Bright Days Ahead for blu

Sale of No. 1 e-cig could accelerate industry consolidation

Mitch Morrison, Vice President of Retailer Relations

Alisom Cooper Imperial Tobacco blu (CSP Daily News / Convenience Stores)

Alison Cooper

FORT LAUDERDALE, Fla. -- Standing on the outside of a robust party, Imperial Tobacco not only knocked, it barged through the front door and in one swoop, took over the party--the e-cig party.

In just one piece of a dramatic sea-change that will transform the entire U.S. tobacco landscape, the British tobacconist acquired blu, the trendy Lorillard e-cig brand that owns 45% of the total U.S. electronic cigarette market, as an offshoot of Reynolds American Inc.'s acquisition of Lorillard Inc. (click here for coverage).

While details remain scare, observers expect Commonwealth-Altadis Inc., Imperial's American arm based in Fort Lauderdale, Fla., to tuck blu into its total-tobacco portfolio and feature it as a marquee asset.

Imperial Tobacco chief executive Alison Cooper on Tuesday touched on blu's domestic and global potential.

"This gives us immediate leadership in e-cigarettes with the No. 1 brand in the U.S., and it has great international growth potential," she said in a webcast. "[blu] is a strong brand franchise, and it's recognized that Lorillard has done a great job at building the brand in what remains a highly fragmented market."

She added in a separate statement, "We intend to internationalize blu, the U.S. leader in e-cigarettes and enhance its growth opportunity with our know-how."  (Click here for coverage.)

blu Reach

Analysts and manufacturers of e-cigarettes and the rapidly expanding e-vaping/open systems market were taking in the rapid developments and speculating what impact the sale of blu could have on the $1.5-billion electronic-cigarette market.

In an updated note to investors late Tuesday, Wells Fargo senior tobacco analyst Bonnie Herzog said the deal "may spark further industry consolidation with e-cigs/vapor as the catalyst."

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