Can Electronic Cigarettes Challenge Big Tobacco?

A curious television commercial aired across the U.S. last month that, until its final few seconds, was indistinguishable from an ad for cigarettes — even though such advertising has been banned from broadcast TV for four decades.

In the television spot, the “cigarette” smoke, ash tip and flame look real. The carton looks authentic. The man smoking it looks satisfied.

The smoke, however, is vapor. The ash tip, plastic. The flame, simulated. The “cigarette” is a so-called electronic cigarette — in this case, an NJOY King, the first smokeless, nicotine-delivering, cigarette-like object that (at least according to its manufacturer) looks and feels and “smokes” like the real thing. Television commercials for NJOY Kings began running nationally in early December, making it the first smoking ad to run since Jan. 1, 1971, when Virginia Slims ran one final commercial a minute before the midnight deadline during The Tonight Show Starring Johnny Carson. (President Nixon had signed legislation banning cigarette ads on TV and radio the year before.)

E-cigarettes, invented in 2003, currently account for less than 1% of the $80 billion U.S. cigarette market. But they are growing rapidly: UBS projects that sales, which have doubled every year since 2008, will reach $1 billion in 2013. Numbers like that have put Big Tobacco on notice. “Consumption of e-cigs may overtake traditional cigarettes in the next decade,” predicts Wells Fargo analyst Bonnie Herzog. “And they’ll only evolve and improve as time goes forward — at far less risk. The technology portion of it is sort of like Apple. This is just Version 1.”

 

Read more: TIME: Business & Money

Related Article: Campaigns for E-Cigarettes Borrow From Tobacco's Hey Day (12/5/12)