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Rise of the e-cigarette: the marlboro man is going electronic – corporate intelligence – wsj

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Andrew Hinderaker for The Wall S

Marlboro maker Altria Group is diving fully into electronic cigarettes, which pose a small but growing competitive threat to traditional smokes.

The U.S. tobacco giant said Wednesday it plans to launch its MarkTen e cigarette nationally starting in the second quarter, after testing the product in Indiana and Arizona in recent months.

Altria controls roughly half of the $100 billion U.S. tobacco industry but is playing catch up in the estimated $1 billion market for e cigarettes, battery powered devices that turn nicotine laced liquid into vapor.

Some smokers are switching to e cigarettes amid growing scientific consensus that they re less harmful than regular cigarettes, which release toxins through combustion. But many public health groups warn not enough is known about the health effects of e cigarettes and authorities are debating how to regulate them. Annual U.S. consumption of regular cigarettes, the leading cause of preventable death, has been dropping 3% to 4% in recent years.

Newport cigarette maker Lorillard, the third largest U.S. tobacco company, is the market leader after acquiring the maker of Blu e cigarettes in 2012. Camel cigarette maker Reynolds American Inc., the No. 2 tobacco company, announced last year it would take its Vuse e cigarette national by mid 2014 after testing it in Colorado and Utah.

Blu and the namesake brands of Njoy Inc. and Logic Technology Development LLC boast a combined market share of about 75% in U.S. stores for e cigarettes, although there is broader competition in online sales.

Altria estimates 90% of adult smokers are aware of e cigarettes and about two thirds have tried them, but that only a small number use them daily.

“Many adult smokers and vapers are still looking for a product that meets their requirements and desires,” Marty Barrington, Altria s chief executive, told an analyst conference Wednesday in Florida, where he announced the broader launch.

Mr. Barrington said MarkTen built up a 48% e cigarette market share in Arizona stores in just seven weeks after leveraging its considerable distribution clout.

Altria also announced earlier this month that it would pay $110 million to acquire Green Smoke Inc., which sells its namesake e cigarettes mostly over the Internet. That deal is expected to close during the second quarter, widening its e cigarette portfolio.

See also
What Do Smokers Really Want E Cigarettes, or Safer Tobacco? Corporate Intelligence
E Cigarettes Encounter Rising Heat WSJ
Tobacco s Gateway Drug? New York Says E Cigarettes are Not OK Corporate Intelligence