E-Cigs A Rapidly Growing Problem For Big Tobacco

Business Insider’s MoneyGame Chart of the Day is titled “E-cigarette Strength An Incremental Secular Volume Headwind (2013 MSe ~0.5%).” If that makes sense to you, then you can probably skip the rest of this post, because it probably says everything you need to know. If, like us, that title gave you a splitting migraine, we’ve done the work of figuring out what the hell it means.

What it shows is a chart from Morgan Stanley that tallies how much of the total cigarette market, including both analogs and personal vaporizers, is taken by e-cigarettes. It shows that e-cigarettes, while an insignificant share of the market in 2007 and 2008, have been growing exponentially in the last couple years. At current rates, David Aldeman of Morgan Stanley estimated that e-cigarettes will take the place of 1.5 billion analogs this year, a huge increase from 600 million in 2012. This number is even more impressive when you take into account that it using “stick equivalents,” meaning that it is counting on a per-cigarette basis.  This most likely means it is not taking APVs and juice sales into account, and only including things like disposables. There is a large number of vapers who are probably not included in this chart.

The context of the article is that it’s a bad time to be in the business of selling traditional cigarettes: they’re more unpopular than ever, and people are using them less and less. However, it also shows a little black line on a graph that’s may look like a drop in the bucket today, but it’s poised for a massive shift in the future. That shift is going to come in the form of a lot more people stubbing out their analogs and vaping instead.

Chart: E-Cigarette Growth – Business Insider.

E-Cigs A Rapidly Growing Problem For Big Tobacco

Altria to Enter E-Cigarette Market

Yesterday we reported that Altria, the makers of Marlboro, L&M and other major cigarettes brands and the largest tobacco company in the world, was the last of the three largest American tobacco companies not to have entered the e-cigarette market. On the heels of that report comes a story from the Wall Street Journal announcing Altria’s intention to market an electronic cigarette product, for which it has not yet announced a name, later this year.

Sales of traditional cigarettes have slowed, dropping 5.2% for Altria, and 6.2% for the industry overall, in the last quarter. Other companies such as Lorillard, makers of the Blu e-cigarette brand, have still managed to show increased revenue thanks in part to e-cigarette sales growth.

This is probably a mixed blessing for vapers. While more visibility and a wide variety of choices are probably good for users of e-cigarettes, and will surely save the lives of smokers who switch, we’re already seeing efforts from tobacco companies like R.J. Reynolds to enact legislation designed to crush smaller e-cigarette makers and vendors, to give large tobacco companies an advantage. Legislation currently under consideration in Oklahoma would require expensive licenses and prohibit Internet sales, giving a huge lift to companies like Atria who already have the licenses, and depend on brick and mortar stores for the bulk of their sales.

Altria to Enter E-Cigarette Market – WSJ.com.

Altria to Enter E-Cigarette Market