VUSE (WEB)

The gap continued to widen during November between Juul, the new top-selling U.S. electronic cigarette, and Vuse of R.J. Reynolds Vapor Co., according to Nielsen data.

Wells Fargo Securities analyst Bonnie Herzog said Tuesday that Juul jumped to a 40 percent market share during the four-week period that ended Dec. 2. That’s up from 32.9 percent in October.

Meanwhile, Vuse dropped from 27.4 percent to 24.3 percent during the measuring period.

E-cig and vaporizer sales were up overall in the sector, led by Juul, which is made by Juul Labs, which was spun out of Pax Labs Inc. in July.

Juul entered the mainstream retail marketplace in 2015, and is sold in the form of a pen or a USB device.

The Juul market-share growth has drawn criticism from anti-tobacco advocates, who say the discreet shape of the product makes it easy to hide its usage, including by teenagers.

Vuse sales growth, as measured by dollars, was up 5.6 percent overall, driven by a price increase that was somewhat offset by lower volume.

Nielsen data tracks the electronic-cigarette mass channel and convenience-store marketplace. Vaporizers, which typically are lower in price, are sold mostly in tobacco and vapor shops, where Nielsen has limited tracking.

The distinction is important given that $3 billion of the $4.4 billion in e-cig and vaporizer revenue Herzog projected for 2017 comes from the vaporizer sector.

The remaining top five e-cigs are MarkTen XL (13.7 percent) of NuMark LLC, a subsidiary of Altria Group Inc.; blu eCigs (10.4 percent) of ITG Brands; and Logic (6.4 percent) of Japan Tobacco. All three also lost market share in the period.

However, when it comes to retail sales over the past year, Vuse remains on top at $381 million, followed by Juul at $267.1 million and MarkTen XL at $186.7 million.

R.J. Reynolds Tobacco Co. continued to gain momentum and market share with traditional cigarettes.

Herzog has said the recent 10-cent per pack list-price increase by Reynolds and Philip Morris USA continues to lessen the impact of California’s $2 a pack increase in its excise tax.

The list price is what wholesalers pay manufacturers for their products. The increases typically are passed on to customers.

In November, California voters approved raising the excise tax to $2.87. It took effect April 1.

Overall cigarette sales volume fell 0.3 percent during the four-week period, but was up 0.8 percent over the past 12 weeks.

It is the sixth confirmed price increase for the Big 3 tobacco manufacturers since May 2014, as well as the second this year.

Herzog maintained her projected overall industry-volume decline for 2017. It is now 3.5 percent, down from 3.8 percent and below the 4 percent average decrease of recent years.

Reynolds posted a 5.1 percent year-over-year gain in pricing and a 2.1 percent decrease in sales volume.

Reynolds’ Newport, the top-selling menthol brand and No. 2 overall brand, and super-premium Natural American Spirit continue to outperform their competition.

Newport sales rose by 6.7 percent over the past 12 weeks, this time driven more by volume growth than pricing.

R.J. Reynolds Tobacco’s corporate parent, Reynolds American Inc., now owned by British American Tobacco PLC, spent $29.25 billion in June 2015 to buy Greensboro rival Lorillard Inc., essentially to acquire the Newport brand.

Since the completion of that deal, Reynolds has sharply increased its marketing efforts for Newport to boost its market share to 13.2 percent.

By comparison, Lorillard was content with a status quo market share of about 12 percent.

Natural American Spirit had a 1.2 percent increase on volume growth and a 6.6 percent jump on pricing. Its market share is 3.2 percent overall.

Camel pricing increased 6.5 percent, while sales volume dropped 1.7 percent during the four-week period. Its market share is at 8.9 percent.

Pall Mall, the nation’s top discount brand and No. 4 overall, dropped 8.3 percent in sales volume for the second consecutive month as more smokers chose to buy a higher-priced product. Pall Mall’s market share is at 6.6 percent.

Herzog has said Philip Morris USA’s top-selling Marlboro brand would be more affected by the California excise-tax increase because of its “strong exposure” in the state.

It experienced a 7 percent volume decline in the four-week period. Its market share was 46 percent.

With ITG Brands over the past 12 weeks, pricing was up 3.5 percent, while sales volume was down 4.7 percent.

Nielsen data showed ITG Brands with a 7.4 percent market share, comprised primarily by 2.2 percent from top-10 brand Winston, 1.6 percent from Kool and 1.6 percent from Maverick.

ITG Brands’ overall market share is down from 10 percent in June 2015 when it acquired three Reynolds brands (Kool, Salem, Winston) and one Lorillard brand (Maverick) as part of parent company Imperial Brands PLC’s $7.1 billion purchase from Reynolds.

Imperial Brands has said ITG’s market share was at 9.2 percent at the end of 2016.

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rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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