Nasdaq reports that e-cigs sales keeps growing over tobacco company Lorillard
In an article by NASDAQ in February, cigarette maker Lorillard Inc. listed a decline of 5.2% in the company’s 2013 fourth quarter earnings. Profit was reported at $293 million, which is down from the previous year’s $309 million. They attributed the decrease in revenues to higher product costs. Even if Sales grew to $1.74 billion, which is 2.3% more compared to previous year, an increase in production cost by 2.3% meant a decrease in earnings. Despite the decline in the earnings, however, Lorillard’s e-cigarette brand sales have improved and grew 38% to $54 million versus the previous year’s fourth quarter e-cigarette revenues.
About Lorillard Inc.
Lorillard Inc. is known as the third largest tobacco company in the United States. The company under its operating subsidiary, Lorillard Tobacco Company, does business in all 50 states plus the District of Columbia and Puerto Rico, and other outlying US possessions.
Lorillard is the oldest continuously operating tobacco company in the United States. The company was founded in 1760 in New York by entrepreneur Pierre Lorillard. The flagship premium cigarette brand is called Newport which remains to be the top-selling menthol and second largest-selling cigarette brand overall in the United States. This is based on gross units sold back in 2011.
The company celebrated its 250th founding anniversary in 2010 making Lorillard the oldest publicly traded company listed on the New York Stock Exchange, as well as one of the oldest continuously operating companies in the United States.
Lorillard currently maintain their headquarters at their Greensboro, North Carolina facility where all traditional cigarette products are also manufactured.
Premium brands: New Port, New Port Non-Menthol, New Port Smooth Select, Kent and True
Discount brands: Maverick and Old Gold
In April 2012, Lorillard acquired blu e-cig, the leading e-cigarette company in the United States. The e-cigarette company was purchased by the tobacco giant for $135 million making Lorillard the leader in the cigarette industry.
Ever since e-cigarettes entered the market within the past decade, analog tobacco companies have been challenged about the new entry in the industry. The demand for traditional cigarettes has been declining over the recent years. It is not only because people are now more conscious about disposable income but of the known health risks smoking can bring. Lorillard played aggressively against bigger tobacco companies such as Altria Group Inc. and Reynolds American Inc. when it bought blu e-cig in 2012.
When Lorillard bought blu e-cig in 2012, the large tobacco company made the news because of its aggressive stance. The tobacco giant had to find ways to keep their market share and splurge on the new industry player in e-cigarettes. From the very beginning, blu e-cig promised to establish the most trusted and the best brand in the world of e-cigarettes. This was in 2009. Since then, blu e-cig has evolved and has been focusing their efforts to deliver the best to its users, up until now that it is already part of the largest cigarette company in the United States. An example is the transition from Chinese-imported e-juices in blu e-cig cartidges to Smoke Juice by Johnson Creek which boasts of original formula with its distinct 7-ingredient recipe duly approved by the FDA.
Blu e-cig is known for its commitment to quality and safety. There is actually an independent quality control organization that inspects products at the blu e-cig facilities. The company is also committed to overall user experience a lot of vapers look for.
What the NASDAQ report could mean
Based on Lorillard’s numbers, the e-cigs sales are growing more quickly than analog cigarettes. Lorillard’s 2013 fourth quarter e-cigarette sales grew to $54 million which is a 38% increase compared to the previous year, while traditional cigarette sales only increased 1.4% to $1.69 billion. This increase in e-cigarette may be attributed to more public-smoking bans of analog cigarettes plus the fact that smoking has been proven to cause health risks both to smokers and second-hand smokers. There are also recent studies that show e-cigarettes are better alternatives than tobacco because of the minimum health risks involved.
E-cigarettes still have a long way to go before they can truly penetrate the cigarette market share but it is definitely on its way. People are now more conscious about what they feed their bodies. Smokers, at least some of them, already believes that e-cigarettes can help them quit if not minimize their use of traditional cigarettes without sacrificing the level of nicotine.