Lorillard purchases Blu E-Cigs

[NorthOfAtlanta]

wasn't blucigs part of the hon lik/ dragonite patent settlement...something new, something old on the horizon perhaps

This just sounds like an extremely good business decision on Lorillards part, they not only get a well known brand but get access to the patent license without having to negotiate with Dragonite as a billion dollar company. I'll bet they would've paid a lot more for the license on their own.

 

[RIMP]

Who says they wont just shut the doors on there new e-cig company.

That's what I figured would happen.......buy up the competition and shut em down....

 

[sqirl1]

I will say this: I'm glad it's a relatively small company like Lorillard compared to something like Phillip Morris, if it were Phillip Morris I'd KNOW they were trying to screw us over. Lorillard really only has Newports and a few obscure luxury brands like Kent.

 

[kristin]

OK, here is my gut impression on this.

Cigarette sales are decline. Cigarette customers are treated like animals. The ANTZ are still trying to ban menthol (Newport is Lorillard's #1 brand.) The FDA is (on paper) open to reduced harm alternatives.

E-cigarette market is growing by leaps and bounds. 5 years on the U.S. market with no reports of significant illness or injury by a standard e-cigarette and the ANTZ haven't been able to show them to be a danger nor stop smokers from switching, in spite of their dire warnings. The market has taken hold in spite of everything. One U.S. company (blu) is already available in most markets and recently broke ground with major retailer and other brands are popping up right beside them on store shelves. Tobacco companies already have a huge source of nicotine at their disposal.

Tobacco companies would be stupid not to jump on that gravy train and even more stupid to then start changing things - if it ain't broke, don't fix it! I'd call whomever made the decision at Lorillard a genius except a true genius would have developed their own device using their brand name recognition as soon as the FDA was beaten in court by Sottera! LOL!

Tobacco companies would be foolish to make e-cigarettes undesirable to customers. If anything, they'll have a ton of money to make them even better, so customers are happy and don't want to quit using them. They could eventually enjoy the status liquor holds in this country as a socially acceptable drug. E-cigarettes don't cause them to lose any business if smokers switch from their cigarettes to their e-cigarettes rather than NRTs. E-cigarettes would help them RETAIN customers. So, rather than a threat, if I was Lorillard, I'd see them as an asset. E-cigarettes are possibly their best chance at a marketable, socially acceptable, FDA-approved tobacco harm reduction product. Why ruin that??

Therefore, it will benefit them to fight the ridiculous laws against e-cigarettes, pour funding into safety/health research, do marketing research to find out what the customers want in a device (when the other big 2 jump in, the fight for market dominance should initiate a battle to be the best - something new to the industry as cigarettes didn't really complete based on performance) and there is a chance to thumb their nose at the FDA and ANTZ.

I don't really see a downside here. All of the concerns of BT turning e-cigarettes into useless pieces of junk and encouraging over regulation by the FDA just make no sense from a business standpoint. One thing we all know is that BT is all about making money! If all of the dire predictions come true about what BT would do to the e-cigarettes, people would just end up buying more from boutique companies and ignore the mass-marketed BT junk - which means BT loses money. If BT manages to eliminate the boutique companies through draconian regulations, then people would stop buying e-cigarettes (because they would suck) and the market is dead and they (BT) are back to square one - declining cigarette markets and people buying NRT instead. Seriously, what would be the point?

The only thing that makes sense from a business standpoint (ie. making money) is to make their product desired by the public and you don't achieve that by sabotaging both your product quality and supporting draconian regulations of your product! You do that by fighting government over-regulation that reduces your product's market appeal, continually making improvements to your product and increasing consumer confidence by implementing and publicizing your self-imposed strict manufacturing and handling process standards and responsible labeling.

My only concern is that BT is as smart as I am about business and I'm not even really that smart, so there is a good chance they are. LOL!

Think about it - when Toshiba started selling DVD players in 1996, VCR companies didn't start making their own crappy DVD players hoping people would just go back to buying their VCRs! Innovation and progress is a speeding train and smart companies know you either jump on or get flattened.

That's my take and I sure hope I'm right!

 

[NorthOfAtlanta]

I will say this: I'm glad it's a relatively small company like Lorillard compared to something like Phillip Morris, if it were Phillip Morris I'd KNOW they were trying to screw us over. Lorillard really only has Newports and a few obscure luxury brands like Kent.

Relatively small but they had 6.466 billion in net sales in 2011. I think I read somewhere on ECF that e-cig sales were in the 200 million range last year. E-cigs just moved into the major leagues and I'm wondering what Lorillard will do with the patent.

