With tighter cigarette rules ahead, here's a peek inside Big Tobacco's pipeline

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With tighter cigarette rules ahead, here's a peek inside Big Tobacco's pipeline

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The Food and Drug Administration shocked many when it announced this summer that it would start the process of lowering nicotine in cigarettes to non-addictive levels. Investors hammered Big Tobacco stocks.

However, with many next-generation products already in development, there are some Big Tobacco companies that could actually benefit from the FDA's new nicotine initiatives.

The two leading concepts Big Tobacco is developing are vaping products and heat-not-burn products.

Most e-cigarettes use vaping technology, which heats liquid nicotine to create vapor. These products do not contain tobacco, potentially eliminating the risks associated with conventional cigarettes. However, critics say e-cigarettes may carry their own risks.

Heat-not-burn products use tobacco, but devices heat it instead of burning it. This prevents combustion, a chemical reaction that creates most toxic chemicals associated with cigarettes. Heat-not-burn products reduce risk by 90 percent or more, companies say.

To be sure, small companies are innovating in big ways. 22nd Century Group's Goodrich Tobacco has created low-nicotine cigarettes. The company modifies tobacco plants' genes in some varieties and breeds plants in others to manipulate how much nicotine the plant produces.

Meanwhile, JUUL Labs' JUUL e-cigarette has soared in popularity among millennials. The sleek device is about as long as the palm of a hand and as thin as a flash drive. It is supposed to provide an experience that's as satisfying as smoking thanks to the use of nicotine salts found in tobacco leaves.

Smaller companies may be generating plenty of buzz, but Big Tobacco is also innovating. Here are some alternative nicotine products some of the world's largest tobacco companies are creating.

  • IQOS

    Philip Morris International's product IQOS contains a ceramic and gold plate that heats Philip Morris-branded tobacco sticks, such as Marlboro, that are designed specifically for the device.

    Philip Morris' senior medical advisor Mikael Franzon said IQOS better replicates a traditional cigarette, which is important when trying to convince smokers to switch.

    "We can have a product that reduces risk by 95 percent, but if no one accepts that product or likes that, it won't have any impact on public health," Franzon said.

    IQOS is available in some international markets, including European countries, Canada and Japan, where it has become wildly popular.

    Philip Morris has submitted two applications to the Food and Drug Administration: one that would allow the product to be sold in the U.S. and one that would allow the product to be marketed as one that reduces risk compared with traditional cigarettes.

    If IQOS receives federal approval, Altria will have sole distribution rights to sell it in the U.S.

    Philip Morris has another heat-not-burn product in the pipeline. Dubbed TEEPS, it is similar to IQOS but uses a carbon heat source. The company plans to run a city test of it this year.

    Philip Morris International's IQOS product
    Source: Philip Morris International
  • MESH and STEEM 

    Philip Morris launched a city test of MESH in the U.K. last year, touting it as a "next generation" e-cigarette.

    Users buy cartridges that contain a MESH heating system and liquid nicotine and flavors. The heating system uses a metallic mesh and tiny holes, which users activate when they push a button. The device heats the liquid and creates vapor.

    The company has another e-vapor product in the pipeline. Called STEEM, it differs from other e-cigarettes because it creates a vapor that contains nicotine in the form of liquid salt.

    A chemical reaction occurs when users take a drag, creating what Philip Morris says are highly water-soluble particles of nicotine salt that can be easily inhaled.

    Philip Morris plans to start a city test of the product this year.

    Philip Morris International's MESH product and cartridges
    Source: Philip Morris International
  • Mark Ten and Green Smoke

    NuMark, a subsidiary of Altria, sells two e-cigarettes: Mark Ten and Green Smoke. Both look like conventional tobacco cigarettes. Both use cartridges that come in a variety of flavors and nicotine levels.

    Mark Ten boasts "Four Draw" technology, where the tip of the e-cigarettes contain four holes for vapor to flow out of the device and into users' mouths.

    "We have the leading brands in all traditional tobacco products, so we have a deep understanding of adult smokers, and we're building our learning over decades of experience to build products we think adult smokers will be interested in," a spokesman said.

    Altria's Mark Ten and Green Smoke products
    Source: Altria
  • Vype

    British American Tobacco launched its e-cigarette, Vype, in 2013. The brand now offers different product lines that vary in style and function.

    Vype sells everything from sleek pens to bulky boxes to compact pebbles. Some products can be replenished with a store-bought cartridge. Others require users to refill them with nicotine liquid.

    Vype eBox's liquid nicotine tank can be refilled manually. This allows users to choose how much power the device has by clicking a plus or minus button, which potentially controls the amount of nicotine users receive.

    The Vype Pebble, meanwhile, is a tiny device that's available in five colors ranging from black to yellow. Users buy cartridges and swap them out.

    With Vype, British American Tobacco has grown its presence. British American Tobacco represents about 40 percent of the U.K. vapor market, a spokeswoman said. Vype is in 10 markets around the globe.

    British American Tobacco's Vype product
    Source: British American Tobacco
  • Glo

    British American Tobacco launched glo, a heat-not-burn product, in Sendai, Japan, last year.

    Users insert a tobacco stick into a square device that looks similar to a portable phone charger. The device heats tobacco to about 240 degrees Celsius, causing it to release vapor.

    The product is now available in three other Japanese markets, one Canadian market, Switzerland and Korea.

    British American Tobacco's glo product
    Source: British American Tobacco
  • Vuse

    R.J. Reynolds Vapor markets e-cigarettes under the Vuse brand. Vuse Solo uses cartridges, while Vuse Vibe uses a pre-filled tank of nicotine liquid.

    The Vuse Solo device includes vapor delivery processor technology. It is designed to monitor and adjust the power and heat that is sent to the nicotine liquid cartridge. The device repeats this process up to 2,000 times per second, which Reynolds says helps create consistently satisfying puffs.

    There also are the Vuse Fob and Vuse Connect devices, which use Bluetooth technology to connect with an app. The devices send data about battery and cartridge levels to the app so users can stay updated about when they need to replace a cartridge or recharge their device.

    R.J. Reynolds Vapor is a unit of Reynolds American Inc., which is now owned by British American Tobacco.

    R.J. Reynolds' Vuse product
    Source: R.J. Reynolds
  • Vapeleaf

    Logic, a subsidiary of Japan Tobacco, sells Vapeleaf, a hybrid of an e-cigarette and a heat-not-burn product. The device heats a non-nicotine liquid. Then the vapor passes through a capsule and heats granulated tobacco.

    Vapeleaf entered the market last summer, but a spokesman said the company was assessing the best retail and consumer opportunities before making the product widely available. Vapeleaf's availability is now being expanded within New York, New Jersey, Florida and Texas.

    "Early indications show that both retailers and consumers are excited about the product and we are optimistic about its future in the USA — even more so following July's announcement from the FDA Commissioner (Scott Gottlieb)," the spokesman said.

    Japan Tobacco is selling the technology overseas and branding it as Ploom Tech.
    The product is available in some Japanese cities and is expected to launch nationally in the first half of next year. It launched in Switzerland earlier this year.

    Correction: If IQOS is approved approved in the U.S., Altria will have the sole distribution rights to sell it in the U.S. JUUL Labs produces the JUUL e-cigarette.

    Logic's Vapeleaf product
    Source: Logic