The e-cigarette business is one of the fastest growing industries of the past few years, reaching a total global worth of over $2 billion dollars and with an estimate of $10 billion by the end of 2017. With so much money on the line, it’s no wonder that some of the biggest players in the tobacco industry already started buying some of the key players on the market in order to get a share of those big profits.
Following the example of the Big Tobacco giants Lorillard, Altria and R.J. Renolds, Universal Corp., the world’s largest supplier of tobacco leaf, has announced that its subsidiary Virginia Tobacco Co. Inc. has formed a joint venture with Avoca, Inc., one of the world’s premier botanical extraction companies, to produce and sell liquid nicotine for ecigarettes.
The Richmond based corporation is the largest tobacco company to enter the e-cigarette business, which has enjoyed exponential growth in recent years, rising from sales equivalent to essentially zero traditional "analog" cigarettes annually in 2007, to the equivalent of 600 million analog cigarettes in 2012, to a projected 1.5 billion analog cigarettes replaced in 2013, according to a report by Business Insider.
“The electronic cigarette industry is developing rapidly and, as a leader in leaf tobacco sourcing and agronomic research, we are pleased to bring our expertise to this dynamic market,” said George C. Freeman III, president and CEO of Universal Corp.
E-cigs are devices that look and function similar to tobacco cigarettes but do not produce any smoke or ash. Instead, the battery-powered devices heat e-liquid (a nicotine solution mixed with vegetable glycerin and propylene glycol), producing a vapor that consumers inhale through a hand-held, cigarette-like tube. Nicotine is the addictive agent in tobacco.
The new company is called AmeriNic, Inc. and is to start production of high quality, USP grade liquid nicotine using fully traceable and compliant tobaccos by the end of 2013.
George C. Freeman III wrote in the company’s press release that “We believe that the best source of liquid nicotine is tobacco and that AmeriNic, Inc. has the capability needed to build a supply chain to provide the highest quality product at a competitive price. AmeriNic, Inc. looks forward to being a reliable, high-quality supplier for this new and emerging market” while David A. Holmes, President of Pharmachem Laboratories, Inc. said:”We are pleased to join with Universal Corporation in forming AmeriNic, Inc. to manufacture and supply liquid nicotine to the fast growing electronic cigarette industry. This venture fits our business model of controlling the supply chain to ensure reliable delivery of high quality ingredients to our customers.”
Even though, the e-cigarette market is still a big gamble as no strict regulations have been enforced by the F.D.A., some of the tobacco giants have spotted the opportunity to expand their product range and after a long fight with their direct competitors decided it’s best to follow the motto “if you can’t beat them, join them”.