 

[Spazmelda]

I agree with Kristen. The one thing that does worry me a bit though, is that so far e-cig manufacturers/retailers have been able to distance themselves somewhat from BT. Now that BT is involved, that changes. I have some concern that this will make e-cigs an even more attractive enemy to antis. Is this going to put an even bigger target on them for groups like the FDA etc...

The good side of that is that Lorillard has money and lawyers to fight back.

 

[NorthOfAtlanta]

I agree with Kristen too, just wondering how long it will take BP to have their house organs attack E-cigs as they are not stupid and realise how much damage the type of advertizing Lorillard can do will affect NRT sales.

 

[Myk]

I saw the same type of paranoia displayed here about RJR buying up pipe tobacco (Lane Limited) and it didn't happen. Other than they seemed to focus on Captain Black to make all their money you wouldn't have noticed as a pipe smoker.
If anything this protects e-cigs from Phillip Morris because they won't go against another BT.

Online pipe tobacco sales were not stopped. They didn't even bother throwing them under the bus in the SCHIPs tax like they did with RYO. In fact pipe tobacco was such a minor blip on the BT radar they ended up quickly selling off the company to someone who's focus was pipe tobacco.
I don't think the same money making criteria will be applied to e-cigs because it's trending up. I think this will cause the big players like Phillip Morris to start working on their own. Imagine the brand recognition of buying real Marlboro e-cigs.
Once that happens there won't be any more question of complete bans although I would expect us to be demonized through guilt by association. That will bring taxes, which we knew were coming anyway.

 

[Bill Godshall]

This is a new era for e-cigarettes.

As one who has been urging PM, Reynolds and Lorillard to begin marketing e-cigarettes for the past three years, I'm confident that Lorillard's purchase of Blu will benefit e-cigarettes, Lorillard and public health in the long run, a win, win, win.

I also anticipate that PM and Reynolds will begin marketing e-cigarettes (perhaps within a year).

But Lorillard's purchase of Blu also presents short and long term threats for e-cigarettes and public health, including:

- abstinence-only prohibitionists (CTFK, ACS, AHA, ALA, ANR, Legacy, etc.) are likely to urge FDA to quickly promulgate the "deeming" regulation to apply Chapter IX of the FSPTCA to e-cigarettes and other currently unregulated tobacco products,

- abstinence-only prohibitionists are likely to claim that Big Tobacco has taken over the e-cigarette industry to addict children in an attempt to further demonize e-cigarettes and Big Tobacco,

- abstinence-only prohibitionists are likely to accuse e-cigarette advocacy groups of being front groups for Big Tobacco,

- Lorillard may not oppose (and may even endorse) FDA's stated intent of promulgating a "deeming" regulation for e-cigarettes (as Lorillard is far better positioned than any other e-cigarette company to potentially deal with FDA regulation of e-cigs, and Lorillard could view FDA regulation of e-cigs as an opportunity to sharply increase e-cigarette market share at the expense of many smaller e-cig companies).

 

[kristin]

Honestly, I don't think e-cigs have been able to distance themselves much at all from BT. I'd be willing to bet a large percentage of the non-smoking/non-vaping public believe that e-cigarettes are already made by BT. And we already know that the ANTZ don't differentiate at all.

I think the biggest hurdle Lorillard will have is earning consumer trust from sokers. There is a mythological distrust of what tobacco companies do to their products from hiding health effects, misrepresenting harm reduction (lights, low tar, etc) to insidiously adding ingredients to make their products more addictive. Smokers seeking harm reduction will have a hard time trusting that the e-cigarettes are actually safer and not being secretly manipulated. BT will have to be highly transparent in order to overcome that in any way. It may give non-tobacco owned e-cig companies a marketing advantage to play upon those trust issues.

 

[Beans]

I don't know, this really bothers me. We all know BT has spent countless hours of research and ungodly amounts of money to make their products as addictive as possible. I have no doubt that they won't stoop that low now, and then were back to square one again (IMHO) They'd be enslaving people to their all new product. I believe that vaping is much safer than smoking but I don't want them dipping their dirty corrupt fingers in my juice and messing with my brain chemistry again. I just feel like we'd be stepping backwards and lose some of the benefits we've all gained by getting away from them *sigh*

 

[EJH]

The announcement from Blu Cigs

blu ecigs the leading electronic cigarette company acquired by Lorillard | blu Cigs E Cigarettes

I chuckled with disgust at this part: (my bold)

"Lorillard Tobacco Company subsidiary, is the third-largest manufacturer of cigarettes in the U.S and has a long and proud tradition.."

