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More e-cigarettes in the hands of big tobacco – corporate intelligence – wsj

Europa – press releases – press release – legislation in france, austria and ireland fixing minimum retail prices for cigarettes infringes european union law

The market for e cigarettes has been the domain of dozens of small, scrappy upstarts in recent years, but with predictions that new kinds of smoke free products could overtake conventional tobacco within a decade, it won’t stay that way for long.

The big tobacco companies are now all active in the electronic business, with Lorillard, maker of the Newport cigarette brand, owning blu, the e cigarette market leader. Reynolds, which makes Camel among others, is pushing its own Vuse brand, while Malboro makers Altria and Philip Morris International have joined forces in a licensing deal to market each other’s next generation products.

Altria took another step today, reports the WSJ’s Ben Fox Rubin

Cigarette maker Altria Group Inc. agreed to buy Green Smoke Inc. for about $110 million in cash, adding to a growing trend of big tobacco companies jumping into the nascent e cigarette market.

Green Smoke, founded in 2008, has operations in the U.S. and Israel and has sold e cigarette products since 2009, mostly in the U.S. Its revenue last year was about $40 million, just a tiny fraction of Altria’s $24.5 billion in 2013 revenue.

The deal, which also includes up to $20 million in incentive payments, contains provisions to retain key management infrastructure and talent. The transaction is expected to close in the second quarter

Green Smoke’s product line is focused on electronic cigarettes, which turn a nicotine liquid into vapor. The devices are currently the most popular kind of smoke free cigarette, but that may not be the case for long Philip Morris, which was spun off from Altria in 2008, is betting big on a line of smokeless cigarettes that are still in development, which heat real tobacco without burning it.

Because these tobacco based products can give a stronger hit of nicotine, the Philip Morris CEO Andr Calantzopoulos says they have a “higher potential than e cigarettes for rapid adoption by adult cigarette smokers.”

But for the time being, e cigarettes are the only game in town for tobacco companies looking to sell something new, and smoke free, to their customers. Wells Fargo tobacco analyst Bonnie Herzog shared her take on Altria’s purchase of Green Smoke

Bottom line, we agree and believe that Altria can leverage its sales force, retailer relationships, and marketing expertise to quickly bring broader distribution to Green Smoke. From a regulatory perspective, this acquisition may put further pressure on the FDA to regulate e vapor products as they become increasingly more mainstream.

See also
E Cigarettes Spark Dilemma for Employers WSJ
What Do Smokers Really Want E Cigarettes, or Safer Tobacco? Corporate Intelligence
The Incredible and Unprecedented Chance to Make Nicotine Safer Corporate Intelligence
E Cigarettes Encounter Rising Heat WSJ