Transnational Tobacco Companies and New Nicotine Delivery Systems

Abstract

While the public health community has focused on the harm-reduction potential of new nicotine delivery systems (NNDSs) and, conversely, their potential for impeding overall efforts to prevent and reduce tobacco use, limited analysis has been conducted on the role of leading transnational tobacco companies (TTCs) in this rapidly growing market. Following aborted efforts during the 1980s and 1990s to develop reduced-risk products, TTCs have heavily invested in selected NNDS products since 2010 via acquisitions and internal research and development.

This article catalogs and analyzes the patterns of investment in NNDSs by leading TTCs over time, and identifies differences in the companies’ approaches to NNDS product acquisition and development in specific markets globally. This analysis raises important questions regarding the companies’ intent, which appears to be to sustain, rather than replace, cigarette sales, and to increase their influence and credibility with respect to NNDS policy and regulation.

We identify the need for greater public health vigilance and research to understand and respond to the increasingly significant role of NNDSs in TTCs’ global business strategies, to ensure that NNDSs advance, rather than hinder, tobacco control efforts.

New nicotine delivery systems (NNDSs) are a rapidly growing market that includes 2 principal categories. First, e-cigarettes heat a liquid solution usually containing nicotine (nicotine-free liquids also available) to produce an aerosol to be inhaled by users. There are different types of devices within the e-cigarette category including “cigalikes,” which closely resemble conventional cigarettes, and larger tank-based devices, which can be customized or modified by users (often called “mods”).¹ Second, the heat-not-burn (HNB) category heats tobacco leaf contained in disposable, cigarette-shaped plugs, which are then inserted into a device to produce an aerosol to be inhaled by users. The total value of the global market for both categories of NNDS devices is still only 1% to 2% of combustible cigarettes (US $12.3 billion vs US $683 billion in 2016).² However, the NNDS market is growing at a much faster rate, expected to rise to US $34 billion by 2021.³ The HNB devices are described as especially “poised for explosive global growth.”^4(p4)

Public health debates about NNDSs to date focus on their potential effectiveness in harm reduction versus their impacts on smoking initiation and relapse.^5,6 Others have emphasized their potential to aid smoking cessation alongside robust claims about their relative safety.⁷ Although available studies suggest that nicotine aerosol is less toxic than cigarette smoke, concerns remain about the possible long-term health effects of NNDS products.⁸ Critics argue that the current lack of evidence on their long-term safety requires governments and health authorities to exercise caution in promoting their use, and regulatory frameworks that balance potential health benefits and as yet unknown harms.⁹ In addition, there is growing evidence that NNDS products are being used in addition to, rather than instead of, combustible cigarettes by many smokers; this “dual use” weakens claims of NNDSs’ “harm-reduction” potential, given that reduced levels of smoking still confer significant health risks.¹⁰

To the extent that NNDSs deter quit attempts, these products may prolong smoking and the associated health harms.^5,11 Moreover, there is a growing body of evidence that NNDS products may attract new nicotine users, acting as a gateway to combustible cigarette use, particularly among youths.¹² The similarities between combustible cigarettes and some NNDS devices (i.e., cigalikes), in terms of product appearance, packaging, and marketing, raise concerns that hard-won tobacco control measures such as standardized packaging, public smoking bans, and restrictions on point-of-sale advertising may be undermined, in addition to concerns regarding the close mimicking of smoking behavior in some NNDS products as potentially renormalizing smoking.¹³ The public health community has been deeply divided on these debates, between a precautionary approach to regulating NNDSs and rapid and widespread use.

Alongside the public health community, leading transnational tobacco companies (TTCs) have also been active in research and policy debates about NNDSs. This includes the creation by Philip Morris International (PMI) of the Foundation for a Smoke-Free World.¹⁴ To date, however, there has been limited analysis of the substantial investments by TTCs in the rapidly growing NNDS market. To better understand the context for contemporary debates about the health risks and benefits from NNDS products and the relevance of tobacco industry involvement in such debates, this article addresses 2 gaps in the current literature.

