This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

E-Cigarettes Are Smoking the Competition: Update

Stocks in this article: ECIG LO MCIG MO RAI VPCO

The growth in the market is expected to continue. Wells Fargo and Bloomberg estimate that e-cigarette sales will surpass traditional cigarettes within the next decade. The U.S. tobacco industry is a $90 billion industry. The most optimistic scenario puts the U.S. e-cigarette market at over $80 billion in 10 years, representing a 47% compound annual growth rate and a global opportunity for $300 billion in 10 years.

Even more conservative estimates are rosy. Assuming no-growth in the overall tobacco market size and 50% cannibalization of tobacco cigarettes sales, e-cigarette sales could reach $45 billion in 10 years, representing almost 40% growth per year. Using a more conservative estimate that e-cigs would take 25% of total traditional cigarette sales, the e-cigarette industry could reach $20 billion over the next decade, or a compound annual growth rate of over 30% per year for the next decade.

Key Trends

The Centers for Disease Control and Prevention found that in 2011, nearly one in five adult cigarette smokers tried e-cigarettes. That number is up 10% from 2010. Currently, about 6% of all adults have tried vapor smoking, nearly double the estimate in 2010. The growing adoption of e-cigarettes is driven by a number of trends including legality, social acceptability, health reasons, cost effectiveness, increased awareness and increased variety.

While tobacco cigarettes are banned in public places across the nation, e-cigarettes are not as strictly regulated. Smoking is banned indoors through much of the country now. And some cities, such as New York, Chicago and Long Beach, prohibit e-cigarettes in the same ways they do traditional cigarettes. But overall e-cigarettes can still be used indoors in the vast majority of cities. This creates significant demand for e-cigarettes, particularly in cold-weather locations. Smokers can get their nicotine fix indoors without having to deal with the harsh weather conditions.

E-cigarettes seem to be more socially acceptable than traditional cigarettes, too. For many, the unacceptable part of traditional cigarettes is the smoke and the smell. Unlike traditional cigarettes, e-cigarettes do not produce smoke. This leads to a lower level of intrusion and a higher level of social acceptance. This is confirmed by the 2014 American E-Cigarette Etiquette Survey conducted by Harris Interactive: nearly 63% of Americans say they would not be bothered by someone using an e-cig in close proximity.

At first glance, e-cigarettes seem to be less of a health risk than traditional cigarettes. With traditional cigarettes, smokers are inhaling a number of additives that cause cancer, including tar, benzenes, formaldehyde, arsenic, ammonia and carbon monoxide.

Nicotine itself does not cause cancer. It is a stimulant similar to caffeine. Stimulants increase your heart rate, speeds up other bodily functions and constrict blood vessels. Both are highly addictive and can cause severe withdrawal symptoms, making it difficult to quit.

E-cigarettes may be more effective then patches or gum at helping smokers stop quitting, as they replicate the process of smoking. The act of smoking becomes almost as addictive as nicotine, with some estimating 60 to 70% of the addiction is the process of placing a cigarette to your lips. The patch carries other disadvantages, like potential visibility, side effects and inability of the user to control the dosage.

A study conducted by the National Institute for Health Innovation at the University of Auckland showed the percentage of people who quit smoking was higher with e-cigarettes than nicotine patches and placebo, at 7.3%, 5.8% and 4.1%, respectively. The study also showed relapsed e-cigarette users smoked less. Of the volunteers in the e-cigarette group, 57% halved their daily cigarette use by the end of the six months, compared with 41% in the nicotine patch group and 45% in the placebo group. According to a 2011 report from the Centers for Disease Control, 68.9% of adult smokers wanted to quit smoking and 42.7% made an attempt to quit. The total market for smoking cessation products such as nicotine patches and gum was estimated at $835 million.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs