NJOY CEO Discusses Future of Electronic Cigarettes

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NJOY CEO Discusses Future of Electronic Cigarettes

By Melissa Kress, Convenience Store News - 04/04/2013

NEW YORK -- When it comes to growth in electronic cigarettes, some in the industry believe it is not a matter of if, but when.

Bonnie Herzog, senior managing director of tobacco, beverage and consumer research at Wells Fargo Securities LLC, has predicted that consumption of e-cigarettes will surpass that of traditional cigarettes within a decade. However, NJOY President and CEO Craig Weiss thinks she is being conservative.

"I don't think it is going to take 10 years," he said, speaking with Herzog during Wells Fargo's Tobacco Talk Conference Call Series this morning.

Weiss pointed out that getting smokers to transition to new products has already happened twice in history. In the 1800s, loose tobacco was generally smoked in a pipe, but then manufactured cigarettes made their debut in the early 1900s. This was followed by the introduction of filtered cigarettes in the 1950s.

Weiss, a former patent attorney, helped form Scottsdale, Ariz.-based NJOY in 2006. Since then, the e-cigarette company has grown to have its products in more than 60,000 U.S. stores, including 22 of the top 25 convenience store chains. 7-Eleven Inc., Circle K Stores Inc. and Casey's General Stores Inc. are just a few. Over the past six-plus years, the NJOY brand has also evolved from a rechargeable product, to a disposable (OneJoy), to now NJOY Kings, which made its way to store shelves this past fall.

NJOY is not stopping there. Without tipping his hand, Weiss said there is still "tremendous opportunity" in the electronic cigarette arena with respect to innovation.

"If you step back and take a look, it is remarkable what has occurred over the past few years," he said. For example, four years ago, an electronic cigarette would cost a consumer between $100 and $200. Today, NJOY retails for $7.99.

With all the growth in the industry, possible regulation still looms. While it is widely believed that the Food and Drug Administration (FDA) will take up the issue of electronic cigarettes soon -- possibly this month -- it is not known what form the FDA regulations will take.

"We don't anticipate that the FDA will make it more difficult to buy an electronic cigarette than it is to buy a cigarette," Weiss explained, adding that the agency cannot be perceived as driving people back to traditional cigarettes.

Weiss admits that it is tough to say what the FDA will do, but he suspects any rules will look similar to cigarette regulations: restrictions on age and advertising, as well as bans on flavors (other than traditional and menthol) and self-service displays.

And that would be fine for NJOY. It does not make flavored e-cigarettes other than traditional and menthol; does not offer self-service displays; and the company is part of the We Card program, he stated. "We've been self-regulating in the absence of regulation."

Once regulations are handed down, it will shake out competitors who are unable to meet the new rules, he added.

NJOY recently made a move that will surely keep it on its toes when it comes to remaining a legitimate and safe product. In late March, the e-cigarette company appointed former U.S. Surgeon General Dr. Richard Carmona to its board of directors and named him chair of its Scientific Advisory Committee. In this role, Carmona will provide strategic counsel to the company on public health and regulatory issues, and spearhead NJOY's research on the harm reduction potential of electronic cigarettes.

"NJOY is committed not only to offering the best product, but the best science," Weiss said. "We want to make sure public health discussions take place based on the science."

Carmona has stated that he will be NJOY's toughest critic. Weiss appreciates that and believes bringing him on board will help shape the legitimacy of the whole industry.

"Many people think that if it walks like a duck and quacks like a duck, it must be a duck. If it has ‘cigarette’ in its name, then it must be a cigarette," he said. "But we always say [an electronic cigarette] is no more a cigarette than a car is an electric horse."

As for competition, Weiss said there is definitely room for more than one player on the e-cigarette field. To ensure it remains one of the top players, NJOY has taken to the airwaves, launching televisions spots in different parts of the country. It bought air time during Super Bowl XLVII and the 85th Academy Awards, both held in February. The company is now gearing up to roll out "a more serious and robust" national campaign, he noted.

This week, NJOY also debuted its first webisode featuring singer Courtney Love. (See video below.)

"Our organization is going all the time," Weiss said. "At the end of the day, the consumer chooses."

Editor’s note: The video below contains explicit language.