E-cigarettes market is now being taken over by big tobacco. As this recently created niche remains unregulated, tobacco advertising can play its best of all time once again. After 43 years ban, Reynolds American is back in the American TV with 60 seconds commercial of Vuse brand (now broadcasted in Colorado). This time it is not about Joe Camel, Camels or cartoon Flintstones smoking them. And the ad is really good, see for yourself.
As Laura Ries, co-founder of an Atlanta-based marketing firm Ries & Ries, comments for Bloomberg:
“This is no Joe Camel fun with people out partying; it’s high-tech, smart and savvy, an almost clinical approach to the scientific delivery of nicotine.”
Indeed, Vuse advertisement reminds successful campaigns launched by British-American Tobacco in Russia to promote Kent brand with its innovative platform, full of technological jargon and unconventional solutions (Nanotek activated charcoal filter, “convertibles” menthol capsule, HD precision delivery etc.). It also follows a traditional Kent’s positioning as the one that delivers nicotine safer due to its advanced filters. This communication gave Kent huge success in Russia, where brand is now a leader of the premium segment with 25% market share and bringing it to the position of the biggest brand in BAT Russia portfolio. This all Kent and Vuse parallel makes much more sense if you remember that BAT is the owner of American Reynolds, and it is just copying its best approach to win the e-cigarettes top market.
Non tobacco e-cigarettes companies also tried to market their products aggressively, although they have limits in terms of budget and skills. NJOY and Blu Ecigs are advertising on TV. LOGIC has placed mobile billboards on taxis in New York City. e-Swisher electronic cigarettes and cigars are official e-cigarettes of the World Series of Poker. But as Big Tobacco enters the game, you can immediately see the difference. Take an example of Blu, independent brand that was acquired by Lollilard in 2013. Being a part of No. 3 tobacco player in the US, it dramatically improved its marketing presence supporting bit lame, animated Mr Cool from its website with real-world celebrity, Jenny McCarthy who asks smokers to “Take back their freedom” using all her sex appeal to sell the new starter pack of blu e-cigarettes.
“When it comes to smoking, smelling like an ashtray is not the ideal aphrodisiac. There is nothing sexy about going outside in the rain or freezing your butt off just to take a puff.”
– Jenny McCarthy, a former Playboy Playmate of the Year, says in a video on blu eCig’s website.
Lollilard invests heavily in the e-cigarettes market. It has recently acquired another, UK-based, brand Skycig for $49 million in cash and the biggest tobacco player, PMI admits it is a good decision.
[box type=”info” align=”aligncenter” ]Market size for e-cigarettes: – It is currently worth about $1.5 bn globally – By 2017 it is estimated to reach $10 bn Current market size of traditional tobacco products is about $800 bn. About 4 million Americans now use e-cigarettes and sales have grown dramatically since 2010, according to the Tobacco Vapor Electronic Cigarette Association. [/box]
Well, there are no limits so far, except of one. Companies can’t tout e-cigarettes as stop-smoking aids, as then they would offer drug-delivery devices regulated by FDA. But “cigarette alternatives” are perfectly OK from the regulatory point of view. The controversy arises, when Big Tobacco (maybe inadverently) tests limits by targeting ads to non-adults. It happened with British American Tobbaco’s brand Vype, which was promoted within an iPad game that could easily be interpreted as targeted to children.
Knowing how mobile ads are working, K-Message is not going to accuse BAT of wrongdoing, but the public outrage happened.
We apologise that an advert has ended up on a channel that it clearly wasn’t intended or appropriate for. As soon as this was brought to our attention, we pulled all our online advertising whilst we look into this matter further and establish how it happened. Vype is an e-cigarette brand marketed and sold by Nicoventures, a subsidiary of British American Tobacco. Children are not, and will never be, the target audience for Vype, which is a product aimed at adult consumers who are able to make an informed choice regarding which brand they choose.
– says BAT in an official statement.
We can now expect Big Tobacco players trying different marketing strategies on selected local markets. For US nationwide campaigns, we will probably need to wait until regulators come with their judgement on e-cigarettes. The proposed new rule of FDA would count e-cigarettes as tobacco products and thus took it over federal control. Regulations are coming also in other markets – in the UK e-cigarettes are going to be regulated to ensure quality of the product, while in France e-smoking may be prohibited in public venues. In the meantime, the market rapidly changes. With the entry of Big Tobacco players, buisness is changing its distribution channels. Primarily e-cigarettes were mostly an online business. Big tobacco with it’s traditional perfect retail distribution moved electonic cigarettes to the brick-and-mortar retailers shelves. Also marketing goes offline using BTL techniques in POS and in out-of-home settings. The retail sales value of the eight largest e-cigarette markets worldwide estimated around $2.5 billion, with a little under half this value outside the USA and China. The annual growth rate of the six most important international markets is estimated to have been around 25% over the last two years. This market, even with new regulatory and taxation constraints will remain a new playground for the tobacco marketers.