Status of the E-cigarettes from Traditional Tobacco Giants

As global regulatory measures for e-cigarettes continue to improve, more and more countries and regions are gradually including e-cigarettes in the category of tobacco products for management. Especially in the United States, the world’s largest e-cigarette consumer market, it was the first to classify e-cigarettes as tobacco products through the revision of relevant legislation, providing important reference value for the development of relevant laws in more areas. It seems that the ultimate destination for e-cigarettes can only be tobacco companies, which is also a kind of “return to the roots.”

As a “new tobacco product” of tobacco companies, they have indeed performed well. Philip Morris International has officially announced a plan to completely replace traditional tobacco products with new tobacco products such as iqos in the future. If iqos belongs to the category of heating tobacco products and cannot represent aerosol-type products, the success of another tobacco giant on aerosol-type e-cigarettes demonstrates the important strategic position and significance of e-cigarettes for tobacco companies.

BAT’s e-cigarette business exceeds expectations

As a tobacco giant, British American Tobacco (BAT) has been carefully deploying its e-cigarette business, and after years of operation, “Vuse” has become its main e-cigarette brand. Recently, BAT’s e-cigarette department announced that the e-cigarette business will achieve full profitability in 2024, far higher than the group’s expectations.

BAT’s total revenue in 2022 reached 27.7 billion pounds, a growth of 7.7% compared to 2021. The growth in revenue is attributed to the company’s “new category” department, which includes e-cigarettes, heated tobacco products, and nicotine pouches, generating 2.9 billion pounds in revenue, accounting for 40.9%.

According to BAT’s CEO, Jack Bowles, based on these data, the new tobacco business can completely turn its losses into profits within a year. Bowles believes: “Our new category business not only achieved strong growth in sales, revenue, and market share, but also has become an important contributor to the group’s profitability. As of 2022, our investment in new categories exceeded 2 billion pounds to promote long-term sustainable growth, while excellent progress has been made in our operations, reducing losses by up to 62%.”

21.5 million new tobacco users

According to BAT’s estimates, by the end of the first three quarters of 2022, there were about 3.2 million new consumers who started using BAT’s non-combustible nicotine products, making the total number of users of BAT’s new tobacco products exceed 21.5 million.

According to Reuters, under this rapid upward trend, BAT predicts that its adjusted earnings per share will increase by a single digit in the new fiscal year, excluding other factors. BAT also stated: “Although the inflation rate of our supply chain is rising, the adjusted operating profit margin will increase significantly. In contrast, sales of combustible cigarettes will remain flat in the third quarter.”

Conclusion

Both Philip Morris International and British American Tobacco have been deploying new tobacco business for several years. The performance of iqos and Vuse also demonstrates the importance of new tobacco business for tobacco companies. In the face of the declining trend of traditional cigarettes worldwide, new tobacco products undoubtedly become the best and only way out.

In the evolution history of tobacco, both the form of cigarettes and accessories such as filters have changed the smoking experience and habits of smokers. Who can say in the future that your tobacco products must be tobacco?

The essence of tobacco is nicotine, which is also consistent with the World Health Organization’s view that people smoke because of nicotine, but pay a painful price for tar. In today’s rapid development of technology, this should also be changed.

Finally, e-cigarettes as representative of new tobacco products, although in a sense, they are the diggers of traditional tobacco, also prove that new tobacco products like e-cigarettes are the new direction of tobacco companies. A new era in the tobacco field has arrived, and tobacco companies should be inclusive and promote e-cigarettes, rather than blindly opposing and blocking them.

Of course, whether traditional tobacco or new tobacco, the fact that smoking is harmful to health is indisputable. We hope that everyone cherishes life and stays away from tobacco.

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.