A Continual Decline in Big Tobacco Sales and an Increase in E-Cigs Sales

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The numbers are in for the third quarter of 2013. Overall big tobacco is down, while electronic cigarettes are on the rise. Big tobacco has been on a steady down ward slope for years now, so the decline in this third quarter is no big surprise. Below is a quick look at how the numbers have played out this quarter. Starting with the biggest reported loss, Reynolds America leads the pack this quarter. They reported a decline of 6.3 percent in overall sales in the third quarter. Reynolds America is the producers of brands such as Camel, Pall Mall, Salem, Dural, and Winston. Next in line is Altria. They have reported a decline of 3.6 percent. Altria is the company behind Philip Morris, the makers of Marlboro.

British American Tobacco did see some increases in sales in Western Europe, Brazil and Egypt. Although at the end of the third quarter overall they still reported a decline of 3.2 percent. Lorillard reported the smallest decline overall of 2.7 percent. An interesting note is that Lorillard seems to be offsetting their decline in cigarette sales with the sale of electronic cigarettes. While big tobacco is declining, electronic cigarette sales are rapidly increasing. A few of the big tobacco companies seem to have picked up on this and are off setting some of their losses by expanding into this new area of sales.

Due to Lorillard’s Blu e-cig, they were able to increase their overall sales by 10 percent since last year. In last year’s third quarter, they had brought in $14 million from their electronic cigarettes. In this third quarter, they have reported bringing in $63 million from their electronic cigarette sales. The reason for their lower overall sales decline, of 2.7 percent, seems to be directly tied to the increase in electronic cigarette sale.

Reynolds American has also started trying to break into the electronic cigarette market. In July, they launched their own brand of e-cigs called the Vuse in Colorado. This is a selective test market, and although it is still in the early stages the results seem very positive. Daniel Dele, president and CEO of Reynolds, said they have seen “significant expansion in the e-cigarette category” since their launch of Vuse in July. This seems to be an encouraging sign for them and their ability to break into a new market Not to be left out, Altria has entered into the electronic cigarette industry, as well. They produced a brand called MarkTen which is a disposable e-cig.

When you look at the numbers, you can’t help but see that big tobacco is on a continual decline; how much of a decline and how fast depends on the company. With electronic cigarettes on the rise, big tobacco companies seem to feel the need to break into this new industry to help bolster their revenue.

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