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, 50% 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.
Overall, pod-mod systems 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 (ECigIntelligence), 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% (ECigIntelligence).
Over the past year within traditional retail, nicotine salts (nicsalts) have grown to become the preferred liquid for pods. 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.
myblu is the pod mod system from e-vapour brand, blu. The myblu device combines the performance demanded by experienced vapers with the ease-of-use appreciated by new entrants to the category. The device’s hassle free Liquidpods allow vapers to switch between flavours in seconds via a simple one-step ‘click and go’ system.
“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,” says Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu. “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.
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,” adds Cunningham. “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.”
Fredrik Svensson, General Manager BAT UK & Ireland, said that “UK policymakers made a bold statement by becoming one of the world’s leading advocates of vaping as an alternative to smoking.”
The vaping sector supports nearly 18,000 jobs in the retail supply chain and is contributing £805 million per annum to UK GDP, as the UK reaps the benefits of its far-sighted investment in vaping and other alternative nicotine products, according to a new report.
Alternative nicotine products – including vaping products (i.e. e-cigarettes), tobacco-free oral nicotine pouches and tobacco heating products – deliver nicotine without the need to burn tobacco, making them potentially less risky than traditional combustible tobacco products.
A new research report by Oxford Economics demonstrates for the first time the massive economic footprint of the UK’s public health leadership position in vaping and other alternative nicotine products.
According to BAT UK, which commissioned the report, the UK is now the global leader in developing high quality alternative nicotine products, generating significant economic benefits for the UK economy.
This report finds that by 2019, alternative nicotine products were supporting 17,800 UK jobs across the retail supply chain and contributing £805 million to UK GDP.
BAT’s research spending at its global R&D centre in Southampton doubled between 2016-20, contributing £210 million to UK GDP in 2019.
Driven by its global R&D hub in Southampton, BAT filed more than 170 patent applications in the UK in 2019 on new alternative nicotine products inventions, making it the UK’s seventh-largest patent applicant in 2019.
By 2019, there were 3.1 million vapers in the UK, a growth of more than one million in just five years. This report highlights research which shows that 97% of all vapers are current or ex-smokers, with two thirds using vapour products either as an aid to stop smoking or because they see vapour products as a less harmful alternative to smoking.
From its R&D base in Southampton, BAT continues to invest heavily in UK science. As the Report highlights, this is creating value across the economy.
In 2019, BAT’s activities and investments in alternative nicotine products contributed £360m to UK GDP, supporting 7,100 jobs and 60 vapes stores on UK high streets.
BAT scientists conducted 164 tests on its Vuse brand alone, including 27 behavioural science tests, 82 chemistry tests, 35 biological tests and 20 clinical tests. BAT holds the largest published dataset on a single vaping product.
“As this new report makes clear, the benefits to the UK economy of this progressive position are now paying dividends. BAT has backed up the government’s bold stance by making big investments in UK-based vaping research and development, unleashing domestic economic growth and jobs, and positioning the UK to drive innovation globally in this fast-growing sector,” Svensson adds.
“Now other countries are finally seeing the light too and looking to the UK for leadership. Not only are these investments helping to design the alternative nicotine products of tomorrow, they are bringing thousands of jobs back into our regions, supporting high street businesses and boosting our economy. What this report shows above all else is that everybody wins when we back UK science and innovation.”
Tom Curle, Marketing Director at 4nx, comments: “Consumers are looking for more pocket friendly smoking alternatives, this is not just about the size of the packaging. The need for a cost-conscious brand is paramount post Covid, as many consumers will now look to save money on their weekly shop whilst still being conscious of their health and wellbeing.”
4nx is positioning itself to be disruptive to the market, with a RSP of £5.00. The aim was to create a high quality product while making it affordable to the consumer and attractive to the retailer with up to 55% margins.
A discreet way to enjoy nicotine, free from tobacco, 4nx has spent lockdown developing three new flavours, Mint 6mg, Icy Mint 10mg and Arctic Mint 12mg, with more flavours coming in 2021. Each pack contains 20 slim nicotine pouches packed with intense flavour.
Oral nicotine is predicted to have the strongest increase in the sector over the next 5 years growing exponentially. 4nx will enter the market with a strong proposition for consumer value and retailer margin. This will allow and encourage smokers and vapers to try an alternative Nicotine replacement.
