Boston, MA 06/04/2014 (wallstreetpr) – Although Altria Group Inc (NYSE:MO) is ranked among the largest tobacco companies in the U.S., where it controls more than 50 percent of the market share in cigarette and smokeless tobacco products. However, the company has had little to saw in the electronic cigarette category, at least until recently.
As regulators tighten measures around the sale, marketing and usage of tobacco products, Altria and its peers in the tobacco business have seen no blessing in their top line. As such, one of the immediate measures big tobacco companies are taking to shore up the balance sheet is the heavy investment in electronic cigarettes or e-cigarettes.
E-cigarettes enjoy favorable usage, marketing and distribution terms. The products are also growing in popularity in the U.S. and around the world. As such, e-cigarettes are considered a viable alternative to keep tobacco companies in business at a time when traditional cigarettes are fast-falling out of favor with users and authorities.
A big battle shaping up
Altria Group Inc (NYSE:MO) intends to start a national rollout of its e-cigarette brand MarkTen next month. The product was initially introduced for the market test in Indiana and Arizona in the second half of 2013. In Arizona, MarkTen went on to gain more than 48 percent of the retail market share in just a couple of weeks of introduction. Altria also recently acquired Green Smoke Inc to bolster its position in e-cigarette market.
Following the success of MarkTen in the test markets, Altria intends to expand its market share nationally. However, in so doing, Altria will be posing serious challenges to Lorillard Inc. (NYSE:LO) that already enjoys the biggest market share in the e-cigarette space. Lorillard controls about 40 percent of the U.S. e-cigarette market with its Blu brand.
Stopping Altria in its tracks
There is a plot to make life hard for Altria Group Inc (NYSE:MO) in the e-cigarette market. The plot involves a merger of Lorillard (NYSE:LO) and Reynolds American, Inc (NYSE:RAI). The two companies believe that joining forces will not only help them generate bigger revenue from the e-cigarette market, but also derail Altria’s progress in the market.
