E-cig maker Mistic shifts production from China to Greenville

Sergio Garcia, a lab technician, prepares flavor samples for customers during a tour of the Purilum facility on Tuesday in Greenville.
Sergio Garcia, a lab technician, prepares flavor samples for customers during a tour of the Purilum facility on Tuesday in Greenville. jhknight@newsobserver.com

A Charlotte e-cigarette company has begun manufacturing its product entirely in the U.S. after opening operations last month among this town’s golden tobacco fields.

Mistic Electronic Cigarettes, which distributes its product to 60,000 retail stores in the U.S., claims to be the first national, independent e-cigarette company to fill, produce and assemble its entire product domestically. R.J. Reynolds, based in Winston-Salem and one of the “big three” tobacco companies, also produces a U.S.-made e-cigarette in Kansas.

Mistic announced its plan to share space with local flavor company Purilum in April, which will lead to 21 hires in Greenville. Mistic had already produced the e-cigarette liquid domestically, but had shipped it to China to manufacture and assemble the device.

“In the heart of tobacco country, we are now changing the industry again,” said Mistic CEO John Wiesehan Jr.

The ability to have better control over the quality of Mistic’s e-cigarettes, as well as reduce production costs and better manage the company’s inventory levels, were all factors in the move, Wiesehan said.

To make the shift possible, Purilum owns machines that assemble cartomizers, the part of the e-cigarette that contains the “e-juice” — the flavored liquid that produces an inhalable vapor when heated. Two of these machines replace about 300 Chinese factory workers.

An e-cigarette is made of three main parts – a rechargeable lithium battery, a cartridge called a cartomizer, and an LED light to simulate the end of a traditional cigarette. Mistic cartridges include nicotine, flavoring, propylene glycol and water.

Mistic has improved its supply chain by shedding the 60 to 90 days it took to ship products overseas. Wiesehan believes that the quality of the liquid – the aerosol that a “vaper” consumes – deteriorates within that time. The product should be fresher by getting it on the shelves within a week of production, he said.

Purilum develops Mistic’s eight flavors, and moving its development into the same factory provides quality assurance, Wiesehan said.

He said domestic manufacturing is also cost-effective, although he would not disclose specific numbers. “Quite frankly, we have a pickup in our (profit) margin,” he said.

The $2.5 billion e-cigarette industry has been under scrutiny in recent months as communities debate whether to put smoking-type restrictions on where the devices can be used. The U.S. Food and Drug Administration is also in the process of drafting new regulations for the industry.

In April, the agency put forward a vague proposal to regulate items such as the flavoring and marketing of e-cigarettes, but the FDA has not yet established standards for the industry. It is expected that use of e-cigarettes will surpass tobacco cigarettes within the decade.

Mistic says it is preparing for the new FDA rules by producing its product domestically and enrolling in the We Card program, which prevents minors from purchasing tobacco products. “We think we have taken the proper steps to set the standards for the industry,” Wiesehan said.

Factory standards at the Greenville facility include segregated nicotine and non-nicotine mixing rooms, automated bottle filling and cartomizer assembly.

The company still imports batteries and some raw products from China, the birthplace of the e-cigarette. Packaging and distribution is based in Charlotte.

Without providing details, Wiesehan said that Mistic plans on releasing a new e-cigarette technology aimed for this year’s holiday season.