Electronic cigarettes are heralded as an expected savior for a tobacco industry distressed for new products and customers in the surface of a shrinking variety of smokers and punitive damages for example the $23.6 billion given by a Florida jury last week.
But it turns out that routine smokers prefer the real thing.
“There’s consumer discontent together with the merchandise, which results in elevated rates of rejection” said Vivian Azer, tobacco and drinks analyst at Cowen & Co. in New York. “Consumers will willingly attempt the merchandise, however they’re not filled.”
Really, U.S. sales of e cigs, which appear similar to a conventional cigarettes without the tax payoff, but use a battery to vaporize rather than combust the nicotine, have been falling for the previous several months.
Based on Nielsen convenience store data, electronic cigarette sales fell 17% in the period ending June 7. What is more, costs have been negative for six consecutive monthly intervals, driven by component declines of 2.8% and lower year-over-year net pricing of 14.2%.
Bonnie Herzog, a senior analyst at Wells Fargo & Co., said the fall in sales tells just part of the narrative.
“We consider the negative pricing tendencies could be as a result of increased penetration of kits that provide a lower cost/cartomizer.” The typical cost per unit was $5.64.
Cartomizers are disposable cartridges with atomizers. The thought is there is a brand-new atomizer in each cartomizer offering maximum vapor generation, based on a description in the web site of My Vapor Store, an on-line ecigarette superstore.
“Additionally, we consider the sales decrease is more reflective of volume going to vapors-tanks-mods, which have a tendency to be sold in non-tracked stations, particularly vape stores,” said Herzog. Vape stores are storefront locations which cater to the community that is vaping.
There are still many questions regarding the health consequences of electronic cigarettes In April The Food and Drug Administration declared a proposal to deem electronic cigarettes a “Tobacco Product” which means it may treat the e-electronic product the same as conventional smokes.
Lorillard Inc. LO, 0.46% commanded 42% of convenience store electronic cigarette sales marketplace with its Blu ecigarette merchandise before it was obtained by Reynolds American Inc. RAI, -0.97% last week. As portion of the amalgamation, Reynolds said it’s selling Blu to Imperial Tobacco IMT, -0.89% to stave off antitrust regulators as well as to promote its own electronic cigarette brand, VUSE.
Brand Logic is in second place in convenience store sales with a 25.5% share of sales and NJOY comes in third with a 10% share, according to Wells Fargo Securities Nielsen Convenience Store Info. The size of the vapor marketplace as a whole is $2.5 billion, with electronic cigarettes accounting for $1.4 billion of that total.
Tobacco firms are facing a large number of lawsuits from former smokers as well as the families of dead smokers in wrongful death suits.
Last week, a Florida jury told Reynolds., the country’s No. 2 cigarette maker, to pay $23.6 billion to the widow of a smoker who died of lung cancer. Legal experts anticipate that amount to be significantly scaled back, either by the judge on appeal, or in the case.
However, the case emphasizes the public continue to blame tobacco firms for the impact their products have on human well-being.