It seems Phillip Morris wants their own electronic cigarette. Philip Morris International, one of the largest tobacco companies in the world reported to have over 15% share of the worldwide cigarette market and operations in 160 countries, is in negotiations with Ruyan Group, the makers of what some call the first e cigarette.
While it’s not clear if this is simply a distribution deal or if Ruyan is interested in selling out the rights to their e-cig completely, this could have a huge impact on the electronic cigarette industry. Only time will tell, but it seems the first round of negotiations didn’t go so well.
“Ruyan Group said that an agreement between the Company and Philip Morris International Management S.A. could not be reached on matters relating to the co-operation between them on its “electronic cigarettes” by the end of the first and exclusive phase of negotiations.”
However, there are some tell tale signs over at Ruyan Group that something big is in their future. They’ve sold their office properties for a reported HK$28.57 million to an undisclosed buyer and their stock trading was suspended on November 2nd pending an “announcement on a price sensitive matter”. In June their stock rose 35% after they announced entering negotiations with an “independent third party”. That third party turns out to be Phillip Morris International.
It is very clear Ruyan wants to get in bed with big tobacco and if it’s not Phillip Morris, they are accepting other tobacco company suitors. An article from July 5th in Quamnet stated:
Ruyan said it will continue to negotiate with Philip Morris on the proposed transaction and the company will commence discussions and negotiations on
similar collaborations with other tobacco manufacturers.
They’ve already entered into an exclusive distribution deal with Taiwan Tobacco and Liquor Corporation for rights to sell the Ruyan e-cigarette in Taiwan. As the leading tobacco and liquor distributor in Taiwan this deal gives Ruyan a leg up over their competition with an instant sales network of tobacco stores spanning the entire country. However, the deal is only for eight months. Is Ruyan covering it’s bases as they seek even larger companies to partner with.
As the only real potential competition to cigarettes to come along in years, perhaps ever, it’s well known the electric cigarettes industry has the attention of big tobacco. Now it seems their attention may not be directed in destroying the industry but rather buying it up.