It is beginning to feel like e-cigarette brands are on sale at the local Wal-Mart. Not e-cig starter kits, mind you, but e-cigarette brands themselves. The run continued as another international tobacco giant gets into the burgeoning electronic cigarette market.
This time it was Philip Morris International, the owner and distributor of Marlboro cigarettes outside of the US, that dove in and acquired the UK’s Nicocigs, which is best known for its Nicolites ecig brand.
Terms of the deal were not disclosed, but it comes at a time when Philip Morris International has cut its profits forecast by 4%, so you have to think the giant tobacco maker is looking to inject optimism into its operation.
Using its flagship Nicolites brand, Nicocigs has amassed a full 27% of the UK market for e-cig starter kits and other products in the “e-vapor” category. With the e-cigarette brands in the UK flourishing, the e-cig market in the UK has grown to an estimated value of $350 million.
Obviously Philip Morris International took notice at the potential in that market and then with Nicolites in particular and decided it was time it swung its own deal to bring electronic cigarettes into its portfolio of holdings. Chief executive Andre went further than that, claiming that the tobacco industry was in an “early stage of a transformational process.”
Of course this is what all big tobacco companies are seeing these days. Every ones of them has seen the value in e-cigarette brands and has either estimated immense growth in the category or decided to hedge its bets against that possibility.
Each company has their own approach, with RJ Reynolds launching the Vuse brand recently, Lorillard getting into the game first with Blu Cigs, and Altria both launching the MarkTen brand and recently purchasing Green Smoke. Tobacco companies operating outside of the United States are following suit, as evidenced by Japan Tobacco’s recent purchase of E-Lites.
Phillip Morris International is expanding
Philip Morris International is a huge company and now the questions will begin with regard to how they plan to market Nicolites. Under the management of Nicocigs, the brand was placed in retailers all across the UK, including Tesco, Asda, Sainsbury’s, Superdrug, Co-op, and WH Smith.
We imagine that at some point Nicolites e-cig starter kits will be pushed into even more retailers, probably beyond the borders of the UK as well.
With its eye on the global market, Philip Morris International could move fast to establish market share in a number of countries where e-cigarettes are only beginning to take hold.
So, the more things change, the more they stay the same. One of the largest e-cigarette brands is sold, and it is to none other than big tobacco. Again. While there are plenty of independent brands servicing millions of vapers, one has to wonder how the entrance of big tobacco into the market might push the little guys out of the way. In the US we are still in the midst of brand consolidation and it is much too early to make any assumptions.
With the UK a few years behind, and currently going through a huge growth spurt, it will be interesting to see how UK brands try to lock up their customers and maintain market share in the face of big tobacco.
These days you have to keep your eyes peeled, because the deals are coming fast and furious. They’re coming from big, established companies and, more often than not, they’re coming from big tobacco.
We’ll keep watching this trend to see how it could affect the industry as a whole, but more importantly how it could affect the consumer. Who’s next to be bought out? Stay tuned here to the ECCR news section for information and analysis.