It’s the store without a name.
Tobacco giant Rothmans, Benson & Hedges Inc. is launching a flagship outlet for its IQOS vaping products at West Edmonton Mall on Friday – but the store has no name.
Federal regulations ban tobacco items such as IQOS, which is a hybrid vaping and tobacco product, from being advertised even though vaping merchandise is permitted to be marketed in limited ways.
IQOS is a device that heats tobacco sticks into vapour, but not hot enough to burn them, making them less harmful than smoking a cigarette, health experts agree. IQOS is different from vaping in that the latter heats a liquid – often nicotine, but not tobacco – into steam, also not burning it.
Since launching the product in Canada in 2017, Rothmans had opened five IQOS stores before new regulations came into effect on May 23. But last month, Health Canada ordered the company to remove the IQOS signs from its existing outlets within 30 days or face potentially stiff penalties under the new tobacco and vaping regulations. Rothmans says it has complied with the rules.
Now, as it prepares to take the wraps off its flagship store at West Edmonton Mall, Rothmans has refrained from placing IQOS – short for I Quit Ordinary Smoking – on the new outlet. But the setback raises the question about how far tobacco companies should be permitted to go in touting their alternative heated tobacco IQOS and other similar products, even as they run into resistance from Ottawa and other health experts. The authorities hold firm to the view that a hybrid tobacco product is still tobacco – and harmful – even if less harmful than smoking traditional cigarettes.
“We now have rules in place that make it very difficult for us to explain that these new products are better, from a health perspective, than cigarettes,” said Peter Luongo, managing director of Rothmans, which is owned by U.S.-based tobacco titan Philip Morris International Inc. of Marlboro cigarette fame.
Rothmans and its major Canadian rival, Imperial Tobacco Canada Ltd., are pushing for federal changes to classify their heated tobacco products in a separate category other than tobacco and loosen the new category’s marketing restrictions. Imperial Tobacco’s equivalent to IQOS is called glo.
Health experts, nevertheless, are raising red flags about such a move.
“IQOS is a tobacco product,” said David Hammond, a professor at the School of Public Health at the University of Waterloo. Research has shown that IQOS has higher levels of toxic chemicals than vaping e-cigarettes, although lower levels than traditional cigarettes, he said.
The companies have a strong profit motive in wanting to tout heat-not-burn tobacco merchandise such as IQOS, he said. Heated tobacco products can generate higher profit margins because their tobacco sticks are designed to be used only with their respective device ensuring loyal, repeat customers, while vaping liquid refills are interchangeable among different companies.
Just as razor companies generate most of their profit margins from selling razor blades rather than the razors themselves, tobacco companies bet on bigger margins from the refillable tobacco sticks rather than the devices themselves, Rothmans’ Mr. Luongo said.
And while Philip Morris produces vaping products for other global markets, its Rothmans division here has only rolled out its IQOS heated tobacco products in Canada. Imperial Tobacco, on the other hand, stocks both its Vype vaping and glo heated tobacco products at retailers that already carry its cigarettes, said spokesman Eric Gagnon. It opened just one glo store – with no name – in Vancouver about two years ago.
The business case for tobacco companies can be attractive. Sales of vaping and heated tobacco products, while still small in this country, are forecast to more than double to US$731.9-million in 2022 from an estimated US$302.9-million last year, according to researcher Euromonitor.
Still, both Rothmans and Imperial Tobacco have found that their heated tobacco products sales are taking time to catch on here. That business is hurt by the federal government’s straitjacket on the companies’ ability to communicate to consumers the benefits of the relatively new heated tobacco products, Mr. Gagnon said.
Rothmans’s IQOS sales make up less than 1 per cent of that company’s total Canadian revenues, Mr. Luongo said. In contrast, alternative tobacco products, including IQOS, made up 13 per cent of Philip Morris’s sales in 2017 and have been targeted to reach 40 per cent by 2025, the parent company has said.