Camel maker plans big e-cigarette push

RICHMOND, Va. Reynolds American Inc. (RAI) is launching a revamped version of its Vuse-brand electronic cigarette -- which promises to give users the "perfect puff" -- in Colorado, with its sights set on expanding nationally.

The expansion represents another push by a tobacco giant into the fast-growing business, a trend that is expected to continue.

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The move announced Thursday by the owner of the nation's second-biggest tobacco company is its first statewide e-cigarette distribution and is the latest in an industrywide 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.

The Winston-Salem, N.C., company, which sells Camel, Pall Mall and Natural American Spirit cigarettes, as well as Grizzly smokeless tobacco, did not disclose the exact size of the Colorado retail distribution set to begin in July or a timeline for a national rollout. The launch will include an advertising campaign, which will include TV spots -- a place tobacco companies have long been prohibited from marketing traditional cigarettes.

Electronic cigarettes are battery-powered devices that heat a liquid nicotine solution, creating vapor that users inhale. Some e-cigarettes are made to look like a real cigarette with a tiny light on the tip that glows. Devotees tout them as a way to break addiction to real cigarettes. They insist the devices address both the nicotine addiction and the behavioral aspects of smoking without the more than 4,000 chemicals found in cigarettes.

While many smokers have tried e-cigarettes, few switch entirely because "the products in the marketplace today just don't meet their expectations," Stephanie Cordisco, president of R.J. Reynolds Vapor Co., said in an interview with The Associated Press ahead of the announcement. The company has tested an electronic cigarette in North Carolina and Virginia for about a year.

E-cigarettes maintain the "familiar ritual of the cigarette," but most of the more than 250 brands available -- hand-assembled and imported from overseas -- have taste and performance issues, Cordisco said. And unlike their Marlboro or Camel cigarettes that let smokers see the pack getting emptier, smokers using their electronic counterparts often can't tell when they are getting close to running out of vapor or battery power.

Reynolds believes its updated electronic cigarette "delivers on what smokers want," by addressing those concerns, Cordisco said.

The rechargeable Vuse e-cigarette has technology that monitors and adjusts heat and power more than 2,000 times per second to deliver consistent puffs. It also has a smart light on the tip of to let users know when it's getting low, needs to be replaced or recharged.

A single e-cigarette and cartridge lasting about as long as one pack of traditional cigarettes is expected to cost about $10 and will include a USB charger. Reynolds also will sell a set for about $30 that will include one electronic cigarette, three cartridges and a USB charger. Additional cartridges in both original and menthol flavors also will be sold as a two-pack for about $6.

The market for e-cigarettes has grown from the thousands of users in 2006 to several million worldwide. Analysts estimate sales could double this year to $1 billion. Some go as far as saying consumption of e-cigs could surpass consumption of traditional cigarettes in the next decade. Tobacco company executives even noted that e-cigarettes drove total industry cigarette volumes down about 600 million cigarettes, or about 1 percent, during the first quarter, excluding Internet sales -- a major avenue for e-cig purchases.

Altria Group Inc. (MO), owner of the nation's biggest cigarette maker, Philip Morris USA, announced in April a subsidiary plans to introduce an electronic cigarette during the second half of the year. The company is expected to provide details on its product at an investor meeting on Tuesday. Lorillard Inc. (LO), the nation's third-biggest tobacco company, acquired e-cigarette maker Blu Ecigs in April 2012.

In recent comments to an industry group, Mitch Zeller, the new head of the Food and Drug Administration's tobacco control efforts, noted that changes in the marketplace have forced the public health community to wrestle with the idea that some tobacco products, such as electronic cigarettes, may pose less of a health risk than others. The FDA plans to assert regulatory authority over e-cigarettes in the near future. Public health officials say the safety of e-cigarettes and their effectiveness in helping people quit regular smokes haven't been fully studied.