12
TOBACCO BUSINESS
MARCH/APRIL 2014
NEWS & TRENDS
MARCH/APRIL 2014
As the e-cigarette category continues to
pick up speed, the Big Three and indepen-
dent manufacturers are all jockeying for
position.
FIN, one of the leading independent
e-cigarette brands, recently agreed to a
merger with Victory Electronic Cigarettes
that will make the combined entity one of
the largest pure-play electronic cigarette
companies, with 2014 sales expected to
surpass $100 million. The new company
plans to combine the sales and marketing
depth of the FIN organization with the sup-
ply chain capabilities, international reach,
and financial strength of Victory. The deal
is expected to close in the next fewweeks.
Victory, which acquired the European
e-cig company VAPESTICK for $70 million
through a combination of cash and stock,
also recently formed a partnership with
Fields Texas Ltd. to drive global distribu-
tion and strategic retail expansion. “The
addition of FIN brings instant accelera-
tion of scale and distribution in the United
States, significantly upgrades the global
leadership team, and furthers the com-
pany’s efforts to consolidate the electronic
cigarette industry globally,” says a com-
pany spokesperson.
Atlanta-based FIN has distribution in
more than 50,000 outlets across all major
channels in the United States, including
7-11, Circle K, Murphy USA, Stripes and
MAPCO Express.
The combination of Victory and FIN pro-
vides the group greater strength to com-
pete in the rapidly evolving and competi-
tive e-cigarette category. The new entity
has established a convergence committee
to identify and capture major cost and rev-
enue synergies in the areas of people and
culture, cost efficiency, and sales, distribu-
tion and marketing.
Each of the convergence areas has ded-
icated work teams to identify and capture
significant synergies. To date, teams have
identified more than $5 million of revenue
synergies resulting from expanding dis-
tribution of both brands and employing
a dual brand strategy. In cost synergies,
more than $10 million of savings have
been identified in the areas of production,
supply chain and marketing spending ef-
fectiveness, all of which are expected to
be achieved within 12 months of closing,
according to Victory.
“The combination of the FIN and Vic-
tory brands provides an incredible one-
two punch for distributors, retailers and
consumers, and an opportunity to further
increase shareholder value by capturing
significant cost and revenue synergies,”
said Elliott Maisel, CEO of FIN. “The com-
bination of the FIN and Victory organiza-
tions, coupledwith the leadership of Fields
Texas and VAPESTICK in Europe, creates
a company with greater potential and
growth opportunity than any other com-
petitor in the industry.”
Meanwhile, the large U.S. cigarette
companies are pushing forward in the cat-
egory. Greensboro-based Lorillard’s blu is
now in 136,000 retail outlets, and the com-
pany has also entered the European mar-
ket by acquiring SKYCIG, an e-cigarette
business based in the United Kingdom.
Lorillard CEOMurray Kessler has reported
that blu eCigs captured approximately 48
percent of the total market for the fourth
quarter and approximately 47 percent for
the year.
“Lorillard has established itself as the
clear leader in the e-cigarette category in
2013,” he claimed in a recent call with in-
vestors. Looking outside the U.S. market,
Kessler explained the company is rebrand-
ing SKYCIG e-cigarettes to blu and will roll
out the product across Europe by mid-
year. “I believe [we] have only scratched
the surface of the category,” he added.
Winston-Salem-based RAI’s subsidiary
R.J. Reynolds Vapor is also focusing on
the category, most recently by expand-
ing its VUSE digital vapor cigarette, which
debuted in Colorado in July, followed
by its introduction in Utah. “VUSE con-
tinues to deliver outstanding results in
Colorado and remains the market leader
in the state,” Daniel Delen, RAI president
and CEO recently told investors during
an earnings call, adding that VUSE has
helped drive growth in the e-cigarette cat-
egory as a whole in Utah. “Since VUSE
was introduced in July, the e-cig category
has tripled in size.”
E-Cig Industry Continues Evolution
Major players rolling out e-cig lines; independents doing deals
JM Tobacco has completely redesigned
its website (
), add-
ing several new pages and features for
greater reader-friendliness and interactiv-
ity. “Probably the most important new
page resulted from smokers’ requests for a
company store page, from which they can
buy direct[ly] fromJMTobacco,” says JM’s
president, Anto Mahroukian, who notes
that JM Tobacco fans have previously re-
lied on the old site’s store locator page to
find the closest of JM’s 900 retailers nation-
wide.
“[This] did not serve smokers without
nearby access to our products,” he ex-
plains, adding that the company continues
to protect its retail partners by limiting sales
to service only brick-and-mortar retailers.
“Consumers can now buy direct[ly] from
[our company store] page, but only if no
JM retailers exist in their zip codes. We will
not undercut brick-and-mortar shops by
discounting our direct sales. We feel this is
equitable to all concerned.”
JM’s site also introduces two pages that
keep visitors informed and involved: “JM
Blog” and “JM News.” The former encour-
ages communications between readers,
the company, and each other, while the lat-
ter apprises them of the company’s latest
products and activities. “We have found
that the free interchange of news and views
is a bonus for both our customers and our-
selves,” says Mahroukian.
JM Tobacco Expands Website
New design incorporates a direct sales company store
