By Paulo Santos:
Today, RBC Capital Markets analyst Nik Modi defended the thesis that the e-cig business will be dominated by Big Tobacco, due to its resources and distribution network. Big Tobacco is commonly known as the oligopoly comprising Lorillard (LO), Reynolds American (RAI), Altria Group (MO), Philip Morris International (PMI) and British American Tobacco (BTI).
I don't believe this thesis will play out as Nik Modi expects. The e-cig market is intrinsically different from the cigarette market.
The traditional cigarette market intrinsically consists of a disposable product -- it burns, you burn 20 of them or 40 of them in a single day, and the next day you'll burn 20 or 40 more.
The e-cig market, on the other hand, works differently. While there are also disposables, these are entry-level devices. The entry-level devices can provide an acceptable experience, but they don't provide the best experience. Vapers will thus enter the
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