The vape category is currently worth around £1bn in the UK, with around 30% of vaping sales taking place in traditional retail stores, 20% online and 50% in specialist stores (ECigIntelligence).
Whilst it is still too soon to know what the full impact of the pandemic will be, there are some trends emerging that could be shaping sales in the vaping category.
Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu, comments: “Overall, pod-mod systems like myblu are becoming increasingly popular thanks to their ease of use and flexibility. Whilst open systems have traditionally dominated the vaping category (currently making up 81% of the market), the introduction of pod-mod devices in recent years has seen closed systems, such as myblu, continue to trend upwards, regaining its share of the category back towards 20%.”
Over the past year within traditional retail, nicotine salts (nicsalts) have grown to become the preferred liquid for pods, Imperial Tobacco estimates. Nicsalts result in nicotine being absorbed into the body faster than normal e-liquids. This rapid absorption of nicotine through nicsalts allows products like myblu Intense to more closely replicate the experience of smoking a traditional cigarette. This appeals 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.
“Now more than ever, investing in education is key to retaining new and existing vape customers,” adds Cunningham. “If retailers don’t invest in training their staff on the products on offer, there’s a strong chance they’ll miss out on sales. However, if they make sure their staff know the products well, so they can talk comfortably to retailers and are equipped to answer any questions they may have, this will pay off massively in terms of sales and repeat visits.”
Every depot is different so it’s important for wholesalers to consider what products are proving popular with customers, alongside the latest trends, to assess the right range for them.
There is a huge variety of devices and liquids available on the market today, so for retailers that are new to the category, deciding what to stock can be a daunting task. Wholesalers are therefore in an excellent position to provide advice to retailers on what products they should be stocking, as well as offering important reassurances on key areas like quality.
By being informed about the vaping market and familiarising themselves and their staff with the different products, terminologies and market trends, wholesalers can provide much needed guidance to retailers about what consumers are buying.
As a result of the Covid-19 pandemic, many customers have started shopping locally or online, in part because they are less willing to go far from home for their products. Therefore, there is an opportunity for retailers to retain customers of vape products that might shop elsewhere (such as specialist vape stores) under normal circumstances.
“Now more than ever, investing in education is key to retaining new and existing vape customers,” says Cunningham. “If wholesalers don’t invest in training their staff on the products on offer, there’s a strong chance they’ll miss out on sales. However, if they make sure their staff know the products well, so they can talk comfortably to retailers and are equipped to answer any questions they may have, this will pay off massively in terms of sales and repeat visits.”
Customer service has a particularly crucial role to play at present, given the in-store restrictions in place as part of the Covid-19 pandemic. Many retailers won’t wish to handle products in order to look at them before they buy and may also be inclined not to ask questions at the till point to avoid queues building up behind them, which can be intimidating. With this in mind, wholesalers need to be prepared to proactively offer them advice and help retailers feel at ease by providing knowledgeable answers to their questions that really showcase their understanding of the category.
Kenton Burchell, Trading Director at Bestway Wholesale, comments: “The vape category has shown tremendous growth and is continually evolving, which makes it a real challenge to get the most out of it. We know many retailers struggle with the variance of devices and liquids in the market and also have stock from all sorts of sources, much of it given to them free. This can result in them having an incoherent range or products – particularly devices that become obsolete.”
However, more and more retailers are seeing the benefit in offering a core range of pods and liquids that will satisfy most vapers’ needs. This category is set to grow as more and more smokers see the health, not to mention financial, benefits of switching to e-cigs from tobacco. More and more retailers also see the profit opportunity that is well worth the investment in time and space in store needed to understand the category and get the most from it.
“We have to be careful in describing products as being safer but NHS England do endorse vaping as a good way to quit smoking and vapers themselves know the huge difference,” adds Burchell. “Added to this there are the cost savings as tobacco continues to escalate in price.”
Bestway is also seeing growth from the pod devices, such as Logic, Juul, Vype and My Blu. Also the heat not burn category continues to grow and is a tobacco product (stated by the manufacturer to be to be 90% safer than traditional smoking). Bestway is are also seeing strong growth from Edge – a range of liquids price marked at £2.50 with excellent margins.
Bestway’s bestselling liquid brand is Edge – price marked at £2.50 and a quality product. The wholesaler also has an extensive range of flavours and nicotine strengths to satisfy shopper needs.
