Electronic cigarettes and vaping are consolidated as the real growth market for tobacco manufacturers as revealed by a recent move from the makers of Marlboro, the biggest American tobacco company, the Altria Group. Altria is going to save $300 million per year through laying off workers in its operations and plans to direct those savings into investing in electronic cigarettes.
Currently controlling more than half of the traditional cigarette market in the US, Altria has however seen its sale volumes decline by 2,6% in the last quarter, and it is going to seek this $300 million in savings from lay offs in order to invest more in the newer trend of “reduced harm products” such as electronic cigarettes and also in its own brands.
Trying to survive the constantly declining smoking rates in the USA over the last half-century, tobacco companies first saw the expansion into developing countries, especially in Asia, which had much more relaxed laws on smoking and the advertisement of smoking products, as the best solution to retain their profit levels. The most recent trend however, has been the effort of the largest tobacco firms to gain a strong foothold in the vaping sector as well either by buying up existing or by starting their own e-cigarette brands.
Although the biggest in the traditional market, Altria, had fallen been behind when it came to the vaping market, because although it is now developing its iQOS e-cigarette, its competitor tobacco companies had already managed to snap up firms with the best brand recognition. For example, the second largest company, Reynolds, which recently also acquired the Lorillard company, has the VUSE brand of e-cig. Before Lorillard was acquired by Reynolds they had also purchased and then managed to spin off a the very popular e-cigarette brand Blu.
Compared to the strictly controlled traditional cigarette market, the electronic cigarette market is still viewed as the Wild West in many ways, due to the fact that regulators are still not resolved and unanimous on how to control and regulate the technology. There is also a lack of consensus on whether electronic cigarettes should be praised for being harm reduction products or condemned for being harmful nicotine-delivery devices.
Vaping has come under fire and strict controls both by local authorities and many private businesses and groups and it seems pretty accurate to predict that such controls will continue and that eventually strict government regulation will also follow suit. However, until this happens, many tobacco companies, such as Altria, view electronic cigarettes as a product with much greater potential than their old-fashioned cigarettes.