First, we document patterns of investment by major TTCs in NNDSs. Today, 84% of the world’s cigarette manufacturing (excluding the closed Chinese market controlled by state-owned Chinese National Tobacco Corporation) is dominated by 4 TTCs: British American Tobacco (BAT), PMI, Japan Tobacco International (JTI), and Imperial Tobacco.¹⁵ We analyzed investments by these companies in NNDSs over time, from 2010 to 2018, by company or products acquired, products developed, and by target market. In addition, we included Reynolds American, which was acquired by BAT in 2017, and Altria, the company that controls PMI brands in the United States. Although they are separate legal entities, close association exists between PMI’s global and US-based businesses and the brand they market. As such, an analysis of PMI’s global investment in NNDS products that ignored the vital US market would be incomplete and so the term TTC should be read as including Altria in the context of this article.

Second, the article begins to address the limited analysis to date of the role of NNDS products within TTCs’ global business strategies. Previous research has found that TTC investments in NNDS products in European markets have been “driven by regulatory threats and health concerns, both likely to impact cigarette sales negatively, and the potential to create a new form of tobacco use among those no longer interested in taking up smoking. Young people were a key target.”^16(p1) Investments by TTCs in e-cigarettes have been documented in the Tobacco Tactics Web site to 2016.¹⁷ As the first systematic analysis of TTC investments in NNDSs, to our knowledge, this article locates the observed investment patterns (focused on cigalike and HNB devices) within the context of substantial global restructuring and consolidation within the tobacco industry since the 1990s. It has been argued elsewhere that these changes have been prompted by trends within the industry, notably declining smoking rates, and stronger regulation in traditional markets, and by broader changes associated with economic globalization.¹⁸ This article builds on these insights to consider the extent to which TTC investments in NNDSs can be explained by tobacco industry globalization and identify areas of further research concerning tobacco control.

BACKGROUND

The first commercially available e-cigarettes came to market in the United States and United Kingdom around 2006.¹⁹ Rapid expansion of the cigalike market in the United States, largely from imports and small independent companies, was prompted in 2010 by the overturning by a federal district court of a 2009 US Food and Drug Administration (FDA) decision to regulate e-cigarettes as therapeutic devices rather than tobacco products, which removed the FDA’s block on e-cigarette imports.²⁰ In 2011, the FDA issued regulation (followed by a “deeming rule” in 2016) allowing it to regulate all e-cigarettes and HNB devices as tobacco products, thereby restricting producers’ ability to make reduced-risk claims or to sell products without FDA permission (see, for example, the Modified Risk Tobacco Product claim that PMI submitted in 2016 for IQOS).^21,22 Despite the substantial TTC investment in research and development on reduced-risk products from the 1960s, their investment in NNDSs remained limited until the late 2000s.

Previous analyses of internal tobacco industry documents revealed longstanding efforts to develop reduced-harm products.²³ Industry investment in “a safer cigarette” began as early as 1960, with patents for “non-combustible cigarettes” and “nicotine inhalers,” closely resembling modern devices, registered in 1979.²⁴ Documents leaked in 2018 from PMI acknowledge that TTC investment in NNDS products was driven by an awareness of the need to “establish the legitimacy of tobacco companies to be a part of the regulatory debate on RRPs [reduced risk products]”^25(p5) and thus to position the industry as being part of the solution to smoking harms by offering alternative tobacco and nicotine products as part of a wider attempt to reframe tobacco cessation debates in terms of harm reduction.²⁶

The industry’s development of purportedly reduced-harm products, however, was halted by concerns from TTC industry management about their liability under personal injury lawsuits in the United States. If less-harmful products were developed and marketed, this would contradict decades of industry denial of the health harms from smoking.²⁷ In September 1999, the US Department of Justice began a $280 billion legal action under the Racketeer Influenced and Organized Crime Act, to hold major US cigarette companies liable for their decision not to develop less-hazardous products despite collective knowledge of the health risks posed by their products.²⁸ The case was supported by many tobacco control organizations including Action on Smoking and Health and the Imperial Cancer Research Fund, which found that, although TTCs had the knowledge, resources, and technology to sell alternative cigarette products, such products were kept in the “bottom drawer” for decades. This case prompted an admission by Philip Morris (the United States entity) regarding the “overwhelming medical and scientific consensus” that smoking causes lung cancer, emphysema, and heart disease, marking what former FDA Commissioner David Kessler called “a new stage for regulation and legislation.”²⁹ These findings were further supported by the leaked internal documents from PMI noted previously.²⁵

