The nation’s oldest continuously operating tobacco business has officially moved into the smokeless, electronic variety. Based in Greensboro, North Carolina, top cigarette maker Lorillard announced today that it has acquired blu ecigs, an electronic cigarette company located in nearby Charlotte.
Shelling out some $135 million in cash to add blu’s assets to its stash, $6.5 billion Lorillard is working to capture this fast-growing and tech-savvy niche of the smokeless tobacco market. Sans the smoke, ash, or smell of a real burning cigarette, leading brand blu ecigs helps smokers looking to kick the habit maintain the social aspects of lighting up. As part of the agreement, blu ecigs will operate as a unit of Lorillard with existing management intact.
Lorillard primarily supplies premium and discount cigarettes — under the Kent, Old Gold, True, and Maverick names — to wholesale distributors that service more than 400,000 retail outlets, chain stores, and government agencies such as the US Armed Forces. These established relationships stand to give the company’s new blu brand some timely traction as competition heats up in e-cigarettes; blu will also benefit from having a big brother that can navigate the industry’s regulatory issues. For more on the nuances of this high-tech tobacco product, refer to a previous Bizmology post from colleague and First Research analyst Rebecca Mallett.
Lorillard has long relied on Newport, its best-selling flagship menthol cigarette brand that generates 85% of revenue. The cigarette manufacturer, founded in 1760 by French immigrant Pierre Lorillard, ranks #3 behind Philip Morris USA and Reynolds American.
To keep up with these tobacco titans and cater to consumers looking for newer smokeless tobacco products, Lorillard did well by strategically acquiring blu and expanding its products portfolio. As more restaurants, companies, and communities continue to bow to pressure from anti-smoking advocates, tobacco companies like Lorillard will need to look for more innovative ways to not only serve active cigarette smokers, but those who require smokeless products or who are opting to kick the habit altogether.