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Vapor Corp. Message Board

  • joelm_shapiro joelm_shapiro Jul 4, 2013 3:37 AM Flag

    How can VPCO compete with Big Tobacco?

    I don't see how any independent e-cig companies can compete with Big Tobacco when they're all selling e-cigs. Can't the big boys drive down prices with their operating leverage and push the higher-cost independents like VPCO out of business?

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    • They don't have to compete.... they have established themselves.. they will be bought out... a buy out from a biggie ensure instant penetration ...a very quick way to the shelves with users...

    • they already have 2nd biggest market share and have distribution with major players. First to market will dominate it.

    • Just like regular tobacco customers who like VPCO products will continue to use theirs due to taste etc. VPCO's margins are quite large and similar to regular tobacco products currently. Big tobacco has barely even dipped their foot into the e cig business. MO and RAI are still using test markets in single cities in the U. S. Big tobacco domination is years away.

      There is going to be a shift over time (some think a 10BB shift) over the next 5-10 years from regular tobacco to e cigs. As this occurs big tobacco will lose revenue from regular cigs. A recent Loriliard presentation mentioned this is happening already. As they lose more regular tobacco revenue are they going to want to replace it with lower e cig revenue? Nope, shareholders are going to demand similar or increased revenue. With that being the case big tobacco maybe able to lower the prices temporarily or some but ultimately they are going to look for increasing revenue. Hard to get increasing revenue when you replace your bread and butter with a lower revenue business. That will not happen, especially when e cigs are marketed as lasting as long as 2 packs of cigs. That in of it self will demand a higher price.

      Where VPCO needs to be vigilant is in advertising. VPCO has a decent marketshare ( 5-16%?) already and as the FDA eventually comes to regulate the industry it will help to weed out the real small players and eventually provide a barrier to entry. The more market share they can eat up now in a new fragmented industry the better.

      I believe at some point VPCO will be bought out but for now its the only publicly traded player in an industry growing 50% a year.

    • soft tip patent could be their saving grace

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