E-CIGARETTES

10

DE-’VAPING’THE TECH BEHIND AN E-CIGARETTE

THE COMPOSITION OF AN E-CIGARETTE

E-CIGARETTES VS REGULAR CIGARETTES

E-CIGARETTE LAWS AROUND THE WORLD

EVOLUTION+REGULATION OF E-CIGARETTES

MARKET COMPARISON (WORLDWIDE)

THE ROAD AHEAD FOR E-CIGARETTES

A PEEK INTO NEW DEVELOPMENTS

THE TECH BEHIND AN E-CIG1

DESIGNED TO IMITATE REGULAR CIGARETTES

& DELIVER NICOTINE IN A TOXIN-FREE VAPOR

3-PIECE(BATTERY,

ATOMIZER,

CARTRIDGE)

2-PIECE(BATTERY,

CARTOMIZER)

THE COMPOSITION OF AN E-CIG

THE E-LIQUID CONTAINS 3 BASE CHEMICALS + FOOD GRADE FLAVOURINGS

(MORE COMPLEX FLAVOURINGS ADD ADDITIONAL COMPOUNDS)

E-LIQUID

STRENGTH

CIGARETTES

SMOKED

None (0mg) 0-5/day

Extra Low (6mg) 5-10/day

Low (11mg) 10-15/day

Medium (18mg) 15-20/day

High (24mg) 20-25/day

Extra High (36mg) 25+/day

2

REGULAR CIGARETTE

NICOTINE DOSAGE

20MG

E-CIGARETTE BRANDS3

GLOBAL PLAYERS INDIAN PLAYERS

E-CIGARETTE VS REG. CIGARETTE

4

No smell, no ash, no smoke, no yellow

teeth. Secondary vapor is less harmful.

Strong smell left behind, messy ash,

stained teeth. Secondary smoke very

harmful

Contains over 7000 chemicals, many

carcinogens.

Filters out most of the chemicals. Minimal

list of ingredients. NO TAR.

Comes in a variety of flavours and serves

as a smoking cessation instrument

Available in few flavours and addiction is

injurious to health

Not recyclable. 4.5 trillion filter-tripped

cigarettes deposited annually

Does not produce toxic butts and is

recyclable

Regular cigarettes are a costly habit.Cost effective (after the startup kit).

One 30ml e-liquid = 600 cigarettes

Technical glitches – battery issues,

exploding e-cigs!

Leads to addiction among kids/teenagers

due to the attraction of flavors.

LAWSTWO-TIERBANNED UNCLEARPERMITTE

D

5

PUNJAB, INDIA1st INDIAN STATE TO BAN

E-CIGARETTES, OCT 2013

CHINA, NEPALUSE & SALE OF ECIGS

IS PERMITTED

BRAZILSALE, IMPORT & ADS OF

ANY ECIG IS FORBIDDEN

CANADAATTEMPTING TO IMPLEMNET

TWO-TIER SYSTEM BUT NOT

YET FOUND LEGAL FOUNDING

SOUTH AFRICATWO-TIER SYSTEM

EVOLUTION+REGULATION

19

63

19

67

20

00

20

03

-04

20

05

-07

20

07

20

08

20

09

20

10

20

11 20

12 20

13

6

1963 – Herbert Gilbert files for a patent on a smokeless tobacco cigarette that has “a

replaceable tip moistened with harmless, warmed substance that could simulate the flavor

of anything from root beer to rum.” Using a heating element it would create a warm vapor

that is inhaled.

1967 – Gilbert was approached by several companies interested in manufacturing his

patented idea, but it was never commercialized.

2000 – Hon Lik, a Chinese pharmacist, invents a device that heats liquid containing

nicotine into a smoke-like vapor that is inhaled into the lungs.

2003-04 – Hon Lik patents his product as an electronic cigarette and distributes his first

product to the domestic Chinese market after changing his company’s name to Ruyan, which

means, “resembling smoking.”

2005-07 – Electronic cigarettes are introduced in Europe and United States. In Europe, it

is introduced by British businessman Greg Carson, under the brand ‘Electro Fag’.

2007 – Lik receives his first international patent for E-cigarette.

Dec-2007 - Electronic Cigarette Forums, world’s largest website on Ecigarettes, is

launched

2008 – The WHO rules e-cigarettes are not to be considered as a smoking cessation aid.

Later in the year, in a study funded by Ruyan, Health New Zealand finds that carcinogens

and toxins are present at below harmful levels. They deem e-cigarettes a “safe alternative to

smoking.”

