E-cigs have hit a wall

dball

From Bloomberg by Duane D. Stanford

E-cigs have hit a wall.

After at least five years of steady growth, sales of the U.S. tobacco industry’s most-hyped product since menthol fell for the first time in May and June. That’s potentially bad news for an industry struggling to offset falling sales of traditional smokes. It also presents a challenge to Reynolds American Inc. (RAI), which agreed to sell the popular Blu e-cig brand as part of its proposed acquisition of Lorillard Inc. (LO) The newly merged company would be left to rely on Vuse, an e-cig line created by Reynolds that’s only now being widely distributed.

After betting on sleek disposable electronic cigarettes, the industry is grappling with rising competition from generic vaporizers that can be refilled with nicotine liquid of many flavors. What’s more, efforts to lure regular smokers to e-cigs are faltering because most return to the real thing.

“There’s clearly a willingness to try the product, the problem is the technology is just not good enough,” said Vivien Azer, an analyst for Cowen & Co. in New York. “If it’s not good enough in terms of replacing a cigarette, smokers are going to stay with the cigarette.”

Sales of e-cigs and refillable vaporizers more than doubled to $1.7 billion in 2013, or 1.7 percent of a roughly $100 billion market for nicotine products. The first signs of a slip came this year. Sales of packaged electronic smoking devices fell 2.9 percent in the four weeks ended May 18 compared with the previous year, according to data from Chicago researcher IRI. Sales slid twice as fast the following month.

“The disposables are on their way out,” said Matt Lamb, whose Just Smoke shop in Atlanta sells an array of e-cigarettes, tanks and liquids, including the melon-flavored “4 Play” by Fantasia.

Asked about the sales slowdown after the deal was announced yesterday, Lorillard Chief Executive Officer Murray Kessler said “it’s normal for a brand new category to have some sort of ups and downs.”

Electronic cigarettes, invented in 2003 by a Chinese pharmacist, mimic the look of combustible cigarettes and use an electrical charge from a small battery to evaporate liquid nicotine into a vapor that is inhaled and exhaled like smoke. Known as “vaping,” there is no burning tobacco to generate smoke or tar. Early e-cigs were mostly made in China and not known for their quality. Upstarts like Blu upped the ante with sleek, well-designed e-cigs. After watching their growing popularity, U.S. tobacco companies waded in, too.

ardle1

Two lessons to be learned from said 'assumption'...
1: Stop ripping the consumer off.
2: Add individual Chinese imports to your stats!

tommy2bad

Their's a pond difference with this report, Americans use Ecigs when referring to cigalikes, they use tank systems for ego and clearo types and vaporizers for the 3rd gen ecigs. The obsession with ecigs is because they are the product tobacco companies sell. and the most visible on shelves of newsagents and filling stations.
Yeah cigalikes have had their day as market leaders but their the only ones traceable in sales stats and lazy jurnos cant be bothered to factor in the sales of 2nd and 3rd gen devices. It's a diverse market and hard to get sales data for reports like this. All is realy available is user numbers which don't match the drop in cigalike sales.