No smoke, but e-cigarettes may spark tobacco industry sales

Blu ecigs, a maker of electronic cigarettes acquired by tobacco titan Lorillard this year, is one of several e-cigarette makers ramping up marketing to win over the rising number of smokeless tobacco users. Lorillard’s $135 million acquisition of blu ecigs was discussed in a previous Bizmology post by Hoover’s colleague Catherine Colbert. Subsequent advertising efforts to “take back your freedom to smoke” are part of the US tobacco industry’s response to the wave of smoking bans, taxes, and publicized negative health effects. Such concerns have driven volume sales of traditional cigarettes down by 3% to 4% a year, according to this Bloomberg article.

Ironically, the US Food and Drug Administration (FDA) may be helping to spur the movement toward more smoke-free tobacco consumption, as it has yet to impose regulations on these cigarette alternatives. This has implicitly given makers the green light to develop and market new smokeless tobacco alternatives without much government intervention.

In addition to Lorillard’s battery-powered e-cigarettes, rival US tobacco companies Altria and Reynolds American have introduced with considerable fanfare finely milled tobacco-concentrated dissolvable lozenges and sticks to spark demand for smokeless tobacco. Reynolds American rolled out Camel Orbs. Altria introduced Marlboro and Skoal brand sticks, and in 2012 Verve, a nicotine disc.

Meeting with mixed consumer reviews, snus, a pouch snuff that isn’t spit, is sold by Altria (through subsidiary UST) and RJR Tobacco (part of Reynolds American). Reynolds American reported more than a 25% jump in earnings in 2011 over the prior year, fueled in part by Camel snus sales. Although Altria’s sales and earnings slipped in 2011, UST posted a shipment volume increase of more than 1% over 2010.

The switch is slow but steadily growing; smokeless alternatives today generate a thin 1% of the overall $90 billion US tobacco market, but sales grew roughly 7.5% in 2011 over 2010, according to Euromonitor International. Prior to that, the CDC reported that about 122.6 million pounds of smokeless tobacco were purchased in the US in 2010, up from 121.4 million pounds in 2009. Lorillard reports that blu ecigs generates $300 million in sales, but that number is expected to increase to $1 billion annually.

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Picture by Jay Shouldol, used under a CC-Share Alike license.

Sylvia Lambert

Sylvia Lambert covers a slew of industries. She has been a writer and editor at Hoover's since 2009. Her former published work includes Herbs: Growing & Using the Plants of Romance, a 1999 Benjamin Franklin Award winner for agriculture and gardening, and Along the Garden Path.

Read more articles by Sylvia Lambert.

Comments

  1. Dear S. Lambert
    I’am glad to see a tobacco co. get in on the e- cigarette market too. I like to see how the FDA and their partner the tax man are going to react. I believe we both know and have to be ready to react or maybe start now .
    Cigarettes are unjustly blamed for every thing a patient is diagosed for, since Surgeon General Kopp’s, smoke free campaign and the so called 300,000 deaths a year number needed to kick it off for attention and with instuctions sent to health facilities. to conform to new policy that had doctors and hospitals chart after a passing. Than later before admitted to hospital only serious ones first with all after about year later on the results after the question did he smoke yes or no ? in oder to inflate the passing number and state cause to desease was contribed by tobacco use, even if only smoked once for a month, This is true and factual.
    What I don’t comlpetely understand how people can be attacking the tobacco industry for everything when were down to 20% of our population that still smokes based on what I read Yet the Death rate as logged has not change but acttually gone up ?
    Well my thoughts are alcohol does a lot lot more and I believe you know the tally on that one and is proven just read a news paper some still around that retain their reputation but They wont go there again for sure. Instead Washington DC sees easy pickings here ( TOBACCO INDUSTRY ) one we can blame and at the same time recieve revenue to boot, good deal.
    Just adding in contrast how would any one in business feel if they were singled out and had their product selling price increased by taxes to the customer, any time and at any amount the Feds and states felt like and taint you and the product for making and selling it. The consumer would do just what everyone does to leave go eleswhere or stop using. Lose sales, pay states for a bad law suit decades ago billions of dollars, where did it go Where did they spend all that money I mean all of it not the small change programs??????

    Well I hope I didn’t bend any ones ear but I felt the need to say something and I can report more on many other matter and subjects If I don’t know it to be true from my own experience I will not Write IT. If it just opinion or conjecture I’ll state it to be…Other than ideas and possible solutions that may solve a problem.
    Thank You
    Best Regards
    Dimitri
    PS I did get on a tangent sorry

  2. NOT a gimmick. These thnigs are pretty awesome. Check out some videos on you tube, and read some forums before you spend any money so you don’t get stuck with some overpriced piece of you know what. (like I did) Learn first . spend money 2nd! LOLCheck out vapersforum.com, nu-vapor.com, thevapercafe.com, or righttovape.com there are many of them. Just make sure that it’s not a forum for ONE single brand of e-cig so you get good info from REAL people and not a sales pitch. Be wary and research anything over $ 50 for a starter kit.Good Luck and happy vaping You are gonna love it.

  3. We bought my son these blu e-cigs to help him quit. They were a waste of time and money. My daughter discovered vaping and shared it with her brother. A personal nicotine vaporizer that uses a tank for e-liquid, a rechargeable battery, and a wick or mesh cartridge to atomize the liquid into vapor has actually helped both my kids stop smoking. The CDC says we taxpayers are going to pay health care expenses at the rate of about $10/pack for the damage done by tobacco cigarettes. I hope the government and big tobacco don’t get in the way of this new and successful form of smoking cessation.

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