Vape Wars – the next generation Specialist vape suppliers and ‘traditional’ tobacco firms vie for sales, driving market to new heights

The UK vaping market continues to grow, developing rapidly in product quality and variety. When the first vaping products arrived here ten years ago, they soon found an enthusiastic following with smokers wanting to kick the habit, but many of the early offerings turned out to be of varying quality.

Now we’re seeing a stream of Next Generation Products (NGP) from specialist vape companies, on one hand, and ‘traditional’ tobacco companies on the other, backed on both sides by major investment in quality innovation and marketing. Significantly for wholesalers, the leading suppliers in both camps recognise the importance of working with wholesalers to make the most of the opportunity, and are actively engaged in doing so.

Starting with the specialist vape companies, JUUL Labs recently announced a partnership with Bestway Wholesale, to widen distribution of its products into the independent convenience channel and help more adult smokers make the switch from cigarettes.

Having come in out of left field in the US to become the market leader in the vape channel, JUUL Labs’ mission is to improve the lives of the world’s one billion adult smokers, 7.4 million of which reside in the UK.

“We are delighted to have partnered with Bestway Wholesale to make JUUL products available to thousands of independent retailers through its Bestway and Batleys depots,” says John Patterson, Sales Director of JUUL Labs UK. “Independent retail is a key strategic focus for JUUL as we aim to make our products available in stores that are traditionally used by smokers to purchase their tobacco products.

Independents and symbol retailers account for 45% of tobacco purchases but less than 10% of overall vape sales, so the opportunity for the channel is huge and we estimate it could be worth an incremental £750m a year by 2020 if convenience gets its fair share. JUUL’s deal with Bestway will help independents address this imbalance in the vaping category and accelerate JUUL’s mission of improving the lives of adult smokers.”

The deal will initially see JUUL Labs’s core range of Starter Kit and five JUULpod flavours – Golden Tobacco, Glacier Mint, Mango Nectar, Royal Creme and Apple Orchard -stocked in 10 selected Bestway and Batleys tobacco rooms from 24th May with further depots coming on board once JUUL’s age-verification process has been tested and verified. Bestway customers who purchase JUUL products will be required to agree to operate Challenge 25, JUUL Labs’s mandatory ageverification requirement, to ensure prevention of access to the category by anyone under 18, the legal purchasing age for vape products.

The selected Bestway depots are Abbey Road, Hackney, Manchester, Liverpool, Birmingham, Brighton, Team Valley & Exeter and Batleys Leeds & Southampton.

Turning to the traditional tobacco companies that have come into the vaping category, a strong performance by Imperial’s vaping brand blu boosted Imperial’s recent half year results, while their tobacco volumes continued to slide, in line with the rest of the industry.

Imperial’s next generation products, which also include heated tobacco and oral nicotine, leapt 245% to £148 million in the six months to March 31st. Blu continues to do well in Europe and Japan, though it has seen a slowdown in the US. Annual global sales of vape products are estimated to be around £8 billion, potentially reaching £30 billion by 2020. Imperial’s overall revenues rose 2.5% to £3.6 billion in the half year, with adjusted operating profit down 2.3% to £1.62 billion.

Chris Street, Head of Trade Marketing at blu UK, says: “Despite only being around a decade or so, the UK vaping market continues to develop and evolve at pace, from both a commercial and technical perspective.”

The category is estimated to be worth £728m, with sales channels spanning online and vape stores as well as traditional retail outlets:

“While it may be difficult to ascertain the true scale of this fast-growing category, what’s clear is that the opportunity it presents for wholesalers is huge.” There are now 3.2m vapers in the UK, a figure expected to continue to rise, says Chris:

“It’s no surprise when you consider the significant lifestyle and cost benefits compared to traditional tobacco.”

However, currently only a minority of vape sales stem from traditional retail outlets, suggesting a real growth opportunity for wholesalers prepared to invest in upskilling their staff and educating their retail customers on the category.

Another important development is that the growing number of dedicated vapers and dualists are increasingly seeking out simple solutions amongst the array of different devices now on offer:

“If you look at the USA, the biggest vaping market,” says Chris Street, “pod mod systems are a key growth category, highlighting the big sales potential for them here. Pod mods offer vapers and smokers a simpler format to use and an easier experience in the transition from smoking to vaping. Combined with the marketing support pod mods have been receiving, vapers and smokers are more aware of these innovations and curious to try them.”

