The e-cigarette market has grown faster than anyone could have imagined. With sales this year looking to top 8 billion dollars manufacturers worldwide have taken notice. This has created a tremendous variety of products for the consumer, which is a wonderful, but also a dangerous thing. According to numerous law enforcement agencies and manufacturers of e-cigarette products, illicit trade of electronic cigarettes is on the rise across many developed countries, creating more uncertainty for the e-cigarette consumer and industry worldwide.
The Wall Street Journal shed light on the rise of the counterfeiters in their February 20th, 2015 edition. They spoke with Liberty Flights Ltd. a well-known British manufacturer of e-cigarettes that offers safe vaping products for its consumers. Imitation versions of their devices and e-liquids are now beginning to appear in several markets not only in England, but in places around the world. These counterfeits are generally made using cheaper materials in low standard manufacturing environments. On the outside they appear to be a great deal to consumers, who feel like they are getting a quality, well-known product at a price lower than they expected.
Matthew Moden is the founder of Liberty Flights. In addition to his successful e-cigarette company, he also owns numerous vape stores of the same name throughout England. “We’ve got a brand, we’re well-known. The same problem is faced by Louis Vuitton.”
Much like any counterfeiting, however, the name stealing is only part of the problem. The strategies of many of these e-cigarette counterfeiters include producing much lower quality products that don’t adhere to the same standards as well-known companies like Liberty. These bogus manufacturers often use batteries that fail to recharge and sometimes produce e-liquids that contain dangerously high levels of nicotine or other harmful particles. Many cases of exploding e-cigarettes and damaging toxins come from devices and e-liquids that were made under substandard conditions.
Forensic experts working for British American Tobacco, PLC say they have even seen unlicensed e-cigarette versions of their own tobacco brands, including Kent and Vogue. “We do see a vast number of substandard products being sold,” said Emma Logan who is a director at JAC Vapour Ltd., a Scotland-based electronic cigarette manufacturer.
In the scope of things, counterfeiting may look like a relatively small problem, but experts are predicting that the illegal operations will only increase as the market continues to grow. The e-cigarette industry banked 7 billion dollars in sales last year, only a small figure in comparison to the 800 billion that the regular tobacco market makes each year. However by the year 2030 experts have projected the growth of sales of e-cigarette devices and products to reach upwards of 50 billion dollars each year. Still small scale as it may be to Big Tobacco, many large cigarette companies who have hinged their bets on the future of e-cigarettes are also concerned. Nikhil Nathwani is the managing director at Nicocigs Ltd., a Phillip Morris backed company. Nathwani said the “potential to attract illicit trade is a real concern,” for manufacturers, even though the current market is “relatively small scale.”
However, the problem is even worse for the smaller companies who don’t have the resources to combat electronic cigarette counterfeiters. They are concerned that these unregulated and generally untested devices and e-liquids available on the market will not only give their companies a bad name, but undercut them and basically steal their sales away too.
The major concern really should be for the consumer, who could be putting their own health at risk; a real irony since their decision to use e-cigarettes was likely to improve their health in the first place. The majority of the counterfeiters seem to be coming from China; that is not a surprise as some estimate that nearly 90% of all e-cigarette related products come from the country. The lack of regulation has created many opportunities for counterfeiting manufacturers to flourish, at the expense of the consumer.
One 2013 study found the presence of tin particles and other metals in e-cigarette which came from the solder joints of poorly made e-cigarette devices. Other studies of imported cigarettes bought in the United States found large amounts of nickel and chromium, which likely came from the heating element, again suggesting that substandard manufacturing can turn a safe device into a dangerous one by allowing metals to enter the e-liquid. “We’ve found on the order of 25 or 26 different elements, including metals, in the e-cigarette aerosols,” said Dr. Prue Talbot, a professor of cell biology at the University of California, Riverside, who co-authored several of these studies. “Some of the metal particles are less than 100 nanometers in diameter, and those are a concern because they can penetrate deep into the lungs.”
Many consumers are aware of the dangers of substandard manufacturing and choose to buy from reputable brands, but that is why counterfeiting poses such a threat. Even an educated consumer can be fooled, especially in such a new industry where brand recognition is only just now becoming possible.
Once again, as it always seems, regulation would be a major factor in curbing the counterfeiting problem. China has a virtual lack of manufacturing standards in place in comparison with the US and the UK. In the absence of regulation standards from the FDA or the European Union there is even more room for these illicit manufacturers to infiltrate the market, putting the consumer at risk and stealing sales from reputable companies.
However many critics are concerned that regulation will force e-cigarette prices to rise in order to compensate for the extra man power and expense needed to adhere to the impending regulation standards, which unfortunately stands to make the counterfeiting problem worse, rather than better. “The minute you make the real product more expensive, that’s when the illicit trade really takes hold,” said Ray Story, chief executive of the Tobacco Vapor Electronic Cigarette Association, a U.S. and European industry group. “It’s just the tip of the iceberg.”
No matter how you look at it, however, regulation is coming and it is yet to be seen whether that will hurt, or help, the black market. In the meantime avoiding counterfeit products will be made easier by knowing and researching reputable companies and being able to trust who you get your vaping products from.
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