“All wholesalers need to have a core range of vape products for retailers which must include a selection of pods from the leading brands – like Logic, Juul and Vype,” suggests Burchell. “They need to decide on which devices to stock for those retailer customers who need one, or want to try vaping and a core range of liquids, preferably several brands with good flavour choices and nicotine strengths. Menthol is the best flavour to enable wholesalers to take sales to the next level. We have a selection of leading vape brands available for delivery to all customers, such and Liberty Flights and Aquavape.”
Nick Geens, Head of Logic and Reduced Risk Products at JTI, comments: “Closed tank devices, or pod mods, are currently the fastest growing vaping segment in the UK, as well as the biggest segment within the category for value sales. This is because vapers are looking for convenient and easy-to-use devices that they can experiment with in terms of flavours and strengths to find the right fit.”
JTI’s premium pod device, Logic Compact, offers a convenient and modern alternative to traditional vaping products. Assembly is simple, with pre-filled e-liquid pods that click magnetically into place.
“Wholesalers should look to stock up on the UK’s most popular flavours to complement their range of best-selling devices,” suggests Geens. “There are many different flavours to choose from, so a good place to start is with the most popular – fruit (31%), tobacco (20%) and menthol (21%). On top of the range of flavours, wholesalers should consider stocking nicotine salts, a growing trend in the category. Offering a smoother and more intense flavour delivery, more and more vapers are seeking an enriched vaping experience, and nicotine salts does just that.”
This year JTI launched Logic Compact Intense flavour pods, compatible with the Logic Compact device. With an RRP of £5.99 and available in 18mg, vapers can choose from; Amber Tobacco, Peppermint, Berry Ripple, Banoffee and Chai Latte, alongside the newest menthol flavours of Berry Mint and Polar Menthol.
“Although it is important to stock a varied range of products in line with customer trends, one thing that will always be prevalent is good quality e-liquids at an affordable price,” adds Geens. “Wholesalers should always look to retain a good level of stock when it comes to value e-liquids and Logic EPIQ is a good place to start.”
Logic EPIQ was expanded earlier this year to include both nicotine salts and High VG 70/30 e-liquids, with the nicotine salt range (18mg/ml) including Peppermint and Berry Mint flavours, and the High VG 70/30 liquids (3mg/ml) available in Mint Royale. With an RSP of £2.99 the new additions offer a more enhanced vaping experience at an affordable price.
The nicotine pouch category is now worth £7.4 million a year (IRI), as adult consumers look for convenient products that can be used when smoking or vaping might not be possible. This growing market shows no signs of slowing down and will be a key product retailers will look for when in depot.
JTI has recently unveiled a new design, flavour and strength to its Nordic Spirit range, the UK’s No. 1 nicotine pouch brand, with a 83.4% market share (IRI). Already available in Mint and Bergamot Wildberry, wholesalers can now stock Elderflower in a regular 6mg and strong 9mg and a 12mg extra strong in Mint. Wholesalers should also consider stocking price mark packs (PMP) as retailers will be looking for these products to help drive sales.
With sales increasing by 270% in the UK in the last 12 months and by 100% since the start of 2020 (IRI), the heated tobacco category represents an exciting sales opportunity for the wholesale channel.
Launched in November, JTI’s new heated tobacco product, Ploom S, offers existing adult smokers an alternative but familiar tobacco experience by heating tobacco instead of burning it.
The Ploom S device will be sold through Ploom-branded lounges – Argyll Street and Westfield Shopping Centre, London – Ploom pop-up shops, online at www.ploom.co.uk and through accredited retailers across London. The device can be used exclusively with EVO tobacco sticks which will be available for all London retailers, as well as most wholesalers within the M25.
The EVO tobacco sticks are available in four different flavours with an RRP of £4.50: Bronze, Sepia, Emerald and Purple.
John Patterson, sales director Juul Labs UK, comments: “The latest figures from IRI suggest that closed systems have now overtaken open systems across the total category in tracked channels and have been the dominant sector in multiple retailers for the past year or so. Based on that growth, it’s believed closed systems will continue to drive category growth as adult smokers look for simpler and more convenient alternatives to cigarettes.”
Other sectors may post higher growth rates, but sales data reveals they are starting from a low base and account for a small fraction of sales compared to vaping products.
IRI figures for total sales across closed and open systems in the 12 weeks pre and post the removal of menthol cigarettes show the vaping category in tracked channels grew by 12.6%, with sales of menthol products up 44.6%. Moreover, menthol and mint products contributed to almost 60% of all growth in the category, with menthol products up 45% in value and responsible for 36% of all growth (IRI).
Sales of tobacco flavours also rose 4% with mint and other flavours increasing by around 10% each – suggesting that many menthol smokers have made the transition to the closed pod vaping category to try menthol flavours in particular.
