POMPANO BEACH, Fla. -- Earlier this year, Tokyo-based Japan Tobacco Inc. (JT) shook up the electronic cigarette industry by officially acquiring the No. 3 e-cig player in the United States, Logic Technology Development LLC. In an exclusive interview, company president Miguel Martin laid out how this move better sets Logic up to succeed in 2016 and beyond.
Q: What benefits are there to a partnership between an independent vape company and major tobacco manufacturers?
A: “Clearly in the adult nicotine space, there are advantages to partnerships, whether that’s Reynolds and Lorillard, Altria and Green Smoke or whatever. It’s the same potential regulatory environment, same sales and marketing position, and most importantly, the same consumer: adult smokers.”
Q: Why merge with an international player like JT?
A: “Companies that work outside of the United States have to have drastically different marketing plans, regulatory plans, pricing plans than what is a pretty homogenous approach in the U.S. With electronic cigarettes, you constantly have to come out with new products, constantly be really reactive to all these different factors. International companies, by necessity, have to run that way.”
“A company like JT has demonstrated the flexibility to take big brands and customize them to unique markets and different consumer bases. That flexibility and agility is particularly applicable to electronic cigarettes because the consumer is moving so quickly.”
Q: How does this set Logic up to compete against Big Tobacco?
A: “Our primary competition is Reynolds, Altria and now Imperial … companies that view electronic cigarettes as a compliment or alternative to their mainline businesses. It’s our only business, so we will be uniquely focused on electronic cigarettes.”
Q: How onerous is the potential cost of regulatory compliance once the deeming regs are finalized?
A: “There’s no question that the regulatory cost is going to be expensive. There are the apparent costs: manufacturing compliance, what it takes to get through the substantial equivalence process as well as any local costs. While expensive societal alignment and regulatory compliance are foundational principles for Logic.”
Q: What should retailers know about this deal?
A: “It’s great to have the partnership and I look forward to working with JT. The Logic people aren’t changing and most importantly the trade-centric approach isn’t changing. What retailers should know is that this partnership will allow us to expand quicker, develop new products faster, have more people assisting them and allowing Logic as a whole to maximize its potential.”
Q: What insights do you have on the future of the e-vapor industry?
A: “Similar to energy drinks, we believe the best way to win is to sell products aligned with the needs of the adult consumer and in a manner that creates mutual profits for your trade partners. The best regulatory-forward product—whether it comes from a small company or a big company—is going to define the winner.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.