Napster Founder Sean Parker Invests in NJOY Electronic Cigarettes
E-cigarette brand NJOY, current holder of the largest market share (about 36 percent), recently announced a $75 million investment.
Napster founder and former Facebook president Sean Parker has joined with investment fund Homewood Capital to buy a stake in the Arizona-based ecig company. Homewood Capital principal Douglas Teitelbaum will be joining the board of NJOY.
Parker is investing about $10 million in NJOY Inc., with additional funding coming from three other partners.
“I’m optimistic that the clever application of technology might someday obsolete the combustion cigarette and all the harm it causes,” – Parker said in a statement.
Known for his philanthropic projects on cancer research, Parker sees electronic cigarettes as a safe alternative to smoking tobacco, though regulatory hurdles remain. E-cigarettes are not federally regulated in the United States, and government agencies have said the safety of the products remains unclear.
The rapidly growing e-cigarette business – expected to top $1 billion in annual sales in the next few years – is racing to command a bigger share of spending among smokers and potential smokers ahead of possible regulations from the Food and Drug Administration.
Mitch Zeller, director of the FDA’s Center for Tobacco Products, described the e-cigarette market as “the wild, wild West” regarding the lack of government oversight.
Investors, and even traditional cigarette companies that are planning to enter the e-cigarette market, clearly see the economic benefits. E-cigarettes are viewed as having far more appeal than other nicotine alternatives such as patches.
According to a report from the Wall Street Journal, industry experts project that retail sales of e-cigarettes in the US could reach $1 billion this year, just 1% of the country’s cigarette market but twice that of 2012, as they spread from the Internet to store shelves and generate buzz through television advertisements and celebrity endorsements.
Altria Group, the parent of Philip Morris, the largest US tobacco company, is expected to announce its entry into the increasingly crowded market during an investor event this week. Last month, R.J. Reynolds rolled out its Vuse Digital Vapor cigarette in Colorado with plans to expand the product nationally. Blu Cigs, which Lorillard acquired last year for $135 million, recently announced its sponsorship of the 2013 Bonnaroo Music & Arts Festival where it will have an air-conditioned Vapor Lounge “activation space” for attendees over 18.