Understanding the U.S. Illicit Tobacco Market Characteristics, Policy Context, and Lessons from International Experiences (2015) / Chapter Skim
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8 Possible Changes in Tobacco Products: Considering Consumer and Supply Responses
8 Possible Changes in Tobacco Products: Considering Consumer and Supply Responses
Pages 173-196
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From page 173... ...
increase incentive for tax evasion and tax avoidance and contribute to existing illicit tobacco markets in the United States. However, other kinds of restrictions can also generate illicit markets: in particular, regulations that restrict or ban features of some cigarette design, formulation, or packaging can generate illicit markets in what are presently legal products.
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From page 174... ...
Although surveys and qualitative studies have examined the characteristics of users of illicit tobacco in comparison with users of licit products (see Chapter 3) , this research has addressed only price-induced illicit markets and rarely considers the question of why only some consumers purchase illicit tobacco products.
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From page 175... ...
: the potential for tobacco products to initiate and maintain tobacco dependence. By manipulating product features tobacco manufacturers optimize the speed and amount of nicotine dosing while providing additional appealing chemosensory characteristics (Ferris Wayne and Connolly, 2002; Carpenter et al., 2005, 2007; Ferris Wayne and Carpenter, 2009; Kreslake and Yerger, 2010)
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From page 176... ...
. Any reduction in product appeal in response to regulated changes in product characteristics may in principle increase the illicit tobacco market to accommodate consumer demand for the original (unregulated)
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From page 177... ...
Other changes in product design, including modifications that lower cigarette ignition propensity, change filter ventilation, and remove characterizing flavors, have produced no more than modest reductions in product appeal in the aggregate. Although the direct impact of regulations on consumer behavior has not been widely assessed, the available evidence, as discussed below, suggests that regulations that have been implemented to reduce ignition propensity and ban cigarette flavors have not led to demand for unregulated products from illicit sources.
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From page 178... ...
. Initial opposition to the introduction of reduced ignition propensity cigarettes included complaints that the modified product would not meet consumer expectations and that taste and other characteristics would be compromised.
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From page 179... ...
Increased filter ventilation does reduce machine yields and changes the smoking sensation; however, research has shown that smokers engage in compensatory smoking behaviors.2 Highly ventilated filters encourage consumers to puff more intensively, which produces similar tar and nicotine yields as a low-ventilation cigarette (National Cancer Institute, 2001; Kozlowski and O'Connor, 2002; Hammond et al., 2005)
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From page 180... ...
. Findings from studies of switches to low-nicotine cigarettes suggest that while very lownicotine cigarettes support smoking behavior and have the capacity to a meliorate craving, reduction in nicotine levels in cigarettes to very low l evels affects product appeal.
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From page 181... ...
However, compensatory increases in puffing intensity might be taken to imply that smokers changed their smoking behavior to overcome a reduction in product appeal caused by lower-thanexpected nicotine. Another study examined the effects of progressively reducing cigarette nicotine content, from 12 mg to 1 mg per cigarette (equal to approximately 0.9- to 0.1-mg machine-yield-nicotine per cigarette)
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From page 182... ...
However, the evidence also suggests that non-nicotine cigarettes have low appeal for smokers. The next step for understanding the potential for illicit markets is to examine how consumers view the permanent loss of specific product features that they have previously found desirable and if that loss is enough to cause them to enter the illicit market.
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From page 183... ...
However, relatively little research is available to guide understanding of how consumers who prefer mentholated products might respond if menthol in cigarettes was removed or reduced by regulation. In an active smoking study using a switching design, menthol smokers smoked a mentholated Camel Crush product (which delivers mentholation in response to "crushing" a flavor pellet embedded in the filter)
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From page 184... ...
Another important research question is whether the adoption of nonmentholated products or quitting are achievable and sustainable outcomes for smokers who prefer menthol products. Other research issues of importance are to what extent consumers will use legal strategies to acquire a mentholated product, in contrast to seeking menthol cigarettes in the illicit market.
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From page 185... ...
The tobacco industry is aggressively challenging Australia's plain packaging law in multiple jurisdictions.4 Research has seldom been undertaken to investigate directly the likelihood that a consumer will engage in the illicit tobacco market when the preferred pack design is unavailable. Therefore, one can consider existing evidence on broader issues of consumer responses.
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From page 186... ...
The rest of this section considers in more detail the research on consumer behavior when graphic warnings and plain packaging are introduced. Tobacco Health Warnings Warning labels on product packaging communicate the risks and dangers of using the product to potential consumers.
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From page 187... ...
Plain packaging is a more aggressive approach to reduce the appeal of tobacco products and increase the prominence of mandated health warnings. The transnational tobacco industry has claimed that standardized packaging makes it more difficult to distinguish legitimate products from counterfeit ones, thereby encouraging illicit trade.
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From page 188... ...
Considering the recency of the first implementation of policies on plain packaging, most research on the potential effects of plain packaging on consumer behavior has focused on perceptions of risk, product appeal, and future intentions to quit. Studies by Wakefield and colleagues demonstrated that the progressive reduction of pack descriptors decreased product appeal and increased negative perceptions of product taste (Wakefield et al., 2008; Germain et al., 2010)
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From page 189... ...
SUPPLY This section considers supply-side responses to possible product regulation. The relevant policy question is whether, if FDA did regulate product features and there is a substantial demand for the original product, what factors would determine whether there is a supply to meet that demand?
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From page 190... ...
. An important policy question is whether smuggling from outside the United States or illegal production within the country are likely to emerge as major sources of illicit tobacco if the formulation or design of specific products is restricted.
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From page 191... ...
There has been no systematic research that would help assess what factors are likely to determine the supply response to product regulation. The likelihood that a large-scale illicit supply will develop in response to product regulations will be influenced by the potential profitability of supplying smokers with illicit products.
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From page 192... ...
; dual use of e-cigarettes and conventional cigarettes, which undermines the full potential for exposure reduction and undermines cessation; and a negative effect on what has been progress in reducing and stigmatizing tobacco use, particularly in public locations (Fairchild et al., 2014)
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From page 193... ...
7 The relatively recent introduction of e-cigarettes makes it difficult to forecast what impact this new product will have on both legal and illicit tobacco consumption. Until recently, the e-cigarette market had been made up of over 200 companies, most of which were small and independent from large tobacco companies.
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From page 194... ...
SUMMARY AND RECOMMENDATIONS Under the FSPTCA, FDA has authority to regulate tobacco products in order to protect public health, including a requirement that new tobacco products do not have greater potential for initiating or maintaining dependence than existing products. To fulfill its responsibilities, FDA is considering a wide range of policy options, which includes trying to estimate the possible effects of those options on the illicit tobacco market.
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From page 195... ...
The only research to date on menthol has been short-term switching studies, which suggest that changes in smoking behavior and habits are minimal for those switched to unmentholated cigarettes for short periods. Research on graphic warnings and plain packaging has shown that consumers report lower product appeal for both packaging possibilities, but the effects on product preference and consumption appear to be modest.
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From page 196... ...
Factors that promote individual variation in response should also be examined. RECOMMENDATION 8-2 Research is needed on the relationship between the use of e-cigarettes and the use of conventional tobacco products and on the role of e-cigarettes as an alternative to partici pation in the illicit tobacco market.
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