Are Altria attempting to take over the e-cigarette Industry?
Their latest investment decision in the e-cigarette industry indicates that it may have greater plans.
The foremost U.S. cigarette maker, which is also wishing to obtain a windfall if Philip Morris International is able to gain the Food and Drug Administration marketing authorization for its heat-not-burn Marlboro Heatsticks e-cig, stated it had taken a minority position within one of the nation’s biggest e-cigarette retail chains simply because doing so will certainly give it a greater understanding of consumers’ buying practices.
The e-cigarette industry has the potential to drastically change in size and scope in this coming year. If Philip Morris are able to gain a reduced-risk classification for the iQOS, it may end up with a competitive edge over other e-cigarette companies that aren’t approved to legally market their products as a safer alternative to traditional cigarettes.
If it fails, but still gains approval to sell the device in the U.S., it will be able to introduce an entirely different and new technology into the marketplace which will ultimately be accompanied by very similar products, like British American Tobacco’s iFuse glo, which the U.K.-based tobacco producer has stated will seek FDA approval for later in the year.
Heat-not-burn technologies rely entirely on actual tobacco to generate the vapor that provides both the nicotine hit and the flavor that smokers crave. The more commonly known devices which are currently on the market in the U.S. depend on nicotine-infused e-juice to give a similar result.
Avail Vapor is one of the largest chains of vape shops, and also makes its own e-juice, which Altria states are manufactured in state-of-the-art, ISO-certified clean rooms. The company also has a full-service analytical laboratory where it performs lab tests to make sure it’s in compliance with federal regulations. Altria already has its own e-cigarettes on the market: the MarkTen XL from its Nu Mark division, as well as Green Smoke, one of the Altria’s first acquisitions. These devices tend to be known as cig-a-likes by users because they’re designed to look like traditional cigarettes, and usually come with disposable cartridges containing the e-liquids that are heated to create a vapor. More advanced devices are referred to as mods, and users can customize them by swapping out different tanks, drippers and other types of atomizers to fit their own personal needs and style.
With conventional tobacco use falling, and the Food and Drug Administration planning potentially disastrous new regulations restricting their nicotine levels, the tobacco industry is getting prepared with products to smooth the transition when the inevitable shift happens. Philip Morris had said it expected to have increased it’s capacity for manufacturing as many as 60 billion iQOS refills from 15 billion up to 60 billion and that it expects to increase capacity even further through 2018.
The iQOS could still be faced with tough opposition from rival Juul Labs, which has exploded in recent times to capture 32% of the e-cig market. Its devices differ from both standard vape mods and heat-not-burn devices. Their device still uses an e-liquid, but instead of heating ordinary nicotine, they contain a naturally occurring nicotine salt. As the recognized market leader, it is extremely unlikely to surrender its preeminent position without a fight.
Although there are tens of thousands of retail locations where e-cigarettes can be purchased around America. Avail possesses 102 shops in 42 states, but if they choose to give preference to Altria’s brands, that might discreetly change the playing field.
At this time, Altria have not shown any indication that it intends to make investments in any other vape franchises, but should it decide to, or even just decide assist Avail to drastically broaden its presence, it may well be a sign that the tobacco giant is making an effort to corner the electronic cigarette market as a whole.