Thanks so much for your participation in the recipe thread yesterday, I loved every minute of it. But now the hamster must once again climb back into the wheel. The price to pay for being a lazy, pompous know-it-all. lol There is Big Tobacco news today from the U.K., and a brief follow up on a previous GUS diary regarding Big Tobacco and the Trans-Pacific Partnership. But first a word from our sponsor.
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Turns out that Big Tobacco, especially in the U.K. wasn’t as all knowing as they thought they were. They took it in the shorts on this one. They were so blinded by their power that they never saw the rise in e-cigarettes coming. And now they’re scrambling to make up for lost time. According to a recent article in Forbes.com they are hell bent for leather to play catch up;
Big tobacco companies were relatively slow to enter the U.K. e-cigarettes market; but they have made up for lost time by using their size and financial power. The unexpected rise in e-cigarette’s popularity took the tobacco companies by surprise. Every one of the big four companies — RJ Reynolds, Philip Morris International, Japan Tobacco International, and Imperial Tobacco — now has e-cigarettes, either already in the market or in development.
But all is not as it seems. Turns our that Big tobacco is lazy, and in a hurry. E-cigarettes are not widgets. It takes years of research and development to produce them, both the base units themselves as well as the “juice” to provide the nicotine delivery. The simple fact of the matter is that vaping units produced by Big Tobacco, both here and overseas are shitty products, The base units are undependable and short lived and the vapors are not very satisfying. But Big Tobacco is getting squeezed now, their British growth rate last year was only 1%, and some of that was due to a self imposed raise in the price of cigarettes to make up for the lost revenue. What, oh what is a self respecting Merchant of Death to do?!?
Short answer? Buy like a bastard maniac! If you’re too lazy to put in the time to do it properly, or don’t have the time to wait, you scarf up whatever is out there so you can sell it.
Since 2013, a flurry of deals in the e-cigarette industry has been witnessed in the U.K. and the world over. Lorillard, the third largest cigarette manufacturer in the U.S., acquired premium e-cigarette maker Skycig to enter the U.K. market; however it was later sold to Imperial. BAT launched an e-cigarette Vype, through the purchase of a start-up, CN Creative. Philip Morris International teamed up with Altria to sell the latter’s electronic cigarettes outside the United States. It also acquired U.K.-based Nicocigs to gain an immediate entry to the market. Many other such deals have taken place; such as Japan Tobacco International’s take-over of E-lites, and the purchase of Dragonite by Fontem Venture, Imperial’s electronic cigarette arm.
But there are a couple of serious risks for Big Tobacco here. As any drug dealer will tell you, there’s nothing like a good solid addict to provide you with long term financial stability. Right now, in the U.S. the cost of a decent base unit from a reputable vapor shop is right around or just above the average cost of a carton of smokes. For my unit a 5 pack of replacement “coils” to heat the juice is well under the cost of ½ carton of cigarettes. I buy a 120 ml bottle of juice, which lasts me 3-4 weeks, and again it comes out to less that ½ carton of coffin nails. about $23. E-cigarette companies and retailers are making good money because they started with absolutely nothing, once they make up the R&D costs to start up, the rest is profit.
The same is most definitely not true for Big Tobacco. They have been used to having a monopoly on the nicotine market, stop smoking aids like patches, gum and nasal nicotine had no effect on them. But let’s just take a quick look at some actual data. The cost of a base unit, and a bottle of juice can be had for most likely anywhere from $100 to $120. Once you’re up and running, replacement coils and juice will cost you an average of $60-$75 a month, just over the cost of a carton at best. And the U.K. is getting ready to put e-cigarettes and juice on the National Health Plan as a quit smoking aid under prescription. The average cost of a pack of smokes today is about $6 a pack. The last I saw, the average consumption rate of a 5+ year smoker was approximately 1.5 packs a day. That’s about $270 or more a month in tobacco consumption. There’s a big difference between $60-$75 a month and $270 or more. There is money to be made in e-cigarettes, but nowhere near enough to make up from the lost revenues from the drop in tobacco sales and use. And it isn’t going to get any better for Big Tobacco soon;
According to many experts, the sales of e-cigarettes will surpass that of conventional tobacco cigarettes in the next decade. This seems like an obvious change given the increasing regulations on the tobacco industry. However, the key question here is if such products can actually be turned into an opportunity for tobacco manufacturers, as many may need to revamp their entire business model.
But there is a much bigger risk for the Merchants of Death in going all in to the vaping craze. And that risk is the perception of e-cigarettes. According to a government study in England, almost all of the 2.3 million vapers in the U.K. are looking at it as a quit smoking tool. But what happens when you finally free yourself from the tobacco addiction? The U.K. is considering vaping as a quit smoking tool, like patches and gum, but what comes after you finally kick the tobacco habit? For a lot of people, at least in the U.K., once you’re tobacco free you begin dialing back on the nicotine content in your juice until you’re finally addiction free of everything. Now Big Tobacco doesn’t even have those crumbs from the pie anymore.
Long and short, this e-cigarette foray is a band aid for the Death Eaters, not a long term fix. It’s like a dinosaur managing to wrench one foot free from the tar pit, you’ve still got three feet in the tar, and you’re still sinking. The simple fact of the matter is that through education, and social change the world is slowly but surely moving away from the siren call of destructive addiction. Rest In Peace shitheels!
Update
In a previous GUS diary I had written about the fact that the Trans-Pacific Partnership was a nightmare for Big Tobacco. One of the clauses stripped the tobacco companies of the right to sue member governments for restrictive regulations applied to their products. This was a huge blow to Big Tobacco since the Asian markets are one of their few remaining growth markets. They used a lawsuit to try to tie up the Australian government to prevent them from enacting new, restrictive “plain packaging” laws for cigarettes. They lost anyway, and the regulations went into effect. The TPP would prohibit them from doing this in the future.
But now it comes down to the nuts and bolts, ratification. The subject will be coming up for debate soon in the U.S. congress. Need I say more? Both Republicans, especially from tobacco heavy states and Democrats under pressure from labor unions(?) are railing against the prohibition. Professional Yertle the Turtle Mitch McConnell is even demanding that the clause be removed from the pact. Talk about the tail wagging the dog.
But it isn’t going to be that easy this time. This time we’re fighting back. Well funded health organizations like the American Cancer Society and the Campaign for Tobacco Free Kids are putting their money where their mouths are. They are putting on a full court press with House and Senate Democrats to back this pact, or face their wrath in a re-election campaign. This is just the first step in a long and bloody fight, I’ll keep you updated as I learn more.
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