“We believe that in order to successfully transition adult smokers away from cigarettes, products have to appeal to adult smokers, be satisfying and replicate their previous cigarette choices,” adds Patterson.
JUUL launched Menthol JUULpods in April to offer adult smokers, particularly those who preferred mentholated cigarettes, a wider range of alternatives.
The latest launch of Rich Tobacco JUULpods addresses the needs of adult smokers who prefer the flavour profile Virginia tobacco, the blend used in nine out of every ten cigarettes sold in the UK (IRI).
“We are focused on developing technologically-based solutions to improve the vaping experience for adult smokers and to further restrict underage access and use,” Patterson continues. “While it is too early to comment on sales of Rich Tobacco, we are pleased with how Menthol JUULpods have performed since launch.”
Exclusively, within wholesale JUUL is currently offering retailers a price-marked alternative on the JUUL Starter Kit which offers a £10 saving on the RRP, designed to make JUUL products more accessible for adult smokers who may wish to transition from combustible cigarettes to potentially less harmful alternative nicotine products.
According to IRI data, JUUL is the UK’s number one vape brand, growing at 63% year on year and accounts for 37% of category growth. In addition, based on value sales, Mint and Menthol JUULpods account for 30% of all Mint and Menthol closed pod sales.
“Wholesalers have to view the smoking alternatives category in its own right rather than an extension of the tobacco category,” Patterson suggests.
Vaping is a category that is demonstrating good growth for both wholesalers and their customers and demands visibility to drive sales.
“Vaping products need not be confined to the tobacco room and, in retail, many supermarkets have seen large sales increases through prominent displays,” Patterson continues. “There is no reason why this cannot be done in wholesale to give greater visibility to the category and help drive incremental distribution. Where space is limited and vaping products have to be sited in the tobacco room, wholesalers may look to use the space vacated by menthol cigarettes to incorporate a greater range of vaping products onto their shelves. However, the range should still be focused on a tight range of best-selling products across smoking alternatives rather than stocking too wide a range.”
JUUL also believes that responsibility has to be delivered throughout the supply chain. The company believes that it’s not just retailers and store staff that need to be responsible for age verification – brands need to be too and wholesalers have also to play their part. Juul Labs mandates Challenge 25 for every JUUL retailer and continues to invest in mystery shopping and age-verification training programmes.
The company also insists that a robust age verification programme is in place at depot level and online to ensure its products are only sold to those retailers who retail responsibly. “Combating underage use is imperative to building consumer, regulatory and stakeholder confidence in the industry and we all have to work together to ensure that vaping products are available to adult smokers only,” adds Patterson.
A large proportion of the tobacco trade goes through the independent and symbol sector who are reliant on supply from wholesalers. Juul Labs believes that in order to offer adult smokers alternatives to transition away from cigarettes – which continue to be the largest cause of preventable death in the UK, responsible for one death every six minutes, its products need to be available to adult smokers where they purchase their cigarettes. So working with wholesalers is key to JUUL’s mission.
In addition to offering category insight and education, JUUL also listens to its wholesale partners to devise and deliver channel specific activity. For example, JUUL has recently introduced a limited period £19.99 price marked pack on the JUUL Starter Kit which is unique to wholesale and will be looking to offer additional promotions in 2021. By offering a more accessible entry point to ENDS products, the company hopes to offer more adult smokers further alternatives to combustible cigarettes and more options to transition away from tobacco.
Chris Carr, UK Sales Director for EDGE commented: “The convenience of pod systems is demonstrably resonating with the contemporary NGP consumer, ample response from retailers to engage with this aspect of the market will undoubtedly drive revenue into 2021, while ensuring a relevant offering of market-leading e-liquids are always available to encourage repeat business once the hardware has been purchased.”
Pod systems continue to dominate the vaping hardware landscape with a 44% category split; outperforming disposables (10%), basic open systems (29%) and advanced open Systems (17%) by a significant margin (Nielsen). In fact, the pod systems market share has been valued at £482 million (Nielsen).
EDGE e-liquids continue to dominate the landscape as the biggest brand in total impulse (40.6% USOM) – a channel which is growing quicker than grocery multiples.
With a 40.6% SOM in convenience and a 22.3% share of the total UK market, EDGE’s e-liquid offering remains its strongest performing product type, holding 17 of the top 25 SKUs in total impulse (Nielsen). Of the top 10 highest selling SKUs in total impulse, nine are EDGE products; Very Menthol 6 & 18mg hold the No1 and No2 rankings respectively, followed by EDGE blackcurrant 6mg, Very Menthol 12mg and Forest Fruits 6mg to complete the top 5.
