The prohibition of flavored cigarettes, cigars, and vapes in the United States is creating an opportunity for companies producing no-nicotine alternatives, with brands already stepping up to fill empty shelf space.
In 2020, the US Food and Drug Administration (FDA) banned certain flavored e-cigarette products in flavors that appeal to children, such as fruit and mint. The regulator has since proposed an additional ban on menthol cigarettes and flavored cigars.
A US menthol ban could lead to more than 1.3 million American smokers quitting, including more than 381,000 African American smokers, according to a Canadian study published in April 2022.
The study, which evaluated the impact of Heath Canada’s nationwide ban on menthol cigarettes introduced in 2017, found that menthol smokers were more likely than non-menthol smokers to quit smoking following the ban.
The state of California is one American jurisdiction that has already banned the sale of flavored tobacco, including menthol cigarettes, effective in late 2023. And this state is not an outlier with at least 145 US communities prohibiting menthol cigarettes and other flavored product sales as of February 2022.
'Huge opportunity'
The gaps left by these products have resulted in increased consumer demand for no-nicotine alternatives, as observed by Nick Medhi, the president of ENDEXX Corp. (OTC:EDXC)'s HYLA division. HYLA is the producer and distributor of guarana-based, no-nicotine vape products.
“It’s a huge opportunity for us to penetrate the market and backfill all the empty shelf space at various outlets,” Medhi told Proactive.
Medhi said that no-nicotine alternatives to cigarettes and cigars have typically been welcomed in Europe and the Middle East but with the new bans in the US, he pointed out that the company was seeing a huge shift.
“The future of vaping is in the non-nicotine space, and we have a two-year advantage over our competitors so we are excited about continuing to win market share,” Medhi said.
Harm reduction without over-restriction needed
While the bans have brought opportunities for no-nicotine vape brands, Chill Brands Group PLC (LSE:CHLL, OTCQB:CHBRF) CEO Callum Sommerton told Proactive that these harm reduction efforts should not be hijacked by calls for prohibition.
“The FDA, Public Health England and other global health bodies agree that vapor products are markedly less risky than traditional tobacco products,” he said. “It should also be recognized that flavored vapor products are responsible for a high percentage of successful 'quit attempts' as adult users graduate from using tobacco and menthol flavors to sweeter flavors.”
Sommerton noted that nicotine-free vapes were another important part of the picture and that Chill Brands was seeing an enhanced appetite for those devices.
London-listed Chill Brands’ products are available in select retail locations across the United States, with the company in June announcing that it had struck an agreement with a specialist carrier to ship its nicotine-free vapor products across all 50 states.
“Our US pilot stores are reporting that some customers are using them to moderate and reduce their nicotine consumption while others benefit from the oral fixation and sensation that they provide,” Sommerton said. “We expect this trend to continue as the public seeks out new alternatives to traditional tobacco products.”
Meanwhile, California’s menthol cigarette ban in particular has resulted in opportunities for acquisition-led CBD company 1606 Corp. (OTC:CBDW)
The Phoenix, Arizona-based company is targeting the empty shelves left by the ban with its menthol-flavored smokable hemp product CBD Singlez.
In May, the company launched a multi-channel direct marketing campaign titled ‘Cali Push’ targeting California merchants who previously stocked menthol-flavored smokable products to introduce them to 1606’s tobacco-free alternative.
As US regulators mull a nationwide ban on menthol-flavored cigarettes, cigars, and vapes, the industry has urged cooperation.
“Now more than ever it is essential for regulators to work with industry operators to nurture a responsible approach to harm reduction without overly restricting the industry,” Chill Brands' Sommerton said, “and pushing people back into the jaws of tobacco.”
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie