products are not doing the necessary
age verification. So, a really big issue.
And there are some key giveaways when it comes to spotting illegal products.
A bigger puff device is certainly wider,
and certainly taller, normally quite square. So actually, if you see that as a consumer
in a shop, anything over 600. You won't find any reputable manufacturer using cartoon characters,
or flavor names that are associated with drinks or food because there's already legislation.
That should give you those warning signs.
Not only are illegal vapes taking a big
slice of the vaping industry, but they’re also putting users in serious danger.
We saw in the U.S. a string of deaths and hospitalizations, which seemingly were
linked to vaping. And that caused 60 deaths and hundreds of hospitalizations with this lung issue,
which they eventually called EVALI. What we found out eventually was that this
illness was being caused by people who were trying to vape THC. And to do that they were
adding something called vitamin E acetate. And this vitamin E acetate is banned in the U.K.
In the U.K., we've seen banned heavy metals in products that have been confiscated in schools.
We've also heard reports of spice being added to vapes and children coming across these. So,
being exposed to drugs which they were not expecting to be exposing themselves to.
So, it's a very, very risky landscape at the moment for young people who are vaping.
And as with most quick-moving markets, regulations will always struggle to
keep up with innovation. Big tobacco firms, including British American Tobacco for example,
are selling heat sticks made from nicotine-infused substances such as rooibos tea, which circumvent
the EU ban of flavored-heated tobacco.
The influx of all the flavors in these
cheap disposable brands from China over the last few years, from a big tobacco perspective,
it's actually a positive because this will encourage regulators now to take action against
these products. It is going to be a positive from a big tobacco perspective, because it leads to
that consolidation, it also creates barriers to entry going forward, so you won't see more
and more products coming in from China.
Meanwhile, smokers are still actively
being encouraged to take up vaping to quit cigarettes. The British National
Health Service for example says it poses a small fraction of the risk of smoking,
which causes around seven out of every ten cases of lung cancer. But health professionals also
highlight that vaping is not completely risk-free, and the longer-term risks are not yet known.
We're fairly certain that vaping will be less harmful for you in the long run than smoking
will be because it's got fewer harmful chemicals intoxicants in there. The issue is, if you're
taking in those harmful chemicals intoxicants, and you wouldn't have been exposed to those otherwise,
you're then increasing your harm. So, we have cigarettes at the top as the most
risky thing you can do. Then there's e-cigarettes underneath that, but the least or least harmful
thing or the safest thing you can do is neither.
Yes, we are seeing increasing youth prevalence,
but I think you need to put that one in context of other vices or over categories like cannabis
and alcohol. But at the same time, we're seeing increased youth usage, youth cigarette smoking
is lower than it's ever been both in the U.S. in the U.K., which would suggest that if these
youths were not using vape, which is much safer than cigarettes, they would otherwise be smoking.
In the U.K., e-cigarette usage is highest among people aged between 16 and 24 while
one in nine children had experimented with vaping in March 2023, which is up from one in
thirteen in the same month in 2022.
So as a fast-growing industry, both legally and on the black market, it looks like vaping is here to stay.
I think we've got to around the level at which it will be at its most popular, but how long it
takes for it to decrease in popularity, again, is yet to be seen. And it's difficult to really
think about how long a fad can last. Until they become less trendy, it's going to be a really,
really uphill drive for us to try and reduce the youth use without having a reduce in the trend.
If you look at the growth curve over the last two years, that has been that demonstrable increase.
That is great, because, in many ways, people weren't sure what it was about, what are these products?
Are they the solution or are they the issue?
Well, actually, hopefully, it's been proven now.