The growth of the e-cig industry

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Posted: Thursday, July 5, 2012 8:00 pm

The electronic cigarette industry is growing. According to a recent survey conducted by the Wells Fargo Securities Tobacco Talk, the electronic cigarette industry which was once viewed as a passing fad, has grown to around $300 million in revenue at retail. While electronic cigarette companies are still waiting for regulation from the Food and Drug Administration (FDA), some industry experts project that this figure could grow to more than $1 billion over the next few years.

Typically composed of three parts - a rechargeable lithium battery, flavor cartridge and atomizer (which turns the cartridge ingredients into a vapor) - electronic cigarettes, or e-cigs as they are commonly referred, are designed to mimic the habitual effects of tobacco cigarettes. Using no tobacco and producing no smoke or offensive odor, these electronic devices are often viewed as an alternative to traditional tobacco cigarettes.

Previously, "big tobacco" was viewed as a major obstacle to the growth of the industry. However, recent developments on both sides have gone a long way to remove potential barriers. According to the Tobacco Talk survey, of the 30,000 tobacco retailers who were polled, the majority believed e-cigarettes are not just a passing trend but that they are here to stay.

One reason cited for this positive outlook was the acquisition of blu Cigs by Lorillard, the third-largest manufacturer of cigarettes in the U.S. In April 2012, Lorillard became the first tobacco company to purchase an electronic cigarette company - a move that many of the survey respondents cited as having a possible positive long-term impact.

Respondents to the Tobacco Talk survey also noted that many consumers believe that e-cigarettes hold distinct advantages over other tobacco products. Of those surveyed, many retailers stated that the typical e-cig user is a current tobacco smoker who is attracted to the low-cost, use-anywhere appeal of the e-cigarette. And, according to a June 2011 national study conducted by ECH Research of Cincinnati, 99 percent of e-cigarette users are either current or past users of tobacco

To date, there are currently 2.5 million e-cigarette users, a figure that is expected to continue to rise considering the past and future projection. Since being introduced to the U.S. in 2007, the e-cig market has been growing at a triple-digit rate. Looking ahead, the Tobacco Vapor Electronic Cigarette Association expects the market to quadruple by the middle of 2014.

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