Lorillard’s Sales of blu eCigs Drop by Almost 40 Percent
By Lindsay Fox Posted January 9, 2015
After having purchased blu eCigs in 2012 (as well as UK-based Skycig), Lorillard became the face of the increasing involvement of big tobacco in the e-cigarette industry. It looked like blu would go from strength to strength with the financial might of the Newport and Kent cigarette manufacturer behind them, but it turns out that the sub-par nature of the cig-a-like they’re peddling has finally taken its toll on their sales. Their takings from blu fell by almost 40 percent in the third quarter of 2014, likely due to the fact that vapers have long-since realized that eGo-style devices or mods are vastly superior to the cigarette-sized weaklings of the vaping industry.
Lorillard’s Financial Figures – A Bad Quarter for blu
E-cig sales may have fell by nearly 40 percent for the quarter ending September 30th, but sales still totaled to $38 million. Additionally, in comparison to the same quarter in the previous year, Lorillard’s overall takings increased by 8.4 percent. This is largely thanks to an increase in cigarette sales and some share repurchases, with the blu brand being the only area showing a decline.
The financial analysts put this down to the fact that Altria and Reynold’s American have rolled out their MarkTen and Vuse e-cigarettes nationwide, thus increasing the direct competition for blu. While this may have been a factor, it seems the core issue is the general shift towards higher-end e-cigarettes, which (to their credit) the financial types did also mention. Simply put, the pathetic battery life, sub-par flavors and generally poor performance of blus is the thing that’s really shooting them in the foot. Many vapers may have started out with something like blu, but it doesn’t take long using an eGo or mod to realize how inferior they really are. The industry has grown alongside this, but big tobacco-owned companies are obstinately sticking to the cig-a-like framework.
Reynolds American Takes Over Lorillard, blu Up For Sale
Sometime around the first half of this year, Lorillard are to be taken over by Reynolds American, paying $27.4 billion and taking over their net debt in the process. As part of this move, blu eCigs is set to be sold off to Imperial Tobacco. Although some originally questioned the wisdom of this move, the declining sales indicate that it may be a pretty smart move.
Conclusion – How to Really Make Money as a Tobacco Giant in the E-Cig Industry
It isn’t the smartest thing they could do, though. Cigarettes may be falling out of favor, but it would be ridiculous to say that they won’t still make the most money for Lorillard/Reynolds, at least for a little while. Instead of clinging to an outmoded product simply because it more closely resembles their main money-spinner, an intelligent tobacco company involved with the e-cig industry would evolve alongside it, putting out a nice mod or dependable eGo style device that may actually attract some already-converted vapers. In fairness to blu, they’ve tried to do this in the UK with the Pro Kit, but the results haven’t been good and it’s yet to surface in the US.
At the moment, in the US, the only time they make money from a smoker-turned-vaper is right at the start of the switch, when he or she may be more inclined to get something more cigarette-like to swap over to. The cig-a-likes a good for this very limited amount of time, but for anybody making a serious switch attempt, they’re quickly ditched in favor of a more capable device. They’ll continue to vape with something better indefinitely. So, for a tobacco company, you either take a few weeks’ worth of sales of something similar-looking to your main product, or you bite the bullet and put out something someone might be happy to vape with for months or even years (selling e-liquids too, if you’re smart), even if it doesn’t fit in with the deadly cigarette-like image.