METHODS

We undertook a narrative review of scholarly and gray literature with PubMed. We then searched the JSTOR database to capture social science publications that may fall outside the remit of PubMed. We undertook additional searches with Google Scholar to identify further publications on TTC engagement with NNDSs. The search terms used in the databases were “vap∗,” “e-cigarette,” “heat-not-burn,” “next generation product,” “alternative tobacco product,” “reduced risk products,” and “ENDS.” We used the same keywords to search industry-related publications (e.g., Tobacco Reporter, Tobacco Journal International, Tobacco Today, Tobacco Tactics) and specialist business news sources (e.g., Vaping Post, Bloomberg, Business Insider, Reuters). We also examined Euromonitor International reports on the e-cigarette market. We undertook searches from January 2017 to May 2018 for articles published after 2010.

We then searched the global Web sites of 4 TTCs (BAT, Imperial, PMI, and JTI) plus Altria for information on their investments in the NNDS market. We excluded the Chinese National Tobacco Corporation given the little evidence of its investment in NNDSs. Given the timeframe of our analysis, from 2010 to 2018, we searched for additional information on Lorillard (merged with Reynolds American in 2015) and Reynolds American (merged fully with BAT in 2017 when BAT purchased the remaining 58% share in Reynolds not previously controlled). We did not examine internal tobacco industry documents, currently available from the Truth Tobacco Documents Library, given the limited data they offer on events since 2010. We included a small number of studies that used contemporary tobacco industry documents published by Reuters and situated our research in relation to previous studies of tobacco industry documents that examined relevant aspects of TTC strategy such as the development of “reduced risk” products.³⁰

We collated information from these sources into a data set (Tables 1 and 2) to identify patterns of investment by each TTC from 2010 to 2018, identifying the specific products marketed by each company, product type (e.g., e-cigarette or HNB devices), if products were developed internally (via research and development) or obtained through company acquisitions, and their target markets and demographics. Together, these 2 tables identify the specific ways in which TTCs have entered the NNDS market as well as highlight differences in TTCs’ approaches to NNDSs, both globally and in particular target markets.

TABLE 1—

New Nicotine Delivery System–Related Acquisitions by Leading Tobacco Companies: Worldwide, 2010 to 2018

