China Flavors and Fragrances Co. Ltd. (03318.HK) is tapping into online retail platforms for the sale of electronic cigarettes, a business the company is entering through the acquisition of Kimree Inc., the Hong Kong Economic Journal reported on Monday.
The company has paid HK$3.6 million as deposit for the acquisition of a 100 percent equity stake in the leading e-cigarette group, according to a stock exchange filing on Nov. 11.
The deal is expected to be completed in the first quarter of next year, China Flavors chairman Wang Ming-fan said.
The company has long been the source of flavors and fragrances for Kimree’s products, providing about a fourth of its demand.
Kimree, which currently holds 3,500 patents, is currently focused on markets in Europe and the Americas.
With the acquisition of Kimree, China Flavors sees great potential in China, which currently does not have regulations on the sale of non-tobacco cigarettes, Wang said.
E-cigarette makers could equal the gross profit margin of real tobacco companies, Wang estimates, adding that global e-cigarette sales could reach US$6 billion from US$5 billion last year.
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