E-Cigs Take On Big Tobacco

"Vapor" smoking companies are ramping up advertising to capture a bigger slice of the cigarette market.

January 09, 2013

SCOTTSDALE, Ariz. - "Smoke" billows around the man in the TV commercial, as he sits with a satisfied expression on his face. The ad? For NJOY King, an electronic cigarette, the first "cigarette" ad to appear on TV since the ban on cigarette advertising on TV and radio went into effect in 1971.

NJOY and other e-cig companies have become increasingly aggressive with their advertising, making it no secret that they want to encroach on big tobacco??s market share, Time reports. E-cigarettes currently occupy a tiny corner of the $80 billion U.S. cigarette sector, but UBS predicts e-cigarette sales will be $1 billion this year. "Consumption of e-cigs may overtake traditional cigarettes in the next decade," wrote Bonnie Herzog, an analyst for Wells Fargo. "And they??ll only evolve and improve as time goes forward ?" at far less risk."

Big tobacco is taking notice. Lorillard snapped up Blu, an e-cig manufacturer with around a quarter of the market share. Reynolds American has been testing Vuse, an e-cig. British American Tobacco is investing in e-cigs. Wells Fargo and Goldman Sachs analysts liken the interest in electronic cigarettes with the explosion of energy drinks. Many of the beverage company players didn??t catch on to the energy drink craze until it was firmly established, and analysts are starting to see the same thing happening with e-cigs.

"Cigarettes haven??t evolved in 70 years," said Craig Weiss, NJOY president. "The last 'product innovation?? was the filter in 1952 and the flip-top box in 1954." He??s upfront about his desire to take down big tobacco. "Our mission at NJOY is to obsolete cigarettes,??" he said.

Thus far, e-cigs do not fall under the province of the U.S. Food and Drug Administration. For more about electronic cigarettes, read "Make Room for Smokeless" in the September 2012 NACS Magazine.

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