Electronic cigarettes — or e-cigs — are puffing along in the United States and one Miami company, V2 Cigs, has taken advantage of this fast-growing market to become the third-largest e-cig vendor in the country in less than five years.
Two friends, Jan Andries Verleur, a smoker, and Dan Recio, who does not smoke, saw there was great potential for e-cigs and decided to develop their own product in Miami. They put together the little money they had in 2009 to start designing electronic cigarettes and lining up manufacturers in China. Once they had a product, they set up a Website and began selling V2 Cigs in 2010.
“We became profitable almost immediately, and put our profits back into the company,” said Recio, a co-founder of V2 and the president of product development.
The partners built their internet sales platform and expended overseas.
Like other e-cig companies, V2 originally focused on Web sales. But in April 2013, the company made a strategic move, reaching an agreement with National Tobacco Company to sell V2 products at 10,000 retail outlets (such as Hess gas stations) that NTC supplies with tobacco products.
As a result, V2 today is a major online vendor of e-cigs and has a growing presence in retail outlets. Its goal is to place its products in around 35,000 retail stores by the end of this year.
E-cigs are devices that allow consumers to inhale nicotine vapor without the smoke, tar, carbon monoxide and other chemicals contained in tobacco. They often look like normal cigarettes and use a tiny battery to activate a heating element that vaporizes liquid nicotine stored in the e-cig tube when air is pulled through the device. E-cigs have a small LED which lights up when the device is being used.
E-cigs use a mixture of nicotine, propylene glycol and flavorings. Since people inhale the vapor, e-cig users say they are “vaping,” not smoking.
E-cigs appeal to many cigarette smokers as an alternative to tobacco and to other consumers as a novelty item. Retail and online sales in 2013 are expected to increase by 240 percent or more, according to a Wells Fargo Securities report.
In South Florida, a range of e-cig brands compete against the much-larger tobacco market in gas stations, retails outlets and online sales sites.
They are cheaper than traditional tobacco cigarettes, have large markups and come in a wide variety of designs and flavor options, as well as different colors and distinctive styles for women.
The e-cigarette market is highly fragmented. There are about 4,000 companies in the U.S. alone, and about 10 control 75 percent of the market.
“E-cigs currently represent only a very small slice of the tobacco market, but their appeal is growing very rapidly,” said Recio, who studied motion pictures and psychology at the University of Miami. But traditional tobacco companies are worried that e-cigs could take away some of their customers.
Lorillard, the third-largest U.S. cigarette producer, is already diversifying into electronic cigarettes. It paid $135 million last year to acquire blu Ecigs, the largest American e-cigarette company, and earlier this year bought a U.K. based e-cig firm, SKYCIG.
V2, a unit of privately held VMR Corp., now is the third-largest e-cig company in the U.S., following Lorillard’s blu Ecigs, the largest, and NJOY, based in Arizona. The name V2 means “Your life, Version 2.0,” Recio said.