Flavor Companies Unfazed by US Ban

Features

The US may have issued a ban on almost all e-liquid flavors, but the move so far seems to have had surprisingly little effect on e-flavor suppliers.

By Thomas Schmid

When the United States’ FDA announced early last year that it was going to introduce a comprehensive ban on practically all e-flavors except “tobacco” and “menthol”, it sent ripples of concern through the global vaping industry. But nothing ever turns out just as hot as it’s been cooked.

While the ban came into effect in January, it did not bring with it the potentially devastating consequences that had been feared; at least not for some of the more prominent flavor manufacturers. It is a curious ban anyhow, as it only applies to pre-filled “removable cartridges” (i.e. pods) but apparently does neither affect refill bottles nor tank systems nor non-refillable vaping pens – and regardless what e-liquid flavor variety they may hold. Secondly, the somewhat ambiguous wording of “all fruit and dessert flavors” being banned at first caused confusion among producers, marketers, and retailers alike. Were “marshmallow”, “chocolate”, or “rum punch” regarded as “dessert” flavors”? Did “coconut”, “chrysanthemum”, or “apple blossom” constitute “fruit” flavors?

A matter of interpretation

Whatever the train of thought among FDA bureaucrats may have been, it appears that the justification for implementing the ban in the first place was that it would help prevent adolescents from picking up the vaping habit by indexing all those “fruit” and “dessert” flavors that seem to lure them in so much. But. the question that persisted was: If these flavor varieties are banned in pods but not in tank devices and single-use pen systems, what’s the entire point? And then of course there were interpretations as to which flavors exactly are blacklisted and which ones aren’t.”

“In our opinion, it does not really make sense to [ban] only fruit and dessert flavors, as other flavor profiles may attract young people just as well,” commented Thorsten Quast, senior flavorist at Germany flavor company Hertz & Selck. “Sweet flavors [that may not necessarily be classified as ‘dessert’], such as marshmallow and chocolate are equally alluring and still freely available.” He added that consumers could simply change from one banned sweet flavor to another, non-banned sweet flavor.

Pulling the sweet tooth

But Emilie Nault, vice president and head of sales at Dubai-based Flavoriq, insisted that the ban indeed extended to all sweet flavors, not just “fruit” and “dessert” ones. “From the information currently circulating, it is not specifically fruit and dessert [flavors] that have been banned from pod systems in the US, but the ‘sweet’ category as a whole, with only tobacco and menthol to be allowed in the future,” Nault explained.

Sweet flavors sold in appealing and easy-to-use packaging could entice younger consumers to start vaping and later move on to real tobacco products, she said. “It seems to be believed [at FDA] that tobacco and menthol are less interesting to this type of younger demographic and instead more aimed at existing smokers looking for an alternative to tobacco products.” That may be, yet it still leaves the conundrum that “sweet” flavors are only indexed as long as they’re filled into pods.

Nothing would prevent a young consumer to legally purchase (even online) a bottle of “sweet” e-liquid and simply use it in a tank system device. Or, they just as easily could go for a closed-system pen available pretty much anywhere across the US, from supermarkets to convenience stores and gas stations.

Business as usual

Nonetheless, it luckily has turned out that the ban did not erode overall sales or lead to sharp declines in “sweet” e-flavor production among flavor companies. Although the US is an important market to many of the players, the country is not the only market. For instance, Hertz & Selck are foremost manufacturers of cigarette flavorings and only secondarily engage in also producing e-flavors.

“E-flavors just account for an estimated 10% of our total annual production volume,” remarked Hertz & Selck’s managing director, Nils Neugebauer. And of that, he said, only a proportion of 5% were supplied to US customers, while the other 95% are shipped elsewhere. “Our sales of e-flavors to the US are not that high and we have never regarded the [country] as our main strategic target market for e-flavors as we’ve always focused on other markets where we still see good growth potential,” Neugebauer said, adding that the company did not make “ready-to-use e-liquids” but solely supplied “key compounds and flavoring agents” that eventually would be manufactured into such.

The situation is of course considerably different at Flavoriq, which exclusively produces flavors for the vaping market and is not involved with tobacco flavorings at all. But even in their case only about 20% of annual exports directly find their way to the US, the rest being destined to customers in numerous other countries.

Reaching the US through other channels

But that doesn’t mean that the actual volume of e-liquids which use components supplied by the two companies and eventually reach the US market could not be higher. After all, both firms maintain a broad customer base of OEM and white label e-liquid producers in all corners of the world.

