Lorillard + Blu = Good for Business?
E-cig companies optimistic about impact of acquisition on industry as a whole
GREENSBORO, N.C. -- Last week, along with its 2012 first quarter results, Lorillard made the announcement that it would be the first of the big three tobacco manufacturers to enter the e-cigarette game with by purchasing Charlotte, N.C-based blu ecigs.
It's notable that this move marks not only Lorillard's first venture into the world of e-cigarettes--but its first venture into any form of alternative tobacco.
In an earnings conference call, Lorillard chairman, president and CEO Murray Kessler acknowledged that after so many of Lorillard's competitors had already entered the smokeless and snus game, the Newport name probably couldn't offer anything new.
The same is not true of e-cigarettes, which Kessler said will allow his company to enter the smokeless market "the Lorillard way."
Jason Healy, president and co-founder of blu ecigs, said that he sees the acquisition as a positive not only for his company, but for the entire industry. "This is a very exciting time for us and an extremely positive step forward for the electronic cigarette industry, which by nature and age has been lacking a lot of the resources necessary to truly take this product to the next level," he told Tobacco E-News/CSP Daily News.
While access to Lorillard's resources will undoubtedly help blu, it's easy to understand why other e-cigarette manufacturers could be nervous about the move. With the current industry being so fragmented, is this the first step towards a monopoly by the big three tobacco companies? What are the implications for other companies? Will they soon be made obsolete, swallowed up or put out of business by the involvement of larger tobacco companies?
Despite these concerns, the response from other e-cigarette companies--large and small--has been positive.
Sherry Cassaw, managing partner of the Kennesaw, Ga.-based Intellicig USA, said, "It was simply a matter of time before one of the tobacco companies made the move to include e-cigarettes to their product line."
She added, "It makes sense that tobacco-free products have a future, just like snus and other alternative products have in this market. This merger shows the tobacco companies are recognizing the future of e-cigarettes and do not want to lose out on the e-cig business."
As for what the news means for her company, Cassaw is confident Intellicig's products will speak for themselves. "Intellicig is so different from the competition that we welcome the attention the merger will bring to electronic cigarettes," Cassaw said.
Indeed, many e-cigarette manufacturers at last week's NATO Show shared Cassaw's view. Representatives from Northbrook, Ill.-based Fin, Livingston, N.J.-based Logic ecig and Scottsdale, Ariz.-based NJOY all expressed certainty that the boosted competition will simply help weed out inferior products, making the e-cigarette category stronger as a whole.
For their part, blu ecigs executives are excited to have Lorillard on board to help them elevate the image and reputation of the industry.
"I have always said that electronic cigarettes have a tremendous responsibility, and this step will allow us to ensure that we continue to live up to and exceed that responsibility," Healy said.
What is the latest with the tobacco display ban in the New York Village of Haverstraw? How will Lorillard’s acquisition of blu affect electronic cigarettes? What is the latest with FDA? And how are retailers changing their tobacco sets? Register today for tomorrow’s Tobacco Update CyberConference.