Convenience Store News

JUL 2015

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82 Convenience Store News | JULY 2015 | WWW.CSNEWS.COM Cigarettes + Cigars + Smokeless + E-Cigs + Other OTP TOBACCO 2040" around harm reduction if there is: • 25 years of innovation; • Regulation and policy that enhances the value proposition; • True and fair presentation of risk and science; • Increased pressure on smoking; and • New accountability in the public health community. NEXT-GENERATION PRODUCTS While no one has a crystal ball, leading tobacco ana- lysts tried to shed some light on e-vapor and its con- tinuing role in the space during the TMA Conference. Vivien Azer, director and senior research analyst at Cowen & Co., pointed out she is not as bullish on the segment as some of her colleagues. "The problem is there is very good trial, but very little repeat," she said. "If you don't have adoption, does it point to a disruptive [product]?" Bonnie Herzog, managing director of beverage, tobacco and convenience store research for Wells Fargo Securities LLC, said she "adamantly believes the technology is going to have to continue to improve across the board because we're simply not there yet." Still, Herzog believes e-vapor consumption will surpass combustible cigarette consumption in the next decade — with 2017-2018 emerging as the tipping year. Michael Lavery, director and senior analyst at CLSA, explained that the e-cigarette segment repre- sents a different competitive landscape from traditional cigarettes. Traditional cigarettes have high brand equity, high brand loyalty and high pricing, while on the e-cigarette side, there are unknown players, unknown brands and lower price points. CSN decides to do is anyone's guess. Two things are evi- dent, though: in the past 24 months, vapor technol- ogy has changed rapidly and distribution has changed along with it. "We've seen the e-vapor product go from a dispos- able cigalike to now that being one of the smallest product segments at retail," Wiesehan explained. "Since August, the industry took a left turn all the way to personal vaporizers." E-vapor products will con- tinue in that direction, he believes, as consumers look to personalize flavors and nicotine levels. Technology will continue to evolve, Wiesehan pre- dicts. "We haven't seen the best of the best yet. We are still working on it," he said. HARM REDUCTION One main focus of tobacco moving forward is the con- cept of harm reduction. Science, technology, innova- tion and new players entering the tobacco industry are all taking key roles in the new era of harm reduction, according to Scott Ballin, director of the Alliance for Health, Economic and Agriculture Development. "Today, it is less important who made the product [and more important] what the product is," Ballin pointed out. As an advocate of harm reduction, he explained that the idea of engagement and dialogue around the continuum of risk is "slowly catching fire" at many venues and various levels — including the Food and Drug Administration and organizations like TMA, which has made harm reduction a major component of its annual conference for the past few years. According to Clive Bates, founder of Counterfactual Consulting, there is "huge public health potential by Dr. Jim Diffley, IHS Global Insight Farrell Delman, Tobacco Merchants Association Senator Mitch McConnell

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