“It is very likely that our products will indirectly end up in the US as we are supplying many multinational companies that will not always disclose the final destinations of their [end products]; and the US could well be among them,” said Neugebauer. And Flavoriq’s Nault concurred: “Our products are sold to many companies which offer OEM and white labeling services to their customers at an international level, so it is safe to say that our flavors may be found in [vaping] products in the US also, although we may not be directly selling to this or that specific American company.”

Other markets want their flavors, too

Hertz & Selck’s aim their marketing mainly at Western and Eastern Europe. “Western Europe is particularly interesting because increasingly more cigarette smokers [there] are quitting and switch to vape products for both health and financial reasons,” pointed out the company’s sales manager vape, Vivien Wenzel. And curiously, Southeast Asia also is high on Hertz & Selck’s radar, although vaping is strictly banned in practically all of the region’s nations.

Wenzel cited Indonesia as an example, where vaping is “officially against the law yet practiced everywhere regardless“. And that illegality notwithstanding, “the country even openly hosts large vaping exhibitions like those in Yogjakarta and Jakarta,” she elaborated. According to Wenzel, Southeast Asia offered excellent growth potential for Hertz & Selck “due to the region’s high percentage of young people being open-minded to new product ideas.” And how about Flavoriq? While Nault conceded that the US was “important for our products as it is one of the largest vaping markets in the world with a high percentage of users,” she also said that continental Europe as well as the UK were at least as crucial.

Despite the US ban, the company has no plans to phase out or adjust its current e-flavor portfolio. “We’d only consider such adjustments if new regulations would require [us to provide] bespoke US versions,” she said. Nault added that the firm already had prior experience with such action as “we had to create German versions of our coffee flavors that complied with EUTPD2.”

China potentially more affected by ban

So, in the end, the US’ ban on “fruit” or “dessert” or “sweet” or whatever e-flavors has affected producers only on a very manageable scale, proving initial panic mongering as largely groundless. But, there exists some tangible effect nevertheless, and it concerns China. The country harbors the world’s highest concentration of vaping device and vaping accessory manufacturers, including producers of pre-filled pods for whom the US constitutes a tremendously important market. And it is perhaps there where the backlash of the FDA ban is felt most intensely. “We have seen a drop in our sales of e-flavor components to Chinese companies, as their main export market is the United States,” admitted Neugebauer. But the company takes that decline in a stride.

“We continue spending a great deal of time and money on research and innovation anyway, and regardless of certain negative effects that single markets [such as China] might experience,” Neugebauer said. Of course, his comment implied that there remain more than enough other markets for the company that can easily compensate for sales losses in China. And although Nault likewise conceded that there was “a small impact with China as most of the companies located there are manufacturing for US customers,” she still insisted that it was of little concern thanks to Flavoriq enjoying a truly global footprint spanning almost every continent.

Not a healthy vitamin

Vitamin E acetate (a.k.a. α-Tocopheryl acetate) is a derivative of vitamin E (α-Tocopheryl). The substance sometimes has been used in e-liquids containing cannabis extracts as a thickening agent and also because it apparently facilitates a faster absorption by body cells of CBD and THC, thus leading to a quicker effect. However, the US Center for Disease Control and Prevention (CDC) identified vitamin E acetate as a very strong culprit of concern in the 2019 outbreak of vaping-associated pulmonary injury (VAPI) and concluded that it may have been responsible for causing several deaths. In September 2019, the country’s Food and Drug Administration (FDA) announced that 56% of vaping liquid samples the authority had collected contained vitamin E acetate.

Accordingly, the substance has been banned since, a move that has been welcomed by flavor manufacturers such as Hertz & Selck and Flavoriq.

“We fully understand and support the FDA’s decision to ban vitamin E acetate in e-liquids,” said Hertz & Selck’s Nils Neugebauer. “We have never used vitamin E acetate in any of our formulations for several reasons; firstly because it is not considered an aromatic substance, and secondly because it does not dissolve well in propylene glycol or vegetable glycerin, the two main solvents used for e-flavors.”

Meanwhile, Flavoriq’s Emilie Nault likewise insisted that none of the products in her company’s portfolio contain any vitamin E acetate -- nor have they ever in the past. Nault also hinted at the European Union’s directive 2014/40/EU, which states that “vitamins or other additives that create the impression that a tobacco product has a health benefit or presents reduced health risks” are banned.