Profiting from the ecig industry.

[Stinknugget]

Blu cigs was just acquired by Lorillard.

Phillip Morris released a statement a few weeks ago that they are developing a technology for a combustionless cigarette to be introduced in 2014.

Is it time to buy up big tobacco stock?

Who would profit the most? The distributors? The patent holders? Some other entity i am unaware of?

I believe this is the infancy of the next great industry. So, lets get in on it.

This is meant for conversation for amateur investors and the curious. Let's keep it civil.

 

[Stinknugget]

http://www.lorillard.com/wp-content/uploads/2012/04/Q1-2012-Earnings-Release_FINAL.pdf

 

[mostapha]

I'm actually amazed that big tobacco isn't just making juice. There's a lot of money to be made from camel/malrboro/whatever-branded juice and e-cigs. I think the stopping point is either them hating to see the end of their current business model or the inability to make e-cigs taste the same as their cigarettes. I'm not sure that right now is the right time to invest……but it's definitely something to watch if you're into that sort of thing.

 

[irwink]

Interesting. I wonder who will jump in next. I also wonder if and how soon the Big Tobacco players will begin trying to smash their smaller competitors.

 

[tj99959]

Pretty simple really. Come up with a product that people want (or swipe someone elses), out-source it to a thirld world country (the US will be a good choice in a couple of years), and get a Swiss bank account. (or let HSBC launder it for you)

 

[MickeyRat]

Who would profit the most? The distributors? The patent holders? Some other entity i am unaware of?

I'm afraid the same entity makes that the most form tobacco will profit the most....governments.

 

[KDude]

I have more problems with creepy salesman type of people going on youtube, posing as users, and reviewing vaping products (when they're really just promoting one product). You can tell who some are just from seeing that they're not even inhaling when they vape.

As for the tobacco companies. I don't trust the huge ones, but I'd take a wait and see approach with smaller ones. Tobacco itself isn't an evil industry. Who knows. Some may very well decide to get out of it just to stay afloat.

 

[DC2]

I'm betting on the patents.

I've got a bit of an investment in Ruyan/Dragonite.
It costs somewhere in the range of one to two cents per share, so how much can you lose?

 

[dgm76513]

BT, in my opinion, will make things great for us in the beginning, by making ecigs legal once and for all. Once they've got the lawmakers sold, then it's time to do to ecigs what they did to cigs. Research, research, research. Hey, did you know if we reduce the amount of nicotine in a cigarette, then the smoker will draw harder to get their fix? Then they would smoke more, plus, we can word our marketing in such a way that implies these light cigarettes are safer. What they don't know won't hurt them.

Hey frank, how are we going to get people to buy more of these cartomizers? I think the nicotine delivery system is flawed. Perhaps if we can get with our chemists to formulate a chemical that would act like tar in a cigarette to stick in the lungs and deliver the nicotine more effectively.

Yep. I can see it now.

And to stay on topic, who will profit is tough to say. I would say BT will invent their own devices based off research on the ecigs, so they will profit from that aspect. Then there's sales, they hold the patents, so they have control over who sells the "best" devices (their devices). Or, it could be one big tax shelter. Buy a company and drive it into the ground, then claim tax shelter for a couple years. I think there's a limit of 3 years in a row? IDK.
Good luck guys.

 

[Stinknugget]

I'm betting on the patents.

I've got a bit of an investment in Ruyan/Dragonite.
It costs somewhere in the range of one to two cents per share, so how much can you lose?

Thats what i was thinking. Hitting up some penny stocks. But i think dgm is right. The release about Phillip Morris i read described a "completely new device" the loose description was obviously an ecig. Im ignorant when it comes to patents. I am assuming you must apply for a patent in each individual country? Not sure how all that works.

 

[thinkingaboutit]

I'm actually amazed that big tobacco isn't just making juice. There's a lot of money to be made from camel/malrboro/whatever-branded juice and e-cigs. I think the stopping point is either them hating to see the end of their current business model or the inability to make e-cigs taste the same as their cigarettes. I'm not sure that right now is the right time to invest……but it's definitely something to watch if you're into that sort of thing.

They are probably doing it and trying to figure out how to add all sorts of chemicals to people get extra hooked on the "no longer safer" e-cig.

 

[Wishdog]

The "ecig" is the electric car of the 1980s. It will take a long time to get into the mainstream, and what ends up being accepted will not be what we have today.

The reason big tobacco would want to make their own unit is so it will be universal. The iPod of vapers. They'd also want people to feel they need to buy "real" nicotine liquid rather than the "made in a garage" type that ours will be portrayed as.