“We see education, retailer support and consumer choice at the forefront of the space over the next 12 months,” adds Curle. “We have to be able to offer consumers and retailers what they need to achieve their goals. Offering a less harmful alternative is critical to a smoke free future for the world. Covid has had an impact but with brands like 4nx doing a fantastic job in offering smoking alternatives, we believe a smoke free future is achievable and our objectives is to support that mission.”
John Patterson, Sales Director Juul Labs UK, comments: “The UK vaping category continues to grow year on year with the figures from IRI showing that total sales in tracked channels have increased by 46.8% over the past year. The biggest rise has been in closed systems refills with 65% growth while eliquids for open systems have increased by 27% (IRI).”
Closed pods systems, such as JUUL, is the leading segment in the category, having overtaken open systems in August 2020, with multiple retailers in particular embracing closed systems as part of their alternative offer for adult smokers.
Of all closed category sales in tracked channels, multiple retailers and key accounts have a 70% share, with 30% of sales going through the independent channel.
The popularity of closed systems as an alternative to cigarettes is largely due to their simplicity: they are simple for the adult smoker to use as they are ready out of the box, using prefilled cartridges and there is no need for detailed product knowledge for the retailer.
Since its launch into traditional retail in November 2018, IRI data shows that JUUL is now the number one vaping brand by value and JUULpods account for four out of the top five best selling closed system skus in multiple retail.
As a company, Juul Labs believes flavoured products can play an important role in helping adult smokers transition away from combustible cigarettes and JUULPods are available in Mint, Menthol, Berry, Mango and Tobacco, all in 18mg/ml nicotine strengths, offering adult smokers a choice of options across flavour segments.
“To be clear, it would be best if no one used any nicotine product. Anyone who smokes should quit and adult smokers who have not successfully quit should completely switch to potentially less harmful alternative nicotine products,” adds Patterson. “Juul Labs and the vaping category exist to help end the era of combustible cigarettes, however more has to be done to highlight the relative risks of vaping in comparison to cigarettes, as there remains confusion and misperceptions around the harm reduction potential of the category.”
E-cigarettes could offer adult smokers who cannot – or will not give up – an opportunity to transition to an alternative and potentially reduce the harm caused to themselves, and others.
Retailers can also play their part in helping adult smokers transition by familiarising themselves and their staff on the various alternatives to combustible cigarettes and the range of options available.
“Keeping a well-stocked, visible display with good availability on key brands will retain the footfall of these vapers and those adult smokers who wish to transition away from combustible cigarettes in the future. It’s about providing choice, and a range of options and alternatives,” suggests Patterson. “Adult smokers tend to purchase the same brand at the same stores on a regular basis. By offering alternatives products where they purchase their tobacco, retailers can introduce them to options which are potentially less harmful than cigarettes.”
Gemma Bateson, Head of Reduced Risk Products at JTI UK, comments: “The vaping category in particular has been especially affected since vape stores were first forced to shut down in early 2020, as they fell into the category of ‘non-essential’ shops. This has meant that adult vapers had to look elsewhere to stock up on their vaping e-liquids and devices – turning to trusted local shops and supermarkets.” At first, more people were inclined to visit their local shop because of their convenience and perceived safeness, with independent stores seeing the biggest increase with a substantial 33% rise in sales (IRI). When vape stores were allowed to re-open on June 15th 2020, sales of e-cigarettes in traditional retail remained 7% higher than pre-pandemic levels and in November last year, sales boosted again, increasing by 8% in traditional retail and 13% in independent stores (IRI).
“Now existing adult smokers and vapers have become more aware of the wide range of vaping products available to them, and just how easy it is to pick them up in traditional retail, we expect these channels to retain new customers once restrictions ease,” adds Bateson. “To meet the rise in demand in retail, wholesalers should keep stocked up and offer a consistent selection for their customers.”
A growing number of existing adult smokers are looking for an alternative but familiar tobacco experience in the form of heated tobacco products.
The Heated Tobacco category is now worth nearly £1 million a week in Traditional Retail (IRI).
