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Procter & Gamble Co/The
Altria Group Inc
I am staring at myself in the mirror, taking my very first drag of a cigarette ever. I look like a man who fought every man I ever thought about fighting, slept with every woman I ever thought about sleeping with, got a free song from every jukebox I thought about punching. There is smoke dragoning out of my mouth, a flame at the end of my cig—or, more accurately, vapor that’s designed to look like smoke, a red LED light that’s designed to look like a flame, a long metal tube with a cell phone-style battery inside that’s designed to look like a cigarette. I am cooler than a guy smoking a cigarette. I am a guy smoking a gadget. And until my wife shows me how to actually inhale my electronic cigarette into my lungs, which causes me to cough and tear, I look very, very cool.
Other people nearly as cool as me are smoking e-cigs too: Britney Spears, Jeremy Piven, Leonardo DiCaprio, Kate Moss, Paris Hilton, and Catherine Zeta-Jones. Katherine Heigl puffed on one while watching The Book of Mormon on Broadway. Charlie Sheen plans to start his own brand of e-cigs, the NicoSheen. According to the U.S. Centers for Disease Control and Prevention, the number of Americans who have smoked an e-cig more than quadrupled, from 0.6 percent of the population in 2009 to 2.7 percent in 2010. That’s more than 8 million people.
There are now hundreds of companies selling e-cigs—although they’re buying parts from just four factories in China, where the technology was first patented by pharmacist Hon Lik in 2003. He formed the company Ruyan (which means “like smoke”) and started selling e-cigs in China the following year before getting an international patent in 2007. Since then the technology has gotten even better and the marketing more sophisticated. Some e-cigs, marketed toward women, are thinner and come in leather cases with a mirror. Some have social networking capabilities that help you find other e-cig smokers. And some come in such flavors as peppermint, Swedish fish, and bacon.
“I can remember a year ago at a restaurant having an electronic cigarette after a meal, and having a waitress say, ‘You can’t smoke here,’ and me having to explain it to her. Now the more common situation is you walk into a restaurant or a bar and smoke an electronic cigarette, and the bartender says, ‘Oh, you’re fine.’ They know,” says Jay Meistrell, co-owner of V2 Cigs . His e-cigs were sold at the Wired Store, a holiday pop-up store in New York that displays new gadgets the tech magazine considers cool. V2 Cigs says its gross revenue grew 20 percent each month last year, including one day when it sold more than $300,000 worth of products. This month, Jeffrey Hill, a former Procter & Gamble (PG) executive, sunk $7 million of his own money into Spire Electronic Cigarette, an e-cig company whose products are sold in New York bars and clubs such as Webster Hall and promoted by “brand ambassadors,” some of whom are Iraq veterans. Hill hopes to market his brand to the military.
Because e-cigs don’t create secondhand smoke, you can smoke them anywhere. “They’ve taken off because the restrictions on regular cigarettes have gotten a little ridiculous. It’s not the land of the free. It’s more like the land of the oppressed,” says Ray Story, an e-cig company owner who is also chief executive officer of the e-cig trade organization, the Tobacco Vapor Electronic Cigarette Assn. “Electronic cigarettes are like the Sony Walkman. People used to walk around with these huge boom boxes, and everybody was subjected to the crap they were listening to. Then they came up with a way that you can enjoy the music, but no one has to hear your crap,” he says.
Few people had tried an e-cig until last year, partly because the technology was new and unrefined. “Until December 2010, the ones that looked like a cigarette were what I call ‘weenie vaping.’ They only lasted 30 minutes and the liquids tasted like dirty socks or hamster cages,” says Jan Snyder, a retired computer hardware designer in Austin, Tex., whose YouTube (GOOG) videos reviewing e-cig products often get several thousand hits.
The Food and Drug Administration gave e-cigs an even bigger boost when it tried to ban the product until clinical trials were completed, claiming it was a drug-delivery product for people trying to quit cigarettes. But Story sued the agency, and last year the U.S. Court of Appeals in Washington, D.C., declared e-cigs should be sold like cigarettes, only sellers don’t need a tobacco license. So now they’re for sale at Walgreens (WAG), convenience stores, and bars, as well as online.
