Altria Takes MarkTen National

Lorillard also planning to expand blu globally

Melissa Vonder Haar, Freelance Writer


BOCA RATON, Fla. -- Big e-cig announcements have come out of this week's Consumer Analyst Group of New York Conference (CAGNY), with Lorillard Inc. revealing intentions to expand its blu Ecigs globally and Altria Group Inc. stating plans for a national rollout of its MarkTen electronic cigarettes.

Altria CEO Marty Barrington said that its NuMark subsidiary will take MarkTen national in the second quarter of 2014, implementing learnings from test markets in Indiana and Arizona, including improvements to the flavor profile and the inclusion of a USB charger in the pack.

Although Altria was the last of the Big Three to enter the electronic cigarette segment, Barrington believes the company "has made meaningful progress toward leadership in a short time."

That progress includes a reported 48% share in the Arizona test market.

"It's really early," Barrington said. "Consumers are still choosing. They're trying to find their product, they're trying to find their brand."

In addition to the MarkTen national rollout, Richmond, Va.-based Altria also announced earlier this month that it is buying e-cigarette company Green Smoke Inc. in a deal that's expected to close in the second quarter. Altria said Green Smoke's experience in the category, along with its supply chain, products and customer service, will complement its business.

Wells Fargo senior analyst Bonnie Herzog was optimistic about both NuMark's expansion and the Green Smoke deal, writing in a research note that "we are encouraged by Altria's increased enthusiasm around the e-vapor category, and we believe Altria's bolder participation in the category will ultimately help catapult category growth."

Meanwhile, Greensboro, N.C.-based Lorillard--the first Big Tobacco company to enter the segment and who currently holds a solid lead with blu--will expand into the EU, both with blu and its recently purchased U.K.-based Skycigs.

While Herzog was encouraged by Lorillard's commitment, she expressed concerns about the company's ability to compete on a global level without assistance.

"We believe it could be difficult for Lorillard to tackle such a massive undertaking in a financially sound way given the urgency and magnitude of investment required and the fact it will be competing against the largest global tobacco players," she said. "Therefore, mid to longer term, we believe (they) may have to strategically partner in some way in order to achieve its aggressive expansion goals for blu."