Big sales drop for Blu E-Cigs
E-smoking devices are becoming increasingly popular by the day, and sales are growing at a steady pace year after year, but there are some problems of the number one brand in the United States. Blu eCigs has witnessed a dramatic decrease in sales for two consecutive quarters of 2014 and is looking for a way to shift the balance.
Lorillard bought Blu eCigs in 2012 for a whopping $135 million and began investing in the e-cigarette company. At the moment of the purchase Blu had a market share of around 10% and about $50 million in sales. Due to Lorillard’s impressive distribution system, comprehensive marketing campaigns and an immense exposure, the e-cig company managed to grow to a 47% market share in 2013 and revenues of around $200 million. Just months after the acquisition Blu was making millions for Lorillard and things seemed to work perfectly for both companies.
With such a big growth potential and a solid clientele, the odds would have clearly favored Blu in the battle with upstarts like the MarkTen from Altria and the VUSE from Reynolds and no one predicted the actual situation. However, it seems that for the last two financial quarters of 2014, Blu eCigs have witnessed a massive decrease in sales, making analysts wonder if the no. 1 US e-cigarette will be able to maintain its dominant position much longer. And to make things worse, in the second quarter of last year, Blu reported a huge 35% decline as compared to the same period of 2013 due to stiff competition and market saturation.
The last quarter of 2014 didn’t bring any good news for Blu, as the company also reported a whopping 40% decline, blaming the numbers on lower sales across the United States and fierce competition from VUSE and MarkTen. However, competition played only a minor role, because according to an investment research firm, the major decrease in sales is mostly due to a shift in consumer preference from two piece cig-a-like models to more powerful tank systems and mech mods. These devices are generally more powerful, have longer lasting batteries and they manage to make the whole vaping experience much more similar to that of smoking an actual cigarette.
At the moment tobacco giant Lorillard is waiting for the ok from federal regulators to undergo the merger with Reynolds. However, some brands that also include Blu eCigs are not part of the huge deal, and they will be sold to Imperial Tobacco. This might also be one of the reasons for the ecig company’s decline since Lorillard doesn’t have solid reasons to invest in the business anymore. However, in recent months Blu announced its new line of products called the PLUS+ which represents the company’s approach to powerful devices - but with disposable prefilled tanks.
But the market trend is pretty clear – with more and more vapers trading their traditional devices for more powerful vaporizers and mechanical mods sold by smaller online companies and vape shops.