Tobacco Company and Year	Product or Company Acquired	Target Market	Notes
Lorillard
2012	blu e-cigs (e-cigarette company)	United States	Lorillard purchases e-cigarette company blu e-cigs for US $154 million. Company becomes 1 of 3 companies selling to US national market.
2013	Skycig (e-cigarette company)	United Kingdom	Lorillard purchases Skycig for US $48.5 million (additional US $48.5 million in 2016 depending on financial performance benchmarks) as leading premium brand in the United Kingdom.
Imperial Tobacco
2012	Fontem Ventures (e-cigarette company)	Netherlands	Imperial creates subsidiary “to acquire, manage, operate, encumber and dispose of property, including patents and other intellectual property” related to e-cigarettes.
2013	Dragonite International (e-cigarette company)	United States, United Kingdom	Subsidiary Fontem Ventures acquires portfolio of global patents for e-cigarettes from health care and pharmaceutical company Dragonite International for US $75 million. Cofounder Hon Lik joins Fontem Ventures.
2014	Puritane (e-cigarette product)	United Kingdom	Subsidiary Fontem Ventures rebrands Dragonite brand Ruyan as Puritane and markets as behind-the-counter health care product to aid cessation. Application submitted for MHRA approval as a medical device.
2014	Fontem Ventures	United States	Subsidiary launches legal case against 11 US vaping companies or brands for patent infringement (based on Dragonite patents) including NJOY, blu e-cigs, Nicoventures, and Logic Technology.
2015	blu e-cigs (e-cigarette company)	United States	Imperial Tobacco buys blu e-cigs from Reynolds (after purchasing Lorillard) for US $7.1 billion. Imperial Tobacco markets blu as a “lifestyle brand” consumer product and safer alternative to smoking.
2016	Fontem Ventures	United States	Subsidiary reaches legal settlement with 11 US e-cigarette companies in the form of nonexclusive royalty-bearing license.
2017	Von Erl Gmbh (e-cigarette company)	Austria	Imperial acquires e-cigarette manufacturing company for undisclosed amount.
2017	Nerudia (e-juice company)	United Kingdom	Imperial acquires e-juice manufacturing company for undisclosed amount.
British American Tobacco (BAT)
2010	Voke (e-cigarette brand)	United Kingdom	Start-up Nicoventures acquires license to manufacture, market, and brand rights, and intellectual property for Voke from Kind Consumer.
2012	CN Creative (e-cigarette company) and Intellicig brand	United Kingdom	BAT acquires company and its products.
2013	CN Creative (e-cigarette company)	United Kingdom	BAT merges company with BAT subsidiary Nicoventures.
2014	Voke (e-cigarette product)	United Kingdom	Nicoventures gains MHRA approval for Voke as a medicinal product to aid smoking cessation and reduce harm. Voke is an inhaler but, rather than heat or batteries (electronic), it uses “a pressurised system that atomises a nicotine formulation into fine droplets, capable of lung absorption.”
2015	CHIC Group (e-cigarette company)	Poland	BAT acquires company and gains control of 70% of Polish market. CHIC produces Polish brands such as VOLISH, P1, Provog, LiQueen, and Aromativ, and distributes Chinese brands Joyetech and Kangertech. BAT strengthens retail networks and research and development capabilities in continental Europe.
2016	Vuse (e-cigarette product)	United States	BAT acquires Vuse brand through merger with Reynolds American. Vuse launched in 2014 by RJ Reynolds Vapor Company as 1 of 3 brands sold in US national market.
2016	Ten Motives (e-cigarette company)	United Kingdom	BAT acquires company for undisclosed sum to expand retail networks through grocery and convenience stores.
2017	Kind Consumer and Nicovations (e-cigarette companies)	United Kingdom	Nicovations (formerly Nicoventures) terminates development and distribution agreement, and reverts rights and intellectual property to Kind Consumer on the grounds that Voke failed to be launched by December 2016 because of manufacturing challenges.
Philip Morris International (PMI)
2011	Jed Rose (Duke University)	United States	PMI acquires patent for nicotine inhaler (e-cigarette).
2013	Solaris (e-cigarette product)	Israel, Spain	PMI obtains exclusive rights from Altria to PMI to market MarkTen products outside the US market under rebranded name.
2014	Nicocigs (e-cigarette company), along with Nicolite, Nicocig, and Vivid products	United Kingdom	PMI acquires company, which held 27% of UK market, for undisclosed sum.
2017	STEEM (e-cigarette product; also known as Platform 3)	TBD	Development and market test of technology acquired from Jed Rose in 2011. Device creates chemical reaction between nicotine liquid and organic acid to produces nicotine-salt vapor.
Altria
2014	Green Smoke (e-cigarette company)	United States, Israel	Subsidiary NuMark acquires Green Smoke (founded in 2008) for US $110 million (and US $20 million in incentive payments).
2017	Avail Vapor (e-cigarette retailer)	United States	Altria acquires 1 of largest US vaping product retailers (e-cigarettes, e-juice).
Japan Tobacco International (JTI)
2011	Ploom (e-cigarette company)	United States	JTI buys minority stake in company. Ploom technology vaporizes pods of loose leaf tobacco.
2014	Zandera (e-cigarette company) and E-Lites product	United Kingdom	JTI acquires Zandera (founded in 2009) for undisclosed sum.
2015	Model Two and pods (e-cigarette product) and Ploom trademark	United States	JTI acquires product line and brand name for undisclosed amount from Ploom.
2015	Ploom (e-cigarette company)	Japan	Ploom buys back minority stake from JTI and changes its name to Pax Labs.
2015	Logic Technology Development (e-cigarette company)	United States	JTI acquires company (founded in 2010) for undisclosed sum. Logic Technology was leading US independent e-cigarette company.
2017	Ploom Tech (e-cigarette product)	Japan, Switzerland	JTI launches Ploom Tech brand as a “hybrid technology to create a tobacco-enriched vapor, by heating a non-nicotine liquid, which passes through a capsule containing granulated tobacco.”

