In summary, a pretty clear pattern emerges from analyst reports.
•There is enormous potential for e-cigarettes (though there are bulls and bears on the eventual prospects) and this threatens to disrupt the tobacco industry, challenging incumbent market shares and creating opportunities and threats for the tobacco firms in an otherwise ‘mature’ industry;
•Regulation, especially medicines regulation, will potentially create high barriers to entry, diminish the appeal, reduce diversity and raise the costs of e-cigarettes;
•Heavy regulation will be benefit the tobacco industry by making it more likely and able to dominate the e-cig industry, by reducing competition and by making e-cigs less competitive relative to cigarettes. The presence of the tobacco industry is inevitable and (in my view as well) desirable for growth of the category, but excessive regulation could reduce competition and create a narrow tobacco based oligopoly;
•Innovation is key to developing future generations of vapour products that create a satisfactory alternative to smoking with mass appeal – we are at the relatively early stages of the development of these products. The extent to which regulation supports or inhibits innovation is therefore critical to the development of e-cigs.
•Indoor vaping bans destroy one of the valuable selling point for e-cigarettes so will slow the rise of e-cigarettes and reduce switching, meaning more will smoke or relapse from vaping to smoking.
E-cigs and regulation – what do investment analysts think? « The counterfactual