The tobacco industry, one of the few recession-proof businesses in the world, is now facing a threat from one of its own. Governments worldwide have cracked down on public smoking in the interests of public welfare?even developing nations like India and China have implemented laws that ban indoor smoking. While these measures haven’t exactly harmed the cigarette industry, it looks like safer alternatives like e-cigarettes are slowly gaining traction. Though e-cigarettes have been around for a few years now, their financial viability as a business is only now becoming apparent. This is evidenced from the investments being made in the industry. Last week, e-cigarette maker NJOY received a $70 million capital injection from a group of investors that include the likes of Morgan Stanley Investment Management and Brookside Capital. This private round of funding reportedly values the company at $1 billion. All this for a company founded only in 2006.
Add to this the fact that experts estimate the market to be worth around $2 billion and that Wells Fargo predicts that e-cigarettes could replace conventional ones within the next decade, and you get a picture of the industry’s trajectory. It must be kept in mind that the $2 billion e-cigarette industry is just a fraction of the tobacco industry as a whole?which is worth $80 billion a year in just the US. And countries worldwide are still grappling with the regulations that should govern this new subset industry. But, given that they are smoke-free and work out to be cheaper than conventional cigarettes, it looks like e-cigarettes could soon pose a real threat to Big Tobacco.
