Aug 1 The electronic cigarette, touted as a way
to cut smoking, is facing a serious contender that even smokers
Vapor tanks are typically hunkier and allow smokers and
would-be quitters to customize nicotine levels, as well as to
puff thousands of blissful flavors. A cult following is likely
to grow as "vaping" becomes more fashionable and more stores,
such as Walmart, carry the battery-powered metal tubes in a wide
range of colors.
As a result e-cigarette sales, like its shape, are slimmer
this year, prompting manufacturers to invest in the next
generation of inhalant products ... as well as smokers.
Tank makers are introducing new models at a rapid clip in
the fledgling market, ramping up research into products that may
even evolve into puff pipes for medicine or marijuana.
E-cigarettes are typically used to smoke nicotine-laced
liquids. When users puff, the nicotine is heated and released as
a vapor containing no tar, unlike conventional cigarettes.
Tanks give smokers "something that more closely resembles a
combustible cigarette because of the bigger plume of vapor,"
said John Wiesehan Jr., chief executive of Mistic, one of the
largest private e-cig makers, which has added a tank device to
its product lineup.
RAPID GROWTH, BIGGER MARGINS
After surging in the last two years, e-cig sales declined
12.9 percent in the four weeks ended July 5 from the prior
period because of lower prices and as smokers migrated to tanks,
Wells Fargo analyst Bonnie Herzog said.
She estimates tanks and e-cigarettes have a combined market
of about $2.5 billion, and believes that tanks will overtake the
latter in the next decade.
Retailers, Herzog said, are starting to discontinue or take
shelf space away from e-cigs to make room for tanks, "given
their attractive growth and margins."
The three big tobacco companies said they are focusing on
e-cigarettes and declined to discuss product plans. But they
could acquire their own tank products after the technology is
Lorillard Inc, which leads the U.S. e-cig market,
already sells a vapor tank in the United Kingdom. It reported
Wednesday that increased competition is hurting its blu eCig,
whose sales slipped last quarter by 35 percent as its U.S.
market share fell to 40.9 percent.
Reynolds American Inc and Altria Group Inc
are rolling out their own e-cig brands, Vuse and MarkTen
respectively, nationwide this summer. They had only been
available in two states.
"There is clearly more competition than there used to be,"
said Craig Weiss, CEO of NJOY, a top U.S. e-cigarette seller
which has filed more than 80 patent applications in recent
years. That, he said, has led to increased innovation.
Demand for NJOY's e-cigs has slowed in the last year, and
the company plans to roll out a new tank device in August.
None of the current technologies "are the perfect delivery
system but people that want a cheaper and more socially
acceptable way of smoking will try what's out there until
something sticks," Morningstar analyst Philip Gorham said.
"I am confident that e-cigs have a future and will likely
get bigger," he said. "What I don't know is which technology
will win out."
(Reporting by Jilian Mincer; Editing by Richard Chang)