Note. MHRA = Medicines and Healthcare Products Regulatory Agency; TBD = to be determined.

Source. See list of data sources available as a supplement to the online version of this article at http://www.ajph.org.

TABLE 2—

New Nicotine Delivery System Product Development by Leading Tobacco Companies: Worldwide, 2010 to 2018

Tobacco Company and Year	Product	Target Market	Notes
Imperial Tobacco: 2015	Jai (e-cigarette product)	France, Italy	Vaping product developed and marketed as consumer product alternative to smoking to be sold by tobacconists.
British American Tobacco (BAT)
2011	Nicoventures (e-cigarette company)	United Kingdom	BAT start-up standalone company formed to “focus exclusively on the development and commercialisation of innovative regulatory approved nicotine products.”
2013	Vype (e-cigarette product)	United Kingdom	Launch of vaping product with varying products such as eBox, eTank, and ePen. BAT becomes first TTC to launch a vaping product in the United Kingdom.
2015	Nicovations (e-cigarette company)	United Kingdom	Nicoventures split into 2 arms—Nicovations (for licensed nicotine products) and another arm.
2015	e-Voke (e-cigarette product)	United Kingdom	Nicovations receives MHRA license to market e-Voke as smoking cession aid, the first e-cigarette to be licensed as a medical product. The electronic-based product is distinct from the nonelectronic Voke.
2015	iFUSE (heat-not-burn product)	Romania	Launch of BAT’s first heat-not-burn product.
2016	Vype Pebble	United Kingdom, Italy	Launch of “mod” e-cigarette at opening of new Vype branded store in Milan, Italy.
2016	glo (heat-not-burn product) using NeoStiks (heat-not-burn sticks)	Japan, Canada, Switzerland	Launch of product to compete with PMI’s iQOS product. NeoStiks available in 3 flavors: (bright tobacco, intensely fresh (menthol), fresh mix (mint).
2017	glo (heat-not-burn product)	South Korea	Launched by BAT Korea into domestic market.
2017	Nicovations	United Kingdom	Nicoventures trades under name of Nicovations.
Philip Morris International
2015	IQOS (heat-not-burn product) using HEETS or HeatSticks (heat-not-burn sticks; also known as Platform 1)	United Kingdom, Japan, United States, Canada, Switzerland, South Korea	Launch of the world’s first heat-not-burn product. Thirty-seven-city roll out by end of 2017. HEETS or Heatsticks available in 3 flavors (amber, yellow, turquoise).
2016	MESH (e-cigarette product) using VEEV (pre-filled, pre-sealed e-liquid cap; also known as Platform 4)	United Kingdom	Development and test launch of “next generation e-vapor product platform.”
2017	TEEPS (heat-not-burn product; also known as Platform 2)	Dominican Republic	Development and test market of heat-not-burn product using carbon heat source as “alternative heat source” to heat tobacco plug.
Altria
2012	NuMark (e-cigarette company)	United States	Altria creates subsidiary to develop and market e-cigarettes.
2014	MarkTen vaping product	United States	Subsidiary launches MarkTen as 1 of 3 vaping products sold in United States national market. Device manufactured in China and e-liquid produced by US affiliate.
RJ Reynolds
1996	Eclipse (e-cigarette product)	United States	Eclipse still sold upon request to wholesalers and retailers.
2012	RJ Reynolds Vapor Company	United States	RJ Reynolds creates subsidiary to develop and market vaping devices.
2013	Vuse (vaping device product)	United States	Test marketing and launch of disposable vaping device.
2014	Eclipse (heat-not-burn product)	United States	RJ Reynolds discontinues production.
2015	Revo (heat-not-burn product)	United States	RJ Reynolds rebrands and relaunches Eclipse as Revo but it is deemed unsuccessful.

