Law change will bring giants into market just as e-cigarettes hit paydirt in NZ

The electronic cigarette industry is heating up and big tobacco is waiting in the wings for the Government to legalise nicotine-based "vapes", according to industry insiders.

E-cigarette use, commonly known as vaping, is becoming increasingly popular in New Zealand as the price of tobacco continues to rise and its associated health risks are emphatically publicised.

The products currently have a hazy legal status in this country. While it is technically illegal to buy e-cigarettes containing addictive nicotine, such products are readily available at some vaping shops across the country, even at some corner dairies.

The Government intends to legalise and regulate products containing nicotine by early next year with an amendment to the Smokefree Environments Act.

Advertisement

E-cigarette retailers spoken to by the Weekend Herald say they have been assured by Government health officials that they will not be prosecuted for selling their nicotine-based wares, despite the fact the law has yet to come into force.

However, the world's largest tobacco companies, which have been investing heavily in the development and manufacture of the products, are yet to home in on the New Zealand market.

Should the law pass, some of the major players told the Weekend Herald they hope to sell their e-cigarettes everywhere tobacco is sold.

Ben Pryor, who owns specialist e-cigarette store Vapo, says big tobacco poses a "massive threat" to his business, which has experienced steadily growing demand since it opened.

"Obviously it's a massive concern for us but we've just got to sort of play the underdog and see what we can do. We've got to stick to our strengths, which is selling that New Zealand-made product."

However, Pryor says tobacco retailers will be better off going into business with local suppliers rather than selling big tobacco companies' products.

"We can offer that local support."

Vapo, which Pryor says sells only products made to the highest standards despite a lack of official guidelines, started out as an online store that allowed pick-ups from his home.

"As our popularity grew the business that once started in a small office took over the entire lounge to the point it had essentially become a vape shop."

Neighbours became concerned at how many people were turning up to the house every day so he decided to open a store on Auckland's Dominion Rd.

Despite his initial apprehensions at entering this new market, the move has paid off and Vapo has just opened its second store, in Onehunga.

One tobacco industry insider, who spoke on condition of anonymity, says the world's major tobacco companies are "ready to roll" into the New Zealand market as soon as the law is changed.

"It's like a new oil rush. I mean, that stuff doesn't get taxed with excise tax and the profits are huge," the insider says.

Big tobacco companies are ready to move in on the NZ vaping market if it is legalised. Photo / Shiho Fukada
Big tobacco companies are ready to move in on the NZ vaping market if it is legalised. Photo / Shiho Fukada

"As soon as the legislation changes, big tobacco's coming in, mate. They just want to carry on making the money and you won't be able to compete because they'll just write it in that these dairies or shopkeepers must take their devices just like they do with their tobacco."

Currently, he says New Zealand's e-cigarette industry is "a free-for-all" with product imported from countries like the United Kingdom that no longer meets that country's more stringent rules. Using poor-quality vaping products could be just as bad for you as smoking, the source says.

"You really need to know exactly what it is you're inhaling. Is my battery device safe? Will it overheat if I leave it plugged into my computer and blow up? What the hell's in the oil? Has it been tested? Is it food-grade?

There were even some bargain stores that sold bottles of "e-liquids".

"I mean, bloody hell, what's in that if you're selling it for three bucks? Someone's got to produce that, put it in the bottle, put labels on and send it from the other side of the world. Then you're putting it into your body."

Nonetheless, some New Zealand companies sold high-quality, reliable products.

Legal highs used to be the primary product sold by independent Glen Eden-based store Wicked Habits, says owner Scott Mesarich.

When these became illegal the business was left in a somewhat tenuous position, until the e-cigarette market started gaining traction about a year ago.

"It's the new product that people are coming in for daily, basically," Mesarich says. "Business is good - it's cranking along nicely."

Mesarich, too, is apprehensive about what the law change will mean for his shop.

"As soon as the legislation is passed you're going to have all the big tobacco companies put all their products through dairies and petrol stations nationwide."

He says current guidelines in New Zealand are "a real mess" and his store follows the UK's regulations.

Auckland man Kody Harris is a good example of what the Government is trying to achieve with the law change.

Harris recently converted to vaping after smoking about a packet of cigarettes a day for 18 years or so. He vapes with nicotine liquid but has gradually been reducing its strength and ultimately plans to stop entirely.

"I switched to vaping to try save some and not smell so bad," he says.

"First couple of weeks it was [hard to transition], just getting used to not having a cigarette and having a vape, but now I'm on the vape all the time and liking it a lot."

