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Japan Tobacco Inc Fights to Stay Relevant

4/30/2015
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Japan Tobacco Inc's (JTI) announcement Thursday, 30 April 2015, to acquire LOGIC Technology Development LLC should hardly come as a surprise: JTI has long been on the sidelines of the US tobacco market, representing less than 1% of cigarette volume sales in the US. With Lorillard Inc acquiring blu e-cigarettes in 2012 (now pending a divestiture to Imperial Tobacco Group) and Reynold American Inc and Altria Group nationally launching Vuse and MarkTen, respectively, in the US, JTI is indicating they have not folded on the US tobacco industry quite yet. By acquiring LOGIC e-cigarettes, JTI positions itself in the midst of their competitors, jockeying for market share in the world's largest vapour device market and also the fastest growing segment of tobacco in the US.

While clearly a strategic move, the acquisition could have negative repercussions for one of America's leading e-cigarette brands. LOGIC e-cigarettes can attribute some portion of their success to independence from the tobacco industry. Along with competitor NJOY Inc, LOGIC has been able to appeal to former cigarette users in a way traditional tobacco companies simply cannot. With no affiliation to traditional cigarettes, LOGIC and NJOY have been able to market themselves as wellness oriented companies whose goal is to assist cigarette users in quitting tobacco. If acting as a subsidiary of JTI, it is unclear how cigarette users hoping to quit will perceive LOGIC e-cigarettes.

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