Imperial’s myblu device launched in spring 2018. Thanks to its exceptional performance and vaping experience, coupled with its sleek, easy-to-use pod mod design, myblu has grown in distribution and availability to become the UK’s No.1 closed kit device.

Alongside myblu, Imperial also launched their Intense Liquidpods featuring Nicotine Salts (nicsalts). Devised by smokers for smokers, nicsalts result in nicotine being absorbed into the body faster than normal e-liquids. This rapid absorption of nicotine allows myblu Intense to more closely replicate the experience of smoking a traditional cigarette, appealing to adult smokers looking to switch for the first time, or those who have tried vaping in the past and haven’t been completely convinced.

ITUK estimates that 54% of vape sales are liquids so, while offering the right range of devices is key, stocking a strong portfolio of e-liquids is just as important, if not more so.

“We always recommend supporting the devices stocked with a range of eliquids,” says Chris Street, “especially fruit flavours, in a variety of nicotine strengths, including nicsalts like myblu Intense, to cater for all tastes. ITUK have liquidpods ranging from tobacco varieties to menthol and fruity flavours.”

Coinciding with research showing that fruit-based flavours are increasingly preferred, three of blu’s five top-selling e-liquid flavours are fruit-based: No.1 menthol, No.2 blueberry, No.3 tobacco, No.4 strawberry mint and No.5 cherry.

With the dizzying number of different devices and liquids now available, says Chris Street, retailers seeking to enter the category may be intimidated by the breadth of the vape offering:

“These retailers need knowledgeable advice on what to buy, along with reassurances on product quality. By taking the time to expand staff’s category understanding, wholesalers can effectively advise these customers and grow their sales as a result.

“It’s vital that depot staff understand not only what products they are selling but also the end customers they are selling to. Training is key to success and by making the time investment to educate all staff on the category, wholesalers can provide an exceptional level of service to customers that will encourage them to return to the depot again and again.”

The UK is the second largest ecigarette market with over 3.2 million adult vapers, says Jan Louw, Head of Wholesale at JTI, another tobacco manufacturer that has moved into Next Generation Products, and with sales expected to grow, the category presents an exciting opportunity for wholesalers.

JTI’s Logic portfolio has enjoyed increased success since launch and now boasts an 11% share of the UK Independent and Symbol vaping market and 10.6% of the overall UK vaping market in traditional retail. Capsule and refillable products are currently the fastest growing devices in vaping and are used by most adult UK vapers.

Wholesalers can tap into the growing refillable market by stocking Logic LQD, which has updated its e-liquid bottles with a new design and competitive RRP of £3.99 to meet demand. There is a clear trend towards value e-liquids with over half of e-liquid sales in the independent and symbol channel selling for less than £3.00. JTI’s recently launched Logic EPIQ range taps in to this demand, with an RRP of £2.50.

Logic PRO is a popular capsule vaping brand with UK retail sales of £11.6 million in 2018. Last year JTI updated its Logic PRO capsule vaping device, with a new finish, lighter weight and improved charging time. The nextgeneration Logic PRO 2 is lighter and more compact than its predecessor.

With a matte black, soft-touch finish, the latest device also includes a 650 mAh battery that fully charges in 100 minutes. Logic PRO capsules are available in eight flavours and a variety of strengths – Tobacco, Menthol, Cherry, Vanilla, Berry Mint, Strawberry, Watermelon and Blueberry – with an RRP of £4.50 per pack of 3 capsules. Logic PRO capsules have an integrated coil and deliver a ‘no spill, no fuss’ experience.

Logic LQD enables retailers to maximise sales from the biggest segment within the category. The device features a variable voltage control, offering a customisable vaping experience. Logic LQD’s e-liquids feature a child-resistant mechanism with a precision nozzle to prevent spillage.

In March 2019, JTI launched EPIQ from Logic – a value range of e-liquids under its successful Logic brand. With over half of e-liquid sales in the independent and symbol channel selling for less than £3.00. the range taps in to growing consumer demand for value products. With an RRP of £2.50 and available in PMPs, Logic EPIQ is supplied in two different strengths and eight flavours.

