It seems that tobacco companies are finally loosing their stronghold on consumers.

Cigarette maker Phillip Morris International Phillip Morris (NYSE: PM) has cut its earnings forecast for this year. It claims that 2014 is proving to be a “complex and truly atypical” year for the company.

Other cigarette companies, including Phillip Morris rivals like Imperial Tobacco Group and British American Tobacco are struggling with declining sales in multiple markets. The attribute to this decline to increased government regulation, more health-conscious consumers, as well as smuggling and economic slump.

The Malboro cigarette makers announced that it now expects to make only $4.87 to $4.97 per share for 2014. This is a 4.32% drop from its earlier forecast of $5.09 to $5.19 per share it expected, and a 7.41% decrease from the $5.26 per share it earned in 2013.

“We continue to face significant currency headwinds, an improving but weak macro-economic environment in the European Union and known challenges in Asia,” Chief Executive Andre Calantzopoulos said in a statement.

However, on a positive note, Phillip Morris expects it’s 2014 adjusted profit to rise 6% to 8% from the $5.40 it reported last year.

The company also forecasts a 2% to 3% fall in the total cigarette industry in 2014, not including China and the United States.

The company also revealed that it acquired Nicocigs, a e-cigarette makes based in the United Kingdom. Nicocigs is a key asset for Phillip Morris to gain access to the growing e-cigarette market in the UK market. The tobacco company did not disclose any financial terms, but said that the deal does not affect its 2014 cash flow.

Phillip Morris expects to add to its company within the next 3 to 4 years, by launching a proprietary e-cigarette in 2016. It hopes that its reduced-risk products will gain back the heath-conscious consumers it has lost, and tap into a quickly rising demand for a less dangerous alternative to cigarettes. Worldwide government crackdowns and reduced consumer consumption have made these less harmful alternatives to cigarettes a key focus for many big tobacco firms.

However, last year the company said it would break into the e-cigarette market in the second half of 2014. While it seems like the company will not be launching its own e-cigarette within the next 6 months, the company joined Altria Group in 2013 to market electronic cigarettes and other reduced-risk tobacco products.

 

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