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Vapor takes lead and Big Tobacco hedges bets

It's official! Vapor-tank systems have moved into a commanding lead position in the vaping supplies market -- cigalike electronic cigarettes are eating dust. V2-maker VMR Products has announced that "open system vaporizers" are now in the lead by $500, and industry observers at Wells Fargo Securities place their contribution to the total market at $1.5B, to e-cigs' $1B.

Big Tobacco, a latecomer to the industry, having muscled its way into the market a mere 2 years ago, and quickly bought a position of dominance, has dealt mainly in those classic imitations of combustible cigarettes sometimes called cigalikes. Not to put too fine a point on it, they took a commanding lead of the losing side.

It isn't difficult to understand why. When they bullied their way in, after several years of horrified opposition, cigalikes seemed to be the whole ball game. And since Big Tobacco's glory days were based on the chic image of the smoker, it was natural for them to assume that demand for the product would continue to respond to that image. As recently as a year ago, it was not uncommon to find comments in the press about personal vaporizers looking uncool and "geeky".

Now that open vaping systems have acquired their own panache, it looks like cigarettes, and their imitators, classic e-cigs, will resume their plummeting trajectory. It is only partly because of public celebrity use. Open systems give the user more freedom, whether we're talking about nicotine concentrations (including the increasingly popular zero level), flavors, or other factors like cloud production.

They also enhance the feeling of engaging in a hobby or joining a club. And as vapers have come to harbor increasingly antagonistic feelings toward Big Tobacco, one may safely say that using a vapor-tank system makes a statement – a clear visual indication of independence from the death-dealing moguls of cigarettes.

The response of Big Tobacco has moved in two contradictory directions, which should come as no surprise given the industry's history of ethics-impaired behavior. Invest on both sides of an issue, ready to move all ones chips to the emergent winner once the outcome begins to become evident.

So R.J. Reynolds sent the FDA a proposal for a ban on open-vaping systems, arguing that they permit too much user freedom, allowing vapers to try borderline dangerous practices (none of them, of course, approaching the danger of smoking a cigarette). It certainly would be a sweet deal for Big Tobacco if the regulatory agency would simply outlaw their competitors. Seems like a long shot, but hey, why not try it? And at the same time...

Blu PLUS+! These kits are a step toward a vapor-tank system, rolled out by Lorillard-owned Blu. (Blu is a subsidiary of Lorillard, which is currently owned by Reynolds, and soon to be owned by Britain's Imperial Tobacco, which in turn owns almost half of Reynolds). The company calls it "a blu tank system" – but it is still cigarette-shaped, black, with a glowing tip. It claimes to have a larger pre-filled e-liquid cartridge (closed) and a longer lasting battery. So outlawing vapor systems and marketing a pseudo-vapor system at the same time, just in case – what a clever way of hedging one's bets against either possible outcome. And other Big Tobacco-owned e-cig companies will also be rolling out their own tanks.

It is all quite consistent with Big Tobacco's behavior through the decades of the Great Cigarette Death of the 20th century. It seems likely that the strategy will fail. Would the FDA really be so spineless as to hand the market to Reynolds on a platter? The outcry would be deafening, and not only from the vaping community! And given that community's antipathy to Blu and other Big Tobacco products, it seems highly unlikely that there will be significant movement toward a Lorillard-produced vapor-tank – or one produced by any other BT-owned company.