Note. MHRA = Medicines and Healthcare Products Regulatory Agency; TTC = transnational tobacco company.

Source. See list of data sources available as a supplement to the online version of this article at http://www.ajph.org.

To analyze the role of NNDS products within TTCs’ global business strategies, we were guided by the heuristic framework set out by Lee and Eckhardt.¹⁵ This focuses on 3 key questions: (1) what are the primary factors behind industry or company globalization, (2) what are the specific globalization strategies pursued by the industry or company, and (3) to what extent has the industry as a whole, or specific companies, globalized to date? Our data set helped to address the second and third questions, namely the importance of NNDS company and product acquisition to the globalization strategies of leading tobacco companies, and the extent to which this has been achieved to date. We triangulated this analysis with market analyses and public statements by tobacco companies, in relation to these investments, to identify stated strategies behind TTCs entering the global NNDS market.

RESULTS

Since the late 2000s, leading TTCs have pursued 2 main strategies in the NNDS sector: acquiring local companies producing specific types of NNDS products (Table 1), and developing and marketing their own NNDS products (Table 2). Table 1 shows that TTCs initially engaged with NNDSs through acquisition of e-cigarette manufacturers. In the late 2000s, there were multiple independent manufacturers supplying a rapidly growing demand in the United States, where there were more than 460 brands on the market in 2014.³¹ By 2012, TTCs began to buy leading manufacturers in the United States and United Kingdom markets, notably blu cigs, Logical Technology, and Dragonite. These acquisitions particularly focused on cigalike products rather than tank-system and other recently emerging e-cigarette devices (e.g., Juul). Juul has emerged as one of the leading NNDSs in the US market with concerns raised about the particular appeal of the devices to youths and nonsmokers. At the time of writing, Altria has expressed interest in acquiring a significant minority stake in Juul, with the company currently valued at US $16 billion.³²

TTCs invested in NNDS companies that offered competitive advantages and the ability to control the development of the market through patent rights, retail distribution networks, and ancillary products (e.g., vaping liquid). For example, Imperial (through its subsidiary Fontem Ventures) acquired Dragonite International in 2013 and its many patents, and launched legal action the following year in the United States claiming patent infringement against 11 leading e-cigarette manufacturers, many of which by then had been bought by other TTCs. Importantly, this legal action made market access more difficult for small independent companies. The ambiguities surrounding the ownership of patent rights over different cigalike products coincided with major investments by Reynolds American (Vuse), BAT (Vype, e-Voke), Altria (MarkTen), Imperial (Jai), and PMI (MESH). By 2015 the e-cigarette market had undergone significant consolidation because of TTC acquisition of cigalike manufacturers, as well as mergers and acquisitions among leading tobacco companies themselves (e.g., Reynolds American–Lorillard, BAT–Reynolds American).

From 2012, TTCs also began to launch internally developed NNDS products to compete in what had become a booming market, including the development of HNB products. Table 2 shows that, unlike e-cigarettes, there were no independent manufacturers of HNB devices. Market research on cigalikes found that, although the devices mimicked the look and use of combustible cigarettes, many consumers reported dissatisfaction with their use (e.g., lack of “throat hit” delivered by combustible but not most e-cigarettes).⁴ The movement into the HNB market was accompanied by investments into different types of e-cigarettes, such as the BAT Pebble. To date, PMI and BAT have led the HNB market, with KT&G entering the Asian market in 2017 with the product lil.

Comparing the Global Business Approaches

All leading TTCs have invested in NNDSs, but with differences in approach.

First, BAT (2010) and Imperial (2013) are the only leading tobacco companies that have sought to develop and gain licenses for medicalized nicotine inhalation devices (Voke or e-Voke and Puritane, respectively) to assist with smoking cessation. Voke is a nicotine inhalation device that does not use electronic heating technology and is thus not strictly speaking an NNDS product. However, it formed an important part of BAT’s range of new nicotine delivery devices at a key stage in the development of the sector and TTC strategy, and is thus included in the analysis here. At the time of Voke’s development, it appeared that medicalization may be the principal regulatory approach taken by governments and an important strategy adopted by TTCs.³³ However, both regulation and TTC product development have subsequently developed in this way.

