Two leading tobacco makers -
Philip Morris International
Altria Group Inc.
) - are poised to combine their marketing powers to ramp up the
distribution of their unconventional cigarettes.
While Altria sells Marlboro exclusively in the U.S., Philip
Morris sells those everywhere else.
To complement each other, Altria and Philip Morris entered
into a distribution agreement. Under the deal, Philip Morris will
market Altria's MarkTen e-cigarettes internationally and the
latter will distribute two of Philip Morris' heated tobacco
products in the United States. The heated tobacco products are
claimed to be less harmful than conventional tobacco products as
they heat the nicotine instead of burning them.
E-cigarettes are becoming increasingly popular, especially
among youngsters. These battery-powered devices turn a
nicotine-based liquid into vapor. They were considered less
harmful than tobacco products and therefore the major tobacco
players capitalized on them. Most of the tobacco biggies
Reynolds American Inc.
) are geared to capture share in the e-cigarette category.
In Nov 2013, Philip Morris announced that it would foray into
the e-cigarette business late 2015. Moreover, the company has
announced that it will accelerate thelaunch of a set of 'Next
Generation Product' (NGP) in 2015, which aims to attract adult
consumers while reducing the risks related to tobacco
Altria forayed into the popular category of e-cigarettes with
the launch of MarkTen e-cigarettes in lead markets in Indiana in
August. MarkTen is different from other e-cigarettes, as it can
be used both as a disposable as well as a rechargeable device.
This flexibility is expected to help the brand quickly gain
The collaboration comes amid growing awareness against tobacco
products. Last week, the European Union (EU) governments and the
European parliament reached a settlement to draft a legislation
which decided that e-cigarettes, with nicotine strength of more
than 20 milligrams per milliliter, would need authorization as a
medicine if they can be proven to have some form of curative or
Otherwise, they will not be shelved in the shops. E-cigarettes
below this level will be categorized as conventional tobacco
products and the same regulations will be applicable to them if
their curative properties cannot be proved.
We now await the Food and Drug Administration's (FDA) decision
on e-cigarettes. The anti-smoking activists have requested the
FDA to impose restrictions on e-cigarettes.
Altria and Philip Morris have also decided to partner on a
regulatory engagement related to the products. The two companies
will also work on gaining shares as well as improving existing
versions for the products.
LORILLARD CO (LO): Free Stock Analysis Report
ALTRIA GROUP (MO): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis
REYNOLDS AMER (RAI): Free Stock Analysis
To read this article on Zacks.com click here.