With electronic cigarettes rapidly growing in popularity and sales projected to top $1 billion in 2013, major tobacco companies are finally starting to take notice of this booming industry. Where e-cigs were once viewed as a passing trend, now they are suddenly becoming stiff competition for tobacco giants that have seen a notable decrease in sales since e-cigs hit the scene. As a result, a lot of tobacco manufacturers are capitalizing on the popularity of e-cigarettes by developing their own e-cigs or buying out existing popular e-cig brands. British American Tobacco is the latest to join the e-cig craze with a new product called Vype.
Best known for top sellers like Lucky Strike and Pall Mall, British American Tobacco (BAT) is a crowd favorite around the world. In fact, they are the world’s second largest manufacturer of tobacco cigarettes. Earlier this week, BAT began offering their brand new Vype electronic cigarettes for purchase online. Within the next few months, Vype products will hit the shelves in retail stores throughout the UK.
However, selling Vype in the UK isn’t the final step for BAT’s new e-cig. Director Kingsley Wheaton revealed plans to take Vype to an international market, saying, “We’ll focus on the UK, but the e-cigarette business is moving quickly all over the world, and we want to make sure that we also move quickly, because we want to take a leading position… I think we’ll be following it (Vype) up with other opportunities around the world with a reasonable degree of speed.”
BAT follows in the footsteps of other tobacco superstars like Reynolds American, Lorillard, Altria, and Imperial Tobacco. These companies have previously released their e-cigarettes and some are already offering them in multiple countries. With so many new brands of e-cigs hitting the market in 2013, some analysts have even projected that these companies will sell more electronic cigarettes than tobacco cigarettes within the next ten years.
The number of people that use e-cigs is certainly growing. Last year, an estimated 700,000 British residents used e-cigarettes and that figure is predicted to nearly double to 1.3 million in 2013. As BAT enters the e-cig market, it will certainly continue pushing more British smokers to consider e-cigarettes and the benefits they bring.
This year’s financial reports have already been positive for BAT. Despite decreasing tobacco use, the profits for BAT were still up by 4 percent during the first half of 2013. This is largely credited to an increase in cigarette prices. Chairman Richard Burrows is optimistic about BAT’s future after viewing the first half reports. “Despite fragile economic conditions persisting in some parts of the world, notably Europe, BAT has delivered another good set of results.”
As the second half of 2013 unfolds, it will be interesting to see how the release of Vype e-cigarettes will impact BAT’s overall profit margin. So far, it has been well received. BAT created the Vype as a single-use disposable e-cig containing pharmaceutical grade nicotine made in the UK. The Vype is available online for 6.99 pounds ($11 USD).
How do you think the new Vype e-cigarettes will change BAT’s profits for 2013? Will it cause them to continue going up?
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