New CLSA report estimates Reynolds lost $520 million on e-cigs from 2013-1015

[Bill Godshall]

In a July 26 report to investors, analysts at CLSA estimated the following financial losses for Reynolds American on e-cigarettes.

2013 - $85M
2014 - $250M
2015 - $185M
2016 - $140M
2017 - $95M

If/when FDA approves Reynolds PMTA applications for Vuse (and/or other Reynolds vapor products) in 2018 (when sales of all vapor products will be banned), those financial losses could quickly turn into huge financial gains.

Edit update on July 29

CLSA also estimated the following vapor product revenue for Reynolds
(note that estimated losses by Reynolds factored in the following)
2013 - $5M
2014 - $50M
2015 - $125M
2016 - $220M
2017 - $235M


CLSA also issued a similar report for Altria, that estimate the following financial losses for its vapor products.
2013 - $76M
2014 - $179M
2015 - $166M
2016 - $147
2017 - $104M

CLSA also estimated the following revenue for Altria vapor sales, which was already factored into their loss estimates above).
2013 - $5M
2014 - $50M
2015 - $65M
2016 - $75M
2017 - $85M

 

[skoony]

@Bill Godshall , The problem as I see it is Reynolds like like the other BT companies go
all in. New plants,research facilities and training new sales staff cost buku bucks.
Of course they are going for volume production to get economy for scale.

This of course creates a interesting question. Should they lobby for the strictest regulations possible going for long term profitability or, lobby for the mildest regulations and,rely on their sheer size and marketing clout to turn profits much quicker?

Regards
Mike

 

[Rossum]

Wow! Almost $750 MILLION in losses...

Do they really believe that vapers will buy their Vuse products after our stuff is removed from the market by the FDA? I can guarantee you this vaper will not.

 

[KentA]

I wonder how much of that went toward the FDA.

 

[sofarsogood]

In a July 26 report to investors, analysts at CLSA estimated the following financial losses for Reynolds American on e-cigarettes.

2013 - $85M
2014 - $250M
2015 - $185M
2016 - $140M
2017 - $95M

If/when FDA approves Reynolds PMTA applications for Vuse (and/or other Reynolds vapor products) in 2018 (when sales of all vapor products will be banned), those financial losses could quickly turn into huge financial gains.

That money is invested, mostly marketing, not lost. It's lost if their products don't become profitable down the road. As we know, their products are suppliments to smoking, not replacements. If you are a tobacco company that's the perfect solution. Why not sell your customers cigarettes and ecigs?

The only products the FDA approves for quitting smoking are things that don't work. That is intentional. They will approve the tobacco company vaping products BECAUSE they don't work. The stuff we buy does work and that is why it will not be approved.

 

[Just Me]

This vaper will not buy their products, either.

 

[zoiDman]

I wonder how much of that went toward the FDA.

Yeah... I also Wonder how much went to Capital Expenditures.

Building something like a Completely Automated e-Liquid/e-Cigarette Facility aint Cheap.

 

[nomore stinkies]

I don't care if I have to enter the nut house, I will NOT purchase from BT. Or enter the Pecan suite or Walnut room. Nope will not. Quitting vaping will be 100 times easier than quitting those burning tobacco sticks. Nope , never. I'm not an angry person but this whole journey is really piiiiiiing me off. Rant time

 

[sofarsogood]

I don't care if I have to enter the nut house, I will NOT purchase from BT. Or enter the Pecan suite or Walnut room. Nope will not. Quitting vaping will be 100 times easier than quitting those burning tobacco sticks. Nope , never. I'm not an angry person but this whole journey is really piiiiiiing me off. Rant time

For less than what it cost me to smoke for 2-3 months I can buy everything vape specific I'll need for the next 10-15 years. Do that and thumb your nose at the Federal Drug Administration.

 

[VNeil]

For every dollar RJR extracts from retail sales the govt rakes in about $4, in a mafiesque protection racket scheme. And that mafia is fiercely protecting their $40 billion protection racket.

Our beef is with the govt but that govt has convinced us that all that is evil is BT. And we as a community fall for it....

 

[KentA]

For every dollar RJR extracts from retail sales the govt rakes in about $4, in a mafiesque protection racket scheme. And that mafia is fiercely protecting their $40 billion protection racket.

Our beef is with the govt but that govt has convinced us that all that is evil is BT. And we as a community fall for it....

The whole bunch of them should be charged with violating the Racketeer Influenced and Corrupt Organizations Act, RICO. When did FDA employees become exempt from law?

