Response to FDA statement on preventing youth access to flavoured products

Notes to Editors

(Reference to Reynolds refers to the activities undertaken by one or more of companies that comprise the RAI Group of companies)

Our presence in the US – by channel and flavours:

•  Reynolds sells vapour products under the VUSE brand name. The VUSE brands include VUSE Solo, VUSE Ciro, VUSE Vibe and VUSE Alto.
•  VUSE sells 12 flavour varieties with tobacco, mint and menthol flavours accounting for over 70% of our total Vuse volumes (Source: Internal data, shipments to retail (STR), kit cartridges and refill cartridges, YTD 1/1 – 9/23/18).
•  Approximately 94% of VUSE consumers are over the age of 25. Moreover, over 60% of our Vuse consumers are over 35 years of age. (Source: Internal data, 1H 2018 Internal Tracker Data)
•  The majority of our business for VUSE is through traditional retail and we believe this channel makes up ~45% of the industry’s sales, with over 30% in vape shops and over 20% online.  (Source: Internal data, S&P with McKinsey and PWC)

Measures Reynolds already has in place to address youth access prevention:

•  Reynolds has taken a responsible approach to developing, and subsequently naming, its flavours to ensure they appeal to adult consumers and not children.
•  Reynolds age verifies through a third-party vendor that all potential online purchases are 21 or older.
•  Reynolds is a founding member of ‘We Card’, an organisation nationally recognised for retailer education and training for age-restricted products. In 2017, We Card was recognised by 38 state governors.
•  Reynolds funds ‘Right Decisions Right Now: Be Tobacco Free’ (RDRN), a youth tobacco prevention education programme which was started in 1991 and is an evidence-based, independently tested programme for use by middle-school educators, parents and community groups.
•  Reynolds currently has a purchase limit of $200 per transaction and plans to implement a more stringent limit of $80 per week and three devices per quarter while instituting purchase pattern monitoring.
•  Reynolds has voluntarily implemented specific guidelines that restrict the content of marketing and advertising materials for our vapour products:
  •  No testimonials by sports figures or celebrities or any person with special appeal to persons under 21 years of age;
  •  No person appearing in any advertising materials shall be under age 25 or be styled to look under age 25;
  •  Content shall not include characters, images, or themes designed to target youth;
  •  Content shall not be related to youth or youth-oriented activities;
  •  Content shall not suggest that use of R.J. Reynolds Vapor Company’s (“RJRV”) products is essential to social prominence, distinction, success or sexual attraction, nor shall any content picture a person using any RJRV products in an exaggerated manner; and
  •  Content shall not depict persons participating in, or obviously just having participated in, a physical activity requiring stamina or athletic conditioning beyond that of normal recreation.

Measures we have committed to undertake in meetings with the FDA and which we are currently implementing:

•  Establishing 21 as the minimum age of purchase for tobacco products in the United States.
•  Supporting an abbreviated and expedited initial pre-market tobacco product application process that could have the effect of early removal of vapour products that are marketed irresponsibly.
•  Not marketing RAI Group products through social media “influencers.”
•  Instituting more stringent online purchase limits of $80 per week and three devices per quarter to prevent “straw” purchases
•  Meeting with our nearly 200,000 contracted retailers to emphasise the importance of compliance with underage sales laws, instituting a mystery shopping programme to check compliance, and establishing an enforcement monitoring programme.
•  Taking action at retail by establishing and enforcing contractual penalties for contracted retailers that sell tobacco products to youth.