Moves to obtain medically licensed products were, in part, a response to attempts by the FDA to regulate NNDSs in 2010 as medical devices under the auspices of the Family Smoking Prevention and Tobacco Control Act.²¹ Similarly, the UK Medicines and Healthcare Products Regulatory Authority announced in 2013 that it would also regulate e-cigarettes as medical devices.³⁴ Following legal challenges, the FDA announced in April 2011 that e-cigarettes would be regulated as tobacco products, although more stringent regulatory regulations as drugs or drug delivery devices would apply to any products marketed as smoking cessation tools or advertising other health benefits; at this time, no NNDS products have been approved for this purpose.²¹ The European Union Tobacco Products Directive in 2014 adopted a “dual approach,” which allows nonlicensed NNDS devices to be brought to market, and appears to have removed the incentive for TTCs to seek medical licenses. In 2016, PMI’s application to FDA to market IQOS as a “modified risk tobacco product,” eschewing medical regulation, reflects this broader shift by leading TTCs away from medical licensing.²²

Second, some companies have invested exclusively in e-cigarettes (e.g., Imperial, JTI, and Altria), whereas PMI and BAT have invested in both e-cigarettes and HNB devices. The diversification in terms of the specific type of NNDS product each TTC has invested in has also been reflected in their approach to acquisitions versus internal product development. For example, JTI has entered the NNDS market exclusively through acquisition of existing companies (e.g., Zandera, Ploom, Logic) as has Imperial (with the exception of its Jai e-cigarette). By contrast, PMI has made only 2 acquisitions (Solaris, NicoCigs), instead investing heavily in research and development to create its own NNDS products (e.g., IQOS, MESH, STEEM, and TEEPS). Altria has made 1 major acquisition (Green Smoke) and developed 1 brand internally (MarkTen), with both marketed through its subsidiary NuMark. Meanwhile, BAT has taken the most diversified approach to its product portfolio, acquiring products (e.g., Voke, CHIC, Vuse) and developing others internally (e.g., Vype, e-Voke, iFuse, glo).

Targeting of Specific Countries and Markets

All leading TTCs sought to gain an initial foothold in the United States and United Kingdom as fast-growing NNDS markets. By 2015, the companies widened their sights to other traditional tobacco markets, notably Canada, Asia (Japan and Korea), and Europe. Reynolds American had marketed earlier HNB devices Premier and Eclipse during the mid-1990s, although efforts to relaunch Eclipse as Revo in 2015 proved unsuccessful.²⁶ Reynolds did have success marketing a subsequent e-cigarette product, Vuse, in the US vaping market, which was then acquired by BAT in 2017 when it took over Reynolds. Thus, BAT has been able to add this leading brand to its NNDS portfolio, alongside its Vype e-cigarette offered in the United Kingdom, Italy, France, Poland, Germany, Canada, New Zealand, Hungary, Ireland, Colombia, the Philippines, Guatemala, and Kuwait.³⁵ The globalization of NNDSs is also reflected in PMI’s close cooperation with Altria to sell the latter’s e-cigarette MarkTen as Solaris outside the United States. In the HNB category, PMI launched IQOS in specific cities and at duty-free outlets, and exceeded its projected target to reach 37 markets by the end of 2017.³⁶

In addition to the rapid expansion of NNDSs in the United States and United Kingdom, our findings show that NNDSs have also been introduced in markets with much weaker tobacco control regimes and limited or no regulation of NNDS devices. Japan has emerged as an important NNDS market for TTCs, with the launch of JTI’s Ploom and Logic brands, BAT’s iGlo, and PMI’s IQOS. This is in part because of weak regulation, including the permitted selling of e-cigarettes to minors.³⁷ Israel was selected as a test market for Altria’s Green Smoke. In March 2017, the Health Minister decided to allow unrestricted import, marketing, and tax exemption of vaping devices.³⁸

