e-cig trend

With tobacco likely to be in slow decline, the market for e-cigarettes is gathering pace. This year, under EUTPD II legislation, the category was regulated for the first time. The string of measures included new regulations around product specifications and nicotine concentration. However, with Brexit in the offing, it is impossible to confirm what legislation will stay and what will go.

Whatever happens, the e-cigarette category has seen steady growth since its introduction in the UK in 2007 and this is not likely to dip next year. According to JTI, it was worth £158m last year, with sales having increased by a fifth in the past two years. The Office of National Statistics also says there are now around 3m users, with more than half using e‑cigarettes as an aid to stop smoking.

The impact of legislation

In May, the transitional period for sell-through of old e-cigarette stock will be complete, meaning that it will be illegal for retailers to sell non-compliant products. Jennifer Roberts, UK category controller at blu, says that as a result, consumers will see a change in the market including a raft of technology improvements and significant rationalisation.

“There will be fewer brands and potentially smaller product ranges,” she cautions. “This will also affect the shape of the retail vaping market, with an estimated 55% of vape shops expected to close by May. This offers a significant opportunity for wholesalers to help their customers grab these consumers and make them regular shoppers.”

Value for money

The price of conventional cigarettes and other tobacco-related products is going up year-on-year, and vaping products present a more affordable option for existing smokers. In the UK, the average vaper spends around £2 on vaping-related products per day, versus £5 on cigarettes.

vaping productsFor wholesalers, tobacco sales may be significant at present, but the profit margins are minimal. Conversely, vaping sales may be small, yet the margins are significant. With the value and size of the category growing in popularity, and as more and more smokers look to switch to vaping products or use them alongside cigarettes, this presents a growing opportunity. According to vaping company Vape Club, once a consumer has started vaping, they spend an average of £1,000 a year on vaping products.

Product Innovation

From this year into next, consumers will start seeing more EUTPD II-compliant stock filtering through the market. JTI’s Jeremy Blackburn says the company predicts e-cigarettes will grow further next year. JTI is also expected to innovate in its Logic range – its closed tank Logic PRO is currently the fastest-growing tank product on the market, Nielsen data suggests.

“We will continue to drive growth by bringing new products to market,” says Blackburn, who adds that he believes more and more retailers will begin to stock e-cigarettes.

Blackburn says the current trend is towards the tank e-cigarette, the market for which has grown by 52% in the past year, and which now accounts for 46% of sales: “Tanks are the fastest growing devices in the traditional retail market, with 88% of UK vapers using them, making it an important area of growth for the category,” Blackburn says.

Leading brands include blu, Vivid and MV, which also sell a range of flavoured e-liquids. Both battery life and the quality of e-liquids should also improve in the future, with JTI reporting menthol, fruit and tobacco flavours as the big sellers.

Labs in the US are also experimenting with synthetic nicotine for vaping liquid companies, but this is unlikely to produce a breakthrough any time soon.

Improved presentation

As the popularity of the e-cigarette market grows, so too will the ways to display e-cigarettes in-store. Unlike conventional tobacco products, e-cigarettes do not have to sit behind a gantry, and many bespoke counter-top displays already exist.

JTI has pioneered a gantry with a modification to include a dedicated space for e-cigarettes. Samantha Brown, from JTI’s merchandising solutions team, says: “The proliferation of brands in the e-cigarette category has led to poor category presentation, lost sales and consumer confusion, as retailers try to squeeze brands into any available space they can find.” She adds that JTI is the first supplier to develop a solution.

On how this works on the ground, Dee Sedani, owner of the One Stop store in Matlock, says: “The new look unit is working really well. I am able to draw attention to the growing e-cigarette profit opportunity with a dedicated space, while also managing the category responsibly.”

In-depot, unlike tobacco products, vaping products will not need to be stocked in the tobacco room once the legislation changes have been enacted.

Blu’s Roberts, says: “We recommend wholesalers take advantage of this and make them as visible as possible in-depot to draw the attention of customers and ultimately drive sales. Dual-siting or promoting vaping products outside the tobacco room is a great way to drive additional sales, particularly with those retailers who do not visit the tobacco room.”

SHARE
Avatar photo
Helena Drakakis is a journalist for betterWholesaling. Liaising with some of the leading suppliers and industry experts, she aims to bring wholesalers the best advice, latest news and inspiration.

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.