Arms outstretched against a blue sky, the casually dressed man in the advertisement leaps in the air, emulating the florid text that runs down the side of the page “Self belief. You need it to climb Kilimanjaro. You also need it to be an epic dad who can endure three hours on the bouncy castle. E Lites. Believe you can.” Not sure what E Lites are? The advert almost whispers that they are “the UK’s favourite electronic cigarette”.

We’ve become so used to the ban on tobacco advertising imposed in 2003 that to see smoking promoted again feels like a startling throwback. A Leicester reader says he was shocked to see the ad in the Observer last week. He was dismayed because it suggested to him the style of “the grand Marlboro cigarette adverts, aiming to associate self belief, fitness and good parenting with a nicotine rush”. He was sad that advertisers had to dream up this approach but was “even more sad that my paper is carrying it”, and, he asked “Are we now likely to face a plethora of competing ads for other brands of electronic cigarettes, spewing out more specious copywriter’s claptrap?”

A senior advertising executive told me that if other manufacturers were to approach the Observer and their adverts complied with ASA guidelines on legality, decency, honesty and truthfulness, they would be accepted. “My team always vets copy. Anything that is potentially offensive is rejected”, he said, adding “We constantly review the impact that advertising has on our business and our readers.”

Currently, UK e cigarettes sales are governed only by trading standards but there are moves to regulate them as medicines as there is some evidence that they help people stop smoking tobacco. Legislation differs around the globe, giving the impression that lawmakers are racing to catch up. Only last week, for instance, two days before he left office, New York mayor Michael Bloomberg expanded the city’s tough anti smoking laws to include e cigarettes, banning them in offices, bars, restaurants and parks.

Devotees believe this is too heavy handed, given that e cigarettes emit vapour, not tobacco smoke. They work by heating and vaporising a nicotine solution, producing a “hit” without, say the manufacturers, the harmful tar and carbon monoxide associated with tobacco. About 1.3m people are using them in the UK and can, in theory, smoke or “vape” them anywhere.

“Evidence suggests that they help people stop smoking tobacco and they are less harmful than normal cigarettes so we want to regulate them like other medicines,” a spokesman for the Medicines and Healthcare Products Regulatory Agency told me. The British Medical Association, however, is more cautious, saying there is no peer reviewed evidence that they are a safe or effective way to stop smoking. It wants restrictions on their sale and promotion so that they are only targeted at smokers as a way of cutting down and quitting, and do not appeal to non smokers, in particular children and young people.

Katherine Devlin, president of the industry trade association, admitted that there was uncertainty about what is allowed in e cigarette advertising, but said her association is helping the Advertising Standards Authority formulate specific guidance by the middle of the year. .

Current ASA guidance tells advertisers to make clear whether the e cigarette contains nicotine something the E Lites ad is careful to do, adding the enigmatic line “18 . Existing smokers only”, which, they tell me, is intended to deter children and non smokers something that is surely difficult to achieve when there is currently no age restriction on the purchase of these products.

E Lites and others in the industry believe the MHRA proposal is unworkable, and point out that the European Parliament rejected regulating e cigarettes as medicines last October. The industry wants a regulatory framework and a minimum purchasing age.

This subject certainly won’t be going away. Just before Christmas, during a debate in the Lords on regulation, Viscount Ridley made this telling observation “There has been approximately an 8% reduction in the use of tobacco in Europe in the past year. The tobacco companies are worried. A big part of that reduction seems to be because of the rapid take up of electronic cigarettes. They are facing their Kodak moment the moment when their whole technology is replaced.”


The cigarette industry: running out of puff

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  • Asia
  • China
  • Europe
  • United Kingdom
  • Smoking and tobacco

Were that to happen America s three big tobacco firms, Altria, Reynolds and Lorillard, could be snuffed out, too. Public health officials plot the same fate for multinationals that supply other markets. The hit list includes Philip Morris International (PMI), which along with Altria makes Marlboro, the top selling global brand Japan Tobacco and British American Tobacco and Imperial Tobacco of Britain.

They are a hardy bunch, unlikely to be spooked. But the methods they have used to withstand a half century of battering by regulators may be losing potency. In the rich world, where the economy is sluggish, smokers are trading down to cheaper puffs. The regulatory climate in developing countries is becoming more hostile. New technologies such as e cigarettes promise to deliver nicotine less riskily. Big tobacco firms may master them, but it would be a radical shift, akin to converting the car industry from internal combustion engines to battery power. David Adelman of Morgan Stanley, an investment bank, does not see anything that s upending the conventional tobacco business model. But the model needs tweaking.

Some reasons for Mr Adelman s confidence are sound. Advertising bans and the industry s pariah status deter would be competitors. When cigarette makers raise prices, smokers cough up. Global consumption keeps rising, thanks largely to population growth in poorer countries. The cigarette giants pamper investors with big dividends and share buy backs they have flocked to tobacco shares (see chart).

But the going is getting tougher. This month health officials in China, home to more smokers than any other country, called for a ban on smoking in public places. That would mainly affect state owned China Tobacco, which has a near monopoly. But multinationals shares wobbled anyway the proposed crackdown could portend tighter regulation elsewhere. Britain s government, after some wavering, may now go ahead and copy Australia s requirement for cigarettes to be sold in ugly, scary plain packs .

Such pleasure pinching regulation strikes at one of the main ways cigarette companies boost profits converting smokers to pricier brands. Premiumisation is still happening in developing countries, where incomes are rising. But elsewhere smokers are turning to cheaper brands or rolling their own cigarettes. Many smokers will not trade back up once the economy improves, largely because smoking and advertising bans have robbed the habit of its air of glamour. Euromonitor International, a research firm, forecasts that everywhere except in Asia and the Middle East prices will rise less from 2012 to 2017 than they did during the previous five years.