2009 – CASAA is created and endorses the use of E-cigarettes

Jan-Mar’09 – Explosive year of regulation worldwide - Australia bans possession & sale; Canada

bans ads, sale & import; Hong Kong bans E-cigarettes; Amazon bans sale, PayPal bans its use for

sale

June’09 – President Barack Obama signs the Family Smoking Prevention and Tobacco Control

Act 18. This provides the FDA power to regulate the tobacco industry.

2010 – The AAPHP states it supports the sale of e-cigarettes to adults. The AAPHP

recommends the FDA reclassify the e-cigarette as a tobacco product, as opposed to a drug

device. Another survey in Boston University concludes electronic cigarettes are much safer

& may hold promise as a smoking cessation method.

Feb’11 – The US Department of Transportation deems the use of electronic cigarettes on

airplanes as unsafe and announces they may issue a ban of the use on all flights.

Apr’11 – FDA announces it will regulate e-cigarettes under the Food Drug and Cosmetics

Act as it currently regulates analog cigarettes

2012 – Rebuildable atomizers make their debut allowing people to build atomizers from

everyday materials like cotton, silica and stainless steel mesh.

Oct’12 – AEMSA is formed, creating recommended standards for e-liquid vendors

Dec’12 – European Union proposes legislation that may render electronic cigarettes as

medicinal devices, effectively banning them for regular use.

2013 – FDA may propose regulation on the advertising, sale and use of electronic

cigarettes in the United States.

MARKET COMPARISON (WORLDWIDE)

7

0

2

4

6

8

10

12

14

16

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

E-CIG VS CONVENTIONAL

CIG

VOLUME

E-CIGARETTES (IN EQUIVALENT PACKS) CONV. CIGARETTES (IN PACKS)

0

2

4

6

8

10

12

14

16

18

20

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

E-CIG VS CONVENTIONAL

CIG

OPERATIONAL PROFIT

POOL

E-CIGARETTES CONVENTIONAL CIGARETTES

SOURCE: WELLS FARGO SECURITIES WEBCAST, NOVEMBER 2013

THE ROAD AHEAD FOR E-CIGARETTES

8

WHY IT LOOKS BRIGHT…CLASSIC DISRUPTIVE

TECHNOLOGYEnergy Drinks : Beverage Industry

E-cigarettes : Tobacco Industry

ENTRY OF BIG TOBACCO

PLAYERSBigTobacco, Reynolds American, Altria

Group all entered the market recently

ATTRACTING VENTURE

CAPITALISTS$75 million funding for NJOY e-cigs by Sean

Parker (Facebook, Napster), former US

Surgeon General - Richard Carmona

THE NUMBERS SPEAK FOR

THEMSELVESAnnual growth rate of 30%

Market revenue close to $2 billion, end of 2013

73% of retailers believe it’s here to stay

More than 50% of buyers are ‘repeat’ users

HOLLYWOOD’S HELPING HANDE-cigarettes have been welcomed in a big way

by celebrities in Hollywood. Contributed to the

10 fold increase in e-cig sales from 2012-13.

EMERGING MARKETS IN

DEVELOPING COUNTRIESIndia, China are adopting this product rapidly

THE ROAD AHEAD FOR E-CIGARETTES

8

WHY IT MAY STUMBLE…

HIGHLY FRAGMENTED

MARKETMarket is highly fragmented & barriers to

entry are increasing

INCONCLUSIVE FDA STANCEFDA still inconclusive on the safety or

effectiveness in quitting tobacco of e-

cigarettes

RESTRICTIONS/BANS ON

ADVERTISINGBeginning in mid-2016, advertising for e-

cigs would be banned in 28 nations of EU;

Touting e-cigs as safer than regular

smokes could draw FDA’s ire

TAXATION WILL INCREASEAs e-cigs become regulated, taxes will

increase, increasing costs

VARYING LAWS ACROSS

COUNTRIESLack of consensus on the safety of e-cigs

has resulted in diametrically opposite laws

in different countries.

BAN ON INTERNET SALESPayPal & Amazon have already forbid e-

cig sales via their services. Citigroup

predicts a more widespread ban on e-sales

due to difficulty in verifying purchaser’s

age

A PEEK INTO NEW DEVELOPMENTS

9

SMOKIO ($110)E-CIG TO HELP YOU TRACK YOUR

‘VAPING’ HABIT

SUPERSMOKER

($110)E-CIG WITH BLUETOOTH,

PHONE, MUSIC