Instead of paying around $120 a week for cigarettes, he now spends about $10 a week on his vaping habit.

Big tobacco

One of the world's largest tobacco companies, Philip Morris, said in a statement to the Weekend Herald it would like to see e-cigarette products made available wherever tobacco is currently sold.

"For smokers to switch, smokeless devices have to be just as available as cigarettes," the company said.

"There is an undeniable demand from smokers around the world and in New Zealand for smokeless alternatives to combustible cigarettes and we want to meet this demand."

Another industry giant, British American Tobacco, said it had a range of products it wished to sell in this country.

"We intend to make these available to adult smokers in New Zealand in the future. We're already doing this successfully in other countries. For example, we are the market leaders in vapour in the UK," it said.

Kody Harris recently converted to vaping after smoking about a pack a day for some 18 years.
Kody Harris recently converted to vaping after smoking about a pack a day for some 18 years.

"We believe that vapour products should be widely available to adult smokers - both in traditional retail outlets and online."

Imperial Brands, whose products include Davidoff, Gauloises Blondes, and Drum rolling tobacco, says it will "always assess opportunities to offer greater choice in satisfying the needs of our adult consumers but in the meantime we will continue to participate in consultations on the development of nicotine vapour regulations".

There is no hard data available on the number of e-cigarette sales or users in New Zealand as yet. However, according to a 2016 EY (formerly Ernst & Young) report, the number of users globally increased by 86 per cent between 2013 and 2015.

The report says there are 5.1 million users in the seven countries surveyed that collectively account for 75 per cent of global consumer turnover.

One New Zealand producer and online retailer of e-liquid, who asked not to be identified, says their sales have jumped by between 1500 per cent and 2000 per cent each month since they launched at the start of the year.

The country's largest retailer of e-cigarettes and related paraphernalia, Shosha, according to its website, operates 22 stores from Whangarei to Christchurch, with four more slated to open in Rotorua, Christchurch and Newtown and Porirua in Wellington.

Health benefits

Despite this apparent boom, the Minister responsible for the Government's "Smokefree 2025" initiative, Associate Health Minister Nicky Wagner, feels that the e-cigarette industry will "always tend to be pretty minor".

"We're down to 15 per cent of adult New Zealanders [who] smoke," Wagner says.

"All the research tells us that it's ex-smokers who are taking up vaping - very little evidence of non-smokers so at the very most that's the population that they're appealing to."

Latest research suggests vaping is up to 95 per cent less harmful than tobacco smoking, she says.

"For me, this is a health issue. We want you to stop smoking - that's what we want you to do - we want to be smoke-free by 2025. If you can't quit, we'd rather you switched [to vaping]."

The Minister confirms it is illegal for businesses to sell vaping products containing nicotine.

"Yes, even though it does happen - lots of people break the law. But the point here is the vast majority of these e-cigarette users are either using non-nicotine liquids or importing them," Wagner says.

"In actual fact, the vape companies have been pretty responsible making it R18 and we have been working with them to work out realistic rules around this."

The new legislation will introduce regulations similar to those adopted by the UK.

"You'll have to register the product that you're selling and you will have to have that product monitored," she says.

"The whole idea is that we want to make e-cigarettes as available, if not more available, than tobacco cigarettes because they're 95 per cent less harmful. It's an absolute harm-reduction policy."

Asked how she felt about big tobacco companies entering the market, the Minister said she was focused on health outcomes and ensuring there were options and support to help people quit smoking.

"Regardless of who produces these products, if they're significantly less harmful, I'd rather people switched."

What is vaping?

• Electronic cigarettes are generally comprised of a tank with a built-in "atomiser" - a coil of wire wrapped around a cotton wick - and a battery, according to information provided by Vapo.

• The tank is filled with "e-liquid" which comes in a range of flavours and is available with or without nicotine at some stores.

• This is then absorbed into the wick while the wire is heated by the battery. The heat then vaporises the liquid in the tank, which is then inhaled by the user who produces smoke-like vapour when they exhale.

• There are a vast array of vaping devices available, with some made to look like traditional tobacco cigarettes.

• A starter kit can cost as little as $19 and the liquid generally costs about $7 per 10ml.

• The atomiser, or "coil", needs to be replaced every week or so, depending on how often the device is used.

• Vapo says an average pack-a-day smoker would spend about $20 a week on liquid.

• Prices vary greatly, however, and some devices cost several hundred dollars.