DISCUSSION

This article catalogs how leading TTCs have actively entered, and quickly come to dominate, certain product categories within the NNDS market through investments from 2010 to 2018. In the e-cigarette sector, TTCs focused on acquiring independent cigalike manufacturers, thereby gaining intellectual property, market share, and distribution networks. This was supplemented by the internal development of additional branded e-cigarettes. Through this strategy, TTCs have come to dominate the global cigalike sector, but have not entered the market for modifiable or tank-based e-cigarettes. The article also identifies the more recent, yet also significant, investment in HNB products particularly by PMI and BAT, which enjoy a strong competitive advantage in this sector. Our findings show that specific products are targeted at different national markets and certain populations within them. Follow-up research is needed to better understand the brand identities of specific NNDS products and the way in which they are positioned and targeted across (i.e., in different countries) and within markets (i.e., different subpopulations and demographics).

These findings raise important implications for current debates on how to regulate NNDSs in ways that support tobacco control. TTCs operate on a global scale, developing products that are promoted and sold in markets worldwide, and benefiting from differences in regulatory regimes across jurisdictions. We suggest that surveillance of these NNDS investments should be situated within ongoing changes in the tobacco industry, including increased concentration of ownership, product diversification, and global expansion into new markets.¹⁵ Study of company-level NNDS strategies are needed to support the development of effective regulatory action nationally and globally. Furthermore, this research raises important questions concerning TTC intentions in entering the NNDS market. There is little evidence to support claims that tobacco companies are “getting out of the cigarette industry.”¹⁴ The TTCs that are investing in NNDSs continue to aggressively market conventional cigarettes and challenge all attempts to regulate these further and reduce smoking.³⁹ These findings suggest that NNDSs may be serving an important strategic role in the globalization of the tobacco industry, not as a reduced-harm alternative to combustible tobacco products but as a key means of supporting their core tobacco businesses.

Moreover, our findings suggest that TTCs may be using investments in NNDSs to position themselves as legitimate stakeholders in research and policy debates, premised on claims of their intent to reduce harm.²⁹ For example, PMI’s Foundation for a Smoke-Free World (created after the development of IQOS), seeks to influence research and policy debates “[t]hrough the support of Centers of Excellence for science-based tobacco control research at academic centers around the world” as well as planning “to develop private-public partnerships.”¹⁴ Attempts by TTCs to rebrand themselves as nicotine technology companies through investments in NNDSs would offer a way for a discredited industry to re-engage scholars and policymakers and ultimately influence the regulatory environment. In this sense, current investments in NNDSs may represent the latest iteration of longstanding tobacco industry strategies to muddy the waters in policy debates, distract attention from effective tobacco control measures, and gain access to policy processes and decision-makers through the development and promotion of allegedly reduced-harm products.³⁰

Finally, the findings raise important questions about the effective implementation of the Framework Convention on Tobacco Control (FCTC).⁴⁰ Investments in NNDSs by TTCs suggest that the FCTC should be extended to cover the regulation of all tobacco-derived products, including NNDSs. This would avoid country-by-country regulation that has enabled the “divide and conquer” tactics of TTCs used for combustible cigarettes in the past.²⁵ Perhaps of greatest importance for the future of global tobacco control is the potential for NNDSs to be used by TTCs to undermine Article 5.3 of the FCTC, which obliges governments to ward against attempts by the tobacco industry to interfere in health policy. An extension of the FCTC to include NNDSs would prevent leading TTCs from re-entering research and policy debates as NNDS manufacturers while still maintaining their profits from cigarettes.

We analyzed patterns of investment by leading TTCs in NNDSs, comparing approaches between companies and across target markets worldwide. We identified how TTCs have positioned themselves as dominant players in the cigalike and HNB product categories. Given the well-documented history of TTCs’ use of product innovation and investment in “reduced-harm” products to stymie regulation and engage policymakers, these latest developments call for governments to regulate NNDSs in ways that support existing tobacco control regimes and to treat TTCs with great caution in the guise as NNDS producers. The highly adaptive political strategies of TTCs call for vigilance by public health actors, and additional research is needed to document the ongoing development of TTCs’ investments in NNDSs and to investigate the synergies that exist between their market and political strategies and between their NNDSs and traditional tobacco products.