Imperial Tobacco to develop e-cigarettes as profits drop

[Petrodus]

I'm not so sure about that. With them concentrating on the "cig-a-likes", I think it will leave room for the rest. The smaller eGo type systems will most likely take a hit, but for those of us using the box mods, Vamo, Provari, mechanicals, etc. we'll still be able to obtain those devices.

The vast majority of the public is completely unaware of the higher end devices. Big tobacco will count on that ignorance to generate sales of their products. If I hadn't done my research, I'd have gone with what I see advertised (Blu). The majority will do exactly that. They'll see it advertised and go with that item, rather than doing research to see if there's anything else out there.

It's understood Big Tobacco with their "cig-a-likes" are not that concerned
today with the "hobbyist" focus on our power vape machines ... However,
they know these propose, over time, a significant market because many
who switch to vaping will find out about these power vape machines and
at best only vape the cig-a-likes in public. Thus our power vape machines
are a threat to their market shares.

Our marketers are selling a TON of power vape machines like the eGo
and the word has spread around the world. Only a TINY percentage
of e-smokers are members of E-cigarette Internet discussion groups.
Everyone knows how to find Google and thus find other vape machines
than the cig-a-likes then they tell their friends and they tell their friends ETC

Sooner or later ... Big Tobacco with their cig-a-likes WILL at least try
to stamp out any competition.

 

[retired1]

I think you give too much credit to the majority of the population. They want to be told what to use, and they're not interested in researching to see if there are other devices that work better.

 

[Petrodus]

I think you give too much credit to the majority of the population. They want to be told what to use, and they're not interested in researching to see if there are other devices that work better.

Many today find out about e-smoking alternatives from other e-smokers.
The Internet is only 1 way the public finds out about alternatives to the cig-a-likes.

Our movement originally spread by "word of mouth"
and the word about alternatives IE the eGo is doing the same.

 

[rolygate]

People will always be able to get hold of their preferred devices, one way or another. Prohibition doesn't work, it just puts prices up and transfers income from legitimate business to the black market.

But the idea that large corporations in the tobacco or pharmaceutical markets will freely permit others to take market share off them is fallacious. RJR just tried to eliminate current ecig vendors in Oklahoma, so this isn't some kind of theoretical issue, it's already happening.

 

[Petrodus]

People will always be able to get hold of their preferred devices, one way or another. Prohibition doesn't work, it just puts prices up and transfers income from legitimate business to the black market.

But the idea that large corporations in the tobacco or pharmaceutical markets will freely permit others to take market share off them is fallacious. RJR just tried to eliminate current ecig vendors in Oklahoma, so this isn't some kind of theoretical issue, it's already happening.

Until recently ...
Our focus has been on Big Pharma's attempts to stamp out e-cigarettes
to protect their market ... Today we are witnessing the early stages of
Big Tobacco's focus on protecting their mainstream "cig-a-like" market.

What will be the future for our preferred devices ??
Time will tell ... However, like Rolygate said ...
"People will always be able to get hold of their preferred devices, one way or another."

I suggest that regardless of our preferences and reasonings ...
The "Mainstream" e-smoking market will always be the "cig-a-likes"
purchased at local stores.

 

[Bill Godshall]

I generally agree with Rolygate's analysis, but the great big unknowns are whether national and/or state governments can effectively ban or regulate e-cigarette sales, advertising and other marketing on the Internet (especially websites outside their jurisdiction), and/or can governments effectively ban the mail delivery of e-cigarettes (that are sold on the Internet).

FDA's import ban in 2009 basically shut down sales at Brick and Mortar stores in the US (except for some mall kiosks and tobacco specialty retailers), and shifted the rapidly growing e-cigarette market to the Internet until early 2011. And the FDA never took any action against Internet e-cigarette marketers (other than sending 5 letters in Sept 2010 warning them of purported "therapeutic claims" on their website).

Since then, B&M retailers (especially convenience store chains) began selling e-cigs. Now, more than 60,000 B&M retailers sell e-cigarette products in the US, and that number is likely to double within the next year.

Health Canada banned sales of e-cigarettes (containing nicotine) in 2009, but its legal to sell mods and no-nicotine e-cig products in Canada, and Canadian vapers buy e-liquid (and many buy nicotine containing e-cigarettes) via the Internet from abroad, and its delivered to Canadians homes. Some e-cigarette prohibitionists in Canada urged Health Canada to ban no-nicotine e-cigarette products because they correctly claim that its impossible to tell if someone is using an e-cig containing nicotine or a no-nicotine e-cigarette.

The California AG has sent letters to various out-of-state and out-of-country Internet marketers of e-cigarette products notifying them that they violated CA laws (either for not having the stupid CA warnings on products, and for selling to a minor or not verifying their age).
But I'm not aware of any followup action taken by the CA AG against out-of-state or out-of-country Internet marketers, and I don't think the CA AG can legally prosecute Internet marketers who aren't located in California.

In an earlier post, Roly indicated that mods and e-liquid account for just 10% of the e-cigarette market.

Was wondering what Roly's estimate is based upon, as I've thought (for the past several years) that mods and e-liquids account for 20%-30% of the overall e-cigarette market share. Then again, with the advent of disposables now being sold at 60,000 B&M stores, I suspect that market share for mods and e-liquids has declined in the past year (even though the number of users and sales continue to increase, as more users of beginner products switch).

