Vaping is big business. According to Beige Market Intelligence, market research analysts expect the worldwide vape products market to reach over $32 billion by 2021.
Unsurprisingly, the biggest names in publicly traded vape stocks come from the biggest cigarette brands. But much of this success can be attributed to the e-cig brands they’ve purchased over the last several years. While it seems a little misleading that three tobacco conglomerates are profiled in an article about vaping investments, these companies own some of the most well-known and popular vape products available today.
Poised to surpass Philip Morris as the world’s leading tobacco company, thanks to an expected acquisition of Reynolds American Inc. (formerly RJ Reynolds), British American Tobacco (BAT) was the first tobacco company to launch an e-cig brand (Vype).
It now owns a wide range of brands around the globe. And it is showing no signs of slowing, with acquisitions of new vape imprints occurring on a regular basis, reaching many countries and regions.
Since it began acquiring and developing e-cig brands, the stock has been a reliable performer, averaging between $60-63 per share, with an annual yield of just over $2.00 per share for 2016.
Of its vape investments, BAT claims, “If we are successful in developing and bringing to market a range of products that meet the needs of adult smokers seeking potentially less risky alternatives to cigarettes, this will help to meet the objectives of a number of leading public health professionals. And, of course, it will also make commercial business sense to us and our shareholders.”
Perhaps the most-recognized corporation in tobacco, Philip Morris International (and its American affiliate Altria, Inc.) is another interesting investment for those looking at e-cig stock. The upcoming release of its iQOS heat-not-burn (HNB) device may throw a monkey wrench into the gears of its competitors, thanks to its use of real tobacco – rather than e-liquid – to more closely replicate traditional cigarette smoking than its competitors.
If it’s able to earn Modified Risk (MRTP) product designation, the iQOS would become the first (and possibly only) “tobacco product” to be able to legally claim it is “safer” than cigarettes. Altria would sell the product in the U.S., if it’s approved.
This would be a tremendous win for PMI, which is already stacking the deck by applying its Marlboro branding to the device in some countries (though that would not be allowed in the U.S.).
By gaining this labeling, it would not only boost market price for Altria in the US, but also set a precedent worldwide as an accepted, safer alternative to smoking. Global stock prices are expected to grow should this occur.
Reynolds (RAI) became a market leader through the launch of its Vuse “digital cigarette” which has since become a runaway success, with 38 percent of convenience store/gas station e-cig sales, thanks to widespread promotion and distribution (in a much more crowded marketplace).
Since the launch of Vuse, Reynolds stock price has climbed steadily, as depicted in the image below, captured from Bloomberg Markets).
Reynolds’ latest vape-related investment is a tobacco-heating device of its own, the Core, which uses similar technology as the competing iQOS – more on that device in a minute – but may have more recognizable branding behind the product marketing. However, the pending merger between RAI and BAT may see a rethinking of both companies’ current e-cig strategies.
Again, our purpose here is not to provide more positive press for the tobacco industry, but it seems the growing vape market has yet to achieve resonance among publicly traded entities. However there are a few:
A premium name in smoking and smokeless tobacco products, including iconic brands such as Beech-Nut and Stoker’s, Turning Point is also a strategic partner of VMR, securing retail distribution rights for V2 electronic cigarettes. Through this partnership, V2 electronic cigarettes are widely available in retail locations throughout the United States.
Moving beyond traditional e-cigs, V2 is now promoting a line of open-system vaporizers, for both e-liquids and dry herb usage. And its famous Zig Zag cigarette paper brand is now also used for a line of pen-style vaporizers, atomizers and liquids.
For more advanced vapers, Turning Point’s Vapor Beast line of vaporizers, e-liquids and accessories can be found in vape shops nationwide and online. And a recent partnership with the Vapor Shark brand of products only enhances this growing vape portfolio.
As of this writing, Turning Point shares are valued at roughly $16/share, making it both a welcoming initial purchase for those looking to invest in a vape stock, while also showing promise for growth.
Vapor Corp Inc., until recently, owned a series of vaping brands, including brick and mortar shops The Vape Store, Vapor Max, Vulcan Vape, and The Grab Bag, each of which focused on advanced vaporizers and e-liquids.
However, as of March 2017, the company has shifted its focus to a broader selection of what it deems “healthy lifestyle” brands.
Jeff Holman, Chairman and CEO of the Company says of the change, “As Vapor Corp. continues down the path of diversification into the organic natural market space, as well as other “Healthier” alternatives, including continuing its Vape Store operations, the name Healthier Choices Management Corp. is significantly more representative of the present company and the path it is endeavoring to take into the future.”
As of this writing, the stock held steady at 0.00. For the last month.
This holding company is one of the few vape-only entities, which – according to its boilerplate – “focuses on designing, marketing, and distributing various vaporization products.” This includes e-cigarettes and other related devices.
However, as of this writing, only one brand appeared in the company’s portfolio – Hive Ceramics, which focuses on a “proprietary blend of ceramic elements for torched, electronic and portable vaporizers, as well as provides any type of custom design and collaboration work.”
The company’s press releases hint at collaborations on the Puffco line of vaporizers, but there is no evidence the collaboration remains.
As indicated in the previous section, there are precious few options for investors looking to dabble in vapor stocks. Though this is a burgeoning industry, it still lacks mainstream understanding and acceptance, and is likely viewed as a risk by most analysts.
But the larger problem lies in how Big Tobacco continues to leave its tar-stained fingerprints on vaping – both with their own products, and by purchasing upstarts looking to carve a niche of their own.
It’s no coincidence that the primary focus of this piece was tobacco companies, which have – save for a few products – done little to move vaping forward. Because they have the size, regulatory experience, and buying power, smaller vape companies rarely get the chance to compete in this space.
So, despite a current lack of impact in the publicly traded arena, we stand firmly behind the few vape companies who have ventured into the stock market. We applaud them for having the courage to take this industry forward, however incremental these steps may be.
We fully expect to pay attention as they continue to grow a lineup of vape-related brands, and move the needle away from tobacco company pockets.
This post is intended to give a general overview of the vaping industry and publicly traded companies that deal with e-cigarettes. Information in this article should not be misconstrued as professional financial investment advice, nor is the site or its employees responsible for any financial decisions you make as a result of reading the content within.