The Altria Acquisition Of Green Smoke

Earlier in 2014, Altria bought Green Smoke, spending more than $100 million to add this reliable business to their lengthening lineup of products. Altria also owns wine companies, is the maker of their own electronic cigarette – the Mark Ten, and is responsible for cigarette brands such as Marlboro and Black and Mild. They represent Big Tobacco and Big Business. Green Smoke is the little guy and successful little guys always attract attention from corporate money.

Why Green Smoke?

Numerous brands of e cigs have been launched since Green Smoke started business in 2008: Halo, NuvoCig, Vapor4Life, and Cigavette are mere fraction of the names you might see at garage stations and online. Why did Altria buy Green Smoke?

Green Smoke has developed a solid reputation in the electronic cigarette business for producing quality products, offering excellent customer service, and generally doing most things right. Vapers look at several factors when choosing a company: vapor production, authenticity compared to real cigarettes, battery life, and flavors.

While cigalikes (devices that resemble cigarettes) are not designed to last all day on a charge, Green Smoke does pretty well. They create decent vapor and their flavors are good for this type of electronic cigarette. Each device (a battery and atomized cartridge sold in white and tan) looks and feels like a cigarette. Theirs are also some of the best-selling products on the market. Altria’s choice is obvious, even if the decision to allow Altria to buy them seems odd.

Alliance with Big Tobacco

What would cause Green Smoke to accept an offer of acquisition? After all, their theme is one of environmental awareness; of green living. Their color scheme and advertising make this clear. Cigarettes are as far from “green” as you can get.

Then again, greenbacks speak loudly when you want to do more — to innovate, progress, and compete. At least one positive side effect of the purchase is that Green Smoke was able to drop their prices considerably in mid-2014. Green Smoke’s credibility paired with Altria’s money makes a solid match.

What’s in it for Altria?

Other cigarette companies have bought e cig firms or developed their own brands of electronic vapor devices. Some have done both. It’s a risky venture and yet a smart one too. Consumers and vendors of these cigarette alternatives claim they are here to stay and the numbers prove them right. Electronic cigarettes are eating into the tobacco market daily even though their future is uncertain with the FDA breathing down their necks.

That means Green Smoke et al. have been infringing on Altria’s market. The most sensible strategy in this case is to join e cigs, not try to beat them.

The Future of Vaping and Tobacco

What does Altria’s acquisition of Green Smoke mean for the vaping business generally? It will certainly put vapers on their guard and force them to question their values. For a lot of people, the takeover defies everything they hold dear about e cigs and they will reject Green Smoke as a consequence.

Many consumers are realistic, however, and can see the logic of Big Tobacco buying into the vaping industry. It seems fitting that Tobacco money should be spent to solidify the position of e cigs in opposition to cigarettes.

But these kinds of takeovers could make it difficult for small electronic cigarette firms to compete. Competition has pushed innovation and stabilized prices, which were excessive until recently. While little companies might crumble under pressure from the FDA, Big Tobacco could benefit from their demise.

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