Wells Fargo Hosts E-Cig Forum

e-cigBig opportunities exist for electronic cigarettes.

Wells Fargo Securities hosted its Inaugural E-Cig Forum in New York City on Nov. 21. The conference gathered e-cig industry leaders, public health and regulatory experts and investors.

“We came away with an even greater conviction that e-cigs will be a game changer and will eventually be margin enhancing to the tobacco industry. We reiterate our Overweight rating on the tobacco sector as we are increasingly optimistic on e-cigs,” noted Bonnie Herzog, managing director, Beverage, Tobacco & Convenience Store Research for Wells Fargo Securities LLC.

Continued Disruptive Innovation Needed
Wells Fargo hosted “fireside chats” with 10 e-cig companies and provided the following key takeaways:

(1) There is a vast opportunity for the category and it is only just getting started—there’s room for both responsible independents and Big Tobacco;

(2) Companies are exploring international expansion—possible combinations or partnerships could be on the horizon;

(3) E-cigs/vapor products are in the early stages of innovation. Wells Fargo anticipates meaningful and positive changes to come over next several months;

(4) E-cigs margins said to be very attractive—rivaling those of combustible cigs with many companies moving towards the rechargeable/razor-blade model;

(5) E-cig companies are differentiating themselves on both technology and branding;

(6) Retailers and wholesalers continue to embrace the category given its attractive margins (~3x those of cigs).

Public Health Panel Suggests Huge Global Health Opportunity
David Sweanor, adjunct professor of law at the University of Ottawa, moderated a panel of industry experts including David Abrams, PhD, Clive Bates, and

Jean-Francois Etter, Ph.D, to discuss current perceptions on public health risks and trends for the e-cig category.

Key takeaways:
(1) E-cigs likely significantly less harmful than traditional cigs and offer a compelling alternative to smokers, which isn’t universally known among smokers since relative risk claims are not allowed;

(2) Current studies on e-cigs are both insufficient and often misinterpreted, leading to a misunderstanding about the risks/benefits of e-cigs by both the public and legislators;

(3) Ongoing innovation is needed to improve “experiential” aspects of e-cigs and convert more existing smokers;

(4) Regulation must be thoughtful and allow for (rather than stifle) innovation and education of the public.

Bottom Line—There appears to be a broad belief in the benefits of e-cigs and the vast public health opportunity, according to Wells Fargo.

Cigarette and E-Cig Differentiation
Clive Bates, former head of ASH (Action on Smoking and Health) hosted a panel—Regulators Must “Mind the Gap” of Differences Between Cigs and E-Cigs—including, Neil Wilcox (blu/ Lorillard), David Graham (NJOY), and Scott Ballin, JD.

The panelists agreed regulation is good and necessary, but the regulation of e-cigs must be different than cigarettes. The panelists generally believe that Mitch Zeller understands this and were encouraged by his recent comments that regulation of all nicotine products should be comprehensive and based on a continuum of risk.

Wilcox summarized the principals that he believed regulators should follow:

(1) Encourage robust research;

(2) Employ rigorous quality standards;

(3) Allow innovation to continue;

(4) Ensure e-cigs are promoted to adult smokers only.

“We believe there is an active, ongoing dialogue with relevant decision makers and believe forthcoming regulation could be an opportunity for e-cig manufacturers to better educate consumers and convert smokers,” noted Herzog.



  1. Howard Roarke says:

    Dream on Big Tobacco. Your market is dying, like your customers. Electronic cigarettes are not the product. Personal vaporizers are the future. E-cigs don’t provide the satisfaction that committed smokers need. Investing in big tobacco is a loser. Just wait until the e-cig products introduced next year from the majors fail miserably. What will the wall street shills have to say about that?

  2. Ray Yeates says:

    Howard is right. Although I started with an ecig…a good Greensmoke…. I wanted to control my nicotine level after time so I could reduce both the level and the time spent using it. A personal vaporizer was the answer and fortunately I am healthier, more active and less time is spent “vaping” as it is termed. Primarily there is no more cancer causing chemicals entering my COPD lungs. Just to pass on to those still doubtful about these ingenious devices being a possible solution and a way out of the smoke, let me just say to you, ” I am a forty plus years smoker. I could not quit. When the day came last year I had to quit or die in very short span of time I tried everything except these devices. I actually had a closed mind because I only knew about the ones in the smoke shops and to me they were targeting kids because I related the flavors to kids. I am wrong about that.

    Today I can’t stand the tobacco flavored ones even though that is where I started. I moved to Mocha and coffee. The apple flavored ones also appeal to me. I found my flavors. They are still the best to me and I swear if it weren’t for the options of various flavors I may not have made it his far. For that I am truly grateful. I’m free of smoking. I thank all of you who started before me for sharing your experiences. This was the real reason I opened my mind. Because of your honesty and passing on the message to those of us who are still feeling trapped. My obligation is to tell my story and I do that wherever I go now. It’s a new generation coming and the younger smokers who have already started on the smoking trip also need to know about this fake cigarette with fake smoke. We can’t wait til they end up with COPD or cancer like me before they know there is a less harmful option and possibility it is a successful quit smoking aid.

    Regulation is needed for safety reasons, I agree….but don’t over regulate or over price them either. In fact in my view knowing about the TSET settlement fund I think millions of them should be made available for free. You could easily do that and at the same time do an honest unbiased study to understand them while determining their value as a quit smoking aid. They have been around since 2006. The ingredients have been around forever it seems and numerous studies have shown little if any risk exist from their use.

    The risk of harm no longer outweighs the death toll of smoking. Estimated 6,000,000 a year worldwide will die from smoking related disease. Health organizations and advocates of health should be researching and studying their options for their patients. Regulators “MUST” make the right choices for the masses, not the corporate interest. Political decision makers must also do what is best in the public safety and health. Not just continuing to let the very fight they are engaged in with big Tobacco distract them from their responsibilities while big tobacco is buying up the market because of poor decisions. My observations tell me too many are looking at these devices in shock because it looks like a cigarette so it must be smoke. It’s not. It’s obviously a far less harmful alternative to smoking. Please…do the right thing. Help a smoker quit smoking; not quit….. quitting. Thank you.

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