The e- cigarette industry was shocked by the headlines in the dailies today. The court in France ruled that electronics cigarettes require to be classified in the same category as tobacco products. The results of this ruling could turn out disastrous to the industry worldwide. As FDA and EU continue staggering on regulations on e-cigarettes, the precedent set by the French court could be dangerous.
This started when one tobacconist in Toulouse sued a rival electronic cigarette company claiming that his market was being taken away while e-cigs lacked appropriate registration. Though electronic cigarettes are indeed tobacco free, the debate on whether vaping devices should be viewed just like tobacco has varied widely. Unfortunately, the courts in French made their ruling in favour of the plaintiff and argued that e-cigarettes should only be sold by registered tobacco dealers. An appeal was filed immediately by electronic cigarettes retailers with intent to have the ruling overturned. If the current ruling is upheld, it is going to be a serious blow to many France businesses and employees working in the fast expanding e-cigarette industry.
The decision was announced by the court which argued that electronics cigarettes violated monopoly of the state on tobacco sale. This argument has outranged many vapours who claim that e-cigarettes are not tobacco and must not in anyway be viewed as such.
A Barenberg senior analyst on tobacco industry, Mr. Erik Bloomquist, said the globe should carefully watch the reaction of EU to the issue. New versions are expected in the year 2014 on Tobacco Products Directive and the court’s decision will no doubt be a great determinant on how electronic cigarettes get classified. ‘This might result to more regulations of e-cigarettes and the industry in terms of manufacturing, distribution, and even use. It could put a serious squeeze on the fast blossoming industry,’ Bloomquist added.
If the ruling is held and registered tobacconists become the only entities who can offer e-cigs, the big companies will have an added advantage over younger emerging stores. “The results could be more favourable to the majors because the ruling implies major countries and EU do not have any intent of damaging the emerging electronic cigarettes industry,” Bloomquist argued.
The decision could further negatively impact the electronic cigarettes sales. When e-cigarettes become unavailable to the market or get heavily taxed, many smokers will not be motivated to shift from traditional cigarettes. Euromonitor International reports indicate that electronics cigarettes sales could hit a high of $ 3.5 billion by close of the year. About $ 700-800 million of these sales will be made in Western Europe.
Before the court’s decision on Monday, the expectation was that sales from e-cigs would jump with over 100% in the course of the year. However, new rules could reduce these sales. Worse still, over 300 electronic cigars stores in France could be closed and leave over 2,500 workers jobless.
Some people are happy about the ruling. British American Tobacco was upbeat on the ruling. BAT spokesman, Hill Will, indicated that BAT was receptive of regulations “targeting to promote consumer safety, product quality, innovation, as well as freedoms for marketing and distribution necessary for growth.” This is not surprising because BAT will benefit heavily by removing e-cigarette brands that are taking a big part of the market share for traditional cigarettes market.
The ruling is also likely to impact use of electronic cigarettes in the UK. The FDA is drawing new regulations on e-cigarettes which are to be unrolled in the year 2014. Other countries’ positions on this will no doubt give an important bearing on FDA focus. The France court’s ruling is also likely to negatively and directly affect American vapours in the near future.
Unless the court’s ruling is overturned, e-cigs industry will no doubt suffer greatly in the entire globe. Classification of electronic cigarettes as tobacco is unreasonable and reckless. There is a chance to have millions of smokers shifting back to tobacco. Besides, millions more will miss the opportunity to get the benefits provided currently by e-cigs.
In your view, will this ruling hold any bearing on vaping in the UK? Are you in any way worried you might lose current rights to smoke e-cigarettes freely?