Priyanka Jethwa analyses whether the wholesale channel has missed the vaping opportunity
With the menthol ban just around the corner, it could provide wholesalers with a second chance to take advantage of the vaping market, as a wave of smokers make the switch.
The latest figures from Action on Smoking and Health also show that the number of vapers in the UK rose to 3.6 million in 2019, up 12.5% from 2018. And the UK market is expected to grow from £1.1bn to £1.7bn in value by 2025.
Despite the category growing quickly over the past few years, the wholesale channel was late to the scene and slow to pick up with suppliers.
As a result, many manufacturers started to work directly with retailers to help them understand the category, presenting a shift in the supply chain different to that of traditional FMCG categories – in effect, they cut out the middle man: the wholesaler.
It’s also fair to say, the four big tobacco firms – BAT, JTI, Imperial Tobacco and Philip Morris – were slightly late in working with wholesalers to build better ranges in depot, alongside educating them on the latest trends.
However, wholesale could have a second chance, according to John Taylor, chief marketing officer at Vape Dinner Lady. “We expect the menthol cigarette ban to provide an opportunity for wholesalers to take advantage of potentially increased sales in menthol and other flavoured e-liquids and e-cigs,” he says.
Andy Morrison, trading director at Dee Bee Wholesale, adds that wholesale may have been slow to approach the category, but it was because it was broad and complex, saturated by new and, at the time, “untested” suppliers.
“The downward trend on tobacco is going to continue, so there will be a growing vape market which should make it easier for wholesalers to take some share, but it is certainly challenging with the direct-tomarket competition, as well as the plethora of formats available,” he says.
Ian Jacombs, managing director of CTC Wholesale, has a less optimistic view. He says: “It will be harder to now catch up, as there are some very important brands that retailers need to stock, but if that supply route is already established with a successful brand, good pricing and availability, why would the retailer switch?”
Ben Mison, Vapouriz head of sales, says for those who did enter the category early, it has proven beneficial, resulting in continued sales growth. Richard Torrance, sales and marketing director at Liberty Flights, agrees, adding that there is definitely an opportunity still out there, and wholesalers should prepare for long-term investment.
However, Morrison believes that progress in the category will depend on how traditional tobacco does. “As [retailers’] traditional market declines, they will be forced to focus more on delivering vaping solutions, and the sensible option is to use their well-established route to market in wholesale and convenience. Once they have consumers using their individual vaping solution, consumers will be forced to seek out retailers that stock that solution and hopefully we can all benefit,” he says.
Wholesalers can still catch up, but readjusting depot layouts is a tough task that doesn’t happen overnight.
They will need to start promoting the category more and partner with the suppliers their customers are already working with.