Lorillard purchases Blu E-Cigs

[kristin]

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).

If they do then they would be ignorant fools, IMO. Over-reaching FDA regulation (such as limiting flavors, nicotine levels, refill liquid, etc) would almost guarantee a market of crappy e-cigarettes that won't appeal to most smokers - effectively killing the industry.

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*

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.

See what I mean? With attitudes like this, BT has a lot of trust issues to overcome. That leaves a (possibly huge) market niche for non-BT e-cig companies to fill - smokers who want to switch (and vapers who already have) but they won't trust BT e-cigarettes.

I just don't think BT will want to risk again going through what they went through with e-cigarettes. It would be in their best interests - both legally and for financially - to make a product that is as clean, safe and appealing as possible. In order to do that, they will have to be proactive and transparent from the get-go. Unlike cigarettes, e-cigs have the opportunity to be socially acceptable - so hopefully the need to make them "more addictive" or any tricks like that to keep people using them would be unnecessary.

I also don't see where they would find it necessary to cut corners on quality ingredients because A) that would erode public trust yet again and B) the ingredients are already very affordable and simple. If they can successfully fight off sin taxes, since there is no danger associated with e-cigarettes to support a sin tax, then the retail costs will remain lower than cigarettes, so no need to cut corners to keep production costs down.

I could be wrong and the executives at Lorillard are really complete business dolts, but I doubt they can be that stupid to do so many things that would shoot themselves in the foot.

 

[Myk]

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.

I first heard of this on Johnson Creek's FB page and they say they will still be making the juice for Blu.
JC is trusted because of their commitment to quality and customer service. I don't see that changing. If Blu drops JC than what you are saying may apply, but for now the goal is money and they're not going to drop a trusted juice maker and JC isn't going to switch to underhanded practices. I'm sure their deal with Blu is so they get future direct customers as they move on to other e-cigs.

 

[Petrodus]

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.

Very interesting...and of course the underlined comment pointing out ...
If your favorite PV is not a Blu then there may be some future concerns.

 

[mikkey9]

It will be interesting to see in the next few months how this will affect Blu`s sales? Will BT`s buyout frighten off existing customer`s? Will it deter new customers from buying Blu?

 

[BuzzKill]

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.

Point well made Roly , we all knew that eventually BIG companies would get in this business , BLU being bought is the first step , I think many others will follow in time.
from what I know ( and it is limited ) most Licences range from 4-7 % of the sales price if done that way , a licence can be anything the patent holder asks for like a fixed per yr cost etc. most do a percentage of sales .

Funny how right after Dragonite has the press release about licensing BLU gets bought ??

Here comes the KENT Ecig.

Humm Maybe a VV version in the future ???

 

[Petrodus]

It will be interesting to see in the next few months how this will affect Blu`s sales?
Will BT`s buyout frighten off existing customer`s? Will it deter new customers from buying Blu?

Freedom of Choice in America today
George Carlin video

 

[bnrkwest]

I hope it is not like the Big Oil Companies buying the newest better battery technology for electric cars and burying it in the back 40 never to be seen again! bnrk

 

[bassworm]

while there is alot of sense made about the possible positives, I just don't see a BT company changing its shady business practices regarding making their products SUPER addictive and deadly. Thats just me, only time will tell, but right now, I think I won't be recommending blu cigarettes to anyone ( not that I ever have, they always seemed to mainstream anyway ).

Besides that, everyone who I have ever talked to always seemed to have started with a blu disposable or PCC kit which they found to suck after a week or 2 and then went off and got something better, maybe blu is selling their slick marketing and trading up for possible better quality...

 

[bnrkwest]

You know I don't like ecigs being aligned with BT because it could make regulation easier for FDA saying well ecigs are part of BT business. Eek! bnrk

 

[NC_Fog]

I have to wonder if Johnson Creek will be next on their list.

 

[Myk]

while there is alot of sense made about the possible positives, I just don't see a BT company changing its shady business practices regarding making their products SUPER addictive and deadly. Thats just me, only time will tell, but right now, I think I won't be recommending blu cigarettes to anyone ( not that I ever have, they always seemed to mainstream anyway ).

Besides that, everyone who I have ever talked to always seemed to have started with a blu disposable or PCC kit which they found to suck after a week or 2 and then went off and got something better, maybe blu is selling their slick marketing and trading up for possible better quality...

If they would make their nicotine freebase to move it closer to the feel you get from a cigarette that would not be a bad thing in many's eyes, mainly those who go back to smoking because it's not the same.
That would also require Johnson Creek to change their business practice, which I don't see happening. Or it would require Lorillard to cut off their nose by changing something that works and getting rid of Johnson Creek, which I don't see happening for a while at least.

In spite of all the wrongs BT did there are a lot of lies that are told and believed about them.
Plus it's not like Lorillard is one of the big players in BT.

I have to wonder if Johnson Creek will be next on their list.

"please tell us that you are not going to sell out your company to Big Tobacco..."

"Johnson Creek Original Smoke Juice: We have no plans to sell our company to anyone. We love what we do and we love how we do it. We have built Johnson Creek over the years into the world's largest maker of American smoke juice and that's a legacy we want to be a part of forever."

 

[kristin]

while there is alot of sense made about the possible positives, I just don't see a BT company changing its shady business practices regarding making their products SUPER addictive and deadly...

Except BT has already been selling smoke-free products for years which are not "deadly" and whether or not they make any serious attempts to alter the naturally addictive tobacco to make those smoke-free products "super addictive' is debatable.