 

[Firestorm]

Not a single penny of mine will ever go to BT or vaping taxes.

 

[KentA]

Not a single penny of mine will ever go to BT or vaping taxes.

Yeah, I've already arranged for that, but I feel sorry for future vapers.

 

[AzPlumber]

In the last five years they lost about $30,000 of my hard earned money due to e-cigs.

 

[bobwho77]

You're all basing your comments on the (IMO mistaken) assumption that BT will stay in the ecig market after the deeming regulations take full effect. I just don't see it. I think that (once the vaping market shakes out) they'll quietly shut down even their existing products. Why should they waste their time/money? They already have a captive audience (smokers) and the profit margins on traditional cigarettes versus ecigs is much higher.

 

[Bob Chill]

You're all basing your comments on the (IMO mistaken) assumption that BT will stay in the ecig market after the deeming regulations take full effect. I just don't see it. I think that (once the vaping market shakes out) they'll quietly shut down even their existing products. Why should they waste their time/money? They already have a captive audience (smokers) and the profit margins on traditional cigarettes versus ecigs is much higher.

You could be right but I disagree. The absolute most important thing for BT is lifetime customers. Of which, the vast majority become one as a teen. If any group is going to be creative and "get whatever they want" it's teenagers.

Teen smoking rates are plummeting faster than any other time. Smoking is falling out of favor with young people pretty quick and I kinda doubt that the FDA regs will cause a quick increase in smoking rates for young people. I think whether the Gov or BT likes it or not, vaping is here to stay. Especially if Cole Bishop or hr2058 survive. There would be no chance at controlling it enough to cause young people to pick up cigs at increasing rates.

With that being said, vaping is definitely going to face some stiff headwinds. Costs will go up and availability will go down. We can only speculate as to how much change is really in the future of the industry

 

[bobwho77]

You could be right but I disagree. The absolute most important thing for BT is lifetime customers. Of which, the vast majority become one as a teen. If any group is going to be creative and "get whatever they want" it's teenagers.

Teen smoking rates are plummeting faster than any other time. Smoking is falling out of favor with young people pretty quick and I kinda doubt that the FDA regs will cause a quick increase in smoking rates for young people. I think whether the Gov or BT likes it or not, vaping is here to stay. Especially if Cole Bishop or hr2058 survive. There would be no chance at controlling it enough to cause young people to pick up cigs at increasing rates.

With that being said, vaping is definitely going to face some stiff headwinds. Costs will go up and availability will go down. We can only speculate as to how much change is really in the future of the industry

Teen smoking rates are dropping (in part) due to the availability of vaping as an attractive alternative. Take it away, and my money says that the rates will start increasing.
I don't think that Cole/Bishop, or HR2058 are going to get anywhere, to be honest. I DO think that the lawsuits currently getting underway will have positive results

 

[DC2]

Well, I agree with all three of the posts below.

Which is why what Big Tobacco will do...
When handed whatever will remain of the vaping industry fascinates me.

There are a lot of factors in play, and a lot of players in the game.
How it all shakes out will be one for the ages.

You're all basing your comments on the (IMO mistaken) assumption that BT will stay in the ecig market after the deeming regulations take full effect. I just don't see it. I think that (once the vaping market shakes out) they'll quietly shut down even their existing products. Why should they waste their time/money? They already have a captive audience (smokers) and the profit margins on traditional cigarettes versus ecigs is much higher.

You could be right but I disagree. The absolute most important thing for BT is lifetime customers. Of which, the vast majority become one as a teen. If any group is going to be creative and "get whatever they want" it's teenagers.

Teen smoking rates are plummeting faster than any other time. Smoking is falling out of favor with young people pretty quick and I kinda doubt that the FDA regs will cause a quick increase in smoking rates for young people. I think whether the Gov or BT likes it or not, vaping is here to stay. Especially if Cole Bishop or hr2058 survive. There would be no chance at controlling it enough to cause young people to pick up cigs at increasing rates.

With that being said, vaping is definitely going to face some stiff headwinds. Costs will go up and availability will go down. We can only speculate as to how much change is really in the future of the industry

Teen smoking rates are dropping (in part) due to the availability of vaping as an attractive alternative. Take it away, and my money says that the rates will start increasing.
I don't think that Cole/Bishop, or HR2058 are going to get anywhere, to be honest. I DO think that the lawsuits currently getting underway will have positive results