Do you remember this article from August of 2012, in which I reported that Johnson Creek Smoke Juice had closed its affiliate program and speculated that the company might be up for sale? My prediction has come to pass, although not quite in the way I guessed. The Milwaukee Wisconsin Journal Sentinel reports that Republic Tobacco has purchased a 50 percent stake in Johnson Creek Smoke Juice and will add the brand’s products to its distribution network.
Republic Tobacco’s best known brand is Zig-Zag, which coincidentally you can already find in the e-cigarette marketplace in the form of flavor cartridges sold by V2 Cigs. Although Johnson Creek didn’t disclose the terms of the sale, they have made it known that they earned $16 million in revenue last year and are projected to earn $25 million this year. According to Johnson Creek founder Christian Berkey, selling half of the company to Republic Tobacco will “increase our distribution network 20-fold.”
It’s impossible to predict whether this deal will result in a termination of Republic Tobacco’s relationship with V2 Cigs, or whether Republic will simply distribute the Johnson Creek brand as it is to a wider customer base — although I think the latter possibility is more likely. V2 Cigs and Johnson Creek are both established brands with slightly different types of customers and there would be little reason to force the two to compete.
The more interesting problem lies in the potential conflict of interest that could arise between Republic Tobacco and Lorillard, who purchased Blu Cigs in 2012. Johnson Creek Smoke Juice is the exclusive supplier of liquid for Blu’s cartridges, and if this arrangement continued it would essentially mean that one tobacco company would be supplying the e-liquid for another tobacco company’s e-cigarettes.
Either way, it’s obvious that Johnson Creek comes out the big winner here. The company’s founders will enjoy an enormous payday without waiting to find out how FDA regulation will change the e-cigarette industry, and Johnson Creek e-liquids will most likely be available in any convenience store that already sells Zig-Zag products. I imagine this would make Johnson Creek just about the largest e-liquid company in the world after Dekang.
How do you feel about this? Have you tried Johnson Creek’s e-liquids and what do you think of them? Leave a comment with your thoughts.