But it will only be sold in Indiana for now Jun 11, 2013, 10 41 am EST By Christopher Freeburn, InvestorPlace Writer

Starting in August, Altria Group (MO) will begin selling an electronic cigarette.

Altria is the final U.S. tobacco company to launch such a product. Users of electronic cigarettes inhale the vapors of heated liquid nicotine, but avoid the smoke and other chemicals associated with cigarettes. The product will be sold under the MarkTen brand, will be limited to Indiana for now, the Associated Press notes.

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The owner of the iconic Marlboro brand has not indicated whether it will produce TV ads for the electronic cigarette. It has also not said whether sales will be extended to other states.

Electronic cigarettes are powered by batteries. MarkTen users can discard their cigarettes when finished, or reuse them by obtaining fresh nicotine cartridges and a battery recharging kit.

The electronic cigarette will retail for about $9.50. It is made in China.

Shares of Altria were flat in Tuesday morning trading.

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Big tobacco begins its takeover of the e-cigarette market – corporate intelligence – wsj

Brand cigarettes promotion, buy promotional brand cigarettes on alibaba.com
Keith Bedford for the Wall Street Journal

By Mike Esterl

Anyone trying to figure out how much clout Big Tobacco can carry into the nascent market for electronic cigarettes might want to check out Colorado.

Lorillard Inc., the No. 3 U.S. tobacco player and maker of Newport cigarettes, acquired the blu e cigarette brand last year and has spent heavily to boost blu s distribution and marketing. Blu is now the clear national leader, ahead of other major e cigarette brands such as NJOY, Logic, Fin and Mistic that aren t owned by a major manufacturer of traditional cigarettes.

Now comes news from Colorado, where Reynolds American Inc., the No. 2 U.S. tobacco player and maker of Camel cigarettes, launched its Vuse e cigarette in stores in July.

The early returns? Vuse has built a 55.6% retail market share in the state over the last 16 weeks, leaving blu (25.5%) and NJOY (7.3%) in the dust, Reynolds said at an investor conference Monday, citing tobacco industry tracker Management Science Associates.

Dedicated e cigarette companies have argued they ll come out on top because they pounced earlier and aren t distracted by the much bigger business of selling regular cigarettes. E cigarettes battery powered instruments that turn nicotine laced liquid into vapor represent only about 1% of the $100 billion U.S. tobacco market.

But the Big Three tobacco companies have at least three big advantages extensive distribution networks, existing customer relationships numbering in the millions, and deep pockets.

After just four months, Vuse s distribution already spans 1,800 retail outlets in Colorado, according to Reynolds. The company also has a national database of 12 million tobacco customers to whom it can market directly a major leg up because most people who try e cigarettes already smoke. And with no current restrictions on e cigarette advertising, it can spend heavily on television, print and radio ads.

Not surprisingly, Reynolds doesn t plan to stop in Colorado. It confirmed Monday that it plans to create a national footprint for Vuse in the first half of 2014.

Altria Group Inc., the No. 1 U.S. tobacco player and maker of Marlboro cigarettes, has been even slower to enter the e cigarette market. In August it began testing its MarkTen e cigarette in some Indiana stores and plans to expand MarkTen into Arizona next month.

But the early results at Lorillard and Reynolds indicate Altria could close the gap in a hurry.

See also
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