The third quarter numbers are in for big tobacco and once again, a downward trend is noticeable across the board for the big cigarette companies. Cigarette sales have been steadily declining for years, but over the past few years, the decline has become quite noticeable. Ironically, during this same period, electronic cigarette sales have been rapidly growing. Here is a look at the big tobacco players and the numbers they have reported for the third quarter of 2013.
Altria is the company behind cigarette giant Philip Morris, maker of Marlboro. Despite their huge empire of tobacco products, they have reported a 3.6 percent decline in revenue from cigarettes this year. Altria blamed the overall decline of cigarette use as the reason for the drop in sales.
Reynolds American is responsible for popular cigarette brands like Camel, Pall Mall, Salem, Dural, and Winston. Despite a huge offering of well known cigarettes, the company reported a decline of 6.3 percent in cigarette sales during the third quarter. Interestingly, Reynolds is experiencing some positive growth with their new e-cigarette Vuse, which is currently being sold to a test market in Colorado.
Compared to competitors, Lorillard showed better numbers, but when compared to third quarter reports from 2012, they were still down 2.7 percent. In many ways, Lorillard is off setting the reduced cigarette sales with its growing foray into electronic cigarettes. As owners of Blu eCigs, this company grew from $14 million in e-cig sales during the third quarter of 2012 to $63 million during the third quarter of 2013.
British American Tobacco
Like its competitors, British American Tobacco also saw a third quarter decline by 3.2 percent. While sales increased in Western Europe, Brazil, and Egypt, the overall trend was a decrease in cigarette sales.
Tobacco Cigarette Sales Vs. Electronic Cigarette Sales
While tobacco cigarette sales show declines across the board, it’s a different story altogether when you examine e-cigarette sales for the third quarter. With Lorillard bringing in $63 million in sales from Blu e-cigs this past quarter, it increased the company’s overall sales totals by around 10 percent from last year. At this point, nearly 4 percent of Lorillard’s revenue is coming directly from electronic cigarettes. Some reports estimate that Lorillard owns half of the United States e-cig market.
Reynolds American is likewise seeing an upwards trend in e-cig sales since launching its test market of Vuse e-cigs in Colorado. “While it’s still early days, the results are significantly exceeding our expectations,” said Daniel Delen, president and CEO of Reynolds. “Vuse is getting a great reception from consumers and retailers, and the brand has already taken the market-leading position in the state. Since Vuse went into Colorado in July, we have seen a significant expansion of the e-cigarette category.”
Altria is also venturing into the e-cigarette industry with the MarkTen brand, a disposable electronic cigarette that will add another layer of revenue to their overall profits.
Overall, electronic cigarette revenue is climbing while tobacco cigarette sales continue to slip further with each passing quarter. Big Tobacco seems to be taking action by moving away from tobacco products as a sole source of revenue and each company is diversifying products to appeal to the consumers in the electronic cigarette industry.
How do you expect the fourth quarter reports to look? Will tobacco numbers continue to decline?