FTC Releases Second Report on E-Cigarette Sales and Advertising in the US

In a recent press release, the Federal Trade Commission (FTC) issued its second e-cigarette report, analyzing domestic sales and marketing trends for the years 2019 and 2020. While FTC has issued a similar report for cigarettes and smokeless tobacco products since 1967 and 1987, respectively, it only recently decided to analyze this type of data for e-cigarettes. FTC collected information from the nation’s largest domestic e-cigarette manufacturers (reporting companies) that account for almost the entire US e-cigarette market. The e-cigarette report is important because it will likely serve as a basis, at least in part, for considering future policies with respect to e-cigarettes sold in the US

Below is a summary of key points from the e-cigarette report.

  • There was significant growth in e-cigarette sales during 2019, but that growth stalled in 2020. FTC credits this decline to products sold by new or growing market participants (yesnot reporting companies), rather than an overall decline in sales.
  • Cartridge-based unit sales declined, and disposable product sales increased in 2020.
  • There was a significant reduction the sale of nonmenthol-flavored cartridges between 2018 and 2020. Menthol-flavored cartridge and flavored disposable e-cigarette sales, however, increased substantially from 2019 to 2020.
  • The largest category of advertising expenses during 2019 and 2020 was attributed to e-cigarette price discounting.
  • Distribution spending for free and deeply discounted e-cigarettes (eg$1 products) doubled from 2019 to 2020.
  • The reporting companies stated that in 2019 and 2020, they used self-certification methods to age verify visitors on their websites and third-party age-verification services before a customer was allowed to make a purchase on their websites.
  • Several reporting companies advertised via social media and, where available, used tools allowing account holders to designate age restrictions before allowing an individual to access a company account.

The above FTC-identified trends and data points can inform the industry in several key ways:

  • The data does not necessarily provide evidence about whether sales increased or declined after the September 9, 2020 deadline to submit marketing applications to FDA for products on the market as of August 8, 2016. The 2020 data in the e-cigarette report is not broken down by month or quarter.
  • There is no current, federal minimum pricing law for e-cigarettes, and we are not aware of any similar laws at the state or local levels. If the trend of steep price discounts continues, however, it is possible that legislatures may consider passing minimum price laws that regulate the price at which e-cigarettes may be sold, especially if there is already a free sample ban in that jurisdiction.
  • As more companies advertise and sell e-cigarettes directly to consumers online, regulators may consider passing laws, if not already in existence in their jurisdictions, to require online sellers and marketers to age verify website visitors and customers through third-party services or impose age restrictions on social media accounts.

.

Leave a Comment