Proud for years and years of destroying lungs and lives.

/shakes head

 

[Randyrtx]

I see this as a huge win for us. We've been wanting e-cigs to go truly mainstream... and they just did.

I suspect the other tobacco companies will make similar acquisitions in the near future. Why develop a new product when they can just acquire one that already exists?

 

[NorthOfAtlanta]

I see this as a huge win for us. We've been wanting e-cigs to go truly mainstream... and they just did.

I suspect the other tobacco companies will make similar acquisitions in the near future. Why develop a new product when they can just acquire one that already exists?

Makes you wonder what kind of bidding war is going on behind the curtain for Njoy.

 

[Petrodus]

I also agree with Kristin (Link)

It will be interesting to watch their reaction when future smoking bans
are proposed that includes e-cigarettes. They have deep pockets and
can field experts and powerful attorneys...wearing Ivy League suits.


I'll never forget the King County, Washington BOH fiasco.
Ban the "appearance" of smoking - Save the children
The King CO BOH can just ... KMA

 

[EJH]

I think the biggest hurdle Lorillard will have is earning consumer trust from sokers. There is a mythological distrust of what tobacco companies do to their products from hiding health effects, misrepresenting harm reduction (lights, low tar, etc) to insidiously adding ingredients to make their products more addictive. Smokers seeking harm reduction will have a hard time trusting that the e-cigarettes are actually safer and not being secretly manipulated. BT will have to be highly transparent in order to overcome that in any way. It may give non-tobacco owned e-cig companies a marketing advantage to play upon those trust issues.

Way back when, in my young and stupid years, I started smoking. That was my choice and I accept responsibility. But I will be damned if I will ever buy a Big Tobacco product again. not after the additives and BT's flagrant, callous disregard to my health just to keep me hooked to cigarettes.

I won't get fooled again.

 

[ianlm]

No chance of Lorillard shutting Blu down. Despite the attraction of viewing BT as chaotic evil murderers, in reality they're just greedy mega-corporations, looking to deliver maximum profit to their shareholders like any other company. Blu is profitable, growing, and has all the potential in the world. They'd be more likely to shut down some of their traditional cig brands, since they are stagnant and doomed in the long term.

With that said, I think the obvious next step is to start branding e-cigs with their big brands. Electronic Newports coming soon, i'd be amazed if that wasn't the very first thing they did.

It's easy to see a lot of potential for both upside and downside to the ecig community as a result of BT getting involved directly. On one hand - we may benefit greatly from their lobbying/marketing power. On the other - we may struggle to differentiate ourselves from the negativity surrounding BT and their existing products.

Will be interesting to see how it all washes out over the coming months/years.

 

[mirinuh]

It will be interesting to see how much of the $135 million cash purchase price will be going to Dragonite (Ruyan) as the settlement amount on the patent litigation announced last week- Blu Cig settled with Dragonite. Despite what many on this board have said- the IP issues are real and problematic for many e-cigs that are manufactured in China and sold in the US. Lorillard didn't just buy an e-cig company with an established brand- they also bought a patent license and, in effect, funded and encouraged Dragonite to widen its US patent prosecution.

 

[rolygate]

There are many ecig company owners who hope for a buyout by BT, that is the primary aim for some of them.

It's been interesting to see the numbers guessed at so far as to the worth of a good ecig company: anywhere from $5m to $20m has been suggested. $135m kind of puts that in the shade, and shows the true worth of the market to BT. There is no way even Blu is worth that figure even though they are one of the best buys and certainly have the best marketing by a long chalk. The value of the patent agreement is bound to contribute, and as yet no one knows what figure Blu paid, what Dragonite agreed with Blu as regards other licensees (if anything), or what fee they might charge other licensees. Patent rights are critical to tobacco companies.

A maker of mini ecigs like Blu can survive in any regulatory climate, no matter what the FDA manage to get away with. Indeed, the tougher the new regs are, the better it is for Blu and the worse for anyone else selling the other 99% of product types in the market.

Lorillard will use Blu to develop Newport and Kent brand ecigs eventually, to sell alongside the Blu brand.

 

[buGG]

and blu is just a merchandiser, but the l88 atomizer, batts and their pack of cig-like pcc were available before them. blue made it incredibly widespread. it's the blu name recognition and packaging lorillard is likely after, and BT and lik's patents are going to go hand in hand for the future marketing and sale of these "safe" cigarettes.