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The Players

Wakeup Big Tobacco

Bonnie Herzog, an analyst with Wells Fargo Securities, has said “e-cigs are to tobacco what energy drinks are to beverages. There are projections of $1 billion in annual sales within a few years, Herzog said, in part because there are no federal or state excise taxes on the products.

“E-cigs are profitable, growing quickly, gaining shelf space and consumer acceptance; therefore e-cigs are an important new niche category for retailers,” she said.

Reynolds American Inc. (RAI), the second-biggest U.S. tobacco maker, has developed a “digital cigarette” using computer chips to replicate smoking a cigarette, Chief Executive Officer Daniel Delen said on a conference call last month.

“We’re looking to make a big splash in the category” with a product made in the U.S. using patented technology to “make sure you get a cigarette experience,” Delen said.

“If manufacturers can create something that tastes, looks, feels and smokes like a traditional cigarette with substantially less risk or harm, more consumers are going to try them and retailers are going to give them more shelf space.”



Bonnie Herzog, an analyst at Wells Fargo & Co.