“We have seen a steady change in the vaping market over the years,” says Ben Mison, Head of Sales at Vapouriz, “as consumers recognise they don’t need to visit a specialist vape shop to get hardware, liquids and, most importantly, knowledge and advice, as they can now find them in their local CStore. It is pivotal that the convenience channel stocks well recognised, highquality brands that these consumers demand.

‘Dual vaping’ has become a considerably popular trend in the vaping industry, says Ben Mison. “Many vapers have a variety of vape kits for different occasions. Versatility is key, as these consumers look for quality eliquids that can be used across various devices.

Vapouriz understand that not all retailers and consumers will understand every distinction of the vaping category, Ben continues: “In response, we have created a practical, high-quality brand, Vapouriz 50|50. The equal ratios of PG and VG in this eliquid range allow it to be used in not only classic plus-ohm vape devices, but sub-ohm devices too. This is the perfect option for beginners and seasoned vapers and an easy product for staff members to sell. With a minimum POR of 50%, it’s an exciting time to be involved in this highly profitable sector.”

Finally, Vapouriz’s ‘Double Drip’ eliquids have received critical acclaim from industry experts and vapers alike. Vapouriz provide high-quality POS to wholesalers and ensure their website and social media presence is consistently high.

Another ‘pure vape’ specialist, Rejuice, Ireland’s largest eliquid manufacturer, is now launching its Vapeboxx brand in the UK. Ireland is the world’s third largest vaping nation in per capita spend and Rejuice’s liquids are sold there in over 800 locations, says Michael Sager, Rejuice’s Sales Director.With its wide variety of flavours and flavour formats Rejuice’s Vapeboxx offering enables retailers to stock a complete vape-shop and maximise choice and profitability in limited spaces.

Vapeboxx’s delivery system has been granted a European design patent and has a US design patent pending. Vapeboxx operate a QMS system in line with ISO 9001 2015 certification to meet Best Manufacturing Practices. They are also fully compliant with the EU Classification Labelling Packaging (CLP) directive.

The Vapeboxx standard box comprises 5 core nicotine strengths. Once mixed with their flavour shots these become 0mg, 3mg, 6mg, 12mg and 18mg strengths. They also have a range of Nicotine salt bases and CBD bases. The current flavour range consists of 60 flavours, including fruit, tobacco, dessert, drink, menthol and gourmet options.

The final word comes from Doug Mutter, Director of Compliance and Manufacturing at VPZ: “The vaping industry is as complex as it is widereaching. In the UK, much like the rest of the world, we have seen significant growth over a very short period. What this has presented many retailers is huge opportunities for growth and new sales – but equally it has meant considerable challenges in terms of legislation which is outdated, illinformed and lacks adaptability to change for this ever-growing market.

“The opportunities are very simple. The number of smokers in the UK are decreasing and the number of vapers is increasing. As more and more people realise the public health opportunities of making the switch to vaping, the more vapers we are seeing. It isn’t a clear-cut swap from a business perspective. Before, when a smoker would come into the shop and purchase cigarettes, now a vaper may come in and purchase hardware, new e-liquid flavours, coils, etc. The purchasing patterns are more complex but that equally creates opportunities for retailers. Our stores at VPZ see over 500 different flavours, from top sellers to high end specialist flavours. Having a wide range is crucial to ensure you meet the consumer’s needs. Trends in flavours and hardware will come and go and the best way to stay on target is to stock a strong mix of products.

“The biggest barrier any retailer faces with vaping products is the legislation demands. Vaping products are treated the same as tobacco ones, despite containing no tobacco whatsoever. Among the various obstacles is the lack of health guidance available to consumers. Most people turn to vaping after years of smoking and wanting to make the switch to vaping. The legislation as it stands prevent retailers being able to advertise or guide consumers towards the best choice. Rather than being able to advise that vaping is 95% less harmful than smoking, as Public Health England confirmed, consumers are faced with conflicting information and nowhere to seek reliable and helpful guidance.

“We at VPZ have consistently called for, and continue to fight for, separate legislation for vaping which allows consumers to be able to find guidance on the best products for their needs and also laws which allow retailers to be able to clearly state what the health professionals have found – that vaping is one of the best tools available to help you quit smoking.”