By Emma Rumney
LONDON (Reuters) – European governments are considering introducing tougher rules on cigarette makers’ new tobacco-free heating sticks, moving to plug loopholes they were designed to exploit just months after their launch.
Major tobacco companies including Philip Morris International (NYSE:) and British American tobacco (NYSE:) announced the launch of the sticks, made with nicotine-infused substances such as rooibos tea, late last year as a way to counter the European Union’s looming ban on flavored heated tobacco products.
The European Commission said it is currently evaluating EU tobacco laws and that any changes will be subject to the results of that effort, public consultation and an impact assessment.
But authorities in Latvia, Lithuania and Croatia are already looking to introduce tougher rules to regulate the products, officials from the three countries told Reuters.
In Latvia, a draft law would classify tobacco-free sticks as tobacco substitutes and subject to relevant controls, as well as a ban on all flavors except tobacco from 2025, a health ministry spokesperson said.
“We intend to regulate them in the future,” agreed a spokesperson for the Croatian health ministry, adding that they are addictive and pose potential health risks. The person did not respond to requests for further information.
Regulation of such products is also under discussion in Lithuania, but it is too early to say what is on the table, a spokesperson for the Ministry of Health said.
German authorities, meanwhile, are discussing with some manufacturers whether current tobacco tax laws cover the new products, according to a spokesperson for the Federal Customs Authority.
BAT (LON:) said it supports the introduction of evidence-based regulation and appropriate excise duties for its zero tobacco sticks, adding that 15 EU member states have already introduced excise duties.
PMI also believes that any alternatives to nicotine-containing cigarettes should be regulated and taxed appropriately, a spokesperson said, adding however that flavors play an important role in encouraging adult smokers to quit smoking.
REGULATORY RISKS
Tobacco-free sticks make only a small contribution to tobacco companies’ revenues, which still largely come from cigarettes.
But they marked a significant strategic development that companies have trumpeted to investors as examples of innovation that can help them operate within increasingly stringent regulations aimed at their other products.
In some markets, sticks have grown rapidly. In the Czech Republic and Romania they already accounted for half of all sticks sold for BAT’s heated tobacco device in December, in Germany 30 percent and in Greece 19 percent.
BAT, which launched its product in 11 European markets in February, plans to launch it globally.
PMI’s product is available in the Czech Republic. It plans further market launches this year and is also poised to launch more flavors, according to market intelligence firm NGP Trends, citing trademark applications from the company.
A spokesperson for the Czech Health Ministry said it is not currently preparing any regulations for tobacco-free sticks. The Romanian Health Ministry did not respond to requests for comment.
However, countries including Belgium, Slovenia, Switzerland and Poland are also working on regulations or taxes for such products, according to analysts at market and regulatory research firm ECigIntelligence.
Meanwhile the European Commission will likely close loopholes at the bloc level when it updates Europe’s tobacco laws, said Malcolm Saxton, senior advisor for chemistry at regulatory consultancy Broughton, adding that it is likely considering controls on flavourings, marketing and more.
To fend off regulations that could limit the appeal of their products, tobacco companies should provide evidence that the products play a role in reducing the harms of smoking and change the perception that they exist only to evade regulation, he continued .
BAT says data to date suggests its product potentially poses a lower risk than cigarettes, but researchers cautioned that the health effects of such products are unknown.