In another move that shows just how quickly e-cigarette brands seem to be consolidating, Victory Electronic Cigarettes made a move to acquire the UK-based e-cigarette brand Ten Motives .
The deal to add Ten Motives to their e-cigarette portfolio is worth a cool $104 million and nets Victory Electronic Cigarettes an e-cig company that has a wide range of products, including e-hookahs and e-cigars.
Ten Motives was launched in 2008 and has since established a strong relationship with retails chains such Tesco, Sainsbury’s, The Co-op, WHSmith Travel, and others.
By adding Ten Motives to their stable, Victory Electronic Cigarettes grows their reach. This is just their latest move to lock up more e-cigarette brands, as they just took over VIP Electronic Cigarette in April. VIP is another of the larger UK e-cigarette brands and brings with it a significant online presence.
Victory E-Cigs was able to reel in the Radcliffe-based VIP Electronic Cigarette with an offer of $50 million. That’s over $150 million that Victory E-Cigs just spent on two UK e-cigarette brands in the span of a few months. That has to raise some eyebrows and make people think, it certainly did that for us here at ECCR.
While it is difficult to say exactly what promoted this spending spree by Victory Electronic Cigarettes, we can see this as another point in the clear trend lately. Companies are buying other e-cigarette brands and they are doing it quickly, building reach, market share, and technological resources.
The race seems to be on and a lot of these companies are drawing the conclusion that the market is heading for some real consolidation. The small and medium sized brands will not be able to compete with the big tobacco brands, so this leaves some companies in the position to buy and stay viable, while leaving others to cash in and get out.
With the recent FDA moves toward regulation, it is becoming very clear to e-cigarette brands that they will need the money and resources of a large company to keep up. Whether that is a good or bad thing for the industry is another debate, but what we do know is that the e-cigarette landscape is quickly changing. It is going from looking like lot of private homes scattered about, to a few skyscrapers with clusters of smaller homes that remain. Those homes will be bought out eventually; the only question is when, for how much, and by whom?
Balance in the industry
Companies like Victory Electronic Cigarettes are going all the way with this idea, trying to stay independent while growing fast enough to keep up with the plans of big tobacco.
Victory was able to raise $22 million in private funding in April to help them to that end and followed up by announcing their intention to sell almost $150 million in common stock as well as transferring their listing to NASDAQ.
Again, these are very deliberate moves meant to keep the company in the game as it moves from one of many small players to one dominated by a few big players.
It is too early to tell what moves like these mean for the e-cigarette industry as a whole and, most importantly, to its consumers.
Generally speaking, the more competition and innovation from little companies, the more it pushes bigger companies to keep up.
Competition is great for consumers as it pushes the players in the market to make the best products for the cheapest price possible so they can compete.
That being said, it isn’t unusual for a new industry to see some consolidation in the amount of companies surviving from it. E-cigarette brands numbers in the hundreds and at some point having so many options just becomes noise to consumers. A balance is what is necessary, and is what we will be watching for.
In the meantime, watching these deals come down so quickly is eye opening. We are in an evolutionary stage of the electronic cigarette industry and that also means it is a crucial one. We’ll be keeping close tabs of all the changes and how they could affect consumers. If the “noise” gets too much, we have our editor reviews listing to simplify things into the top rated brands on the market and help you out.
Stay tuned for more as this is bound to be a very hot summer for electronic cigarettes!