Carr added: “Our innovations team is working tirelessly to develop our hardware range, recently having launched the innovative EDGE HYBRID – the first filtered vape device, born of consumer demand to bridge the gap between smoking and vaping by combining the best elements of both experiences into one convenient, ergonomic and stylish package.
An EDGE study found that 37% of consumers that had tried vaping, were put off by the hard and unfamiliar mouthpiece.
HYBRID resolves this woe by incorporating patented innovations in pod system technology alongside a soft, microfibre filter tip complete with an integrated menthol crushball to bring the vaping experience that much closer to traditional smoking, without the understood risks to personal wellbeing.
Early 2020 saw the launch of the EDGE Pro AIO pen device featuring patented rapid release coil technology previously unseen in the market, with more exciting announcements planned for the near future.
John Taylor, Chief Marketing Officer at Vape Dinner Lady, comments: “With the ongoing Covid-19 pandemic, we have seen increasing numbers of cigarette smokers who are turning to the Dinner Lady disposable vape pens, as they reconsider their lifestyle choices. Sales of the device from April to August this year increased by 400%, and consumer insight sessions have backed up the figures. More smokers are looking to improve their lung health by quitting cigarettes, and they’re choosing vaping and e-cigarettes to help them do that – as we know Public Health England states vaping to be 95 per cent less harmful than cigarette smoking. Dinner Lady’s disposable vape pen is an ideal entry level product for someone looking to quit smoking.”
Vape Dinner Lady’s best-selling product is its Lemon Tart e-liquid. This year, the company has seen a lot of growth and interest in the disposable vape pen, which is available in nine flavours.
“It’s so important to stock leading well-known premium brands like Dinner Lady – because retailers recognise that it’s got brand pull and they will get a great rate of sale from their vape customers, who know and love the brand,” adds Taylor. “What we’ve seen through our own e-commerce channels, is how crucial it is to stock a full range of products to support consumers throughout their vaping journey.”
The Dinner Lady disposable vape pen is a quality offering for those new to vape, who want to try vaping without a major spend, to see if it will work for them. The company also supplies a full range of e-liquids and formulations, to suit all needs – whether for those continuing to reduce their nicotine intake, as well as those who class themselves as vaping enthusiasts.
Vape Dinner Lady has recently launched a range of Lemon Tart samples, which are being supplied to retailers to share the love with their customers. This comes with a full supporting campaign, including a new promotional video showcasing the love of Lemon Tart around the world.
The company supports retailers with customised marketing solutions. The Dinner Lady team recently supported the launch of a new Lucky Cash & Carry wholesale store in Glasgow, expanding from their Manchester base, with a huge range of display and POS materials which were custom designed by the in-house team.
“Working in partnership with wholesalers like this, and providing similar support to retailers, is a great way for us to ensure that any marketing support is customised to support the specific retail environment,” says Taylor.
That can range from compact, eye-catching counter top units (CTUs), or small footprint free-standing display units (FSDUs) holding a broad range of products, or even full Dinner Lady branded vape walls. “It all starts with the consumer; the retailer needs to stock a broad range of validated products which consumers know and love,” Taylor comments. “The wholesaler needs to ensure they have that available for the retailer.”
“We love to work very closely with wholesalers, ensuring they have the right mix of products to best suit their customers and to ensure a steady flow of goods for everyone,” Taylor continues. “Our sales teams are always ready to secure a new order and we have a real focus across the business on making sure the customer wins and is happy to work with us.”
Asked how consumers, retailers, wholesalers and suppliers have reacted to the Coronavirus crisis, Taylor replied: “This year has definitely seen a shift to greater investment in online, both breadth of stock and ensuring sufficient stock is in place to meet the consumer’s demands. When vape stores shut in March, online sales went through the roof. The most successful retailers were those who have a compelling, effective online channel, giving consumers the service they want in these challenging times. By ensuring a strong, effective online offering, alongside in-store stock, you have continuity for customers and they’ll keep coming back.
“From insight we’ve done throughout the pandemic, consumers are concerned about smoking making them more susceptible to Covid-19. People have spoken about that a lot, and how they’re turning to vaping as a less harmful alternative. Alongside this, retailers need to be able to educate customers about the product range, so that they can support them through their vaping journey, and they need a wide range of stock to back that up. If retailers educate themselves and their staff to be able to support the consumer, they will create consumer loyalty which will pay dividends in time.”