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- advertising and promotion
- British American Tobacco (BAT)
- electronic cigarettes
- next-generation products
- product category growth
- retail merchandising
Electronic cigarettes (e-cigarettes) were initially offered by many independent producers, but multinational tobacco companies, which have notable marketing budgets, have increasingly acquired e-cigarette brands and developed their own ‘next generation products.’1 In the USA, for example, the top-selling e-cigarette brands during 2018 were JUUL, Vuse, MarkTen XL, Blu and Logic, which collectively accounted for a 97% market share.2 3 With the exception of JUUL, the leading e-cigarette brands were all produced by multinational tobacco companies. While JUUL is the evident brand leader by possessing an estimated 72% market share, Altria bought a 35% minority ownership of the e-cigarette producer for $12.8 billion in December 2018.4–6 Specialty vape shops were initially the standard for acquiring e-cigarettes, but convenience stores are emerging as key retailers given the established distribution channels of multinational tobacco companies.
British American Tobacco (BAT) is the parent company of Imperial Tobacco Canada Limited—Canada’s largest producer of combustible cigarettes with an approximate 51% market share—and offers Vype among their portfolio of ‘next generation products.’7 8 As seen in figure 1, Vype promotions have circulated in Canada’s most populous province, Ontario, since August 2018, being placed on petrol pumps at Esso as well as the exterior and interior of affiliated Circle K convenience stores. Within the convenience store, promotional signage and displays for Vype e-cigarettes can also be seen (figures 2–4), including directly behind the cash register at point of sale (POS) and situated where conventional cigarettes and tobacco products are stored for sale. Like previously observed for tobacco retail merchandising, the display and advertisement locations for e-cigarettes are often at low-eye levels adjacent to candy, which suggests that their reach includes young consumers.9–13 Moreover, the juxtaposition of e-cigarette promotions with those of milk and sweet-flavoured beverages serves to normalise the product and build what has been termed, ‘friendly familiarity’ in advertising circles.14 The taglines of Vype promotions include ‘Hits the Spot’, ‘This is the One’ and ‘Genius! Click & Vape’, which are simple and straightforward while suggesting instant gratification. Such e-cigarette promotion began to circulate soon after the provincial election that resulted in a new governing party, which quickly made regulatory changes (amending the Smoke-Free Ontario Act) such that Ontario became the only Canadian province with e-cigarette legislation to allow e-cigarette promotion at retail sites where youth (minors) have access.15
BAT documentation states that the company has four global in-store marketing objectives with respect to tobacco retail merchandising: category leadership, increased brand presence, volume growth and profit. For volume growth, BAT seeks to ‘achieve long-term dependable growth of the category and our brands. Use of innovative in-store marketing techniques by trade channels will help us to achieve our growth objectives.’16 In reaching their growth objectives, it is important to note that BAT is referring to both their portfolio of brands and the tobacco product category generally. When discussing partnership benefits at the category product level, BAT states that their in-store marketing techniques ‘grows new segments,’ and for trade partners ‘insures volume/profit growth.’16 Moreover, BAT documentation indicates that while the tobacco company benefits through ‘increased share, sales and profit,’ trade partners, such as wholesalers and retailers, benefit from merchandising marketing activities due to ‘increased category sales and profits.’17
Similar corporate objectives are demonstrated with respect to vaping and e-cigarette product marketing. In a presentation by BAT’s Kingsley Wheaton, Managing Director—Next Generation Products, the USA and the UK are identified as the top two markets globally for vapour products (online supplementary file 1). For the UK market, the company’s multicategory strategy and forecasting further growth of the vapour product category includes the observation that consumption of combustible tobacco is also predicted to continuously increase from 2017 to 2020 (figure 5). Tobacco and vapour products are both identified as growth opportunities with consumer groups including ‘never smoked’, ‘dual smoker-vaper’ and ‘ex-smoker’, with ‘never smoked’ and ‘dual smoker-vaper’ combining to represent a majority of vapour users.18 An additional presentation delivered to shareholders aimed at motivating major financial investors by BAT’s chief executive officer, Nicandro Durante (online supplementary file 2), indicates that 8 million consumers were added in 2017 as a result of ‘next generation products,’ with the nicotine consumer pool continuing to grow, and states that vapour products, through flavour experiences, are attracting ‘new consumers’ and ‘new behaviours’ (figures 6 and 7).19
Marketing and promotional expenditures for e-cigarettes have increased rapidly within the past few years and coincide with a rapidly increasing market for such products.20 21 According to the 2016 US Surgeon General’s report, ‘the marketing of e-cigarettes drives consumer demand for these products.’22 In Canada, e-cigarette use is increasing rapidly among young people, and this growth appears exacerbated by the appearance of widespread advertising in several provinces, including Ontario.23 24 While the focus of this paper is on retail merchandising, other marketing communication channels, including television, billboards, as well as digital and social media, have been used for Vype. One of the television ads, which was shown from September to November 2018, serves as a particularly egregious violation of federal law with its lifestyle portrayals (ie, by depicting people) and prominently displaying an apple to infer health (ie, the aphorism, ‘an apple a day keeps the doctor away’) (online supplementary video 1). Federal legislation, with the short title of Tobacco and Vaping Products Act, bans lifestyle advertising, but marketing communication for e-cigarettes remains permissible in media that reach youthful and prospective consumers. Given these recent developments, the federal government has issued a notice of intent and proposed more stringent advertising regulations to address youth vaping, including prohibiting vaping product advertising placed on billboards and in other outdoor media, social media platforms and at the POS where youth have access.25 26 In the meantime, e-cigarette advertising and promotion regulations vary considerably at the provincial level. The aforementioned television advertisement did not broadcast in provinces with a more comprehensive set of regulations (ie, Quebec, Manitoba, Nova Scotia and Prince Edward Island), but it appears amended federal legislation might be necessary to respond to the Government of Ontario’s recent weakening of e-cigarette advertising restrictions.27
The author thanks Jeff Darling for his assistance in preparing the figures in this paper. TD also thanks Flory Doucas and Jason Mutch for providing helpful information and insight. Finally, TD thanks two anonymous reviewers for their useful and constructive comments.
Contributors TD solely contributed to the writing and analysis of the study.
Competing interests TD is an Associate Editor of Tobacco Control with respect to Product Marketing and Promotion. He has served as an expert witness in tobacco and vaping litigation on behalf of governments whose policies have undergone constitutional challenges.
Patient consent for publication Not required.
Provenance and peer review Not commissioned; externally peer reviewed.