Big Tobacco Is Scrambling To Get A Piece Of The Booming E-Cigarette Business
In other words, these are things that will dramatically alter how their respective industries operate.
There was one technology you could put in your mouth: e-cigarettes.
What are e-cigarettes? They're basically thin pipes of vaporized, flavored nicotine. When you take a drag, a pressure-activated switch turns on a miniature heater that emits fake smoke. They're said to be less addictive than regular smokes, and more importantly, cheaper.
We've previously discussed some of the hurdles e-cigs face: regulation, flavor, general coolness.
Citi does not discount those, but says they won't stand in the way of the product becoming a $3 billion market segment.
Here's their forecast in chart form:
Citi tobacco analysts Adam Spielman and Vivien Azer note that the big players are scrambling to get a piece of the action:
E-cigarettes have become an increasing focus for investors, especially in the U.S., given 1) the relative absence of innovation seen in the tobacco industry, and 2) the product’s increased visibility since Lorillard’s acquisition of blue eCigs in April 2012. Indeed, while still a small contributor to Lorillard’s sales and profits, (1.3% of sales and 0.1% of profits in FY12) with the company opting to offer specific financial disclosure of this business it will continue to garner increased investor Further, we expect this will become an increasing focus for global investors, as Reynolds American has introduced their own e-cigarette brand, Vuse, into test markets in the U.S. and we expect they will be rolling out this product into the broader market in the near future. Looks like a lot of people are gonna be coughing it up for this product.