in else part

The Growth of the International Electronic Cigarette Market

Posted July 24th, 2013 in News by Steve

Up until quite recently, most people had not heard about electronic cigarettes – or e-cigarettes as they are sometimes known – even though the product began to be mass-marketed in 2004. Today, hardly a day goes by that electronic cigarettes are not in the news. There are debates over their safety and effectiveness, and a number of jurisdictions have taken steps to either ban them completely or to limit their availability. Despite this, sales are booming, and it is estimated that the global e-cigarette market is valued at approximately $2 billion. The United States is the world’s biggest market, accounting for about one-quarter of total sales.

The electronic cigarette was initially only manufactured in China and it was a generic product that some companies labeled with their brand name and logo. Claims that one brand is superior to another are generally overinflated and do not reflect the fact that all of them are of a similar standard. Recently, however, manufacturing businesses have opened up in the United States to improve the quality of the devices, which, being mass produced in China, is not always at the level demanded by consumers in developed countries.

Although e-cigarettes were initially only available from online businesses and were viewed as something a bit odd, they have become a mainstream product, being sold at petrol stations and convenience stores. In the United Kingdom, Tesco, the leading supermarket conglomerate, sells them; a sure sign that they have become a mainstream product and no longer the exclusive preserve of electronic cigarette aficionados.

This rising popularity of e-cigarettes has drawn the attention of two colossal and ruthless global industries: the pharmaceutical and tobacco. Both have seen the electronic cigarette eat away at their bottom line, and big tobacco has entered the market in an attempt to reap some of the economic benefits of the booming trade in e-cigarettes. In the United States, Lorillard, one of the leading cigarette companies, purchased Blu Ecigs in April 2012 for $135 million, a sign that it believes that the electronic cigarette is a cash cow to be milked well into the future. British American Tobacco, on the other hand, has established a research company called Nicoventures to develop its own e-cigarette. The Chief Financial Officer of British American Tobacco stated in an interview with the Financial Times in September 2012 that electronic cigarettes would account for about 40 per cent of the company’s revenues in twenty years time.

All of this poses an enormous threat to the big pharmaceutical companies – mainly Pfizer – which currently dominate the Nicotine Replacement Therapy (NRT) market which is valued at around $2.4 billion, and whose market dominance has been largely unchallenged up until quite recently with the arrival and growing popularity of the e-cigarette. This explains the strong political lobbying by Pfizer and other pharmaceutical companies that sell NRTs to have electronic cigarettes banned.

Source: Euromonitor International, 23 November 2012.

Leave a Reply