Flavor Capsule Variants' Performance in a "Dark Market": Implications for Standardized Packaging

Background: By increasing excise taxes, eliminating tobacco marketing, and requiring standardized (plain) packaging of tobacco products, governments internationally have reduced smoking's allure. Yet product innovations, such as flavor capsule variants (FCVs), remain unregulated and may appeal to non-smokers. We examined the growth of FCVs in a country with a progressive policy environment.

Methods: Each year, New Zealand tobacco companies must provide details of the number of cigarette sticks released for each brand and variant to the Ministry of Health. We used this information to analyze FCVs' performance for British American Tobacco (BAT) and Philip Morris International (PMI), which account for a large proportion of New Zealand tobacco sales. We report the quantity released of each variant and share of parent brand portfolio, and examine growth patterns within the premium, everyday, and value market subsections.

Results: BAT introduced FCVs in 2012 and by 2014 offered FCVs in all market subsections; PMI introduced a Marlboro FCV in 2014. FCVs grew rapidly relative to unflavored variants and, by 2017, represented nearly 10% of BAT's product portfolio and more than 3% of PMI's product portfolio. By 2017, FCVs accounted for more than a third of the Dunhill sticks released, 14% of Holiday, and 17% of Pall Mall.

Conclusions: FCVs' rapid growth may have reduced declines in the numbers of sticks released. Policy makers should disallow FCV innovations, which offer no health benefits to smokers and may instead attract non-smokers to smoking. Where timely, these regulations could be incorporated into standardized packaging policies.

Implications: FCVs have grown quickly in countries with comprehensive tobacco marketing restrictions, which suggests tobacco companies are now focusing on novel product designs to attract new smokers. Standardized packaging regulations could address both external packaging and stick design innovations, such as FCVs; alternatively, specific regulations prohibiting FCVs may be required.