Notes from the NATO Show – Bridging the Divide

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This Blog is supplied by Norm Bour and VapeMentorS, consultants to vape shops, on-line businesses and others in the Vape Space. This and other related reports can be viewed at www.VapeMentorS.com.

In this world of tobacco and tobacco like derivatives there are two distinctive camps:

• Combustible tobacco vs. electronic or e-cigs, and

• Big Tobacco vs. The growing Vape Space

As the tide of vaping and the growing Vape Space expands, these two worlds are coming together. I recently attended the 13th National Association of Tobacco Outlets (NATO) Convention which was held at the Paris Hotel in Las Vegas. I have never attended any kind of tobacco trade shows though have attended many that were similar.

natocentral.org

Wouldn’t you like to be a fly on the wall of the Big Tobacco board rooms occupied by the likes of RJ Reynolds (and their new spin-off, RJ Vapors), Altria, Lorillard and many smaller companies including Republic Tobacco (which recently teamed with Vape Juice manufacturer, Johnson Creek for north of $100M), Njoy e-cig company, and V2?

I had the next best thing as the conversations were surprisingly candid and honest.

During the course of the two day event some things really jumped out and said “pay attention to this.”

• The program brochure/guide was dominated by e-cigarette and vaping concerns. Do they have that much MORE money or were they trying to make a statement? I believe it was the later.

• On the convention floor was every conceivable tobacco or related vendor you could think of from cigar sellers, hookah suppliers, glassware of all sorts for any type of piping, e-cigarettes galore along with vape juice dealers and manufacturers plus lots and lots of device sellers either from China or representing Chinese manufacturers. About 50% of all vendors were involved in the Vape Space. What will it look like in FIVE years? I’ll let you know as I will be a regular from now on.

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• I spoke with most of the Big Tobacco reps and the transition of combustible cigs to electronic ones is here to stay and they are not only paying attention but staking their future on it. I wrote a Special Report several months ago about how e-cigs and vaping could potentially be the best PR move involving Big Tobacco in decades and I stand by that.

• The uncertainty of the “FDA decision” was a hot topic of conversation and the Nine Steps involved in their process from beginning to end was outlined. Currently we are at Step Four and the conclusion from the event: it is highly unlikely we will see any regulations in 2014. One of the items that was discussed was the term “e-cigarette” and whether there should be a different name that does NOT include the term cigarette in it. Stay tuned for that.

• “E-vapor (a newly coined term) is to Tobacco what Energy Drinks are to Beverage” was a quote shared by the NATO team as they accurately concluded that E-vapor, which is currently just 1% of the overall “tobacco market” is guaranteed to grow.

• Wells Fargo media analyst Bonnie Herzog is one of the most influential experts in the Tobacco Industry (and growing alternative industries) and after conducting surveys reached the conclusion that Vape Shops and liquids are approximately $2.2B industry. She also pegged the number of Vape Shops to north of 5,000. I participated in her survey and have heard the number of shops calculated to be as much as 10,000. Personally I have a hard time with that.

• The “states issue.” Now that the Fed is determined to be out of the conversation for a while, the next items to be aware of are the STATE issues and the LOCAL one. Right now we have 16 states with some type of regulation on the books related to our Vape World and the number of “local issues” has grown from about 50 in 2012, to 110 last year and 56 year to date and an estimated 200 coming this calendar year 2014. I have written and spoken on these matters many times and am disheartened by the chicken-shit attitude of city leaders as they follow the leader down a very incorrect path.

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censoredHere’s a question that is more than rhetorical: If a city or state restricts advertising of vaping or e-cig products is that a FIRST AMENDMENT violation? It’s a Big Question but the conclusion is YES, it is. Will this present itself as a class action lawsuit that could go to the Higher Courts? This is not an impossible scenario.

Another conclusion that was reached is that the FDA cannot institute or mandate anything related to taxation on e-cigs or vaping products. States and cities are another question. Can the FDA ban internet sales? The answer is NO to that as well.

There are many more details that will be shared as this continues to unfold. I was able to interview several influencers at the NATO event including Don Bores, the founder, as he shared his 50 year history in the industry and his reaction when he ignited the FIRST electronic cigarette in 2006 at a trade show. Jaws dropped as he took a puff, without requiring a lighter or match, and then put this new-fangled device in his shirt pocket. History was irrevocably changed and things will never be the same.

That interview will be included in the new Vape News Radio Show (www.VapeNewsRadio.com) which will launch in April, 2014 and be published two times per month starting in May. If you need information please contact the show host and writer of this article, Norm Bour at norm@VapeMentorS.com.

Steve K

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