U.S. e-cigarette sales seen rising 24.2% per year through 2018

June 10, 2014, 10:23 PM UTC

Americans might be butting out by the tens of millions, but many of them are turning to an increasingly popular alternative: electronic cigarettes.

Sales of e-cigs in the United States, estimated to now be a $1.5 billion market, are set to grow 24.2% per year through 2018, according to new projections from Research and Markets. It’s no wonder Big Tobacco has been expanding its e-cig offerings.

The number of traditional cigarettes sold in the United States has fallen 29.6 percent since 2004, according to Euromonitor International data. That is partly the result of education campaigns and countless bans on smoking in public places in towns and cities nationwide. In contrast, some on Wall Street expect e-cigs to surpass the tobacco cigarette market within 10 years.

Big tobacco companies have jumped in in the last couple of years, looking for a new source of growth.

Lorillard (LO) bought the market-leading blu e-cigarette brand in 2012, and then, last October, bought SKYCIG, a U.K.-based e-cig business. Reynolds American  (RAI) last year introduced its VUSE digital vapor cigarettes in Colorado and is rolling the product out nationwide in 2014. Altria (MO) started selling its MarkTen e-cigs in Indiana last year and is introducing it to additional states this year.

E-cigs are slim, reusable tubes with an electronic inhaler delivery system that mimics tobacco smoking. Some consider them less harmful to one’s health because they produce vapor, which has no tar, rather than smoke and see them as a helpful smoking cessation aid.

Part of the appeal for these companies is that e-cigs are not regulated, at least not yet, and there are no excise taxes on them, unlike tobacco cigarettes. But that could change: in the spring, the U.S. Food and Drug Administration proposed rules that would ban the sale of e-cigarettes to minors and require companies to list ingredients, and many advocacy groups are calling for more scrutiny.

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