By Peter Galuszka
A couple of weekends ago, RVA Vapes, brightly lit with colorful lights, held its grand opening in Richmond.
It’s one of a rising number of new outlets that cater to “vapers” or people who use electronic cigarettes. There are plenty of such stores, many decorated in a 1960s head shop style from Arlington to Virginia Beach not to mention the rest of the country. I was there for a Style Weekly cover story which ran just as Business Week (ironically, my old employer) ran its cover piece on e-cigs.
E-cigs look like tobacco cigarettes and offer the same addictive kick of nicotine. But there’s no smoke, just vapor made up of water, nicotine and flavorings from bubble gum, to mango to cookies and cream. There is no tar and other deadly chemicals that allow tobacco smoking to take 480,000 lives a year. But it’s not quite certain just how safe unregulated e-cigs are.
This trend has enormous implications for Virginia which has genuflected before the Golden Leaf since the days of Jamestown. When the predecessors of today’s General Assembly sat down to do business, one of their first items of legislation was setting tobacco price supports.
Today, Altria and Philip Morris USA have their headquarters in Richmond as well as a huge manufacturing facility that is the last place in the country that makes Marlboros, the nation’s best-selling traditional cigarette.
Altria is a major player in philanthropy, giving to arts, municipal groups, sports and other causes throughout the state not to mention the District. Since 2000, Altria has given $3.8 million to Virginia political campaigns, according to the Virginia Public Access Project.
E-cigs popped up from Asia and their growth has come organically up from the bottom with the help of small, independent entrepreneurs many of whom fit a counter-culture style. Big Tobacco is just catching up in a business that overnight has grown to about $1.5 billion to $1.8 billion. One expert I spoke with, Bonnie Herzog at Wells Fargo Securities, says that within a decade there will be as many e-cig “vapers” as there are tobacco cigarette smokers now.
So why is Altria so late in the game with e-cigs? Competitor Lollilard beat it by buying the “Blu” e-cig brand. Altria just started test marketing MarkTen e-cigs in Arizona and Indiana last year and is shelling out $110 million for another e-cig brand called “Green.”
One problem is that no one knows whether the U.S. Food and Drug Administration will regulate e-cigs as tobacco products. Doing so is problematic because the only related product is nicotine and one can get that from non-tobacco sources such as potatoes, eggplants and peppers, not to mention marijuana.
Altria employs nearly 4,000 in Virginia and many of those jobs depend on how well their employer can deal with the unmistakably downward trend on tobacco use, roughly about 4 percent less year over year. Altria has tried to diversify into wine and non-tobacco products but cigarettes still make up about 88 percent of its $23 billion in revenues.
Tobacco critics are not certain what to make of e-cigs yet. Matthew Myers, head of Washington-based Campaign for Tobacco Free Kids, says that e-cigs do not have many of the fatal ingredients of regular smokes but there’s still cause for concern. Nicotine, the central ingredient in e-cigs, is addictive and can be harmful, if not fatal, if ingested in sufficient quantities. It can cause birth defects if used by pregnant women and can hamper adolescent brain development. It boosts blood pressure and causes the heart to beat faster.
Plus, Myers says, there isn’t much quality control at places that sell e-cigs now, “so, you really don’t know what you’re getting.” Another problem he sees is that e-cig sellers are drawing from Big Tobacco’s tried-and-true advertising to make their products seem sexy and sophisticated. The problem is that young people mesmerized by Humphrey Bogart bedecked in a rumpled trench coat puffing away on a stogie might see the entire smoking experience as ultra-cool.
That positive vibe might be transferred from a e-cig to a real cig, revitalizing Big Tobacco’s lethal image. It could happen if Big Tobacco somehow dominates the e-cig trade and then uses it to expand its old product line rather than seeing e-cigs as a healthier replacement product.
A lot depends on what the FDA does and, for much of Virginia, how Altria responds.
