Big Vapor

Big tobacco is trying to take over the electronic cigarette market. Wait, not trying, going to take over the electronic cigarette market.

The big three U.S. tobacco companies are Lorillard, Reynolds American and Altria.

  • Lorillard’s top cigarette brand is Newport and purchased Blu eCigs in 2012. Lorillard currently holds 50% of the emerging electronic cigarette market share. They got into the electronic cigarette market early partly because the FDA has been trying to ban menthol cigarettes, which make up a large percentage of Lorillard’s products.
  • Reynolds American’s top cigarette brands are Camel and Winston. It just started selling it’s electronic cigarette brand, Vuse, nationwide this month. Reynolds American is the second largest tobacco company in the U.S.
  • Altria manufactures and sells a variety of cigarette brands including Marlboro, Virginia Slims and Benson & Hedges. Under it’s NuMark subsidiary, Altria will begin selling it’s electronic cigarette, Mark Ten, nationwide by the end of 2014. Altria is one of the largest tobacco companies in the world. Used to be Phillip Morris.

I doubt the claim that Lorillard captures 50% of the electronic cigarette market share includes advanced electronic cigarette mods such as the one below. I am willing to guess that this market share is for “cigalikes.”

Astro Mod with a Kraken RBA

Astro Mod with a Kraken RBA

The three largest tobacco companies are beginning to infiltrate the growing electronic cigarette market. Lorillard has been a player for two years. Altria and Reynolds are ramping up this year. If you don’t think Big Tobacco is the frenemy of vape shops, non-cigalike manufacturers and vape juice makers, you need to read between the lines of this article: A Bolder Effort by Big Tobacco on E-Cigarettes (New York Times)

Especially this paragraph:

Mr. Bannon of Lorillard said the company saw two reasons to invest in e-cigarettes: first, as an insurance policy in case e-cigarette sales took off, and second, as a self-funding source of research and development into e-cigarette technology.

And the last two sentences of the article:

Ms. Cordisco, the president of Reynolds’s vapor subsidiary, said, “We’re not here to put the small players out of business.”

But, she added, “If anyone can deliver a product that meets the needs of smokers in satisfaction and taste, it would be us.”

Outside of the information in the article, consider this. The big three tobacco companies have a ton of money. They are well connected in Washington D.C. They lobby Congress hard. And they have years of experience dealing with the FDA and tobacco regulations. With their money, governmental ties and regulatory compliance experience, it wouldn’t surprise me one iota if someday, big tobacco begins designing, manufacturing and selling advanced electronic cigarette mods, accessories and vape juices. Big tobacco is the predator in the big pond. They have the resources and wherewithal to gobble up the little fish like V2, Greensmoke and countless other companies and own the market.

Don’t be surprised if, once they realize that their “cigalike” products are not the products their customers choose or stick with or they decide to diversify within the electronic cigarette market beyond “cigalikes,” big tobacco starts investing their R&D dollars into advanced electronic cigarette mods, accessories and vape juices, or buying up the best companies for those products. It’s not a far fetched pipe dream. I think it’s something that could very well happen within the next five years

Big tobacco may just be starting out in the electronic cigarette market. But it probably won’t be long before Big Tobacco becomes Big Vapor.

[Addendum – 04 August 2014]

I missed this article in the Wall Street Journal, dated 03 February 2014, which reports that Altria is purchasing Green Smoke, Inc. for $110 million. Big Vapor. It’s coming. It won’t be long. Remember you first heard that term here.

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