Altria Comments On Flavor Ban

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Altria Group, the parent company of Big Tobacco brands including Marlboro and Virginia Slim, made a bold move in a presentation to shareholders that, if heeded, could alter the face of the vaping world as we know it.

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In late February, Altria Group's Chairman and CEO Howard Willard trekked to Boca Raton, Florida to speak to investors at the Consumer Analyst Group of New York Conference on his company's holdings, which include the aforementioned tobacco brands and a 35 percent stake in cigalike upstart Juul, among others.

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A good portion of Willard's pitch focused on protecting revenues and market share as US demand for cigarettes continues its decades-long decline by diversifying into alcohol, cannabis, and vapor products.

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There was an acknowledgment of the ongoing problem with underage nicotine use, particularly with regard to vaping. To that end, the tobacco giant says they'll spend $100 million over the next two years 'specifically to address youth e-vapor use.'

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Then, buried in the middle of a 57-slide deck, a surprising proposal emerged that should set off alarm bells for vapers across the nation:

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'Encourage FDA to take industry-wide action by banning retail and vape store sales of all non-traditional flavors until the youth issue is otherwise addressed, such as by the use of advanced age verification technology or pre-market authorization.'

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The emphasis here is ours, but it's a major departure from the current path the government is pursuing, and if Altria gets their way, it could have a devastating impact. Let's explore how.

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First, in early March FDA chief Scott Gottlieb delivered his plan to combat underage vaping to the White House. It's believed to be similar to a proposal Gottlieb made back in November, though the exact text hasn't emerged. In a surprise turn, Gottlieb announced his resignation days later, so the future of regulation is very much unclear at this point.

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Under the FDA's plan, all flavored vapor products (with an exception for tobacco and menthol) must be displayed in an age-restricted retail location. That means that vape shops would have to ID all customers and prohibit entry  by minors (most good shops already practice this), and that convenience stores or other retail locations that aren't age-restricted would have to set up a separate area of the store only accessible to adults with proper identification if they wanted to continue selling flavored vapes.

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These restrictions, in general, make sense. No one is going to argue that vapor products should be marketed to children, and keeping them behind an age-restricted barrier cuts down on both advertising exposure and physical access to the adults-only merchandise. It's no different from any responsible vape e-tailer, like here at Breazy, deploying third-party age verification technology on every order.

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A complete ban on what Altria calls 'non-traditional flavors' goes a step further. We know from survey data that 95 percent of adult vapers prefer these flavors to tobacco and menthol, and likewise, nearly all of the e-liquid sold for refillable devices, from open-system pod mods all the way to high-powered box mods, is of the 'non-traditional' variety.

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If people aren’t able to access the flavors they prefer, would they continue to vape? Worse, if 78 percent of vapers who say finding an enjoyable flavor was instrumental in helping them quit smoking didn't have access to those flavors, would they even have quit?

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There are a couple of incentives for Marlboro to make this kind of play. The first, and most obvious, is that if flavors help incentivize people to switch from smoking to vaping, reduced access to flavor means fewer people making the switch, which props up the company's core business.

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Even if people still choose cigarette-flavored vapes, Juul already has that market cornered – recent estimates have placed the brand's market share at 70 percent or more of sales that happen outside vape-specific retailers like vape shops and websites. The power Altria wields over traditional tobacco retailers means that the presence of Juul in places where cigarettes are sold is only going to become more prominent. Eliminating outlets that Altria/Juul can't control (like vape shops) would help drive more attention to their brand, while gas stations are unlikely to ever heavily stock advanced devices that require their clerks to understand and be able to explain their use to consumers.

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Moving on in the quote from Altria's presentation, they're calling for a flavor to be restricted only 'until the youth issue is otherwise addressed.' That sounds innocuous on its own, but consider this: a 'youth issue' surrounding tobacco use, in general, has existed as long as tobacco products have existed – teen smoking is still a concern today. The War on Drugs was declared in 1972, and to this day no metric even exists for declaring victory on that front.

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In other words, the 'youth issue' surrounding vaping may be one that's never fully resolved. But Altria does have one suggestion on how it could be, our second emphasis in their quote: by requiring 'pre-market authorization.'

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We've covered this before, but the pre-market authorization process for new 'tobacco products' as it currently exists is incredibly complex, laborious, and costly. Because every vapor product in use today was introduced to the market after an early-2007 deadline that would exempt them from the process, the FDA at any time could invoke its authorization authority and essentially declare all vapor products illegal.

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In order to obtain pre-market authorization, every single vapor device, flavor, and nicotine strength of each flavor would require as much as a year of research and testing, and the cost estimates for bringing a product to market range from $100,000 to more than $1 million.

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Since the vast majority of American vapor companies (liquid producers in particular) are small businesses with just a handful of employees and limited budgets, these costs would represent a death blow even at the low end of the scale. But with Juul now backed by Altria, they're effectively a rounding error. This means that while Big Tobacco companies (which market less-popular cigalikes like the Vuse and Blu) could stay in the vapor business, the small-market entrepreneurs responsible for creating the industry would quickly be driven out.

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The FDA's Gottlieb understands the burden of the authorization process, or at least at one point, he seemed to. That's why, in 2017, he pushed back the deadline for compliance from August 2018 to August 2022, citing at the time a need to take a closer look at how to streamline approvals rather than using their requirement as a de facto ban on vaping.

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That, however, was in a world before Juul's meteoric rise and wildly successful social media campaigns resulted in an explosion in underaged use of vapor products. Over the course of 2018, Juul effectively became the face of vaping, and particularly the face of underaged vaping, despite efforts to rebrand by shifting its marketing from using young models to middle-aged former smokers. Gottlieb has since focused on the company specifically as being representative of the entire vaping community and has threatened action on more than one occasion that would disproportionately impact all vapers based on the actions of one company.

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This gives Altria/Juul massive sway, along with the direct ear of the FDA, when it comes to crafting policy. So while today these suggestions to end vaping as we know it may be a few words buried in a slide deck, given their source it's not unreasonable to suspect they may have an outsized impact on shaping the future of vaping in America.

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Want to do something about it? Join a vaper's advocacy group (we really love CASAA), contact your congresscritter and let them know you vape and vote (tell them if vaping played a role for you in quitting smoking), or even reach out to the FDA directly. The landscape of vaping is going to be changing, it's up to all of us to define how it'll go.