A downfall in the stock of two of the major tobacco brands Imperial and BAT has coincided with respected market analysts Canaccord Genuity calling for investors to make the switch to electronic cigarettes. Quoted within the Times, Canaccord claim that e-cigarettes represent, ‘the most important development for tobacco generally for more than 1000 years” A bold claim, but with an upsurge in investment and a consumer base increasingly aware of the benefits of e-cigarettes, it is certainly advice worth heralding.
As this news broke, the city was quick to react and major stock market analysts advised clients to sell tobacco stocks. Both BAT and Imperial stock was downgraded overnight. These analysts are now turning to the next big market and electronic cigarettes are most certainly this. With BAT’s investment in marketing their own e-cigarette, industry experts have pointed out that although this a good step in taking their share of the new nicotine market, others have labelled the move as a tentative and problematic first step into the world of e-cigarettes.
The investment community dealing in tobacco stocks during this product launch have already raised questions about the size of the profit hit required in order to enter the already competitive e-cigarette market. Many investment groups have turned toward the established brands in the e-cigarette market, shunning the old handed tobacco groups, as they see this as a fresh and disruptive product being brought to the market by a younger generation of entrepreneurs rather than the methods of big tobacco.
The tobacco market is currently valued at around $700 billion and for a long time has stood alone as a profit machine, however with respected companies such as Wells Fargo and Forbes predicting the rise of e-cigarettes for well over a year now, the investment market has started to wake up to the profitability of a market that Canaccord has predicted will rise from a $2 billion a year industry to $3 billion this year. This is even more remarkable when you consider that currently e-cigarette brands are still working within the antiquated systems of tobacco.
Eddy Hargreaves speaking to the Guardian said, “In the longer term, the total combined market will shrink at a more rapid rate than most investors envisage as e-cigarettes wean smokers off tobacco, but do not attract new users into the overall category. Winners and losers will emerge, but are hard to predict at this relatively early stage in e-cigarettes' development, and there will be margin pressure in the short term across the board as companies race for share. This new uncertainty, and the faster long-term decline of tobacco which we predict, should cause investors to reassess their holdings in the sector”
Gamucci has been part of the electronic cigarette market from the offset, establishing a superb customer base that relies on the superior Gamucci product. A patent and a wholly owned manufacturing process set Gamucci apart from the competition, and as this market expands exponentially the foundations of many e-cigarette brands will come under more and more scrutiny. This is where Gamucci stands alone.
Building a foundation and heritage in the next global market has been the key to Gamucci’s expansion, and it is now where this forward planning will begin to reap reward.