Is Big Tobacco a Barrier to E-Cigs' Entry?

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March 5 (Bloomberg) -- Bloomberg Industries’ Kenneth Shea examines the growth of e-cigarettes and how that plays into the future of big tobacco on Bloomberg Television’s “Bloomberg Surveillance.”

I've not tried that.

It seems the flavorings, the options keep exploding.

Let's cut to the chase.

Are these things good or bad for you?

It depends on who you ask.

If you ask a lot of health advocates, they would say it is a lot better than combustible cigarettes.

If you asked some of the critics, they would say because it contains nicotine, it is probably something that we want to watch, particularly when it comes to children.

Can, cigarette consumption and smoking rates in the u.s. have fallen over the past decade but the players and tobacco industry really haven't changed out that much.

Or market share has not changed, either.

Why hasn't that changed?

Good question.

It is probably because high barrier injuries is the easiest answer.

To the nus, it means your accepting a lot of legal risk -- to compete in the u.s., you are accepting a lot of legal risk, you owe billions of dollars every year depending on your market share to the state attorneys general.

There are high barriers to entry.

That translates for investors to high return on stop performances have done well.

Can we have a moment while we talk nicotine?

I'm going to have caffeine.

You're not allowed to have e-cigarettes.

My word, i'm having caffeine, i guess i'm a bad person.

Tim bitsberger with us from bnp.

Is this a domestic story or are e-cigarettes of french and emerging-market story?

They are a global story.

I'm estimating around a $3.5 billion industry today.

The u.s. accounts for about half of that business.

Virtually, all of the large tobacco manufacturers including philip morris international are looking to e-cigarettes as basically the growth platform of the year.

Given the vast distribution of these companies and what seems to be a growing demand for safer alternative than combustible cigarettes, it seems to be translating into a good opportunity.

You are an expert on regulation and financial markets.

Do you see the washington regulation of tobacco transferring abroad to other countries?

I would doubt that.

The contentious nature between financial regulation, between the whole sovereignty issues and what regulators in charge of what it what country, i would be very surprised if that were to spread international.

And tobacco has to look abroad if the u.s. is shutting down.

I get to paris several times a year and it amazes me how many street corners so many people are congregated smoking cigarettes.

I used to smoke gitane.

They are just as vicious.

Go back to your coffee, tom.

I need to ask about regulators.

According to some, likely to approve a deal between reynolds and lorillard, but the fda still needs to make a decision on e-cigarettes.

Who do we look to first for some kind of clarity?

Both of those points are valid.

The u.s. cigarette market is highly concentrated already.

The top three players are 85% of the market.

A combination of those would mean the top two would control 85% of the market.

Looking at the u.s. beer industry, the top to control it up or send, i don't think that will into the conversation.

In terms of the fda, the fda is supposed to come out with decisions any day now, although they've been saying that for a while, regarding how it will regulate the mental industry as well as how it will regulate the e-cigarettes industry.

A lot of people are waiting for a cue from them.

Ken shea, thank you so much.

Very valuable effort here.

We tried the e-cigarettes here.

I found it very uncomfortable.

You were buzzed at 4:00 in

This text has been automatically generated. It may not be 100% accurate.

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