Is the recent popular movement from paper cigarettes to electronic cigarettes a result of the tobacco settlement and our recent willingne…
Answer by Steve Peach:
Opinion only, I won't claim credentials on this topic. But…
Your question betrays misconceptions about the nature of the tobacco companies' participation in the e-cigarette market. They most definitely did not introduce a new product to meet consumer demand, they bought into an existing technology when they belatedly recognized potential competition. (Probably with the intention to either own or destroy the market).
If you're going to talk economics, I think you have to recognize that standard theory does not apply to the tobacco trade for two reasons – addiction and regulation.
When your customers are addicted to the product there's no need to innovate, or even care about what your customers want – "take it or leave it" works just fine as a marketing strategy. They've even found that marketing isn't required. In many countries any form of advertising or sponsorship is banned, and plain packaging with gruesome warnings is mandated, it hasn't made much of a difference. Heavy regulation also removes incentives for (or prohibits) innovation, so they can redirect their R&D to cost reduction or just move that budget over to paying lobbyists and lawyers to keep those regulations to their liking. But the best thing about a regulated market is it keeps start-up competition out since you need vast resources to comply.
So I don't imagine they were too happy to see a product that actually competes with tobacco but wasn't subject to the same regulatory burden. Imagine where the notion of regulating e-cigs "the same as tobacco" might have originated. Absent heavy regulation (which was specifically crafted to reign in huge multi-national corporations selling a known deadly product), e-cigs are a rapidly evolving, internet enabled, disruptive technology. And on the small business side; low barriers to entry, minimal investment required, massive growth potential and customers who evangelize for the product. Not very much like tobacco at all, really.
Personally, I see the fact that tobacco companies entered the e-cig market by purchasing cigalike brands as evidence that they don't want the product to succeed. Cigalikes are rather ineffective for replacing smoking, but they do remind the user that the real thing still exists. Cigalikes are closed systems that can be standardized and made proprietary and jumped through all the hoops and trials required. They can be neatly slotted into the existing regulations and business model for tobacco. But it's not worth doing if they also allow a better product to remain unregulated and freely available.
Taking an abrupt left turn, why weren't they produced in the 60's? Well actually they were:The story sounds a bit sordid, the invention didn't use nicotine (but could have), but I suspect 60's battery technology wasn't up to the task anyway. Then there was this attempt from 1979:
But in my opinion, true vaping actually originated with the countless modders who retroactively legitimized e-cigarettes by making the idea actually work. They modified flashlights and project boxes to hold a usable load of lithium-ion batteries, they invented tanks by punching holes in their e-cig cartridges, adding a glass sleeve and rubber stoppers, and invented "dripping" by re-filling those disposable cartomizers, they worked out a standardized fitting to connect any mod to any atomizer, and they did it all live on the internet for all to share. In effect they reversed engineered the e-cigarette and posted the source code on the net. Without the modders meddling, it's doubtful that even this latest attempt at a less harmful nicotine delivery system would have been more than another fad. (again, IMHO)
And veering back again, just to leave no stone unmolested, the Master Settlement Agreement. Others have written extensively about the MSA
I'll just say it was a master stroke by the tobacco companies' lawyers. Bring all the state governments on board with propping up tobacco sales if they want keep getting their settlement money, and exempt Big Tobacco from all future liability? Brilliant!