Japanese banking giant Nomura is forecasting a steady decline in cigarette volumes as the e-cigarette revolution gathers pace.
Nomura believes cigarette volumes will fall by 3.8 per cent (five-year compound annual growth rate), while e-cigarettes are set to rise to 15 per cent of equivalent units in the US by 2023.
E-cigarettes are changing the landscape of the tobacco world, with talk of the new devices being the industry's "Kodak moment." Wells Fargo has even gone so far as to predict that e-cigarettes could outsell regular cigarettes within a decade.
Nomura's bullish outlook for e-cigarettes in the US is being more than matched in the UK. In 2013, e-cigarette sales for the UK rocketed 340 per cent year-on-year, overtaking nicotine patches for the first time. There are now an estimated 1.3m e-cigarette users in the UK alone.
The new devices have been warmly welcomed by some anti-smoking campaigners, such as former director of Action on Smoking and Health, Clive Bates.
However, the advance of e-cigarettes has not all been smooth sailing and there maybe tough times ahead for the insurgent product.
In February, the EU banned the sale of e-cigarettes with a nicotine concentration of over 20mg/ml. The decision was widely criticised as mistaken application of the precautionary principle.
The implications of the decision could be far more devastating than a reduction of consumer freedom. Modelling conducted by London Economics, estimates the ruling could prevent the saving of 105,000 European lives per year.
The US cigarette industry is not only facing challenges from e-cigarettes, but may soon be facing the tidal wave of regulation their European counterparts have had to endure.
Menthol cigarettes have come under increasing pressure from the Food and Drug Administration (FDA) after it published a report in 2011 concluding, "the removal of menthol cigarettes from the marketplace would benefit public health in the United States."
While Nomura do not expect an imminent ban of the mint flavoured smokes, such as that seen in the European Union, it does expect menthols to be subject to greater taxation and higher age restrictions.
US courts have so far protected cigarette packs from being covered in gruesome pictures of lungs and throats in various stages of smoking induced decay, thanks to the first amendment.
However, Nomura believe that it is only matter of time before US cigarette packs join their European cousins with graphic health warnings.
Some companies may also be hitting the so-called "tobacco wall,"a term coined to describe when come companies reach a point of optimum efficiency, beyond which it becomes too uncompetitive to be a national tobacco manufacturer.
While far from signalling the death knell of the tobacco industry, Nomura's research note further highlights the dangers to an industry under pressure from governments and competitors alike.