Wednesday, April 25, 2012

Lorillard and Blu Cigs take big electronic cigarette plunge

I think it’s safe to say that the electronic cigarette landscape changed was sufficiently rocked with today’s big announcement of the Lorillard Tobacco Company’s acquisition of the Blu Cigs electronic cigarette company for $135 million.

E Cig Werks first blogged about possible impending nuptials between smaller electronic cigarette brands and the major tobacco companies in December 2011. At that time, an article on the Seeking Alpha financial website described electronic cigarettes as a “threat” faced by major tobacco companies. The article by Paul Santos was one of the first to note the logical interest in electronic cigarettes for large worldwide tobacco companies.

At the time, Blu Cigs president Jason Healy made the following comment on Santos’ Dec. 7, 2011 column. “It’s good to see this topic being discussed, said Healy. “I am obviously betting on the fact that we have and will continue to make an impression on big tobacco.”

The impression was apparently a good one as the Greensboro, N.C.-based Lorillard will keep Blu as a separate company operated by its current management team in Charlotte while acknowledging Blu as the “best selling” electronic cigarette brand.

"This is a very exciting move for me and my team,” Healy said in a statement today. “I am particularly excited about what this means for the brand and our customers. It gives us access to the tremendously experienced team and resources at Lorillard and will allow us to move to the next level on our expansion and product development."

Having followed the growth of the electronic cigarette industry pretty closely for well over a year, I was just waiting for the larger tobacco companies to get involved as e-cig and acceptance popularity increased.

According to the CDC, the percentage of U.S. adults who tried electronic cigarettes quadrupled from .06 percent in 2009 to 2.7 percent in 2010. While those numbers are small, they have increased significantly since then, but still pale in comparison to those using regular cigarettes.

A New York magazine story had noted that the number of posts on the Electronic Cigarette Forum were at about 4.2 million for 2011 compared to some 30,000 three years ago in 2008. In addition, the online world of social media is full of websites, blogs, forums, Facebook and Twitter pages, and more outlets focusing on electronic cigarettes.

With benefits like health considerations, cost savings, decreased odor, improved access and more, it seemed that an unsettled regulatory climate might prevent faster growth. However, since a U.S. Appeals Court ruled that electronic cigarettes be regulated as a tobacco product and not a smoking cessation device in late 2010, the market has grown further.  

As many smaller companies like Blu grew and competed in the online and retail marketplace, it was only a matter of time before the big companies like Lorillard came around to electronic cigarettes.

"For a relatively modest investment, we believe this acquisition can open up a significant avenue of growth for the company long-term,” said Lorillard Chairman, CEO & President Murray Kessler. "I'd say this because e-cigarettes is a rapidly expanding market segment, which is very early in development, and Blu cigs is the leading brand and innovator in the segment. We believe that Blu will benefit from Lorillard Tobacco Company's regulatory experience and sales infrastructure which are needed for it, and the category, to reach its potential in a responsible manner."

Of course, there are still many unknowns in the electronic cigarette marketplace like further regulation, production and even advertising and promotion. However, in attending recent vaping events in Chicago and talking to others in the industry, it appears to be poised for growth.

At a recent visit to Johnson Creek Original Smoke Juice in Wisconsin, which makes its own smoke juice flavors, as well as those for Blu and other brands, those interviewed said they welcomed legitimate regulation and competition.

While bigger companies may be slower to embrace new technology, it appears they have finally got religion on electronic cigarettes with the Blu acquisition by Lorillard.

Since “big tobacco” is likely the most demonized of global industries and hasn’t exactly done the best job in the area of public relations, it might learn from the electronic cigarette companies like Blu, which have done a pretty good job on the PR and regulation front.

Only time will tell if electronic cigarettes can actually replace tobacco, but the news of Lorillard’s purchase of Blu sure makes for an interesting marriage of new and old industries.

Tuesday, April 3, 2012

Vapefest, Vapebash bring vapers together in Chicago, sort of

 E Cig Werks wasn’t the only vaper a bit confused by the dueling vaping events in Chicago last weekend.
There was Vapefest organized by the National Vapers Club(NVC) at the Chicago O’ Hare Hyatt and at the same time, there was Vapebash at the O’ Hare Holiday Inn Express organized by the Windy City Vapers Club.
I’ll let the various vaping forums cover the details and politics as to why there were two similar events only a couple miles apart on one weekend in Chicago. E Cig Werks is simply going to provide a more general review and some observations from the crowds and vendors who were there.
Both events were pretty well attended with about 20-30 vendors each and hundreds of vapers, but a major difference was that Vapefest had a $10 entry while Vapebash was free. It sure would have been better to have everyone at one location, but it still worked out fine, especially thanks to a shuttle bus between the two that was apparently provided by the folks at Cignot.
Even though many of the vendors and attendees were from the Chicago area like Cignot, Vapor4Life and Instant E-Cig, some had come a pretty long way including VapeNY, VapeRite from Georgia, MapVapes from North Carolina, and White Stag Vapor from Ohio.
We spent Saturday afternoon mixing with attendees and talking to vendors, suppliers, manufacturers and other media. While E Cig Werks tries to focus its coverage on electronic cigarettes, it was interesting to see the wide variety of vaping products, e-liquids and smoke juice products and services.
There were plenty of examples of the growing variety and popularity of e-liquid flavors in Chicago with samples from bold coffees to exotic spices to homegrown organics from vendors like VapeNY, Vapor4Life, Clouds of Vapor, Century 21 Smoking and others.
One new product making its debut at Vapefest was Century21 Smoking’s unique liquid dispensing device with a juice canister and cigarette dispenser. We noticed the “cool” factor of setting it on a bar or conference room table, as well as the potential hygiene benefits. The device is loaded with juice, flipped over and is then ready for vaping.
Other popular products were larger battery “mods” with drip tips or specialty flavors from vendors like VapeNY, Cignot, MadVapes and others. Smaller disposable e-cigs were not as prevalent although Instant E-Cig from Chicago had some quality reasonably priced products available.
Among the observations from Vapebash and Vapefest in Chicago were that the electronic cigarette and vaping industry is growing and growing quickly. The big question on many minds was just how big can it grow and when will it become more accepted and mainstream? Hopefully, it will be sooner than later, depending on factors such as regulation, marketing, advertising, endorsements and more.
Another takeaway from the Chicago events was the competitive camaraderie that seems to exist in the vaping community. Despite the obvious issues of the competing Vapebash and Vapefest events, everyone seemed to enjoy and appreciate the chance to socialize, spend and make money, and discuss the state of the industry.
As much as most vendors were in Chicago to market and sell their products, some provided interesting success stories about how e-cigs had improved either their lives or the lives of their customers by allowing them to quit smoking regular cigarettes. Several vapers were also quick to share similar stories.
So, hopefully, Vapebash and Vapefest organizers can figure out a way to combine forces for future Chicago events. E Cig Werks thoroughly enjoyed attending its first electronic industry trade show and hopes to get to more in the future.
Please feel free to provide your comments on either event or anything else!