Wednesday, 21 August 2019

Are we prepared for an e-cigarette price war?

CNBC reported today that the price war among vaping companies in the United States is driving the cost of experimenting with nicotine to below the cost of a candy bar. Some starter kits can be bought for as little as US$0.99. 

"Late last year, NJOY started selling its Ace e-cigarettes for 99 cents in stores, compared with the $7.99 it currently charges online." (Pictured below is one such offer from a US web-retailer).


The price war among vaping companies in Canada as not yet hit that level, although, as reported here earlier this summer, it has resulted in the price of  major vaping devices being cut in half in only 6 months. Thankfully they are not (at least yet!) at the levels observed in the USA.

It  could be only a matter of time before the companies launch a full-scale price war in Canada. If so, there is little sign that governments will be able to prevent young people from becoming collateral damage.

What could they be doing?  I'm glad you asked.

* Health ministries could prepare to amend tobacco and vaping laws in order to give themselves regulatory authority over promotional prices. Many of these laws already have some form of restraint on using price to induce young users -- measures like minimum package sizes and bans on certain discounts. But for the most part, price promotions for tobacco products (including vaping) are currently exempted. Filling this loop hole is more important than ever.

* the federal department of Innovation, Science and Economic Development (formerly Industry Canada) could prepare to undo the damage it imposed in 2009, when it  amended the Competition Act in the infamous omnibus budget bill of 2009. Before then, manufacturers could not set discriminatory wholesale prices between retailers. By re-inserting restrictions on wholesale price discounting for harmful products like tobacco and nicotine, this department could end the localized pricing practices that are undermining tobacco tax policies and stop them from expanding into nicotine.

* finance ministries can be exploring optimum tax policies for e-cigarettes. The World Bank has scoped out the use of taxes to discourage young people from vaping, and several U.S. states and other countries have already put e-cigarette taxes into effect. (Pictured below is the impact that US state-level taxes would have on a package of cartridge in Canada).



The importance of tax and price policies to reduce tobacco use has been recognized for several decades- and is a cornerstone of the Framework Convention on Tobacco Control

How many more children need to be addicted before this tool is taken out of the shed?


Tuesday, 13 August 2019

Monetizing peer pressure: JUUL joins in.

Some months ago, I received an e-mail from the Canadian marketers of Philip Morris' IQOS offering me the opportunity to earn $75 by putting them in touch with one of my friends who was willing to buy one of their products. "Each referred friend who meets an IQOS expert will receive $25", they promised and "For every friend who purchases IQOS, you will receive $75."


This, I believe, was a departure in tobacco marketing in Canada. I could not recall a previous time when tobacco companies recruited such a direct and sales-focused type of 'paid influencer'.

One might have thought that this practice was banned by Canadian tobacco law, which has for many years told manufacturers that they can't offer prizes, money or other inducements to purchase tobacco products. (IQOS and other heat-not-burn devices are considered tobacco products under federal law).

The ban was recently reaffirmed when the federal Tobacco and Vaping Products Act was overhauled in 2018:

29 No manufacturer or retailer shall
(a) provide or offer to provide any consideration, for the purchase of a tobacco product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, draw, lottery or contest...


Six months have passed since Physicians for a Smoke-Free Canada filed a complaint to Health Canada about the IQOS referral offer yet the IQOS referral web-site is still active (referiqos.com).

Which brings us to JUUL.

Yesterday, JUUL presented me with a similar, if somewhat less lucrative, offer. As the e-mail presented the offer, every referred adult smoker who makes a purchase gets a discount of $20 on their account, with a similar credit given to the person who referred them.



The federal law sets different rules for vaping promotions than it does for tobacco. You are allowed to offer cash or other 'considerations' -- but only in a physical store ("retail establishment") to which young persons do not have access.

30.6 (1) No manufacturer or retailer shall, in a place to which young persons have access,
(a) offer to provide any consideration, for the purchase of a vaping product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, draw, lottery or contest; or
(b) offer to furnish a vaping product in consideration of the purchase of a product or service or the performance of a service.


