Blu e-cigarette maker plans to restrict online sales amid FDA crackdown on teen use

  • Fontem Ventures, a unit of tobacco company Imperial Brands and maker of blu e-cigarette, plans to tighten its sales practices.
  • FDA Commissioner Scott Gottlieb ordered Imperial Brands and four other manufacturers to curb teen use.
  • Gottlieb is expected to announce this week new restrictions on where pod-based flavored e-cigarettes can be sold.
Source: Blu

The maker of blu e-cigarettes plans to tighten its sales practices in an effort to restrict underage access and appease federal health officials amid an industry-wide crackdown on "epidemic" teen use.

Fontem Ventures, a unit of tobacco company Imperial Brands, said it will raise the minimum age requirements to buy pods on its website to 21 across the U.S. and require its online retail partners to use age verification technology, among other measures designed to stop kids from buying its products. The new age requirements will apply even for sales to consumers living in states with lower age limits, the company said.

It also plans to review its packaging and product descriptions, possibly changing them, to ensure they're "responsible," CEO Richard Hill told CNBC. Unlike some of its competitors that are pulling flavored nicotine pods off the market, blu will continue selling its sweeter flavors, including "honeymoon," "neon dream," "blue ice" and "melon time," according to a list on its website. Critics argue fruity flavors attract kids to e-cigarettes, but the company insists they help former adult smokers switch to its products.

"We don't think our products are attractive to kids but are for adults. I'm actually sitting here as we speak vaping on blueberry," Hill said during a phone interview with CNBC.

Food and Drug Administration Commissioner Scott Gottlieb in September ordered Imperial Brands and four other manufacturers — Juul Labs, British American Tobacco, Altria and Japan Tobacco International — to come up with solutions to what he's calling "epidemic" levels of teens using e-cigarettes by last Sunday.

Some of the companies have released their plans. Altria said it will voluntarily remove its MarkTen pod-based products and will stop selling all flavors except for menthol or tobacco in its "cig-a-like" products until the FDA reviews and approves them. The company said it also supports federal legislation to make 21 the minimum age to buy tobacco products.

Juul, the market leader, plans to pull its mango, cucumber, fruit and creme flavored nicotine pods from convenience store and other retailers, a person briefed on the company's plan who asked not to be named because the proposal is not yet public told CNBC. The company plans to restrict most of its sales to its age-verified online shop, the person said.

Fontem Ventures' Hill said the manufacturer stands behind its flavors because research shows they're "really important" in helping smokers switch from conventional cigarettes. Plus, he's not convinced flavors alone caused a surge in teen use. Instead, he thinks it's the marketing practices of "one brand," though he declined to name which one.

"When you look at the issue of youth access generally, let's be clear: We see this as being caused by the irresponsible actions of one brand in particular," he said. "Thinking about this as an industry issue is slightly wrong, but nonetheless, we take this issue very seriously."

Fontem Ventures will instead focus most of its efforts on limiting teen access of its products.

It will also start a hotline for consumers to report underage sales of its products and create a new youth access officer to oversee efforts to monitor social media. Juul has already started scraping Instagram and Facebook to scrape inappropriate posts.

Fontem Ventures pledges to end contracts with retailers found illegally selling e-cigarettes to teens despite a federal ban on sales to minors.

Fontem Ventures also plans to start testing connected devices outside of the U.S. early next year that may be equipped child locks and geofencing technology to prevent minors from using the e-cigarettes. In order to introduce new e-cigarettes in the U.S., companies need to submit them to the FDA for review.

Gottlieb told CNBC in September he's considering fast-tracking the process for e-cigarettes with features proven to keep kids from using them. He's expected to announce this week new restrictions on where pod-based flavored e-cigarettes can be sold, barring them from convenience stores and gas stations, senior FDA officials told CNBC.

So even though Fontem Ventures doesn't plan to pull its flavored products from stores, regulators may limit where they can be sold.

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