Top 3 Legal Predictions on Electronic Cigarettes and Novel Tobacco Products for 2020

By Francesca Romana Ferrucci and Alessandro Ferrari

2019 was a very interesting year for tobacco, electronic cigarettes (“e-cigs”) and novel tobacco products (“NTPs”) all around the world. Going from new products in the process of accessing new markets, moving on with the mayhem concerning severe health issues allegedly connected to the use of e-cigs. The past year has definitely been quite a rollercoaster for the sector and the upcoming year is likely to be just as intense.

  1. Marketing and advertisement: the saga continues

As highlighted in our previous legal predictions for 2019, the Italian legal background concerning marketing and advertisement activities for e-cigs and NTPs is quite tricky when it comes to tracing an exact line between what is permitted and what is not. These gray areas have led consumer associations to file several claims throughout the past couple of years and 2019 has been – as of today – probably the peak of them all. In our previous predictions we were expecting some of the claims filed by consumer associations to come to a decision and – finally – that moment has arrived.

In November 2019, a major e-cig company faced a preliminary injunctions proceedings filed by an Italian consumer association in front of the Court of Rome. The subject-matter of the case was essentially linked to the fact that the e-cig company had been carrying out massive – online and offline – marketing activities, allegedly infringing the legal prohibition set forth by applicable Italian laws on tobacco and e-cig advertisement. The Court of Rome decided to go with a very strict interpretation of the applicable laws and decided that promotion of e-cigs by means of billboards, posters on public transportation and similar means is in contrast with the prohibition to “[directly or] indirectly publicize smoking products”. To this extent, it is interesting to highlight that the current tobacco-related prohibition on promotional activities is to be found in a dated piece of law issued at times in which e-cigs and NTPs did not even exist. For this reason it is arguable that when the legislator prohibits any advertisement of “smoking products” he is likely referring to “smoking traditional tobacco products”. That said and as highlighted in last year’s prediction, in the prohibition the legislator had also included the fact that the prohibition covered “indirect” promotion of smoking products and the Court of Rome – as had occurred with a previous case in front of the Court of Milan – found that advertising e-cigs would anyhow amount to the indirect advertisement of traditional smoking products. Thus, the Judge ruled against the e-cig company and ordered that the latter should immediately withdraw all of its outdoor marketing activities and materials.

The preliminary injunction order was unsuccessfully appealed by the e-cig company and the injunctive measures were confirmed by the Court of Rome.

That said and based on the above decision, we expect 2020 to be another very active year in terms of consumer associations bringing actions against many players of the tobacco and e-cig world. At the same time, we also expect a strong response from the industry to said actions.

  1. Tobacco packaging: from status symbol to social stigma – the road to plain packaging for tobacco products

In 2016 the World Health Organization addressed a clear message to all countries calling on governments to get ready for plain packaging of tobacco products, but – as a fact – plain packaging has been buzzing around for quite a long time. Although this approach has been put in place in a limited number of countries, we expect a significant increase of the numbers of countries adopting it in the course of 2020 – and following years –.

Belgium has been the latest country to access the plain packaging club, which is for now dominated by Asia-Pacific countries and has a very limited number of European members.

Plain packaging for tobacco products stems from the need to make these goods less appealing for consumers by removing brands and by standardizing the appearance of the packaging, leaving room only to health warnings and legally required wording. Plain packaging has also entailed a great effort in finding chromatic solutions which would make these products even less appealing for consumers. In addition, and going back to our above prediction, plain packaging for tobacco products also aims at reducing any type of advertisement of these products, coming to the point that tobacco brands will be left with no means to convey their commercial communications and exploit their trademarks.

Needless to say, with every up there is a down and plain packaging is no exception to this saying. While plain packaging appears to be a promising – yet not demonstrated – way to step away from “smoke-as-a-status-symbol”, at the same time it puts consumers in a difficult position when it comes to identifying counterfeit products. The majority of tobacco brands create unique packaging and find graphic solutions that also enable them and consumers to clearly identify counterfeit-goods. In a world where there is no room for brand details, counterfeiters are eased in mastering counterfeit products without having to put too much effort in creating non-original goods.

Furthermore, in an economy where trademarks represent major assets for companies, the tobacco sector is experiencing the exact contrary. As an effect, we also believe that trademark applications for tobacco companies could possibly follow a negative trend due to the fact that tobacco trademarks will progressively be more and more difficult to exploit by their owners.

On the one hand, we expect plain packaging to take on a growing number of countries and, on the other hand, we also expect to witness a rising trend of counterfeit tobacco goods, especially among the countries that are part of the plain packaging club.

  1. The rise – and fall – of electronic cigarettes in the USA: room for heat-not-burn products?

Electronic Nicotine Delivery Systems (“ENDS”) such as e-cigs, vaping devices, vape pens, etc., have played a leading role in the US news over the last months, not only in terms of revenues but also – and especially – in terms of breaking the news. Cases of allegedly ENDS-related deaths have made it to the top of the headlines in the US and – consequentially – created real mayhem for the industry.

Some US states have come to the point of imaging ENDS-free cities, while others have opted for “flavor-free” e-liquids in the attempt of making these goods less appealing for consumers, hence reducing their sale and consumption.

In light of the above scenario where ENDS appear to lose ground on the US market, it is likely that we will witness access of heat-not-burn (“HNB”) products in this context.

HNBs are characterized by a particular technology – while ENDS generate vapor, HNB products function by means of a technology that heats tobacco sticks (sticks which have a similar look and feel to traditional cigarettes) without reaching combustion temperatures. HNB products have become quite popular over the last couple of years in Europe and appear to be the leading trend when it comes to smoking products that are alternative to traditional cigarettes.

In the US, the FDA took quite a while to give its green light for HNBs to access the market and it is likely that it will continue keeping a vigilant eye on these products now that they are in the process of spreading across the US market.

In 2020 we expect to witness a significant change of the American tobacco-alternatives market – moving from the monocracy of vaping to the diarchy where HNBs will have their say on the market rules and trends.

Check out other trending topics for 2020 at this link.