Transnational tobacco companies enter new markets through mergers and acquisitions

Tobacco in recent years, are pouring in on important transnational tobacco companies to carry out mergers and acquisitions activities, and continuously improve their competitive strength. In this wave of mergers and acquisitions, it is easy to neglect the acquisition of non-tobacco core business.

In fact, in order to enhance their competitive strength, to compete for market share, some of the transnational tobacco companies in addition to their core business of mergers and acquisitions in recent years, but also actively explore into the competitor’s product areas, such as nicotine replacement products, electronic cigarettes etc., to increase non- tobacco core business acquisition efforts. In 2009, Reynolds American acquired a called to Niconovum the Swedish company – this company produces a nicotine patch, nicotine gum and sprays. Not long ago, BAT established a new company called Nicoventures development regulations to allow the nicotine replacement products. This product to provide consumers with the experience that they want to get from cigarettes, and will not pose a risk. In April of this year, Lorillard to $ 135 million acquisition of Blue electronic cigarette company to enter the electronic cigarette market, greatly increased strength.

These acquisitions show that some of the transnational tobacco companies are playing called “If you can not beat ’em, join’ em” game. They are expanding into new markets, was the market of its competitors to compete for market share while trying to maintain.

At present, nicotine replacement products market is relatively more concentrated, with a handful of pharmaceutical companies such as Pfizer, Novartis is closely linked to the electronic cigarette market is relatively fragmented. Under such circumstances, the multinational tobacco companies whether through mergers and acquisitions related companies control nicotine substitutes market?

As a new field of “beginner”, tobacco companies need to understand consumer demand, it is very important. For the consumer, they seem to be more like tobacco products, nicotine substitutes as a drug. But in the long run, out of curiosity for new products, some customers choose to use nicotine replacement products, its sales will increase. Especially in developed countries, consumers are increasingly concerned about nicotine replacement products.

Accept the changing reality of the transnational tobacco companies, in favor of competitors to compete for new markets, which may be more fruitful. Overall, it may thus appear beneficial win-win situation for consumers and the tobacco companies.

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