Another Richmond-based tobacco company is getting into the
growing electronic cigarettes market, this time as a supplier of an essential
ingredient: nicotine.
Universal Corp., the world’s largest supplier of tobacco
leaf, said Tuesday that its subsidiary Virginia Tobacco Co. Inc. is forming a
joint venture with another company to produce and sell the liquid nicotine used
in electronic cigarettes, or e-cigarettes.
 |
E Liquid Cigarette |
E-cigarettes are devices that look and function similar to
cigarettes but do not produce smoke. Instead, the battery-powered devices heat
a nicotine solution, producing a vapor that consumers inhale through a
hand-held, cigarette-like tube. Nicotine is the addictive agent in tobacco.
The devices are made and sold by several companies, such as
NJOY and Blu eCigs, and are now widely available at retail stores in the United
States.
Driven in part by television advertising, which is forbidden
for conventional cigarettes, e-cigarettes are seeing growing sales, and some
analysts have predicted retail sales could exceed $2 billion this year.
Yet some uncertainties surround the e-cigarette industry,
including to what extent smokers will accept the products and to what extent
the devices will be regulated.
The Food and Drug Administration has said it is developing
regulations for e-cigarettes under its authority to regulate tobacco products.
Universal said its subsidiary has joined Avoca Inc. of Merry
Hill, N.C., a botanical extraction company, to create a joint venture called
AmeriNic Inc. that will produce liquid nicotine for electronic cigarettes.
“The electronic cigarette industry is developing rapidly
and, as a leader in leaf tobacco sourcing and agronomic research, we are
pleased to bring our expertise to this dynamic market,” said George C. Freeman
III, Universal’s chairman, president and CEO.
Universal’s primary business is supplying tobacco leaf to
cigarette makers and other tobacco companies. The company buys leaf from
farmers around the world and processes it. Universal’s revenue in its fiscal
year ended March 31 was $2.5 billion.
In the company’s quarterly earnings conference call Tuesday,
executives said the new venture is in its early stages and it is too soon to
estimate how much liquid nicotine it will sell.
The company said the venture “is not expected to have a material
impact on cash flows or operating results for the current fiscal year.”
Executives indicated the company plans to manufacture the
liquid nicotine in the United States, with production starting this year.
Avoca is a division of Pharmachem Laboratories Inc. of
Kearny, N.J. Pharmachem is the parent of several companies that make and supply
custom ingredients for nutritional products, food and beverages, and flavors
and fragrances.
With sales of e-cigarettes on the rise, major cigarette
makers have jumped into the business, seeking ways to offset declining sales of
conventional cigarettes.
Henrico County-based tobacco giant Altria Group Inc.
announced in April that it would introduce its own electronic cigarette this
year. Its NuMark LLC subsidiary will introduce the e-cigarette under the
MarkTen brand name at retail stores in Indiana starting this month.
Altria’s entry into the category followed those of its
rivals Reynolds American Inc., which has an e-cigarette sold under the Vuse
brand name, and Lorillard Inc., which acquired e-cigarette maker Blu eCigs in
April 2012.
Universal said its new business line “will produce
high-quality, United States Pharmacopeia (USP)-grade liquid nicotine in the
United States using fully traceable and compliant tobaccos.”
Article Credit: http://www.timesdispatch.com
No comments:
Post a Comment