The popularity of electronic cigarettes is on the rise both in the US and across the globe and the sales of these devices have steadily increased for the last few years to a market of over $2 billion. However, things are looking a bit grim financially for the number 1 brand in the States as Blu E-cigs has witnessed a big drop in sales for two consecutive quarters.
They key for Blu’s past success was the purchase of the brand by tobacco giant Lorillard back in 2012, for a transaction worth $135 million according to some sources. Taking full advantage of the impressive distribution system and the massive exposure, Blu went from 10% of the market at the time of the acquisition to owning 47 percent of the US e-cigarette market in 2013 and revenues of around $200 million. In only a few months after the purchase ‘Blu eCigs’ was already responsible for a nice percentage of Lorillard’s earnings.
With such a huge growth potential, it seemed impossible for Blu to lose ground in favor of newcomers like Altria’s MarkTen and Reynolds’s VUSE but the reality was quite different. 2014 was not a very good year for America’s no. 1 ecig brand and the dramatic sales decrease made analysts wonder if Blu could maintain its dominance for much longer. In the second quarter of last year the company announced a whopping 35% decline in sales compared to 2013 and they blamed the situation of fierce competition and the saturation of the cig market.
The last quarter of 2014 didn’t bring any good news, as Blu announced once again a stiff drop in sales, this time with almost 40%. This time MarkTen and VUSE were to blame – but according to financial analysts the thing responsible for such a sales drop was the shift in consumer preference. Blu eCigs has been renowned for their good two piece cig-a-likes and their delicious Johnson’s Creek USA made e-liquids but in the last half of 2014 more and more vapers decided to switch their traditional e-cigarettes with more powerful mech mods and eGo style vaporizers. These devices had bigger batteries, were refillable and most importantly gave a far superior vapor production, throat hit and flavor.
In the last few months Blu has released its PLUS+ starter kit – a more powerful e-cigarette that gives more vapor and flavor and has a transparent tank – but it’s not refillable. So we must wait and see if this new line of products will have something to say in the battle with the popular mods.
Another reason that might be responsible for the ecig company’s decline in sales is that Lorillard is waiting for the ‘good to go’ from federal regulator to merge with Reynolds. This merger might mean a lot for the big tobacco company financially, but it will be forced to give up on some of the E-cig brands – including Blu Ecigs, which will be sold to Imperial Tobacco.