Murray Kessler, Lorillard chief executive, told analysts during the company's April earnings call that the slowdown "is directly related to the rapid rise of vaporiser sales in vape shops".
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Nik Modi, analyst at RBC Capital Markets, cited Google data showing US searches for "vape shop" have reached new highs every month this year, while queries for "electronic cigarette" have fallen back to 2009 levels. The pattern is similar in the UK, where e-cigarette sales are estimated at about £200m.
Mr Kessler said vaporisers are growing faster than traditional e-cigarettes "because they deliver a superior consumer experience at a better value . . . bigger batteries, more vapour, more satisfaction, lower cost to refill".
While new consumers may be comfortable starting with a traditional e-cigarette, those who stick with vaping may find the products are "somewhat lacking", said Andries Verleur, chief executive of VMR Products, which sells e-liquids, disposables and cartridge-based e-cigarettes.
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"The large-scale devices solve this problem to an extent with the amount of liquid they can carry. You only need to charge and fill it once a week," Mr Verleur said.
The ability to try a wide range of flavours and nicotine levels is also appealing, and liquids tend to be cheaper than e-cigarettes, widening the price gap with traditional cigarettes.
Other market leaders have also taken notice. Njoy, backed by Sean Parker and Peter Thiel, has slipped from second to third place by US market share and said earlier this month it would add a refillable tank system to its product line-up in July and August. Mistic, another big brand, started selling a vaporiser in February.
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Analysts say such moves could push big tobacco to move more quickly into refillable systems. The two largest US cigarette makers, Altria and Reynolds American, are expanding their own cig-alike products nationally this year.
Last month, Lorillard's Mr Kessler said the challenge is to "close the performance gap relative to vaporisers and do that in months, not years". The company is working on technical improvements, including battery strength, that he said "will minimise the defection from traditional e-cigs."
Whether those changes will be enough to woo consumers is unclear. After a recent visit to a new vapour shop in New York, Ms Herzog wrote: "The cig-alike e-cigs as they are today are already becoming 'your father's e-cig'."
—By Shannon Bond, Financial Times