In anticipation of his morning keynote presentation on Day 2 of ENDS US 2017, we sat down with Tim Philips, Founder and Director of ECigIntelligence, who shared information on the global impact of regulations, and a panoramic outlook for the ENDS and E-Cigarette industry.
What are the biggest challenges or common complaints with regards to TPD2 compliance and how regulations are impacting the European E-cigarette market?
A major challenge for many e-cigarette brands and manufacturers in the lead-up to TPD2 in Europe was how to comply with a patchwork of different regulations in each of the different countries within the 28 member states of the EU. The costs and time spent carrying out detailed testing and toxicology analysis of every product which became the subject of a new notification process in each country in which they are being sold was a significant change for an industry not used to such levels of compliance. But companies also had to deal with differing notification costs in each market (from no fee to thousands of euros per individual product), and with a myriad of local restrictions which have been implemented on a country by country basis.
However, since implementation of the TPD, the problem is now all about enforcement, or more precisely, lack of it. Most country regulatory authorities do not have the resources or the inclination to check the compliance of thousands of different products and retailers, and we have seen a soft-touch approach to enforcement in many countries. While this might sound appealing, in reality the sector remains in a regulatory grey zone, companies are continually having to interpret how far they can go in pushing the limits of the new regulations, and we have seen the rise of products in the market which were not intended to be compliant, but which have become hugely popular such as “shake and vape” and large tank hardware. While consumers continue to demand such products and many companies offer them, the sector will largely stay outside the regulated environment which law-makers hoped to apply across the EU. And companies who remain selling only “TPD-compliant” product which increases its costs due to notification and testing are left with uncompetitive product. It is not an ideal scenario for governments who were hoping to bring a new and growing sector into a regulated environment.
And while this level of uncertainty remains in the e-cig sector in Europe, we are seeing different regulatory regimes emerge for a new set of products which contain tobacco, both heated tobacco like IQOS and hybrid devices which combine tobacco with an e-liquid vaporizer. These devices may well be seen to be very similar to e-cigs by consumers, but will be treated completely differently in terms of tax and regulation across Europe.
Concerning a panoramic overview of the global e-cigarette industry, where do you foresee ENDS and E-Cigs biggest possibilities of growth in the coming years?
We see that over the long term, there is a huge opportunity for this sector to become more mainstream and adopted by a much wider group of consumers than is currently the case. New products will need to be developed, but the consumer demand for a product which provides the experience of smoking without the dangers will mean that this sector continues to grow. In most markets, even the leading markets (US and Europe), have very low levels of consumer usage, and this can only grow as the products get better and more useable.
How will new regulations affect innovation and advancements for E-Cigarettes and ENDS products?
Innovation in device design and usability are major areas of focus for the industry at the moment, and in the e-cig sector we see huge growth in smaller pod and ultra-portable devices which combine the power of a large tank device with the portability of the original cigalikes. Development of new technology has been through very fast cycles in the past, but new regulations have slowed down the launch of new products and therefore the pace of innovation. However, because of the lack of enforcement of new regulations, as noted above, we see that the sector will continue to develop and adapt to consumer demand.
What are you looking forward to hearing during ENDS US 2017?
I am very keen to hear Mitch Zeller and his perspective of the sector from the FDA’s point of view under the new administration. Also keen to get industry feedback on how the US market has reacted to the delay in implementation of the Deeming Regulations, and what this means for companies in the sector.