The acquisition of SKYCIG by Imperial Tobacco (IMT) competitor Lorillard, along with the latter's blu eCig deal in 2012, gives Lorillard the most exposure to eCigs of any large publicly-traded tobacco company.
Morningstar analyst Thomas Mullarkey expects Lorillard will attempt to replicate its blu game plan in Europe, namely ramping up retail points of sale, increased marketing and looking to lower the price of the “starter kit” to cost while encouraging vapers (e-cigarette ‘smoker’s) to buy the refillable cartomisers. “As Lorillard does not sell cigarettes overseas, every new SKYCIG convert will be poached from a traditional tobacco company,” Mullarkey writes in his latest Imperial Tobacco research report. “We expect that Imperial Tobacco, which has 45% share in the UK cigarette market, could have the most to lose in the near term,” he adds.
However, Mullarkey notes that Imperial is in the process of acquiring the eCig patents of Dragonite and could use them to build its own eCigs and to seek royalties or combat other eCig players. “However, SKYCIG has patents of its own so we are unsure if the Dragonite patents will serve as an impediment to Lorillard,” he warns.
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