A new FTC report on data from 6 major e-cigarette companies show that retail stores account for most e-cigarette sales and marketing expenditure. It also shows the popularity of flavored e-cigarette products that helped drive youth smoking rates. The report makes it clear that the retail environment is critical when creating public health policies.
The Federal Trade Commission (FTC) has reported on tobacco companies’ marketing expenditures for cigarettes and smokeless tobacco for decades. In October 2019, the FTC issued orders to 6 major e-cigarette companies (Fontem US, Inc.; JUUL Labs, Inc.; Logic Technology Department LLC; NJOY, LLC; Nu Mark LLC; and R.J. Reynolds Vapor Company) seeking information on their sales, advertising, and promotional activities from 2015-2018. This month, the FTC published their first report on e-cigarettes using that data.
The data show that most e-cigarette sales are happening at retail stores – total e-cigarette sales, including both disposable units and those using changeable cartridges, increased more than six-fold from 2015-2018. It also makes evident the rise in popularity of sweet, fruity flavors that have helped drive youth e-cigarette use. The sales of fruit and other flavored e-cigarette cartridges preferred by youth increased seven-fold during the three year period. These sales numbers are prior to any federal regulations on flavored e-cigarettes, and we expect to see a new report on 2019-2020 sales at some point, since the FTC issued another order in September 2021.
The retail setting is where e-cigarette companies are spending the vast majority of their money. The FTC found that the e-cigarette companies more than tripled their spending on advertising and promotion in three years. Research shows that exposure to tobacco marketing can cause youth to start smoking, keep people who currently smoke hooked, and make it harder for people to quit and stay quit. Point-of-sale marketing often disproportionately targets minority and low-income neighborhoods, and research shows this targeted marketing works, with higher rates of smoking among individuals of lower socioeconomic status and education level.
The expenditure from e-cigarette companies include pricing strategies such as free or deeply discounted e-cigarette products and price discounts paid to retailers or wholesalers, so they can reduce the price of e-cigarettes to consumers. While research on the impacts of e-cigarette pricing is less extensive than on the impacts of cigarette pricing, the existing data show that both disposable and reusable e-cigarette sales are responsive to price changes. When e-cigarette prices increase, sales decrease, particularly among price-sensitive groups like youth. We know that lower prices, along with coupons and price discounts, encourage youth to start smoking and move them along from experimentation to regular cigarette use.
E-cigarette companies engage in these practices because the same thing is likely to happen with e-cigarettes. These FTC reports emphasize the critical need to monitor and address tobacco industry activity in the retail environment. Policies that raise the price of tobacco products, such as increasing excise taxes, banning coupons, or setting minimum price floors, are just a few examples of effective strategies for addressing significant spending on tobacco marketing and promotion at the point-of-sale.