That said, there are probably 100x more people running Linux out there than there are vapers. Maybe 1000x. It doesn't have to be accepted by the slovenly masses. Uncle Bovine Couch Potato will puff his Doral Lights watching American Idol and feel that getting nicotine in any other form is uppity (vaping) or subhuman (mouth tobacco) and that patches and gum are what doctors hassle him with when he goes in about his heart attack/cancer.

 

[Nach]

I'm actually amazed that big tobacco isn't just making juice. There's a lot of money to be made from camel/malrboro/whatever-branded juice and e-cigs. I think the stopping point is either them hating to see the end of their current business model or the inability to make e-cigs taste the same as their cigarettes. I'm not sure that right now is the right time to invest……but it's definitely something to watch if you're into that sort of thing.

Better for them to embrace technology instead of turning their cheek.

 

[mostapha]

I mean…camel at least already makes snus. And there are rumors that they're prepared for the day when laws change with branding, packaging, and strains of other smokable plants that are way more of a legal liability. There's no reason for them not to come out with Marlboro/Camel/whatever-branded liquid except they might be afraid of facing more legal troubles from marketing "a safer cigarette" again.

 

[MickeyRat]

I'm going to try to drag this thread back to where it was intended and that's investments that might make money with PVs.

I suspect that you aren't going to get it buying Phillip Morris or Llorilard. Though you might in time. Assuming their commercials don't convince everyone that it's the same as smoking and they should hate it just as much.

However, one thing I have noticed that surprised me. If you go on to a flavor company's site, they are catering to vapers that make their own juice and to vendors of juice. For instance, Capella has a notice for PV users that their flavors don't contain diacetyls. Flavorart has cautions on certain flavors saying they aren't suitable for vaping. I wouldn't think that we represent a large enough segment of that industry for them to notice but, apparently we do. Also an awful lot of hardware is a one time purchase. Most people don't buy a Buzz Pro every week but, people have to keep coming back for juice. Even DIYers have to buy flavoring. So, it's possible that flavor makers might stand to benefit and that might be a good place to invest.

 

[Stinknugget]

The "ecig" is the electric car of the 1980s. It will take a long time to get into the mainstream, and what ends up being accepted will not be what we have today.

The reason big tobacco would want to make their own unit is so it will be universal. The iPod of vapers. They'd also want people to feel they need to buy "real" nicotine liquid rather than the "made in a garage" type that ours will be portrayed as.

That said, there are probably 100x more people running Linux out there than there are vapers. Maybe 1000x. It doesn't have to be accepted by the slovenly masses. Uncle Bovine Couch Potato will puff his Doral Lights watching American Idol and feel that getting nicotine in any other form is uppity (vaping) or subhuman (mouth tobacco) and that patches and gum are what doctors hassle him with when he goes in about his heart attack/cancer.

The ipod of vapers.....This got me thinking (maybe a little wishful lol). What if the big catch is an unknown player to keep an eye out for.

Microsoft lost to apple. Apple's losing to Google. Google's losing or will be to? My personal belief is that as these companies grow people tend to lose interest in them. BT may embrace the market but will consumers respond as predicted? I believe tobacco marketing will raise awarness of vaping but im not sure if consumers will gravitate to a BT product. Like i said before, theres a "cool" factor at play here. Obviously BT can hire any marketing firm they want to tailor an image accordingly, but i think the fact that they have the ability to do so will drive consumers away in the future. No more cool factor at that point. Just another marketing ploy. I imagine some small genuinly cool company will pop up with a catchy logo and some celeb endorsements. This company will also understand the personalization factor of the equipment and all the little things we love about the industry now.

It's just a possibility. Nothings set in stone.

 

[Wishdog]

Microsoft lost to apple. Apple's losing to Google. Google's losing or will be to? My personal belief is that as these companies grow people tend to lose interest in them.

First, a little off topic comment:
Microsoft isn't losing. Sure, the Zune was no iPod and I think it's dead. But they own the OS market. Apple owns the music playing device (phone or just iPod) scene. Google owns the freakin' earth in the areas they succeed in, and utterly fail in those that they don't. But, that said, companies don't need to be #1. The mom & pop pancake place isn't "losing" to Hardee's in the morning food arena. As long as a company doesn't overexpand and still makes a profit, it's all good.

