E-Cigarette Sales to Exceed Traditional Cigarettes by 2021

A tobacco analyst predicts the Big 3 will lead the electronic cigarette category, with sales that will overtake tobacco cigarettes by 2021.

September 17, 2013

WINSTON-SALEM, NC – Tobacco analyst Bonnie Herzog of Wells Fargo reaffirmed her previous prediction that electronic cigarette sales will exceed those for tobacco cigarettes within the next decade, the Winston-Salem Journal reports. She also predicted that Big Tobacco would probably control most of the electronic cigarette market.

Herzog said that U.S. e-cigarette sales will reach roughly $2 billion by the end of this year and up to $10 billion by 2017. She expects Altria, R.J. Reynolds and Lorillard to take an increasing presence in the category, which will accelerate its growth. 

Herzog based her projection on three factors: The manufacturers’ ability to invest in the electronic cigarettes; their supply chain relationships with retailers and distributors; and their expertise at building successful brands.

"Undoubtedly, technology is a crucial part of driving e-cig consumption,” Herzog said. “But building compelling brands is equally, if not more important, in our view.”

However, Herzog’s predictions can be upset by the FDA’s decision to regulate electronic cigarettes, said Carl Philips, scientific director for Consumer Advocates for Smoke-free Alternatives Association. ”We remain cautiously optimistic that the regulations will favor consumers and public health, which will mean not imposing the restrictions that favor large manufacturers.”

Herzog disagrees, and said pending FDA regulation and taxation “shouldn’t derail the long-term growth trajectory” of e-cigs.

"We’ve long believed the e-cig category will be regulated, possibly similar to the conventional cig category, and that e-cigs will likely be taxed, but in a way that better reflects the potential relative risk.”