To help retailers profit from this growing category, at the end of 2020 JTI launched Ploom, a sleek, unique and innovative heated tobacco product alongside EVO tobacco sticks available in four different flavours. Closed tank devices, or pod mods, are currently the fastest growing vaping segment in the UK (IRI), as well as the biggest segment within the category for value sales.
“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,” says Bateson. Our premium pod device, Logic Compact, offers a convenient and modern alternative to traditional vaping products.”
The most popular vaping flavours are fruit (31%), menthol (21%), and tobacco (20%) according to Kantar.
“Wholesalers should stock up on the UK’s most popular flavours to complement their range of best-selling devices,” suggests Bateson. “There are many different flavours to choose from, so a good place to start is with the most sought after.”
Kate O’Dowd, Head of Commercial Planning UK & Ireland, Philip Morris Limited, comments: “Much has happened in the tobacco category so far this year, with trends – some existing, some emerging – painting a picture as to how the rest of 2021 might play out.”
Already this year, sales of cigarettes and Roll-Your-Own (RYO) products have increased, with declining access to illicit and duty-free products seemingly pushing up the premium end of the market.
Despite this increase in traditional tobacco, the exponential growth of smoke-free categories – which include heated tobacco products and e-cigarettes – continues to build unstoppable momentum.
At the end of 2020, a survey carried out by KAM Media on behalf of PML, found that more than a third (38%) of all retailers expect more adult smokers to switch to smoke-free categories in 2021.
Despite comparatively small sales in relation to traditional tobacco, smoke-free products are eating into the market share of cigarettes. The sales of heated tobacco products, for instance, grew by 270% in 2020. The performance of HEETS heated tobacco sticks demonstrates the strong traction of IQOS – Philip Morris’s tobacco heating system used in conjunction with HEETS – which has more than 17.6 million users worldwide.
Soon, PML will be launching its new Digital Trade Engagement platform, HEETWAVE OPEN. The company has invested significantly in strengthening the digital support it offers retailers to include online training tools that improve knowledge of its expanding smoke-free portfolio, whilst also encouraging more peer-to-peer advice sharing through the platform and a new FAQs section to provide stockists with an initial reference point, should they need support.
“We know retailers care about their adult smoker customers and are keen to switch them onto better alternatives than continued smoking,” adds O’Dowd. “This again was evidenced in our research with KAM Media, which found 45% of store owners believe they play a role in helping adult smokers move away from cigarettes.”
Irshad Kara, Managing Director at nzo, comments: “We have seen a rise in consumers transitioning into convenience stores as well as an increase in the selection of products offered by these stores. This brings their offering more in line with that of the traditional specialist vape store. Many consumers will have become used to the ease of buying their vape products from these accessible convenience stores at the same time as doing their weekly shop, and so we anticipate that customer retention in this sector will remain high.”
Kara expects that the specialist vape stores will reset, and perhaps reopen from a smaller base; vape stores still offer that USP of consumer support and switching advice which is critical to the category.
The brand is offering education and support programmes to its distribution network to ensure that the consumer is still receiving the best service within the FMCG category.
nzo anticipates the demand for its closed pod systems will accelerate further in the coming years due to the ease and convenience that this option offers to both current vapers and those looking to make the switch from traditional cigarettes. It is easy to sell via FMCG as it is a clean and straightforward ‘plug and go’ solution, which offers a diverse range of both flavours and strengths whilst being easy to educate the consumer through our retailer education programme offered to retailers via our field team.
“We anticipate the demand for choice will continue over the next 12 months – closed pod systems will accelerate in the coming years due to the ease and convenience that this option offers to both current vapers and those looking to make the switch from traditional cigarettes,” adds Kara. “We see the need for more flavour choice and why nzo continue to partner with leading vape brands but we also are investing in a nzo open-pod-system to aid the consumer journey from closed-pod-systems to supplement the new nzo 10ml range – increased flavour profiles bridge the gap for the vapour and smoker.”
nzo has invested up to £3.8m into its strategy and unique approach to the category. Off the back of a nationwide out of home campaign the brand is going to be seen at over 8 festivals this summer as the main sponsor of VM Music events such as Made in Leeds, Beach Jam and Pier Jam.
