Tag: tabexpo2019

  • High Demand

    Patrick BashamPatrick Basham, founding director of the Democracy Institute, a politically independent think tank, said that when the Canadian government legalized medical marijuana in 2001 and legalized recreational use in 2018, the marijuana industry began to see a change in the types of businesses getting into the fast-growing segment. Speaking at TABEXPO, a vapor and tobacco trade show that was held in Amsterdam in November, Basham gave an overview of the marijuana market, detailing the entrance of major tobacco companies into the rapidly growing cannabis industry. Basham has been involved in the legal cannabis industry for more than 22 years.

    Major tobacco companies entered the cannabis industry starting in 2018; however, the mission began much earlier, according to Basham. “Big Tobacco first sought to join the marijuana business in the 1960s. The companies were driven then by the same shift in public attitudes that are now pushing legalization globally,” he said. “Cannabis laws are changing all over the world. In 2013, Uraguay legalized weed. Canada followed suit last year. In America, more than half the population thinks marijuana use should be legalized.”

    In December 2018, Altria dove into the cannabis market with a $2.4 billion investment in Cronos Group, a Canadian medical and recreational marijuana company. In July of this year, Imperial Brands made its biggest investment in the cannabis sector with a £75 million deal to take a stake in Canadian company Auxly Cannabis Group. The legal cannabis market in Canada is estimated to be worth $6 billion, according to Ernst & Young, and is forecast to increase to $11 billion by 2025 following regulation in October to legalize edible cannabis products as well as cannabis oils, lotions and vapor products.

    The tobacco industry possesses expertise in the production of materials and an agricultural supply chain, controlling costs and driving margins on the finished product, according to Basham. “Legal cannabis legislation will require substantial compliance procedures and efficiency, something that is the cornerstone of the current tobacco business,” he said. “Specific tobacco-related expertise, such as that related to track-and-trace, is likely also to be highly valuable in a cannabis context.”

    Basham said tobacco companies have astutely seized a golden opportunity to diversify their business and enrich its shareholders. “Tobacco is in a far, far better position today, in an institutional sense, to enter and to compete in the cannabis market than it would have been in the past,” said Basham. “Five years from now, I think it will even be better placed.”

  • Retail Experience

    Stavroula AnastasopoulouThe European e-cigarette market is estimated to be worth €3.8 billion, and 3.1 percent of adults smoke e-cigarettes. The specialized vape shops are the prominent distributor. These were the major facts shared by Stavroula Anastasopoulou, senior market analyst for ECigIntelligence, a data provider for the global e-cigarette industry.

    Speaking at TABEXPO, a vapor and tobacco trade show that was held in Amsterdam in November, Anastasopoulou gave an overview of the e-cigarette market and the future of the vapor sector, which has been impacted by strict regulation and the U.S. health warnings regarding vaping black market THC. About 70 percent of the EU market is e-liquids, according to Anastasopoulou.

    “This is due to price differences and frequency of use. The EU market is small compared to the combustible market, which was estimated to be worth more than €100 million in 2017,” she said. “E-cigarette market growth, however, has been relatively steady.”

    The EU vapor market is concentrated in five markets that make up much of the EU segment (an estimated 80 percent). The U.K., France, Italy, Germany and Poland all exhibit different growth patterns as well. “The U.K. takes up a third of the whole market (€1.2 billion) and is one of the fastest growing markets in the world,” according to Anastasopoulou.

    Italy looks more optimistic as online channels are opening and a large e-cigarette tax has been placed on hold. Anastasopoulou said she expects the negative vaping news coming from the U.S. to affect the overall EU market. However, she still estimates the EU e-cigarette market to be €5.1 billion in 2022, which is 30 percent higher than its current value, with an estimated 10 percent yearly growth rate.

    Specialized vape shops are the preferred distribution method in the U.K. with 50 percent of the market. “We believe that 30 percent of the market comes from traditional retail, and that segment has been growing over the past year,” says Anastasopoulou. “There are now more independent brands (not affiliated with a tobacco company) moving into this channel.”

    In Poland, online sales are officially banned, so that segment is very small. France and Italy have a similar split to the U.K. where vape shops hold 55 percent to 60 percent of the market, says Anastasopoulou. “Germany has a large online presence of about 50 percent while [brick-and-mortar] vape shops only hold 30 [percent] to 35 percent of the market. This is because the total number of vape shops is relatively lower than the other markets, but also the top online retailers are seeing more traffic than other EU countries.”

    In general, Anastasopoulou expects future traditional retail sales to increase due to the growing popularity of closed devices, and more brands are expected to enter the channel. “We also expect online channels to suffer from more strict regulations. The vape shop channel is uncertain due to negative publicity from the U.S. as well,” she says. “Shops in France and Belgium are saying that they are experiencing lower revenues due to the health issues in the U.S., and shops in the U.K. are reporting 25 percent less revenue over the last month due to negative publicity.”

  • Inside Perspective

    Maggie GowenThe vapor industry makes an economic impact of more than $24 billion in the U.S. The news media is now being more responsible in its reports surrounding lung disease caused by black market THC vapor products. Speaking at TABEXPO, a vapor and tobacco trade show that was held in Amsterdam in November, Maggie Gowen, the executive director of the Global Vaping Standards Association (GVSA), said the e-cigarette and vapor industry in the U.S. is larger than the country’s iron and steel industry and employs nearly as many people as the commercial fishing industry. The industry has produced over 166,000 jobs, and wages and benefits earned are about $8 billion.

    Gowen also updated attendees on the recent rash of lung disease caused by black market THC vapor products. “Over the last three months, the U.S. government health agencies have done a terrible job separating nicotine-based vaping products versus illegal black market THC vaping products. And as a result, they have conflated the two issues. The two agencies issued conflicting warnings to the public,” she said.

    The U.S. Food and Drug Administration (FDA) was a bit more responsible, warning the public “to stop using THC-containing” vapor products while the U.S. Centers for Disease Control and Prevention (CDC) recommended consumers “stop using e-cigarette products” altogether, said Gowen. “As a result, the media went into a frenzy and began to sensationalize the headlines. Vaping death headlines soared throughout the national news outlets, becoming the top stories in the morning and evening news for weeks. The vaping industry quickly came under attack. And, unfortunately, the CDC did nothing to clarify their warnings. Instead, they choose to continue to lead their reporting with self-reported patient claims.”

    Gowen explained that the panic then trickled down to individual states. Some governors used their executive powers to issue statewide emergency bans on nicotine-based vapor products, especially attacking and targeting flavored vapor products. “To counter this, many industry stakeholders are joining forces and filing lawsuits, but as we know, that takes time, and businesses and supply chains are being greatly affected,” she said. “Many vape shops have already closed their doors. Many other businesses are reporting double-digit declines as a result of the issues.”

    As of today, the CDC and the media are reporting a little more responsibly, according to Gowen. The latest CDC warning recommends that consumers do not use e-cigarettes or vapor products containing THC. A stark contrast from the organization previously stating not to use e-cigarettes at all. “As a result, the headlines are slowly improving and telling a more realistic story. We are seeing, in my opinion, more responsible reporting,” said Gowen. “THC vaping products are actually in the headlines. Michigan, which was the first state to impose an emergency ban, is now reporting that [a] ‘Michigan resident dies from vaping-related illness as state remains silent about black market THC.’ Other media outlets, such as CNN, are warning consumers to ‘stop using THC vaping products.’ This is a stark contrast to the reporting in September.”