 

[jazon1]

I'm not so sure about that. With them concentrating on the "cig-a-likes", I think it will leave room for the rest. The smaller eGo type systems will most likely take a hit, but for those of us using the box mods, Vamo, Provari, mechanicals, etc. we'll still be able to obtain those devices.

The vast majority of the public is completely unaware of the higher end devices. Big Tobacco will count on that ignorance to generate sales of their products. If I hadn't done my research, I'd have gone with what I see advertised (Blu). The majority will do exactly that. They'll see it advertised and go with that item, rather than doing research to see if there's anything else out there.

i dont really agree ether, we have a lot of people who vape out here that i see every day and i have not seen a single person using a cig-a-like.while most people might start with one as soon as they google vaping or see another user blowing out a cloud of vapor using something better then there cig-a-like and search for it.
while Blu's do target new users they have very few return customers i would guess and before long there will be so many vapors out there that people will know what to look for when they decide to switch to vaping,BT is all about return customers they wont settle for single sale items for long.

 

[DC2]

Big Tobacco will soon realize that it is in the best interests to offer a device like the Twist to their customers.

 

[rolygate]

@Bill
I think that whatever estimate is given for the upgrade market / aftermarket / specialist market / advanced product market size, or however we want to define the online community type of products (although these products also feature strongly in many stores), it can be attacked as being too low or too high. Certainly I was attacked in the past for saying that 'our' end of the market was about 10% and very firmly told that 'we' are about 2% of the market.

Several market research firms and publications like the WSJ regularly ask me to quote exact figures for various things, which is impossible. There have been times when several data sources seemed to agree regarding certain figures, but on the whole it is a guessing game. This year I've just told them to go away and work it out themselves, it is probably impossible to quote an accurate figure. One good reason for that is because no one knows the annual market growth; and since it is impossible for that to be lower than 40% for any given metric*, and could easily be 100% for some metrics, it means that any figure quoted is obsolete next month. In a market growing as fast as this one, who can possibly give an accurate figure at any time?

* 'Growth' is a flexible concept because someone might mean any of three metrics: market size, user numbers, or units sold. Which exactly is meant - because each could be very different? Probably, the user number will experience the lowest growth, and the units sold** will experience the highest growth, with market size somewhere between the two.

** 'Number of units sold' - a figure the market researchers are always desperate to try and pin down - is particularly hard to estimate in the ecig world. What exactly is meant: complete units sold in a box, disregarding the 4x volume of parts sold (batteries, cartos etc)? And what about the advanced product market area where people are buying vast quantities of generic batteries, assorted heads, and hundreds of thousands of gallons of refill liquid? It seems to me that in the e-cigarette area, the usual concept of 'units sold' is particularly hard to define.


The way I would try to figure out market size is as follows:

- Estimate the total turnover for mini ecig vendors based on turnover posted by the giant firms, plus estimated total turnover of all the smaller firms
- Estimate the total turnover for advanced product vendors based on turnover posted by the larger firms, plus estimated total turnover of all the smaller firms
- Add together, then add a fudge factor

For the minis: a year or so back the biggest vendor was reputed to be V2, with a turnover of $60m. Blu was at about half that. Others came in a bit lower than Blu. This year Blu/Lorillard are posting ~$50m per quarter so they have taken a massive leap - maybe 4x turnover this year, if that can be believed [1]. I guess you could estimate about $700m for the mini section of the market currently, from figures that are visible/guessable. Add 20% fudge factor: let's say $840m.

For the advanced product market, there aren't many vendors with an annual gross of over $10m, a few at $5m - $10m, and many around $0.5m to $1m. Dozens if not hundreds at <$0.1m. So $150m for this section? Add a fudge factor of 20% and it adds up to $180m.

So, what have we got: total ~$1bn ($1,020m), and the advanced market is 17.6%. Near enough to 20% I guess, so Bill is right if my guesses are right (or if they are right plus n% all round).

OK Bill you're right, especially if the advanced market is bigger than my guess (which, actually, is probably true).


There may be an issue with which category to put certain vendors in. For example there are valid arguments to put V4L (Vapor4Life) in either.

Then add whatever percentage of the US market you figure for the ROTW market, for a world total. Plus 50%? Plus 150%? Who knows.


[1] Caution: any sales figure published can generally be divided by two due to exaggeration - unless they are posting the same figure in their official company accounts. As far as I know, no ecig firm's PR sales figure ever lined up with what they told the IRS, in a manner of speaking. Also you can judge the honesty factor from claims about market share: company X says, "Our sales are $40m this year and we have 22% of the US market". Um, no, the market is probably approaching $1bn so, assuming your PR sales figure is anywhere near accurate (a big assumption), you have about 4% of the US market.

 

[Petrodus]

Regardless of our reasonings ...
The cig-a-like is preferred by "mainstream" e-smokers
as PV of choice ... at least for vaping in public.
I suggest that will not change in the near future.

Big Tobacco is NOT focused on "Health" ... They are focused on profit
from those INITIALLY switching to e-smoking...and that market is HUGE.
Also...Believe-It-OR-Not ... many find the cig-a-likes satisfactory for their
wants, needs, and desires.

Many here prefer the cig-a-like ...
However, we seldom hear from them because when they
say they like their cig-a-like ... They get "hammered" by those of us
who believe our hobbyist PV is the best.