Even though the shift to closed pod systems grew in 2020, nzo also launched it’s very own 10ml e-liquid in 10 popular flavours, in order to diversify it’s offering catering for the open-pod-system. The brand is also investing in a nzo open-pod-system to aid the consumer journey from closed-pod-systems – this is a key area for wholesalers for 2021 and 2022.
Paris Mannion, Marketing Manager, Nextgen360, comments: “The outlook for the vaping category looks promising, with the industry having seen significant growth during 2020, which was frankly not expected when COVID-19 became a global pandemic issue. Statistics have reported an uplift in smoking quit success over the course of 2020, increasing by +8% Vs. 2019 figures.”
For some time now, e-cigarettes have been the go-to product used to support smokers quitting – during 2020 there has been an increase in the number of smokers looking to quit and a respective increase in the number of them doing so by utilising vaping products.
If these trends persist then it seems likely that vaping will remain on the up, while tobacco continues to trend down in popularity.
Pod systems commanded a 44% SOM in category as of August 2020 with clear trends demonstrating continued growth in 2021.
The decrease in average price of 10ml e-liquids from £3.07 (Feb ’20) to £2.96 (Sep ’20), alongside trends of which brands are performing best shows us vapers are looking for value for money products, high quality e-liquids with no compromise on safety and at the right price.
“EDGE have been the go-to brand in COVID-19 because of this reason, gaining +2.2% share of market in that time,” adds Mannion.” As tobacco taxation continues to increase the cost of smoking and consumers tackle tough financial times, the cost saving benefits of vaping has made the category even more appealing to quitters, so a retail focus positioning NGP as a strong alternative to traditional tobacco products will inevitably help drive sales as we continue through 2021.”
EDGE has announced the launch of the latest update to its uber-compact, convenient and powerful pod system, the EDGE GO! The next generation of EDGE GO delivers convenient satisfaction with a new and improved aesthetic design alongside a wide range of innovative features. The new 450mAh battery offers up to 30% more life than its predecessor with improved USB-C charging technology minimising down time. The battery offers peace of mind with its integration of low voltage, short circuit, over vaping and over charging protection. Intuitive feedback via the 3 LED display allows users to monitor and manage their vaping experience at home or on the go. Despite its improved look and feel, the New EDGE GO will still be compatible with the same pod type as before. The comprehensive EDGE GO starter kit features the new generation GO battery, a rapid USB-C charging cable and the best-selling Very Menthol flavour GO Pod in 18mg.
John Taylor, Chief Marketing Officer at Vape Dinner Lady, comments: “The biggest trend is the ongoing growth of the e-cigarette market, with disposables predicted to be the fastest growing segment. UK sales of disposables and closed pod systems are currently worth around £340m [Ecigintelligence, 2021].”
Disposables offer an excellent retail solution for wholesalers selling into the convenience and grocery trades as they are a perfect product for this environment.
“For some time, grocery and convenience has struggled to unlock the full opportunity of the vape category, but the simple-to-stock, simple-to-use nature of the Dinner Lady disposable Vape Pen makes it a perfect solution,” adds Taylor. “There’s no need for the specialist knowledge or one-to-one customer service that traditional e-cigarettes and e-liquids need to support their sales and growth.”
The big launch from Dinner Lady this year has been the disposable Vape Pen. Increasingly, first-time vapers are choosing disposable devices as they make the switch to a less harmful alternative to cigarettes and traditional tobacco products. Disposables like the Dinner Lady Vape Pen are ideal for beginners as a simple introduction, as they just open the box and vape.
“Wholesalers need to be responding to – or more crucially pre-empting what retailers need from them,” says Taylor. “We see convenience retailers’ vape categories thriving when their staff are well educated in both devices and e-liquids and are knowledgeable in how to best match these to suit the consumer, because that’s the level of service vapers are used to in specialist stores. But that is hard to replicate in non-specialist retail with an unassisted sales model in place.”
“So, for wholesalers to maximise their sales, they need to offer the ranges and access to the training, education and support, that retailers need in order to meet these consumer demands – even consider training a staff member as a vape specialist to support customers too,” Taylor continues. “Strategic brand partnerships can help with this, by demonstrating that as a wholesaler you have an understanding of the vape market which can be shared with customers, who in turn can take their knowledge back to their stores. Key brands such as Dinner Lady will be a great pull for consumers and help support strong sales for retailers and in turn for wholesalers.”