(More off topic than that - Microsofts gen1 and gen2 Zunes were good devices and had the unique feature of a $15 a month subscription to the best unlimited music service. When I ditched my Zune and went iOS, I was shocked at all the albums I'd had that I actually didn't own. If I could have a Zune that didn't feel like it was stuck in 2003, I'd have one.)

On topic:
I don't think the small scale, friendly liquid and vaping hardware places would necessarily "lose" if RJR popped out their own vaper. They'd just stay as a niche. Now, if RJR did a proprietay liquid and the thing sold great, that might effect things. But they'd never be able to provide the variety of flavors, etc, that are available here and now under the current system. But, that said, Big Tobacco doesn't have to be profitable, which leads me to my second point...

Camel and Marlboro lose scads of cash on their "snus" which is not real snus. I've used the Camel and you better spit just like normal dip tobacco (aka moist snuff) in the first 30 min or you'll be sick as dog. And they do the mouth tobacco very badly. I was on Skoal and Grizzly before I switched over to vaping (Skoal Citrus is quite good if you like that kind of thing) because there is no way I could afford cigs in this economy. ("This economy" includes my wife losing her job back in February and not being able to find anything at her level anymore.)

I can see Camel coming out with a disposable vaping failure in the next six years. That's what they use the Camel brand for.

 

[humpty]

It's not such a bad thing if the big boys can muscle in on the PR side. I'm surprised thay haven't made a prescence yet.
Philip Morris almost made a deal with Ruyan/Dragonite a few years back. Dragonite stock plummeted after the talks broke up and has gone way down south since. All dragonite have are the dubious patents, I think it's a lost cause for them. I mean it's just PG on a hot coil mate.

 

[Fabio Chaves]

Pros of the Blu/Lorillard buy:

- The big money from the tobacco industry is almost guaranteed to keep e-cigs legal. They have infinite resources for lawyers;
- They also have infinite money for large-scale health studies. On the long run, those studies may be useful to make the e-cigs legal in other countries also. The regulatory agencies will have less and less the excuse of saying "we don't know anything about them yet";
- Blu Cigarettes are the easiest to find, since you can buy them at walgreens. I am betting they will be even more available (eventually CVS??). Since Blus are so often the "entry point", I am sure more smokers are going to start vaping;
- That crappy product they have is sure to improve in quality.

Cons:

- As the tobacco industry gets into the market, they will welcome heavy regulation that kills the small business and allows only big players to stay in the market. Since the FDA is being very aggressive in regulation, we can be sure that long-term there will not be so many options. Three or four big brands, and that's it. Actually, that was probably going to be the fate of e-cigs anyway;
- The obvious bad publicity for e-cigs.

 

[mostapha]

As the tobacco industry gets into the market, they will welcome heavy regulation that kills the small business and allows only big players to stay in the market. Since the FDA is being very aggressive in regulation, we can be sure that long-term there will not be so many options. Three or four big brands, and that's it. Actually, that was probably going to be the fate of e-cigs anyway;

I actually disagree with that. The reason Tobacco got ridiculously concentrated in very few companies is that tobacco is very hard to grow; it's hard on the land. You have to let land lay fallow for a while after growing a crop of tobacco, then grow other plants to re-nurture the soil. Small businesses can't put up with that, especially if you're expected to keep products coming out.

Juice might get harder to come by, but it'll still be available. That's the one thing that I'd be vaguely afraid of……but, well, sheesha (hookah tobacco) still exists and is easy to come by. How much of that comes from big tobacco? 5%?

The cartos/attys might see a tremendous flood of cigarette company made stuff, but at least it'll be insanely consistent………if they offer blanks. If not, I don't think anything will change. It might be more difficult to order foreign stuff and not have it confiscated by customs……but that wouldn't be much different from ordering foreign cigars. If you order cigars from anywhere and customs says they're from Cuba……it's on you to prove they're not, which is almost impossible.

Mods won't be affected. The marketing might……it might be insanely more complicated to search for "pv mod" or something because people might think up more and more creative ways to not say "e-cigarette". But they're essentially tubes or boxes and batteries that are used in a lot of stuff, maybe some circuitry, and one piece that's specific to e-cigs (the 510/901/801/ego) connector.

It might hurt the ego/kgo/cig-a-like market, but it won't hurt mods. And we might all be forced to go to things like the HH.357 instead of cheap, chinese attys because they won't have import restrictions on stuff made in the US.

I think it could make things more expensive, but it'll be because the cheap, Chinese stuff could disappear from the marketplace. And even if that's the case, it's not hard to get Brittish or European cigarettes……just not that many people carry them because it's hard to compete with the big company's distribution networks.