Are Electronic Cigarette Stocks a Healthy Investment? LO, RAI, SFIO, VPCO, MFST
So-called electronic cigarette or e-cigarettes offer the tobacco industry a potential source for growth with big tobacco stocks like Lorillard Inc (NYSE: LO) and Reynolds American (NYSE: RAI) already players in the industry while small cap electronic cigarette stocks like Smokefree Innotec (PINK: SFIO), Vapor Corp (PINK: VPCO) and Medifirst Solutions (OTC: MFST) are potential acquisition targets for tobacco stocks like Altria Group (NYSE: MO) (which is not yet active in the e-cig space) or as players in their own right. After all, electronic cigarettes, which are nicotine-infused, battery-heated tubes that create vapor rather than smoke, could go from being a $300 million industry right now to become a $1 billion industry in the next three years.
..in April 2012, Lorillard Inc acquired blu eCigs, a leading electronic cigarette company in the US, for $135 million and the move marked big tobacco’s first foray into the industry.
Reynolds American Inc., the second-biggest US tobacco maker, has also developed a “digital cigarette” using computer chips to replicate smoking a cigarette.
80% of RAI’s resources are still in the combustible tobacco space, 90% of its organizational resources focus on combustibles and 90% of the R&D budget is still centered on combustibles.
...and for good reason: market demand dictates the direction of business. Thus, two things stand out to me after reading this:
1) There is a demand for e-cigarettes, which are ultimately going to replace many or most NRT products that are currently on the market.
2) There is an even bigger demand that remains for combustibles, proving that analog cigarettes are going to be around for some time to come. 90+% of smokers still prefer combustibles; many or most of us smokers would be willing to switch (or at least try) reduced risk combustibles if they were to be made both satisfactory and widely available.
If e-cigarettes are fast becoming a "healthy" investment, then it is a no-brainier to conclude that there are even bigger opportunities waiting to be had in the field of harm reduction.
..and in speaking of investments, markets, and tobacco harm reduction, this also arrived in my inbox at roughly the same time as the above article about e-cigarettes:
Big Stock Alert 12/17/1222nd Century Group (XXII)
According to SmallCap Network, 22nd Century Group is a tobacco harm reduction company very big stock potential:
When we look for Big Stocks, we want to see a company that has a competitive advantage
in a major investing wave. This wave can be created by disruptive technology, a government mandate...or fortunately for us in this case, both.
I, for one, am very much against government mandates, especially when it comes to the regulation of nicotine, Consumer demand (not the government) should take precedence over forced mandates, but I digress:
Over several years with multiple R& D partners, XXII has developed and patented, genetic engineering and plant breeding technologies that allow for the level of nicotine in the tobacco plant to be decreased or increased. The resulting tobacco is grown and processed exactly like conventional tobacco.
As I have mentioned on this blog before, I personally prefer the idea of increased nicotine and many smokers would most likely agree with me. However, even though it may not suit my individual preference, it is also apparent that a VLN (Very Low Nicotine) cigarette may be equally as attractive to that (albeit much smaller) segment of the smoking population that may wish to eliminate/separate all or most of the nicotine from the smoking experience, much in the same way that some e-cigarette users choose zero-nicotine cartridges for e-cigarettes. Ultimately, we smokers have varying wants and needs and XXII appears to take this into account. I just wish that I could say the same about the FDA and the NIH.
A Bank of America/Merrill Lynch analyst published a report on Modified Risk Tobacco Products (MRTPs) highlighting the impact that it will have on the $748B annual worldwide tobacco industry.
Because XXII’s cigarettes, due to smoking behavior, reduce exposure to whole tobacco smoke, not just limited smoke toxins, the company expects their cigarette brands will be the first cigarettes to be authorized by the F.D.A .as Modified Risk Products. Why do they feel that confident? They already have a 5-year contract with the government to supply them with modified nicotine cigarettes. The U. S. Government is buying the company’s SPECTRUM cigarettes for research purposes.
Now, this is certainly interesting in the sense that the U.S. Government appears (at least on the surface) to be acknowledging that there is merit in promoting (or at least researching) tobacco harm reduction for combustible tobacco, and thus the idea of there being a dose response relationship with regards to tobacco use and mortality. However, there are some in the world of tobacco control that seem to be pushing vociferously towards the idea of a government mandate that would lower the nicotine content of all commercial cigarette brands in the U.S.:
Harvard Professor of Public Health and former member of the F.D.A. Tobacco Products
Scientific Advisory Committee (known as TPSAC), Dr. Gregory Connolly, is also publicly calling for the F.D.A. to mandate a massive reduction of nicotine levels in cigarettes to approximately 0.3 milligrams per cigarette.
It's important to note that Dr. Connolly is a former, rather than current, member of TPSAC; this is a good thing, for to mandate such low nicotine levels for all commercial brands would surely be a grave mistake in that it would alienate many smokers (such as myself) while contributing to the continued emergence of a black market. However, this does not mean that I, as a smoker and blogger, am against the idea of VLN cigarettes; it just means that I am for freedom of choice: if this is what some smokers prefer, in addition to there being proof of reduced harm and bio-markers, then so be it. ALL forms of THR need to be explored, for we smokers are as varied in our habits and preferences as one snowflake is to the next in the middle of a January snowstorm.
What works for one, may not work for the next. The future of THR is going to take a varied approach and it appears that many are starting to take this to heart, as is expressed in this recent analysis that was published recently in the BMJ:
Tobacco harm reduction: the devil is in the deployment
The concept of harm reduction in tobacco control is exciting interest among policy makers and industry. Gerard Hastings, Marisa de Andrade, and Crawford Moodie argue that it presents public health with some challenges
The idea of tobacco harm reduction—that smokers who cannot wean themselves off nicotine should be encouraged to adopt less harmful ways of consuming it—has much to recommend it. It avoids the trap of making the excellent (complete cessation) the enemy of the good (reduced harm) and provides a way forward where otherwise there is only a cruel impasse. It also provides a clear focus on disease and premature death—rather than tobacco addiction or corporate power—and this enemy, like so many medical problems before it, will be defeated with rigorous evidence, effective medicines, and skilled treatment.
It seems like it's taking forever, but things are changing.