Altria Group, the largest seller of tobacco in the U.S., plans to introduce an e-cigarette this year, chasing smaller rivals as demand for traditional smokes declines.
The e-cigarette will be sold in an undisclosed market starting in the second half of 2013, Richmond, Virginia-based Altria said today in a statement. The company declined to provide additional information until a conference call with analysts today, according to a story in Bloomburg News.
CEO Martin Barrington is trying to catch up to smaller rivals such as closely held NJOY and Lorillard Inc., which says its Blu e-cigs brand controls more than 40 percent of the U.S. market. Reynolds American Inc. said this week it plans to expand its Vuse e-cigarette this year.
First-quarter cigarette shipments fell at Altria, Winston-Salem, North Carolina-based Reynolds and Greensboro, North Carolina-based Lorillard. Altria’s U.S. volume tumbled 5.2 percent, with top-selling Marlboro slipping 5.5 percent.
Lorillard CEO Murray Kessler told analysts yesterday the company estimates that e-cigarette sales displaced consumption of about 600 million cigarettes in the first quarter. That translates to an annual rate of about 2.4 billion cigarettes, accounting for about 1 percent of the U.S. market, according to Kenneth Shea, a Bloomberg Industries analyst in Skillman, New Jersey.
For more than a year, the system worked flawlessly. Containers of counterfeit cigarettes shipped from China to the ports of Newark, N.J., and New York City moved easily through customs and the U.S. Department of Homeland Security without inspection.
From the docks, the cigarettes, falsely labeled as Marlboros and Marlboro Lights, made their way to a nondescript warehouse in South Jersey, where they were readied for the final leg of their trip, the sunny skies of California. The transport crew, responsible for smoothing the way through Homeland Security and making sure the cigarettes – nearly 2.3 million packs – got to California safely was none other than the FBI, accordibng to as story in The Philadelphia Inquirer.
The elaborate logistics operation was part of a sting to stem the flow of contraband cigarettes into the United States, according to court documents filed this week in U.S. District Court in Camden.
FBI undercover agents were paid “handling fees” of as much as $55,000 per shipment to deliver the cigarettes to four men in California. Three of the men were indicted in the case. The fourth was named in an earlier complaint but not in the indictment.
The fake Marlboros typically sell for half-price on the street. A bargain, perhaps, for smokers, but not for the State of California, said V. Grady O’Malley, the assistant U.S. attorney handling the case, because it lost 87 cents a pack in taxes, or about $2 million, according to legal documents.
“Were the defendants New Jersey residents and we arrested [them] here, the New Jersey tax loss would have been over $4 million,” O’Malley said. Cigarette taxes in New Jersey are about $2 a pack, he said.
Philip Morris Indonesia plans to boost its production and export capacity, reports the Jakarta Globe. The company intends to build a new factory in West Java in 2013 that will produce non-clove cigarettes, especially Marlboros.
Philip Morris Indonesia, which employs some 200 people at its existing factory in Bekasi, also in West Java, plans to hire 100 additional workers at the new factory.
Marlboro has 4.5 percent share of the Indonesian cigarette market.