THE innovation economy is hot.
FROM the city halls in Rust Belt states hoping to re-invent themselves in the 21st century to boardrooms of multibillion-dollar application developers, innovation is a catch-all classification for economic progress.
It implies efficiency, empowerment and disruption. E-cigarettes arguably qualify as innovative. For about a decade, electronic cigarettes have been on the market. Users don’t smoke them like a traditional tobacco cigarette. Instead, these electronic versions heat a liquid that contains nicotine, producing a vapour. In the USA, the Food and drugs Adminitration (FDA) regulates cigarette tobacco – but it has no authority over electronic cigarettes. Historically, innovation has a way of moving faster than regulators. The second-largest cigarette maker in the US on Monday starts distributing its e-cigarettes across the US. Reynolds American is better known for its brands such as Camel, Pall Mall and Natural American Spirit cigarettes. The company’s Vuse Digital Vapor Cigarette aims to add to that portfolio – and profits. It is a crowded market with dozens of brands and thousands of flavours, from standard American tobacco to mint chocolate truffle. Sales of e-cigarettes are forecast to reach $US2 billion ($A2.16 billion) this year. That’s only a third of the annual cigarette sales from RJ Reynolds, but e-cigarettes are growing fast. Marlboro’s parent company, Altria, is expanding its electronic brand across the US in 2014, too. While the stocks of American cigarette makers have risen, sales have been trending lower. Health problems, growing public disapproval and tighter rules are taking their toll. Business risks, regulations and consumer demand lead to innovation. The cigarette industry is no different.