On the Call: Altria Group CEO Barrington

Tobacco firm Altria Group CEO Marty Barrington discusses the electronic cigarette market

Associated Press

Just a few months after Altria Group Inc.'s foray into the fast-growing electronic cigarette business, the tobacco company's NuMark subsidiary is planning to expand.

The owner of the nation's biggest cigarette maker, Philip Morris USA, said Thursday that it's expanding its first e-cigarette under the MarkTen brand into Arizona in December following a launch in Indiana in August.

In the first test market in Indiana, the company said it has coverage in more than 3,000 stores covering 85 percent of cigarette volume. It plans to cover about 2,000 stores in Arizona.

The nation's major tobacco companies, including rivals Reynolds American Inc. and Lorillard Inc. are entering the category as part of a push to diversify beyond the traditional cigarette business, which has become tougher in the face of tax hikes, smoking bans, health concerns and social stigma. Other pure-play electronic cigarette companies like NJOY also are among the more than 250 brands in the marketplace.

Electronic cigarettes are battery-powered devices that heat a liquid nicotine solution, creating vapor that users inhale. Devotees say e-cigarettes address both the addictive and behavioral aspects of smoking. Smokers get their nicotine without the more than 4,000 chemicals found in regular cigarettes. And they get to hold something shaped like a cigarette, while puffing and exhaling something that looks like smoke.

MarkTen is a disposable e-cigarette but can be reused by buying a separate battery recharging kit and additional cartridges in both tobacco and menthol flavors. The company said the e-cigarette's "Four Draw" technology is designed to give users a "more consistent experience" that closely resembles the draw of a traditional cigarette.

In a conference call with analysts on Thursday regarding Altria's third-quarter earnings, CEO Marty Barrington discussed the electronic cigarette business.

"I think it's too early to talk about the numbers because I just don't think that they're well-developed enough to share (and) to be confident in them, but I can tell you with respect to who is trying the products in e-vapor generally that there is dual use. Particularly as adult smokers try e-vapor products, we know that some of them are satisfied and others are not, some of them use them situationally. ... Obviously the category has grown very quickly off a very low base. Whether it will continue to grow at that trajectory, of course, no one knows yet."

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