Talking Tobacco With LOGIC's President


NEW YORK – The vapor products landscape may be shifting with the entry of Big Tobacco and the popularity of the open-system vapor/tanks/mods (VTMs), but LOGIC Technology Development LLC's President Miguel Martin still sees huge potential in electronic cigarettes.

On the same day as new Nielsen data showed LOGIC as the unit share leader in the convenience channel e-cigarette category for the first time, Martin discussed the changing category with Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo Securities LLC. Their discussion Wednesday morning marked the latest installment of the firm's Tobacco Talk conference call series.

In recent months, there has been conflicting data over whether the electronic cigarette category is decelerating. Martin said LOGIC has not seen a deceleration, although he acknowledged that may be specific to the Pompano Beach, Fla.-based company.

In fact, he noted that LOGIC has seen growth in its rechargeable e-cigarette business and according to the latest results from Nielsen’s C-Track Database, LOGIC now holds the No. 1 position in unit share (24.3 percent) ahead of Lorillard Inc.’s blu eCigs. In dollar sales, LOGIC holds the No. 2 rank at 22.9 percent behind the blu brand.

Even with the company's solid numbers, Martin believes there is more room to grow.

"Any store that sells cigarettes responsibly to adult consumers can sell electronic cigarettes," he said, noting there is plenty more distribution opportunities available.

For example, he pointed out there has been movement by traditional retail channels that have been slow to enter the e-cigarette category, such as mass merchandisers. In addition, only 67 percent of convenience stores –- an early player in the field -– are now offering e-cigarettes.

"Stores that haven’t sold electronic cigarettes are now getting into it, and stores that didn’t carry a full line of products are now carrying rechargeables," Martin explained.

International markets have also been on LOGIC's radar lately. The e-cigarette maker already has a presence in Australia and parts of Europe, and it just recently signed a deal to bring LOGIC Zero to more than 30,000 accounts in Canada through a partnership with Hilary’s Salesmaster Inc.

Even as it looks for additional international partnerships, Martin said there is still a lot of "white space for [LOGIC] in the U.S., west of Mississippi."

He also sees opportunity for LOGIC as Nu Mark's MarkTen and R.J. Reynolds Vapor Co.'s (RJRV) VUSE brands roll out nationally. Nu Mark is a subsidiary of Richmond, Va.-based The Altria Group Inc. and RJRV is a subsidiary of Winston-Salem, N.C.-based Reynolds American Inc.

Drawing on e-cigarettes' similarities to the energy drink category, Martin said independent, proactive companies can be successful against major players. "A lot of people had the belief that Coke and Pepsi would just crush Monster and 5-hour Energy and that didn’t happen," he added.

The entry of the top two of the "Big Three" tobacco companies will lead more consumers to try electronic cigarettes, he said, but at the end of the day, the best products will win out.

"MarkTen and VUSE will have no problem getting trial, but the real question will be how did these products hold up [against others]," Martin said.

As for LOGIC's own immediate future, the industry could see two new products from the company this year. Martin, however, declined to detail the new offerings.

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