It is official, the Altria Group, parent of Philip Morris USA, buys Green Smoke Electronic Cigarettes for 110 million dollars. The Altria Group enjoys annual revenues of more than 6 billion dollars and owns almost 40 billion dollars in total assets.
The trend is clear, big tobacco, once so opposed to the electronic cigarette, is moving in to the ecig industry. Once again the old adage proves true, specifically – if you can’t beat’em, join’em.
E-cig company Green Smoke has been a leader in the industry for several years. In 2013, Green Smoke brought in revenues of 40 million dollars.
Philip Morris identified Green Smoke’s supply chain, the quality of its product and renown customer service as the central basis for purchasing the company. How will this affect the ecig industry?
How will this affect the e-cig industry?
Considering the overwhelming size and clout of big tobacco, their involvement in the ecig industry will accelerate a path to mainstream acceptance and recognition. Alongside acceptance and recognition, the formation of an alliance with a large and powerful corporate entity will enable the e cig to better combat its powerful enemies in the pharmaceutical and political realms. Additionally, while the ecig industry has been on a tremendous growth trajectory, a more mainstream presence will equate to an even faster growth trajectory.
Philip Morris has access to a retail distribution network that is the envy of the majority of companies in America. They have shelf space in virtually every gas station, convenience stores, big box stores and more. While the ecig industry has been led by e-commerce business models it is reasonable to expect that as big tobacco becomes more involved, retail will become a growing segment of the business. The bottom line is that Philip Morris understands retail and will apply its own strengths to the e cig industry.
As the retail presence increases, prices will increase accordingly. E-commerce will continue to offer more competitive prices and home delivery service.
With major corporations on board and with an established presence in the marketplace, there is an expectation that regulation will soon be following. The form and function of any forthcoming regulation is unknown but it is a safe assumption that Philip Morris, Lorillard and others will have an active hand in determining future regulations.
READ: We recently wrote about Lorillard’s acquisition of Blu Cigs and UK based SkyCigs
The face of the electronic cigarette business is changing and in all likelihood will continue to change. Expect more and more for the juggernauts in big tobacco and corporate America as a whole to begin understanding what most have you have known from the beginning, specifically that e cigarettes are simply an outstanding product that saves lives.