“The middle of Q1 and Q2 of last year is when we really started to see phenomenal growth,” says Jason Healy, CEO of Blu Cigs, probably the largest e-cig seller. “The FDA stuck their head in. The antismoking people stuck their head in. And it easily picked up momentum.” Blu Cigs, founded in 2008, had $12.5 million in sales in 2010 and more than $30 million in sales last year, according to the company. In the last four months, the company has gone from selling strictly online to retailing at more than 10,000 stores. It now sells packs that vibrate whenever a fellow Blu Cigs smoker is around. You notice them immediately—they’re all black with a blue tip. “I wanted to make that statement, ‘Hey, I’m not smoking,’ to the people across the room, to the people at the airport, to my family and friends. ‘This doesn’t concern you anymore. I’m not smoking. Don’t worry about me,’ ” Healy says.
The FDA remains worried. As is the American Cancer Society. Both are seeking regulation and fighting to keep e-cigs from public places. Many cities such as Boston have banned them from all workplaces, and the Federal Aviation Administration won’t let you smoke them on planes. This drives e-cig people crazy, since they think they’re fighting the good fight against Big Tobacco by helping people quit. E-cigs, they argue, are just little vaporizers that deliver liquid nicotine, which doesn’t cause cancer. Yet Thomas J. Glynn, director of cancer science and trends at the American Cancer Society, says: “One of the side benefits of the increase of smoke-free environments is more people who are smokers are saying, ‘I can’t stand standing outside anymore, so I’m going to make the real serious attempt to quit.’ Whereas if they can have something like this to bridge them, they may not quit.” There are no statistics on whether e-cigs help people quit, largely because if e-cig makers ran those studies, they’d be claiming e-cigs are a smoking cessation tool, which would allow the FDA to swoop in. So instead, they’re marketed like a, you know, fun thing to do.
The prospect that scares e-cig companies as much as another fight with the FDA is being joined by Big Tobacco. Altria (MO) won’t say if it’s developing an electronic cigarette, but most e-cig manufacturers figure it is. “About a quarter of all adult smokers are interested in a smokeless tobacco product. You have evolving consumer preferences for these products,” says Steve Callahan, senior manager of communications for Altria, about the company’s noncigarette products. “The smokeless tobacco category grows each year. It grew about 7 percent last year in the U.S.”
John Cameron, CEO and co-owner of Safe Cig, is looking forward to that fight. As the brother of Avatar director James Cameron and underwater robot engineer Mike Cameron, he thinks he can beat Big Tobacco at e-cig technology. When I walk into his office in the back of a warehouse in Hollywood, Cameron, an ex-Marine with a giant gray beard, pulls a curtain to hide part of the room. A few minutes into our conversation, Seamus Blackley, who helped create the Xbox, pops in to ask a question. By next year, Cameron intends to have a next-generation product that he thinks will greatly improve the popularity of e-cigs. “This is an Apple IIe,” he says, taking a long drag off of his current zero-nicotine technology Safe Cig, which he fills with a sweet, chocolatey tobacco flavor called Trinidad.
Cameron quit the nicotine habit, but not the psychological habit of smoking, which is why he thinks e-cigs will help people stop smoking far better than patches or gum. “I was working on Avatar with Jimbo and I knew I needed to get healthier to really get into it. I stopped smoking, I stopped drinking, I stopped caffeine,” he says. But he quickly started smoking again. Then his fiancée gave him an e-cig. Shortly after, he bought Safe Cig, a five-year-old company. “Our growth rate until I got here was static,” says Cameron. “People weren’t treating this product right. They were treating it like a hula hoop.” The company says it tripled U.S. sales in the third quarter of last year, partly due to efforts such as the Safe Cig girls, who go to Hollywood events dressed like Mad Men-era cigarette girls, handing out samples. Cameron thinks e-cigs are about to become cool, though he doesn’t know when. “In The Tourist, Johnny Depp portrayed them as dorky and effete,” he says. “I don’t know what the culminating moment for e-cigarettes is, but it hasn’t happened yet.” Although, Cameron admits, he hopes it’s in his brother’s next movie, Avatar 2, where he’s trying to get characters to smoke them. “In every scene,” he says.