NEW YORK (TheStreet.com) -- For the biggest players in the $100 billion U.S. tobacco industry, the rise in electronic cigarette usage and so-called e-vapor companies has meant one thing: either change with the times and enter the market or be left behind in fumes.
A recent report from the Centers for Disease Control and Prevention found e-cigarette use among middle and high school students tripled from 2013 to 2014, exceeding traditional cigarettes. At the same time, the number of high school students who smoked conventional cigarettes declined significantly, from 16% to 9% from 2011 to 2014, according to the organization's annual youth tobacco survey.
Big Tobacco has been busy making its bets on the new technology. Industry leader Altria (MO) owns e-vapor company Nu Mark and its e-cigarette MarkTen. The country's second-largest cigarette maker, Reynolds American (RAI), distributes the No. 1 convenience store-selling Vuse e-cigarette through its subsidiary R.J. Reynolds Vapor Company. The country's third-largest tobacco manufacturer, Lorillard (LO), whose $27 billion purchase by Reynolds awaits approval by the Federal Trade Commission, acquired popular blu eCigs in 2012.
"With each of the three tobacco companies entering the category, they're positioned to capitalize on it," said Cowen analyst Vivien Azer.
The companies' efforts are starting to pay off. Total e-cigarette sales in food, drug, convenience and mass merchandise stores rose 10% in 2014, according to a recent analysis by Cowen. These figures don't include online sales of e-cigarettes, which are booming (no specific figures on online sales of e-cigarettes are available).
Vuse has seen strong sales growth of 17% over the past 12-week time period, relative to the prior 12 weeks, while MarkTen's sales have been weaker; both brands launched nationally last year, according to Cowen. MarkTen e-cigarettes are already being sold in roughly 130,000 stores while Vuse e-cigs are sold in about 100,000 stores; neither are being sold online.