$300M in revenue
- By WILSON DIZARD
- Last Updated: 11:00 PM, January 12, 2013
- Posted: 11:00 PM, January 12, 2013
This electronic-cigarette company isn’t blowing smoke, but vapor.
New Jersey-based Logic boasted a growth rate of 600 percent between 2011 and 2012, along with a product that the company says is a safer alternative to classic, and deadly, tobacco.
Although the Food and Drug Association says e-cigarettes are not a healthy choice, users of the product save a bundle in sales taxes in a city whose leaders are bent on citizens butting out.
Lighting up a little more than two years ago, Logic hawks its product relentlessly. And New York City, with its tough smoking regulations, is Logic’s biggest market. Competitors include brands like Eonsmoke, Blu and Njoy.
Azam Asaduzzaman, a SoHo newsstand clerk, said his shop had only started selling e-cigarettes about three months ago, but already sells about 12 a day for a total between $300 and $400, making up about 20 percent of its total sales of nicotine-delivery systems.
“Most people who buy are between 25 and 35 years old, and they get the rechargeable kind. They don’t buy regular cigarettes from me,” said Asaduzzaman.
Prices of e-cigarettes vary from about $10 for disposable ones to $25 or $40 for rechargeable versions. Nicotine cartridges sell for about $15, and, depending on how much the smoker puffs, can last for two or three days. Cartridges also come in different nicotine intensities and flavors.
Logic claims that one of its e-cigars, the Cuban, is good for 1,500 puffs. It retails online for $19.99.
A private company, Logic won’t divulge exactly how many e-cigarettes it sells, but a company spokesperson said that it has received multiple requests from tobacco companies and investors to buy it out or partner with it. A press release says Logic is an “eight-figure company with millions in revenue.”
A Wells Fargo analysis of the e-cigarette market has found that it is a $300 million industry, with Logic’s competitor Blu believed to have a 25 percent share of the market.
When a person takes a drag of an e-cigarette, a battery-powered metal coil inside heats a cartridge, vaporizing liquid nicotine within. The smoker exhales odorless water vapor.
The experience is intended to simulate the smoking of a regular cigarette. While e-cigarettes do not produce the kind of noxious smell that tobacco does, Eli Alelov, Logic’s chief executive officer, doesn’t think they’re appropriate everywhere.
“As far as smoking this in public places, we don’t want to show a young generation that they can smoke it in a plane, train,” he said, adding that there should not be exceptions made for e-cigarettes in New York laws banning cigarettes on subways and in similarly close quarters.
Alelov says he has taken flak from fellow e-cigarette makers for his position, since they’d like to see e-cigarettes become allowed in places where tobacco is banned.
“We think e-cigarettes are more than just a fad; however, we expect increased regulatory scrutiny and taxation of the products in time,” Wells Fargo said in a report that details the opportunities for investors looking to profit from nicotine dependence.
But the government has not yet had the last word on whether e-cigarettes are totally safe, with the FDA finding in 2009 that one unnamed e-cigarette contained significant traces of a chemical found in antifreeze.
Alelov calls that study outdated, and he says that the government has been too harsh on a nascent industry that makes a safer product than big tobacco does.
“The only money the US government spent on e-cigarettes is to fight the e-cigarette industry, not to develop it,” Alelov said. “Think about this. How much does it cost to prevent a disease that kills 400,000 people every year?”
You can read the article: http://www.nypost.com/p/news/business/cigs_lighting_up_sales_dvO61J3qPK8t9089IU4XYM