Hey all. Lizette here in San Francisco, the home of vaping startup Juul Labs Inc., and the new epicenter of the modern nicotine industry. Federal health officials widely acknowledge that teen vaping is a health crisis, but it appears the extent of that crisis is still coming to light.
The U.S. Centers for Disease Control and Prevention said this month it was investigating serious lung illnesses reported by people who vaped in 22 states. The institute also announced the first ever vaping-related death, putting a once-hypothetical worst case scenario into stark terms.
The sobering effects had barely started to sink in when Big Tobacco made a surprise announcement: They want to get bigger! Philip Morris International Inc. and Altria Group Inc. aim to combine forces, merging after being separated for more than a decade. They split while traditional cigarette sales declined and have explored new, more profitable growth markets independently: Altria in the U.S. and Philip Morris everywhere else.
For Altria, this included buying a slice of Juul, the San Francisco-based startup that popularized vaping and grew to a $38 billion valuation in the process. Selling devices as slick as iPhones and as tasty and addictive as candy, Juul became a fast favorite among the gadget-loving teen set, quickly climbing to cult status, becoming a verb and creating a new generation of electronic smokers that now, as the CDC report shows, are beginning to feel the effects.
Philip Morris pursued a parallel strategy. It purchased a portion of Canadian cannabis company Cronos Group Inc. and, in 2014, began selling a new device that warms tobacco rather than burning it outright. After experimenting with it in dozens of countries, the company decided to bring the gadget to U.S. consumers.
The Food and Drug Administration, even while juggling existing objections to the e-cigarettes already on the market, gave Philip Morris the OK. The device, called the IQOS, hits U.S. stores in September.
One thing that seems odd, is while the FDA is permitting the sale, it won't let Philip Morris advertise the product as less risky than cigarettes. What's the rationale behind permitting something else to enter the market that has the same risk level as the substance already known as harmful?
Also, because of its similarities to cigarettes, no TV or radio advertising of IQOS will be allowed. Social media platforms—the same ones that gave Juul its glow up—will now be tightly monitored, which seems a bit quaint given the balance of user-generated content to officially branded content.
The proposed reunification of the two global tobacco giants would create a $200 billion powerhouse—the largest merger in years that would herald a new era of Big Tobacco. The plan is to pour their substantial resources into electronic product lines that have grown tremendously and are far more promising than traditional cigarettes.
The genie is out of the bottle at this point with young people using these products and many reporting difficulty quitting. Even with the recent reports that vaping is linked to serious lung diseases and death, usage is set to expand again next month.
"This is the doubling down of the industry to support vaping," said Meredith Berkman, co-founder of Parents Against Vaping E-Cigarettes. "If this isn't Tobacco 2.0 I don't know what is." —Lizette Chapman
Post a Comment