FTC Report Shows Sharp Increase in Flavored E-cigarette Sales Among Youth

The Federal Trade Commission (FTC) in the United States recently released its second report on national sales and advertising of electronic cigarettes, which highlighted a significant increase in the sales of flavored disposable e-cigarettes and menthol e-cigarette pods in 2020. This growth coincides with the federal government's ban on flavored pods, which was aimed at reducing the appeal of e-cigarettes among young people. However, the report suggests that instead of decreasing, the use of e-cigarettes among teenagers may be shifting towards alternative products. Furthermore, the report found that the distribution of free and discounted e-cigarettes, a practice that has been linked to an increase in teenage vaping rates, has reached an all-time high.

The Director of the Consumer Protection Bureau at the Federal Trade Commission, Samuel Levine, stated, "This report indicates that teenagers still face risks when purchasing flavored or discounted electronic cigarettes." "The evidence shows that e-cigarette marketers have excelled in avoiding FDA regulation and creating addictive products for young people.

Since 1967, the Federal Trade Commission (FTC) has been reporting annual tobacco sales, and has been reporting on smokeless tobacco sales since 1987. Last year, the FTC expanded its research into the industry and released its first report on electronic cigarettes. Electronic cigarettes, or e-cigarettes, are battery-powered devices used to inhale aerosol, which typically contains nicotine, flavorings, and other chemicals. The two main types of e-cigarettes are pods and disposables. Pods are rechargeable and can be used multiple times, with users typically replacing the pre-filled pod when it runs out. Disposables are not rechargeable or refillable and are discarded once the battery or e-liquid runs out.

This year's e-cigarette report covers sales and advertising data from 2019 and 2020. During this time, the US Food and Drug Administration (FDA) issued a policy prohibiting the sale of flavored e-cigarette pods, with the exception of menthol. Overall, the report found that total e-cigarette sales increased from $304.2 million in 2015 to $2.046 billion in 2018, growing to $2.703 billion in 2019 but decreasing to $2.24 billion in 2020. The FTC report notes that the 2020 decline may not represent the market due to significant industry changes. Key findings in the report include:

Major shift in flavored disposable e-cigarettes: Publicly available data shows that sales of flavored disposable e-cigarettes (not constrained by the FDA's 2020 policy) have significantly increased, with "other" flavored disposable products accounting for 77.6% of all disposable e-cigarette sales in December 2020. However, FTC data does not show an increase in disposable sales. Nevertheless, FTC data may not be representative of the disposable e-cigarette market. Among the five companies that submitted data for 2019-20, only two continued to sell disposable e-cigarettes in 2020 and those that continued to sell offered a more limited product line. In order to improve the representativeness of their industry sales data for future FTC reports, the FTC recently issued orders to four additional e-cigarette companies.

Sales of menthol pods greatly increased: Similarly, the report found that sales of remaining non-FDA banned flavored pods, specifically menthol, showed a significant increase, accounting for 63.5% of all pod sales in 2020.

Discounts for e-cigarettes reach historic high: Data also shows that e-cigarette discount prices reached a record-breaking $182.3 million in 2019. Although slightly decreasing in 2020, these discounts still remain the largest category of advertising expenses for e-cigarettes.

Almost Free E-cigarette Samples Doubled: Data collected from 2019 to 2020 shows that within just two years, spending on free and heavily discounted e-cigarette samples and distribution has increased by over 100%, making it the second largest expenditure category. The reason for this increase in 2020 was due to the FDA's ban on tobacco product sampling in 2016 to limit youth exposure, which led some companies to offer e-cigarettes at $1 or even lower prices, apparently to circumvent the ban.

The FTC's report provides an important market snapshot of the impact of the FDA's efforts to restrict the harmful use of e-cigarettes among teenagers, as well as a roadmap of additional steps the FDA can take to combat youth addiction to nicotine. There is significant evidence that flavored e-cigarettes still appeal to young people, which increases the serious potential for more American youth to become addicted to nicotine and its harmful effects on the body. The report shows that partially banning certain types of e-cigarettes using certain types of flavors is unlikely to successfully reduce youth addiction to nicotine through the use of e-cigarettes.

The FTC is also concerned about sales tactics used by electronic cigarette companies, particularly discounts on prices. Studies have shown that consumers are highly responsive to changes in tobacco product prices, with younger smokers being more strongly influenced than older ones. This research has led American surgeons to conclude that discounts on prices lead to an increase in tobacco use among young people. The FTC believes that similar discounts on prices for electronic cigarettes are also worrying. Efforts by the FDA to restrict free samples of electronic cigarettes appear to have prompted manufacturers to circumvent the ban by offering record discounts and almost free products.

The committee approved the 2019-2020 electronic cigarette report and corresponding data tables from the Federal Trade Commission with a 5-0 vote.

Attached is the second report on the sales and advertising of e-cigarettes throughout the country.

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