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Marlboro maker Altria plans electronic cigarette as sales drop

April 25, 2013|By Chad Terhune
  • John Durst demonstrates the use of an electronic cigarette at his shop in Oklahoma City. Marlboro maker Altria Group Inc. said Thursday it is rolling out an electronic cigarette.
John Durst demonstrates the use of an electronic cigarette at his shop in… (Sue Ogrocki / Associated…)

Altria Group Inc., the largest U.S. tobacco company, said Thursday it will introduce an electronic cigarette this year amid a continuing slump in sales of its top-selling Marlboro brand.

Some of Altria's competitors -- including Lorillard Inc., with its blue eCigs brand, as well as smaller rivals such as NJOY -- have been quicker to seize on the rising popularity of e-cigarettes.

E-cigarettes are battery-powered devices that heat liquid nicotine in a disposable cartridge and produce a vapor that's inhaled. Consumers can buy refill cartridges in various flavors, often at a discount to what traditional cigarettes cost.

Altria's move could cannibalize sales of Marlboro and its other brands, but analysts say the company could grab a significant piece of the business in short order given its size and resources.

"We are pleased to announce another step in our efforts to address the changing preferences of adult tobacco consumers," Marty Barrington, Altria's chairman and chief executive, said Thursday. "In the second half of this year, Altria's subsidiary, Nu Mark, plans to introduce an electronic cigarette."

Despite increased use of e-cigarettes, they remain a relatively small part of the overall market, according to industry experts.

Some anti-smoking groups and lawmakers have called for more regulation of e-cigarettes. The U.S. Food and Drug Administration has been reviewing the product category.

Altria reported Thursday that its cigarette sales volume fell 5.2% in the first quarter. The Marlboro brand's sales volume dropped 5.5%.

The company, based in Richmond, Va., said its first-quarter net income grew 16% to $1.4 billion, or 69 cents a share, from $1.2 billion, or 59 cents a share, a year earlier. Revenue declined 2% to $5.5 billion.

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