Marlboro maker Altria taking e-cigs nationally
Richmond, Va. • Marlboro maker Altria Group Inc. said Wednesday that it plans to expand its MarkTen electronic cigarette brand nationally in the second quarter.
Altria's Nu Mark subsidiary first launched MarkTen in test markets in Indiana and Arizona late last year. The company has said the disposable e-cigarette, which can be reused with a charging kit and additional cartridges, provides a more consistent user experience through its "Four Draw" technology that closely resembles the draw of a traditional cigarette.
The owner of the nation's biggest cigarette maker, Philip Morris USA, was the last of the nation's major tobacco companies to market an electronic cigarette in an industrywide push to diversify beyond the traditional cigarette business, which has become tougher in the face of tax hikes, smoking bans, health concerns and social stigma.
Electronic cigarettes are battery-powered devices that heat a liquid nicotine solution, creating vapor that users inhale. Devotees say e-cigarettes address both the addictive and behavioral aspects of smoking. Smokers get their nicotine without the more than 4,000 chemicals found in regular cigarettes. And they get to hold something shaped like a cigarette, while puffing and exhaling something that looks like smoke.
Altria said consumer spending on electronic cigarettes in the U.S. reached about $1 billion. Increased awareness and trial of e-cigarettes have driven category growth, and the company estimates that 90 percent of adult smokers are aware of the products and about two-thirds have tried them.
At an investor conference Wednesday, CEO Marty Barrington said the category is "just leaving the starting gates" but the company "has made meaningful progress toward leadership in a short time."
"It's really early," he said. "Consumers are still choosing. They're trying to find their product, they're trying to find their brand."
In addition to MarkTen, the company announced earlier this month that it's buying electronic cigarette company Green Smoke Inc. in a deal that's expected to close in the second quarter. Altria said Green Smoke's experience in the category, along with its supply chain, products and customer service, will complement its business.
Rival Reynolds American Inc., the nation's second-biggest tobacco company, launched a revamped version of its Vuse-brand electronic cigarette in Colorado over the summer and rolled out the brand in neighboring Utah within the last month. It also plans a significant geographic expansion by the middle of 2014. Lorillard Inc., the nation's third-biggest tobacco company, acquired e-cigarette maker Blu Ecigs in April 2012. It also bought U.K.-based electronic cigarette maker Skycig in October to expand its global presence in the fast-growing business.
Other pure-play electronic cigarette companies like NJOY also are among the more than 250 brands in the marketplace.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.
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