Big Tobacco, once on its heels after years of having its image tarnished thanks to its own nefarious actions, is now seeing a resurrection of sorts thanks to electronic cigarettes.
Lorillard, the tobacco kingpin company that produces Newport and Kent smokes is now seeing 4% of its revenue coming in through electronic cigarettes. While the percentage may seem small, considering just how much money comes in for the addictive smoking sector, 4% constitutes a severe amount of income.
The North Carolina-based company is the maker of the Blu e-Cigarette, and has posted a $63 million mark passed in sales in the recent quarter. The strong sales total means Lorillard has experienced a 10% uptick to $1.8 billion in the quarter. The company now estimates that it holds almost half of the U.S. E-cig market.
The electronic sales have seen a rise of nearly 500% over 2013, as TV and radio sales have upped as well. Commercials like Jenny McCarthy and gaining notice and a “strong repeat purchasing” market are reasons for the upturn, says Lorillard.
Wells Fargo notes that the global market is nearly $2 billion, while the estimates of nearly $10 billion are expected for 2017. The Bloomberg Industry states that in 25 years the e-cig market will surpass the traditional smokes in total sales.
While the Blu brand is considered the most popular today, the company is building a line of the products for abroad sales. Skycig, a British brand was bought last month for $49 million in cash. And Lorillard has been telling more traditional smokes lately as well.
A 3.5% rise from last year has been seen among old-fashioned cigarettes. But the company has to hand over $79 million in damages in liability battles in the state of Massachusettes. That is partially why e-cigarettes are considered so enticing for the future of Big Tobacco.
“I still think we’re looking at an industry that’s declining,” Lorillard Chief Executive Officer Murray Kessler said on a conference call this morning. While there’s plenty of debate about the safety of e-cigarettes, if they can help big tobacco companies avoid—or at least offset—massive one-time costs from lawsuits and regulatory battles, investors will be cheering.
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