E-cigarettes are generally cheaper than traditional cigarettes. According to NJOY, a single NJOY King sells for $7.99 and lasts as long as two packs of cigarettes. The Tobacco Atlas places the average pack of cigarettes at $6.36 in the U.S., leading to an average savings per two packs of cigarettes of about 40%.
In 2012, the average U.S. smoker smoked 19.1 cigarettes a day. At a consumption rate of 20 cigarettes per day, the average smoker in the U.S. could save $863 per year with e-cigarettes. Reynolds American estimates that annual savings of about $1,000 for smokers who convert to e-cigarettes. In New York City, the cost of a pack of cigarettes is roughly $15, suggesting an average annual savings of $3,834.
Manufacturers NJOY and Blu are advertising heavily, drawing consumer attention. NJOY ran a commercial during the Super Bowl, and Blu enlisted celebrities Stephen Dorff and Jenny McCarthy to promote their products. Traditional cigarette advertising was banned from television in 1970, and banned from outdoor advertising in 1997. Regulations may change, but for now this gives the advertising advantage to e-cigarettes.
A wide variety of flavors are available to e-cig buyers, perhaps enticing social smokers. Traditional cigarettes are now banned from adding any flavors.
With all these factors in place, the e-cig market should continue to grow.
But how can investors profit from this trend? I'll discuss that more in my next article.
Part 2 of this article on e-cigarettes will arrive at TheStreet Thursday. Stay tuned.
Harris Shapiro is the publisher of The Focused Stock Trader.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.