Lorillard Leads As E-Cigs Continue To Grow

e-cigIncreased penetration of kits could be impacting negative pricing trends, Wells Fargo reports.

Lorillard claimed the No. 1 spot among e-cigarette companies in c-stores, with 45.5% dollar share in the recent period ended March 15, 2014, up 17.6 share points, year over year, according to a report by Wells Fargo.

E-cigarette dollar sales overall continue to grow but slowed to +17.3%, according to Nielsen data for the period ended March 15, 2014, driven by eq. unit growth of +35%. This was partially offset by lower net pricing of -13%. The price has now been negative for three sequential periods. Average eq. price per unit was $5.71, according to Wells Fargo.  “We believe the negative pricing trends could be due to increased penetration of kits, which offer a lower price/cartomizer,” noted Bonnie Herzog, managing director, Beverage, Tobacco & Convenience Store Research Wells Fargo Securities LLC.

After Lorillard, Logic maintained its second place share position (20%), followed by  NJOY (16.4%). Reynolds American Inc. (RAI) and Altria (MO) e-cigs garnered 2.1 and 0.9 share points, respectively.

Though e-cig category dollar sales growth has been slowing, growth is still strong.  The category saw dollar sales of 45.5MM this period in the c-store channel and $11.9MM in the XAOC take-home channel.

“This implies about $750MM annual sales in Nielsen-tracked channels, and we believe e-cig sales in non-Nielsen tracked channels (such as vape shops) plus online sales ($500-625MM) suggest the e-vapor category is about $2 billion,” noted Herzog.

She added that while vapors/tanks are under-represented in Nielsen, they are growing twice as fast as the e-vapor category, according to Wells Fargo’s “Tobacco Talk” survey.

“If the robust growth of vapor/tanks continues and is not hindered by the FDA, we expect big tobacco has no choice but to enter this category organically or via acquisition. Bottom line, if regulations don’t stifle innovation, we continue to believe e-vapor consumption could surpass combustible cig consumption in the next decade, driving total profit pool growth and generating a roughly 7% CAGR,” noted Herzog.





  1. Lorillard’s market share dominance in the cartomizer-style e-cig market makes sense, simply because their product (Blu) has the highest advertising profile and the widest retail availability. The two problems they’ll face in coming years are 1) their product just isn’t very good or very cost-effective, even compared to the other cartomizer-style rechargables (the same holds true for their disposables as well), and 2) cartomizer-style e-cigs are pretty much training wheels for people who have just begun vaping and don’t know very much about it. They’re good for getting people off tobacco initially, because they more closely mimic the act of cigarette smoking, but hardly anybody keeps using them in the long term because they quickly switch to personal vaporizers, which are both more enjoyable to use and much less expensive to refill.

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