The European Parliament recently passed a draft law that tackles tobacco products and electronic cigarettes. Not all details listed in this draft law were approved. Some of them, such as ecigarette plan were far from what the draft law hoped to achieve. According to Fitch Ratings, a global rating agency, these decisions, particularly on ecigarettes would bring forth some significant results.
Tobacco Products Plan
The Parliament approved the need to make tobacco more unappealing to the youth by requiring that cigarette packs will carry health warnings on the 65% of the pack surface. Brand of cigarettes must appear at the bottom.
Menthol and fruit flavored cigarettes are also approved to be prohibited as well as small packs of tobacco products. Slim cigarettes are not approved for prohibition.
As for ecigarette plan, the draft law recommends that these products be regulated as medicines. Although the Parliament said that ecigs need to be regulated; they should not be monitored as medicinal products unless the products are claimed to have healing and preventive effects.
If there are no claims like these, ecig products should contain over 30 mg/ml of nicotine. They must also carry warnings and they must not be sold to minors. Manufacturers must also provide the authorities with their list of ingredients. Ecig advertisements must also be restricted like tobacco product advertisement.
Possible Outcomes From This Decision
Fitch Ratings said that this ecigarette plan by the parliament could encourage tobacco companies to increase their investment and accelerate roll out of their specific products.
The parliament’s decision only means that ecigarette market remains a fertile and profitable area for small industry players that initiated this emerging market. Tobacco firms that invested on ecigs will most certainly like to ensure their growth in this market.
Ecig market is still growing, now accounting for only 2% of the smoking industry in E. Its midterm growth is rather hard to predict because there are several factors to affect this like pricing, consumer experience and availability. Nonetheless, what can be assured is that the market will continue to grow.
Being unapproved to be regulated as medicines, this means there will be no impact on the product availability. The ecig products will become, more viable alternatives to tobacco cigarettes. Thus, tobacco companies will experience the impact of this decision.
Individual EU countries, however, have chances to lobby for any changes before rules are finally enforced or to introduce their local policies. In UK, for example, it was already announced earlier by the MHRA that ecigarettes will be licensed as medicines beginning 2016.
In Italy, the authority expressed concerns that easily available ecigs might be used by the youth to start smoking. These concerns somehow offset the health benefits of the devices to smokers.
Tobacco Companies More Equipped Than Small Players
Tobacco companies, at first were not involved or interested about electronic cigarettes. Recently, they have made their individual moves in embracing the fledgling market. Due to their participation in the market, small players are somewhat pressured and threatened. Looming regulations and demand for more studies can be easily bridged by the Big Tobacco companies than small players.
It is not only about the financial capability of tobacco companies that makes them better equipped. The fact that these tobacco firms have for years been surviving in a heavily regulated environment gives them the edge over small ecig companies.
If ecigarettes, in the long run, surpass traditional cigarettes, Government revenue from cigarettes will be significantly reduced. Thus, the authorities might consider taxing these products to cover for their revenue losses. The total yearly income of EU government from tobacco taxes is 100 billion Euros, an amount that outweighs extra healthcare expenses related to smoking in this area. Thus, if ecigarettes would prove to be more preferred than cigarettes, the government will need to figure out how to solve this financial loss.