Altria CEO intensifies concerns over unregulated e-cigarette products in the US

According to a report from journalnow, Altria Group CEO Billy Gifford is ramping up efforts to express concerns about unregulated imported e-cigarette products, in hopes of garnering attention from the U.S. Food and Drug Administration (FDA) under the Trump administration.

Gifford told analysts during Altria's fourth-quarter conference call, "The main drivers of industry and smokeless products growth continue to be the widespread availability of illegal disposable e-cigarette products." He asserted that these products are "jeopardizing the long-term opportunity for reduced tobacco harm, which has been authorized by the FDA in American-made e-cigarette products.

Gifford pointed out that the American market has clearly divided into two: one operating within the regulatory framework, while the other openly violates and circumvents regulations. He bluntly stated, "Simply put, we believe the regulatory structure has collapsed, and the tobacco market is not operating as intended by Congress. The number of FDA authorized smokeless products is insufficient to meet consumer demand for legal products.

In June 2009, when the Democratic Party controlled Congress, the Tobacco Control Act was passed, giving the FDA regulatory authority over the tobacco industry. However, during the Biden administration, anti-smoking and anti-tobacco advocacy groups criticized the FDA for acting slowly in regulating unregulated imported e-cigarette products.

According to data from Altria, the top three leading unregulated brands in market share are Zone, Fre, and Juice Head, along with Elf Bar, Breeze, and Mr. Fog. A report from the Centers for Disease Control and Prevention (CDC) in September noted that approximately 87% of youth e-cigarette users, or 1.4 million people, prefer fruit, candy, and dessert flavors, which are mostly sold by unregulated manufacturers.

British American Tobacco Plc and Altria have been urging the FDA for over a year to strengthen enforcement efforts against unregulated synthetic products. These companies claim that these products account for roughly half of the current e-cigarette market in the United States.

Gifford stated that Altria estimates there are approximately 28 million adults using vaporized and oral tobacco products, primarily Zyn nicotine pouches from Swedish Match Company. This is nearly equivalent to the number of adults who smoke traditional cigarettes. In 2023, Altria fully acquired NJoy for $2.75 billion in cash.

At the time, Altria believed that unregulated e-cigarette products were just a small factor. However, Gifford said, "The illicit e-cigarette market has grown beyond what we expected in size and scale... impacting our ability to achieve our 2028 smoke-free product sales and revenue goals, as well as our ability to reach specific financial goals for NJoy.

In 2024, it is expected that smokeless alternatives will account for 45% of the overall nicotine market, an increase from 40% in 2023. This trend presents a mixed bag for Altria and British American Tobacco. While the tobacco industry is increasingly accepting of smokeless alternatives, Geoff Gifford notes that regulatory bodies "have not held malicious actors accountable.

The Congress has formed a bipartisan alliance to push for further restrictions on unregulated e-cigarette products. On June 11th, the FDA and the US Department of Justice announced the formation of a task force involving other federal agencies in order to address the domestic distribution and sale of illegal e-cigarette products. The FDA has already announced several crackdowns on unregulated e-cigarette products.

Meanwhile, the International Trade Commission is investigating "improper conduct in the import and sale of disposable e-cigarettes and other disposable products, as well as patent infringement issues." Gifford believes that by approving more pre-market tobacco applications to establish a legal alternative market and collaborating with other federal agencies to prevent illegal products from entering the United States, the FDA can restore market order. According to Clive Bates, from the London-based public health and sustainability consulting firm Counterfactual, the tracking number proposal suggested by the FDA is nothing but a "whack-a-mole" approach. Bates points out, "The FDA is trying to persuade Congress that more funding is needed to address problems it has created entirely on its own.

Bates also said that the only way to combat illegal trade is to offer a wide variety of legal products that people want to buy and use. The FDA's failure to create a safe enough market for alternatives to cigarettes is ultimately what leads to illegal trade.