WASHINGTON — The $1.5 billion U.S. electronic- cigarette industry has tripled sales this year with the help of TV ads, Nascar sponsorships and product giveaways. Government regulation may now threaten those marketing tactics.
The FDA is set to decide this month whether to lump e-cigarettes in with conventional smokes as part of its oversight of the $90 billion U.S. tobacco market. Such a step would set the stage for greater restrictions on production, advertising, flavorings and online sales.
With at least 40 U.S. states seeking stricter rules and federal health officials raising the alarm about e-cigarette use by children, manufacturers of the smokeless devices are preparing for a FDA crackdown.
“We do anticipate becoming a regulated industry, so it is very possible the way in which we advertise will change,” said Andries Verleur, co-founder of e-cigarette maker VMR Products.
E-cigarettes heat liquid nicotine into an inhaled vapor without the tar of normal cigarettes. For the moment, marketers operate with few, if any, of the regulatory limits that apply to tobacco companies such as Philip Morris USA and Reynolds American Inc. TV advertisements by tobacco companies were banned in 1971, and in 2010 the FDA eliminated cigarette sampling. Sporting leagues such as Nascar also have severed ties.
With the FDA seeking to expand its regulatory authority beyond conventional cigarettes and smokeless tobacco, some e- cigarette companies are opening up the marketing spigot while they still have a chance.
Victory Electronic Cigarettes, run by the same marketing executive who helped build InBev NV into a dominant brewer, is handing out 1 million e-cigarettes starting this month at events in 50 U.S. cities. There will be a traveling van and tents at Nascar races, said Chief Executive Officer Brent Willis, who was once the president of InBev’s Asia-Pacific operations and helped introduce the Kraft brand to China.