(2) No manufacturer or retailer shall, in a place other than a retail establishment where vaping products are ordinarily sold,
(a) provide any consideration, for the purchase of a vaping product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, draw, lottery or contest; or
(b) furnish a vaping product in consideration of the purchase of a product or service or the performance of a service.


Influence peddling

Tobacco companies have long known that peer pressure is a driving force for uptake of nicotine. Imperial Tobacco Canada (BAT) infamously studied the role that peer pressure played in teenagers - its Project 16 report found "there is no doubt that peer group influence is the single most important factor in the decision by an adolescent to smoke."  

New communications technologies now allow the companies to harness the power of peer pressure -- and the law seems unable to prevent it from happening.

Everything new is old again

For a century, tobacco companies have pioneered marketing strategies and pushed the envelope of marketing codes and legal restrictions. For decades, governments have been caught flat footed, unable to keep up with, let alone control, the inventiveness and deep pockets of marketers. The difference now is that we know the consequences of regulatory inaction.

If paying people to encourage their friends to use use of addictive and harmful products is permitted under the federal TVPA, then a new law is needed.

Thursday, 8 August 2019

Imperial Tobacco is encouraging you to pimp your vape

On July, Imperial Tobacco posted an ad on its Instagram account, announcing that "ePod Skin Collections are coming soon. Stay tuned! Happy Canada Day!" 



Sure enough, later last month the company put on offer 19 different sleeves that can be used to dress up a vaping device. They are pretty spiff, and are sold under evocative descriptors like "maze", "tropico", "relief", and "express". The skins can be ordered from the company'  web-site for about $4 each.


When decorative covers were first sold by British American Tobacco for the ePen 3 in the United Kingdom, they were launched as "high fashion pieces" commissioned by clothing designer Henry Holland. His aim was to help consumers incorporate things in their lives that gave them "positivity", "empowerment" and helped them "feel really good about themselves."

Res ipsa loquitur

Linking addictive nicotine to a fashion lifestyle is likely not permitted under Canada's federal Tobacco and Vaping Products Act (s. 30.2), which may be why there was no similarly splashy launch to sale of these fashion accessories in Canada.

The Tobacco and Vaping Products Act says that "30.2 No person shall promote a vaping product, a vaping product-related brand element or a thing that displays a vaping product-related brand element by means of lifestyle advertising."

Health Canada recently finalized regulations to put cigarettes in plain packaging. One of the reasons for doing so was that branded packages functioned as 'mini-billboards', encouraging young people to try smoking.

By the same logic, these fancy-dress sleeves will serve as mini-billboards for vaping products -- a consumer-carried lifestyle advertisements.

Only in Canada, you say?  Pity.

The skins are not yet listed for sale in the few other countries where the epod is marketed, eg FranceGermany and the United Kingdom.

Visualizing the gains since 2000

I spent my coffee break this morning playing with the *awesome* visualization tools made available courtesy of ourworldindata.org based on data provided by the World Health Organization.

Enormous strides have been made over the past decade in standardizing health indicators and in making data available for analysis in ways previously unimaginable. Our thanks to those who have invested in this important work.

For reasons never made clear, Canadian health authorities have rarely age-standardized smoking rates. Most people start smoking when they are young and a proportion of them quit as they age - so it doesn't make sense to compare the smoking rates of a relatively young population (say Africa or Canada in the 1960s) with those of a relatively old population (say Japan or Canada in 2017!).

Because WHO age standardizes smoking rates in its Global Health Observatory repository, we can compare Canada's progress with other countries with a little more confidence.

The charts below suggest that:
  • wealthy countries with modest anti-smoking programs (France and Germany) have made little progress in reducing current smoking (daily and occasional) among men or women
  • wealthy countries with more active anti-smoking strategies and liberalized markets for harm-reduction/tobacco alternatives (United Kingdom, United States, Sweden), have made more progress against smoking
  • wealthy countries with more active smoking strategies and restricted markets for harm-reduction/tobacco alternatives (Canada  until 2016, Australia) have made similar progress. 
  • developing countries with more active smoking strategies and restricted markets for tobacco alternatives (Thailand, Brazil) have similarly made progress.

Data is more plentiful, more accurate and more usable -- but it still isn't enough to make a prima facie case that liberalized nicotine markets drive down current smoking. More analysis needed!