Our Bullish E Cigs Thesis Remains Intact

E Cig Online Sales Ban Being Considered as We Expected We wanted to put out some thoughts on an article earlier this afternoon on potential online sales restrictions on e cigs. According to a WSJ article, the FDA may be considering a ban of online sales of e cigs, citing people ”familiar” with the ”package of regulations” the FDA is readying for e cigs, which we continue to believe will be released in October. We have long been saying that we expect tight regulations of e cigs and that we wouldn’t be surprised if an online ban was eventually enacted. If online sales are banned, we’d expect most of the online sales volume (currently $500 625M) to move to traditional retailers, where we believe e cig sales have passed $1B (we believe total sales retail and online will hit $1.7B by the end of the year). If online sales of e cigs were banned, we believe this clearly would be a huge positive for e cig manufacturers that are already well entrenched with retailers, including LO (blu) with over 100,000 retail points of distribution and privately held NJOY. Blu’s online sales are about 15 20% of its total and we think most of this volume would move to brick and mortar stores if online sales were banned. Bottom line we would not be surprised if online e cig sales were restricted or banned but this does not impact our bullish thesis that consumption of e cigs could overtake conventional cigs within the next decade.

An Online Sales Ban Would Benefit RAI and MO Too Though RAI’s Vuse e cig and MO’s MarkTen e cig are still in limited distribution in test markets, an online sales ban would be positive for them as well given their strong relationships with retailers which we believe will enable them to have easy access to shelf space once they are ready for a broader product roll out. RAI and MO would likely take share from the dozens of smaller e cig players, who do not have strong relationships with retailers, who would find themselves in a tough spot if online sales were banned.

Link to full Equity Research E Cigs Online Sales Ban Being Considered 8 22 13

Packets of ten cigarettes and menthol flavours banned under new eu rules – telegraph

Cheap salem cigarettes – buy discount salem cigarettes online

Packets of ten cigarettes will be banned in the UK by 2016 after the European Parliament voted in favour of tough new anti smoking rules governing the tobacco market.

The raft of new measures also include the introduction of mandatory picture and text health warnings covering about two thirds of cigarette packs in an effort to reduce the number of smokers by 2.4 million.

There will also be a ban on flavoured cigarettes such as menthol varieties.

Politicians voted for the larger warning labels, with the inclusion of graphic pictures such as cancer infested lungs and tighter regulation of e cigarettes.

Health advocates welcome the legislation as a milestone in helping to reduce the number of smokers in the 28 nation bloc, while the tobacco industry condemns it as a burdensome regulation stymieing a legal industry, which is heavily taxed.

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The legislation will take effect in 2016 following what is expected to be a rubber stamp approval procedure by EU governments next month.

Pro smoking groups have criticised a “nanny state mentality”, but cancer charities have backed the measures.

The new rules to be introduced across the European Union include

&bull picture warnings must cover 65% of the front and back of every packet of cigarettes, with additional warnings on the top of the pack

&bull a ban on “lipstick style” packs aimed at women all packs must have at least 20 cigarettes to leave room for health warnings

&bull roll your own tobacco packs to have similar picture warnings

&bull a ban on promotional elements, such saying “this product is free of additives” or is less harmful than other brands

&bull a ban on flavoured cigarettes, such as menthol, fruit and vanilla

&bull a maximum nicotine concentration level for e cigarettes.

&bull EU wide tracking of cigarettes to combat illegal trade

Ministers are expected to endorse the rules in March, to come into force in May 2014. Member states will have two years to introduce the legislation.

The European Commission says the new rules will “deter young people from experimenting with, and becoming addicted to, tobacco” and should lead to a 2% drop in the amount smoked over the next five years.

EU Health Commissioner Tonio Borg said “Today is a great day for EU health policy.

Today marks a genuine turning point for European tobacco control ”

“The new rules will help to reduce the number of people who start smoking in the EU.

“These measures put an end to products which entice children and teenagers into starting to smoke in the European Union.”

However, the director of the pro smoking campaign group Forest, Simon Clark said banning menthol cigarettes was a ban on consumer choice that “will do little” to deter children from smoking.

He also questioned the need for plain packaging legislation to remove any branding from packs, which is being considered in some EU countries, including the UK.