Frankly, the concern about whether or not an e-cigarette is being sold using the highest quality, non-toxic, essential ingredients without contaminants should have been raised long before BT even got into the market. Consumers have naively trusted the e-cigarette industry for the past 5 years as some sort of holy benefactor rather than what they really are - businesses seeking to make a profit and no more immune to corruption than BT was. Consumers haven't even required existing e-cigarette manufacturers to show that their product is free of unnecessary and potentially harmful ingredients. Consumers must demand this proof of both BT e-cigarettes and non-BT e-cigarettes or neither will bother. The chances of the smaller vendors taking dangerous shortcuts with e-cliquid to compete with the prices BT will be able to offer due to negotiating high-volume purchases are higher than BT attempting to hide dangerous modifications to an existing product which contains very few ingredients within which to hide said ingredients.

Given the past history and reputation, it's more likely that BT will be the first to promote transparency and list all ingredients and test liquids for "purity" (essential ingredients only) and toxicity to address concerns - something we've been asking vendors to do for years now.

 

[DC2]

I wonder how all of the following factors are going to come into play down the road...

1) Ruyan (now Dragonite) was in talks with Phillip Morris back in 2009 but no agreement was reached
2) Ruyan (now Dragonite) won three patent infringement lawsuits against Chinese companies back in 2009
3) Dragonite (formerly Ruyan) filed patent infringement lawsuit in January 2011 US against Blu, Smoking Everywhere, and Instead
4) Dragonite (formerly Ruyan) is awarded a US patent

This is all I could find regarding the progress of the US patent infringement lawsuits filed by Dragonite...
Dragonite International Limited (DGTLF) Stock Message Board - InvestorsHub

January 2011: Dragonite has filed patent infringement cases against most major US-based e-cigarette companies including Njoy, Blu, and Smoking Everywhere. Dragonite's US cases is represented by a top American Law firm. | Court Filing

May 2011: Update - 4 defendants have been officially summon to appear within 21 days.

June 2011: Update - US Court enters default judgement against Smoking Everywhere and Instead.

August 2011: Update - Dragonite files more complaint, and now suing nearly the entire US E-Cigarette industry, encompassing 6 more companies, including Janty and Intellicig.

 

[Petrodus]

My favorite vendor was recently shopped by Blu
Blu was looking to purchase a large quantity of e-juice from them.
Blu said "never mind" when they found out the e-juice was NOT
from the USA. They said they were ONLY interested in e-juice
"Made in the USA"

 

[mirinuh]

Last Tuesday, 4/17/12, Dragonite announced that it had settled with Blu and would be receiving a monetary settlement- details not disclosed. Eight days later, Lorillard acquires Blu for $135 million in cash (less than 10% of their available cash, by the way). This transaction will have severe and lasting consequences on the retail e-cig distribution supply chain. Why would any distributor and/or retailer take a legal and financial risk by handling a product that has a litigation cloud over it when it can deal with an established, successful tobacco company that has the rights to distribute, market, merchandise and sell under a license from the only company who has been granted patents in the e-cig category?

 

[Randyrtx]

Lorillard also has the resources to do the independant testing that the ANTZ and the FDA has been wailing on about.

So far as them making e-cigs more addictive... the only thing I would reasonably expect them to do is to perhaps move towards WTA, which some suppliers are already getting involved with. But, I would view that as making e-cigs "work" for more existing smokers, rather than making them more addictive.

 

[mirinuh]

Now that BT has entered the fray in a big way I expect that BP is next. Sometime in the next 120 days a pharma company will announce the initiation of clinical trials with a vaporizing NRT with the capability of measuring and monitoring nicotine content on a "per puff" basis.

 

[Stubby]

Except BT has already been selling smoke-free products for years which are not "deadly" and whether or not they make any serious attempts to alter the naturally addictive tobacco to make those smoke-free products "super addictive' is debatable.

Thank you for that Kristin. Much of the propaganda against BT in regards to making cigarettes more toxic and additive was started by the ANTZ and has little basis in fact. Many people in the e-cig community jumped on the anti-BT bandwagon and pushed the ANTZ propaganda machine against BT because it was...... convenient, and kind of fit in nicely with what we are doing.

I'm not saying BT hasn't done some lousy things in the past, but cigarettes need little in the way of help as far as being toxic or addicting. Smoking cigarettes does that very well on its own and really doesn't need any help.

Its BT that has been moving into tobacco harm reduction in a big way as they have been buying up smokeless tobacco companies, besides making their own snus brands. They know where things are moving and what the future of tobacco is. Call me cautiously optimistic with BTs move into e-cigs.

 

[Bill Godshall]

Please note that Reynolds was first among large tobacco companies to advocate tobacco harm reduction after buying Conwood (maker of Grizzly snuff) and beginning to market Camel Snus, Orbs, Strips and Sticks.

Altria jumped on the harm reduction bandwagon after buying UST (maker of Skoal and Copenhagen) and by marketing Taboka, Marlboro and Skoal Snus, Marlboro and Skoal Sticks.

Lorillard test marketed an unsuccessful snus product (called Triumph) several years ago, and blu ecigs are now the only harm reduction product marketed by Lorillard.

While anti tobacco groups insist upon lumping all tobacco companies together (by calling them Big Tobacco or the tobacco industry), the reality is that tobacco companies are extremely competitive against each other.

 

[Petrodus]

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).

Doesn't appeal to my wants, needs, and desires
However, its a smart cold calculated business plan