Cigarettes will always be a poor man’s burden.
When I worked on oil rigs in the North Sea I met a tool pusher, a senior bod on any drilling rig, who smoked rather a lot. He told me that he only started smoking because, as a young roustabout, it was the only way he could get a break. For him, less time working in this hard and dangerous environment was the real benefit of smoking – this tough Stetson-wearing Texan’s resemblance to a Marlboro advert is purely coincidental. The other 1.5 Billion cigarette smoker’s in the world see a range of benefits to smoking cigarettes which broadly separate into two categories; the physiological benefits of the drugs in the smoke, and the psychological and social benefits of being seen to be a smoker.
Whilst the relentless, but some might argue cynically slow, pressure on cigarette manufactures to reduce their marketing activities, including current moves towards plain packaging, doesn’t seem to have made too much impact on the overall consumption of cigarettes, the relative size of some market segments has changed quite a lot since the dangers of smoking have become better understood. Whilst rates of smoking have declined in the developed world, they have reduced by 50% in the US alone since 1965, they are still increasing in the developing world and 80% of all smokers now live in developing or transitional economies. Ten percent of all deaths each year are tobacco related, of which 70% occur in the developing world, and incredibly about 20% of all 13-15 year olds living on planet Earth smoke cigarettes.
It looks like some smokers, who still want the drug benefits of cigarettes, but not the potential consequences of inhaling smoke, are now turning to e-cigarettes – an imitation cigarette containing nicotine-infused water that is inhaled as a vapour and so can even be legally consumed indoors. A “£20 starter kit” gets you a battery powered tube and vapour charges that contain several hundred doses of this apparently satisfying medication.
Various investors, including “big tobacco”, seem to be getting into this game and betting that e-cigarettes could be a future substitute for the “wealthier drug dependents”, my name for a possible segment of this market. It also plays particularly well in the nicotine replacement therapy market, currently dominated by chewing gum and patches, that is worth about £150M a year in the UK alone. The industry argues that 650000 of the UK’s 10 million smokers use e-cigarettes regularly but I doubt that, or that 2M of them have tried one.
British American Tobacco is taking a broader approach to the problem and last year established Nicoventures, devoted to cigarette alternatives, and it plans a nicotine inhaler by the end of 2014. BAT is also supporting another new business in this market space, called Kind Consumer, which is currently trying to raise £10m to develop a cigarette substitute. Imperial Tobacco has also taken an undisclosed position in an e-cigarette company and Japan Tobacco looks like it is doing a deal to commercialise the nicotine “vaporisers” made by US based Ploom. Philip Morris is taking a different approach and planning a “healthier version of its cigarettes” in 2016, under the Marlboro brand; something that tastes better then the e-cigarette it seems.
So what to make of all this? Well, BP comes to mind with its hopelessly transparent and almost comical window-dressing brand change to “Beyond Petroleum”. The cigarette industry doesn’t have a lot of friends, apart from its investors, and all this activity is very good PR for them, but it has very little commercial consequence to my mind. Although perplexing and hard to understand by the educated elites, like you and me, the drives to smoke real cigarettes are only going to disappear when poverty does and that isn’t going to happen soon. Whilst the advent of e-cigarettes may make us all feel a little happier about the moral and financial burdens placed on us as a society it is nothing to the burden that cigarettes create for the under-privileged and poorly educated of this little planet we live on – cigarettes will always be a poor man’s burden which will probably indirectly fund your smoke-free pension.